INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, is made and entered into this 3rd day of December, 1996, by
and between Xxxxx Opportunity Fund (the "Fund"), a separately managed
series of Xxxxx Funds, Inc., a Minnesota corporation (the "Company") and Xxxxx
Associates, Inc., a Minnesota corporation (the "Adviser").
1. INVESTMENT ADVISORY SERVICES
The Company, for and on behalf of the Fund, hereby engages the Adviser, and
the Adviser hereby agrees to act as investment adviser for, and to manage the
affairs, business and the investment of the assets of the Fund.
The investment of the assets of the Fund shall at all times be subject to
the applicable provisions of the Company's Articles of Incorporation, By-Laws
and Registration Statement on Form N-1A and any representations contained in the
Prospectus of the Fund and shall conform to the policies and purposes of the
Fund as set forth in such Registration Statement and Prospectus and (i) as
interpreted from time to time by the Board of Directors of the Company and
(ii) as may be amended from time to time by the Board of Directors of the
Company and/or the shareholders of the Fund as permitted by the Investment
Company Act of 1940, as amended. Within the framework of the investment
policies of the Fund, the Adviser shall have the sole and exclusive
responsibility for the management of the Fund's assets and making and execution
of all investment decisions for the Fund. The Adviser shall report to the Board
of Directors of the Company regularly at such times and in such detail as the
Board may from time to time determine to be appropriate, in order to permit the
Board to determine the adherence of the Adviser to the investment policies of
the Fund.
The Adviser shall, at its own expense, furnish the Fund with suitable
office space, and all necessary office facilities, equipment and personnel for
servicing the investments of the Fund. The Adviser shall arrange, if requested
by the Fund, for officers, employees or other Affiliated Persons (as defined in
Section 2(a)(3) of the Investment Company Act of 1940, as amended and the rules,
regulations and releases relating thereto) of the Adviser to serve without
compensation from the Fund as directors, officers, or employees of the Company
if duly elected to such positions by the shareholders or directors of the
Company.
The Adviser hereby acknowledges that all records necessary in the operation
of the Fund, including records pertaining to its shareholders and investments,
are the property of the Fund, and in the event that a transfer of management or
investment advisory services to someone other than the Adviser should ever
occur, the Adviser will promptly, and at its own cost, take all steps necessary
to segregate such records and deliver them to the Fund.
2. COMPENSATION FOR SERVICES
In payment for all services, facilities, equipment and personnel, and for
other costs of the Adviser hereunder, the Fund shall pay to the Adviser a
monthly investment advisory fee determined by applying the annual rate of 1.30%
to the Fund's average daily net assets.
For purposes of the calculation of such fee, the Fund's net assets shall be
computed at the times and in the manner specified in the Company's Registration
Statement on Form N-1A. Such fee shall be payable on the fifth day of each
calendar month for service performed hereunder during the preceding
month. The fee applicable during the first and last months that this Agreement
is in effect shall be prorated according to the proportion which such portion of
the month bears to the full month.
3. ALLOCATION OF EXPENSES
(a) In addition to the fees described in Section 2 hereof, the Fund shall
pay all its expenses which are not assumed by the Adviser in its capacity as the
Fund's investment adviser. These Fund expenses include, by way of example, but
not by way of limitation, (a) brokerage and commission expenses; (b) interest
charges on borrowings; (c) fees and expenses of legal counsel and independent
auditors; (d) the Fund's organizational and offering expenses, whether or not
advanced by the Adviser; (e) Federal, state, local and foreign taxes, including
issue and transfer taxes incurred by or levied on the Fund; (f) cost of
certificates representing common shares of the Fund and any other expenses
(including clerical expenses) of issuance, sale or repurchase of the common
shares of the Fund; (g) association membership dues; (h) fees and expenses of
registering the Fund's shares under the appropriate Federal securities laws and
of qualifying the Fund's shares under applicable state securities laws;
(i) expenses of printing and distributing reports, notices and proxy materials
to shareholders; (j) costs of annual and special shareholders' meetings;
(k) expenses of filing reports and other documents with governmental agencies;
(l) charges and expenses of the Fund's administrator, custodian, registrar,
transfer agent and dividend disbursing agent; (m) expenses of disbursing
dividends and distributions; (n) compensation of the Fund's officers, directors
and employees that are not Affiliated Persons or Interested Persons (as defined
in Section 2(a) of the Investment Company Act of 1940, as amended and the rules,
regulations and releases relating thereto) of the Adviser; (o) the cost of other
personnel providing services to the Fund; (p) travel expenses for attendance of
Board of Directors meetings by all members of the Board of Directors of the
Fund; (q) insurance expenses; (r) costs of stationery and supplies; and (s) any
extraordinary expenses of a nonrecurring nature.
