EXHIBIT 5.3
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 12th day of December, 1991, between XXXXXXXX
FUNDS, INC., a Maryland corporation (the "Company"), and XXXXXXXX CAPITAL
MANAGEMENT (the "Adviser").
W I T N E S S E T H :
WHEREAS, the Company is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 (the "Act")
as an open-end management investment company comprising a series of four
mutual funds, the Xxxxxxxx Blue Chip Growth Fund, the Xxxxxxxx Opportunity
Fund, the Xxxxxxxx U.S. Government Bond Fund and the Xxxxxxxx Money Market
Fund; and
WHEREAS, the Company desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940
and which is engaged principally in the business of rendering investment
supervisory services within the meaning of Section 202(a)(13) of the
Investment Advisers Act of 1940, as the investment adviser for the
Xxxxxxxx Opportunity Fund.
NOW, THEREFORE, the Company and the Adviser do mutually promise
and agree as follows:
1. Employment. The Company hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Xxxxxxxx
Opportunity Fund for the period and on the terms set forth in this
Agreement. The Adviser hereby accepts such employment for the
compensation herein provided and agrees during such period to render the
services and to assume the obligations herein set forth.
2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Xxxxxxxx Opportunity Fund, and,
subject to such policies as the board of directors of the Company may
determine, direct the purchase and sale of investment securities in the
day to day management of the Xxxxxxxx Opportunity Fund. The Adviser shall
for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Company in any way or otherwise be
deemed an agent of the Company. However, one or more shareholders,
officers, directors or employees of the Adviser may serve as directors
and/or officers of the Company, but without compensation or reimbursement
of expenses for such services from the Company. Nothing herein contained
shall be deemed to require the Company to take any action contrary to its
Articles of Incorporation, as amended or supplemented, or any applicable
statute or regulation, or to relieve or deprive the board of directors of
the Company of its responsibility for and control of the affairs of the
Company.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Company, shall furnish office space, and all
necessary office facilities, equipment and executive personnel for
managing the investments of the Xxxxxxxx Opportunity Fund. The Adviser
shall not be required to pay any expenses of the Xxxxxxxx Opportunity Fund
except as provided herein if the total expenses borne by the Xxxxxxxx
Opportunity Fund, including the Adviser's fee and the fees paid to the
Xxxxxxxx Opportunity Fund's Administrator but excluding all federal, state
and local taxes, interest, brokerage commissions and extraordinary items,
in any year exceed that percentage of the average net asset value of the
Xxxxxxxx Opportunity Fund for such year, as determined by valuations made
as of the close of each business day, which is the most restrictive
percentage provided by the state laws of the various states in which the
Xxxxxxxx Opportunity Fund's shares are qualified for sale or, if the
states in which the Xxxxxxxx Opportunity Fund's shares are qualified for
sale impose no such restrictions, 2%. The expenses of the Xxxxxxxx
Opportunity Fund's operations borne by the Xxxxxxxx Opportunity Fund
include by way of illustration and not limitation, directors fees paid to
those directors who are not officers of the Company, the costs of
preparing and printing registration statements required under the
Securities Act of 1933 and the Act (and amendments thereto), the expense
of registering its shares with the Securities and Exchange Commission and
in the various states, the printing and distribution cost of prospectuses
mailed to existing shareholders, the cost of stock certificates (if any),
director and officer liability insurance, reports to shareholders, reports
to government authorities and proxy statements, interest charges, taxes,
legal expenses, salaries of administrative and clerical personnel,
association membership dues, auditing and accounting services, insurance
premiums, brokerage and other expenses connected with the execution of
portfolio securities transactions, fees and expenses of the custodian of
the Xxxxxxxx Opportunity Fund's assets, expenses of calculating the net
asset value and repurchasing and redeeming shares, printing and mailing
expenses, charges and expenses of dividend disbursing agents, registrars
and stock transfer agents and the cost of keeping all necessary
shareholder records and accounts.
The Xxxxxxxx Opportunity Fund shall monitor its expense ratio on
a monthly basis. If the accrued amount of the expenses of the Xxxxxxxx
Opportunity Fund exceeds the expense limitation established herein, the
Xxxxxxxx Opportunity Fund shall create an account receivable from the
Adviser in the amount of such excess. In such a situation the monthly
payment of the Adviser's fee will be reduced by the amount of such excess,
subject to adjustment month by month during the balance of the Xxxxxxxx
Opportunity Fund's fiscal year if accrued expenses thereafter fall below
the expense limitation.