(b) Notwithstanding the foregoing, if the aggregate expenses incurred by,
or allocated to, the Fund in any fiscal year shall exceed the expense
limitations applicable to the Fund imposed by state securities laws or
regulations thereunder, as such limitations may be raised or lowered from time
to time, the Adviser shall reimburse the Fund for such excess, provided that
Adviser's reimbursement obligation will be limited to the amount of fees it
receives from the Fund during the period in which such expense limitations were
exceeded, unless otherwise required by applicable laws or regulations. With
respect to portions of a fiscal year in which this contract shall be in effect,
the foregoing limitations shall be prorated according to the proportion which
that portion of the fiscal year bears to the full fiscal year. Any payments
required to be made by this Paragraph 3(b) shall be made once a year promptly
after the end of the Fund's fiscal year.
4. FREEDOM TO DEAL WITH THIRD PARTIES
The Adviser shall be free to render services to others similar to those
rendered under this Agreement or of a different nature except as such services
may conflict with the services to be rendered or the duties to be assumed
hereunder.
5. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective as of the day and date first above
written (the "Effective Date"). Wherever referred to in this Agreement, the
vote or approval of the holders of a majority of the outstanding shares of the
Fund shall mean the vote of 67% or more of such shares if the holders of more
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than 50% of such shares are present in person or by proxy or the vote of more
than 50% of such shares, whichever is less.
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect through December 3, 1998, and thereafter shall continue in
effect for successive periods of 12 months thereafter, provided that each
continuance is specifically approved annually by (a) the vote of a majority of
the Company's Board of Directors who are not parties to the Agreement or
interested persons (as defined in the Investment Company Act of 1940, as amended
and the rules, regulations and releases relating thereto) of the Company or the
Adviser, cast in person at a meeting called for the purpose of voting on
approval and (b) either (i) the vote of a majority of the outstanding voting
securities of the Fund or (ii) the vote of a majority of the Company's Board of
Directors.
This Agreement may be terminated at any time without the payment of any
penalty by the vote of the Board of Directors of the Company or by the vote of
the holders of a majority of the outstanding shares of the Fund, upon sixty (60)
days written notice to the Adviser. The Adviser may terminate this Agreement
without penalty on ninety (90) days written notice to the Company. This
Agreement shall automatically terminate in the event of its assignment as
defined in the Investment Company Act of 1940 and the rules thereunder. This
Agreement shall automatically terminate upon completion of the dissolution,
liquidation and winding up of the Fund.
6. LIMITATION OF LIABILITY
The Adviser will not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund or its shareholders in connection with the
performance of its duties under this Agreement, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its duties under
this Agreement.
7. AMENDMENTS TO AGREEMENT
No material amendment to this Agreement shall be effective until approved
by vote of the holders of a majority of the outstanding shares of the Fund.
8. NOTICES
Any notice under this Agreement shall be in writing, addressed, delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate in writing for receipt of such notice.
9. NAME
The Fund may use "Xxxxx" as part of its name for so long as the Adviser
serves as investment adviser to the Fund. The Adviser may at any time permit
others, including companies registered under the Investment Company Act of 1940,
as amended, to use the name "Xxxxx".
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IN WITNESS WHEREOF, the Company and the Adviser have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
above written.
XXXXX FUNDS, INC.
By:
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Its:
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XXXXX ASSOCIATES, INC.
By:
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Its:
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