4. Compensation of the Adviser. For the services to be
rendered by the Adviser hereunder, the Company through the Xxxxxxxx
Opportunity Fund shall pay to the Adviser an advisory fee, paid monthly,
based on the average net asset value of the Xxxxxxxx Opportunity Fund, as
determined by valuations made as of the close of each business day of the
month. The advisory fee shall be 1/12 of 1.00% of such net asset value .
For any month in which this Agreement is not in effect for the entire
month, such fee shall be reduced proportionately on the basis of the
number of calendar days during which it is in effect and the fee computed
upon the average net asset value of the business days during which it is
so in effect.
5. Ownership of Shares of the Xxxxxxxx Opportunity Fund. The
Adviser shall not take an ownership position in the Xxxxxxxx Opportunity
Fund, and shall not permit any of its shareholders, officers, directors or
employees to take a long or short position in the shares of the Xxxxxxxx
Opportunity Fund, except for the purchase of shares of the Xxxxxxxx
Opportunity Fund for investment purposes at the same price as that
available to the public at the time of purchase or in connection with the
initial capitalization of the Company.
6. Exclusivity. The services of the Adviser to the Xxxxxxxx
Opportunity Fund hereunder are not to be deemed exclusive and the Adviser
shall be free to furnish similar services to others as long as the
services hereunder are not impaired thereby. Although the Adviser has
agreed to permit the Company to use the name "Xxxxxxxx", if it so desires,
it is understood and agreed that the Adviser reserves the right to use and
permit other persons, firms or corporations, including investment
companies, to use such name. During the period that this Agreement is in
effect, the Adviser shall be the Xxxxxxxx Opportunity Fund's sole
investment adviser.
7. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Xxxxxxxx Opportunity Fund or to any shareholder of the
Xxxxxxxx Opportunity Fund for any act or omission in the course of, or
connected with, rendering services hereunder, or for any losses that may
be sustained in the purchase, holding or sale of any security.
8. Brokerage Commissions. The Adviser may cause the Xxxxxxxx
Opportunity Fund to pay a broker-dealer which provides brokerage and
research services, as such services are defined in Section 28(e) of the
Securities Exchange Act of 1934 (the "Exchange Act"), to the Adviser a
commission for effecting a securities transaction in excess of the amount
another broker-dealer would have charged for effecting such transaction,
if the Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of brokerage and research services
provided by the executing broker-dealer viewed in terms of either that
particular transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion (as defined in
Section 3(a)(35) of the Exchange Act).
9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be
amended without the approval of the board of directors of the Company in
the manner required by the Act, and by the vote of the majority of the
outstanding voting securities of the Xxxxxxxx Opportunity Fund, as defined
in the Act.
10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the board of directors of the
Company or by a vote of the majority of the outstanding voting securities
of the Xxxxxxxx Opportunity Fund, as defined in the Act, upon giving
sixty (60) days' written notice to the Adviser. This Agreement may be
terminated by the Adviser at any time upon the giving of sixty (60) days'
written notice to the Company. This Agreement shall terminate
automatically in the event of its assignment (as defined in
Section 2(a)(4) of the Act). Subject to prior termination as hereinbefore
provided, this Agreement shall continue in effect for an initial period
beginning as of the date hereof and ending December 12, 1993 and
indefinitely thereafter, but only so long as the continuance after such
initial period is specifically approved annually by (i) the board of
directors of the Company or by the vote of the majority of the outstanding
voting securities of the Xxxxxxxx Opportunity Fund, as defined in the Act,
and (ii) the board of directors of the Company in the manner required by
the Act, provided that any such approval may be made effective not more
than sixty (60) days thereafter.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.
XXXXXXXX CAPITAL MANAGEMENT
(the "Adviser")
By: _________________________________
Xxxxxxxxx X. Xxxxxxxx, Sole
Proprietor
XXXXXXXX FUNDS, INC.
(the "Company")
By: ___________________________ By: _________________________________
Secretary President
