INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, dated as of the ___ day of ____________, 2007, is made by
and between The Aegis Funds, a Delaware statutory trust (the "Trust") operating
as an open-end, management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), on behalf of its investment
series the Aegis High Yield Fund (the "Fund"), and Aegis Financial Corporation
(formerly, Berno, Gambal & Xxxxxx, Inc.), an investment adviser having its
principal offices at 0000 Xxxxx Xxxxx Xxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx
00000 (the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end, management investment
company under the 1940 Act; and
WHEREAS, the Investment Adviser is registered as an investment adviser with
the Securities and Exchange Commission under the Investment Advisers Act of
1940; and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory services with respect to the Fund, and the Investment
Adviser is willing to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties as follows:
1. Appointment. The Trust hereby appoints the Investment Adviser to act as
investment adviser to the Fund for the period and on the terms set forth in this
Agreement. The Investment Adviser hereby accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment Adviser
with copies of each of the following:
(a) Resolutions of the Board of Trustees authorizing the appointment of the
Investment Adviser and approving this Agreement; and
(b) The Fund's most recent Prospectus and Statement of Additional
Information (such Prospectus and Statement of Additional Information, as
presently in effect and all amendments and supplements thereto, are herein
called the "Prospectus").
The Fund will furnish the Investment Adviser from time to time with copies
of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Board of Trustees, the
Investment Adviser will provide a continuous investment program for the Fund,
including investment research and day-to-day management of the Fund's assets.
The Investment Adviser will determine from time to time what securities and
other investments will be purchased, retained or sold by the Fund. The
Investment Adviser will provide the services under this Agreement in accordance
with the Fund's' investment objectives, policies and restrictions as stated in
the Prospectus and resolutions of the Board of Trustees. The Investment Adviser
further agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission;
(b) will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer, which may
include affiliates of the Investment Adviser. In executing portfolio
transactions, the Investment Adviser will use its best efforts to seek on behalf
of the Fund the best overall terms available. In assessing the best overall
terms available for any transaction, the Investment Adviser shall consider all
factors that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the broker-dealer to execute
a particular transaction, the Investment Adviser may also consider the brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the Fund and any other accounts
over which the Investment Adviser exercises investment discretion. The
Investment Adviser is authorized, subject to the prior approval of the Board of
Trustees, to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction in such instances where the Investment
Adviser determines in good faith that such commission was reasonable in relation
to the value of the brokerage and research services provided by such broker or
dealer as viewed in terms of that particular transaction or in terms of the
overall responsibilities of the Investment Adviser to the Fund. In addition, the
Investment Adviser may take into account the sale of the Fund's shares in
allocating purchase and sale orders for portfolio securities to brokers or
dealers (including brokers and dealers that are affiliated with the Fund, the
Investment Adviser or the principal underwriter), provided that the Investment
Adviser believes that the quality of execution and the commission are comparable
to what they would be by other qualified firms. In no instance, however, will
portfolio securities be purchased from or sold to the Investment Adviser or the
principal underwriter or any affiliated person of either the Fund, the
Investment Adviser or the principal underwriter or any affiliated person of the
Fund, the Investment Adviser or the principal underwriter, acting as principal
in the transaction except to the extent permitted by the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc.;
(c) will maintain all books and records with respect to the Fund's
securities transactions which the Fund is required to maintain under applicable
laws and will furnish the Board of Trustees such periodic and special reports as
the Board may request; and
(d) will treat confidentially and as proprietary information of the Fund
all records and other information relative to the Fund and prior, present or
potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to, and approval in writing by, the Board of
Trustees, which approval shall not be unreasonably withheld and may not be
withheld where the Investment Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Board
of Trustees.
4. Services Not Exclusive. The investment management services furnished by
the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others whether
or not for compensation so long as its services under this Agreement are not
impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Investment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required by Rule 31a-1 to be maintained
under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Fund.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, effective as of the date of the effectiveness of
this Agreement, the Fund will pay the Investment Adviser and the Investment
Adviser will accept as full compensation therefor a fee, accrued daily and paid
monthly, at an annual rate of 0.90% of the daily net asset value of the Fund.
8. Limitation of Liability. The Investment Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
9. Duration and Termination. This Agreement will become effective at such
time as shall have been approved by the shareholders of the Fund, in accordance
with the requirements under the 1940 Act, and, unless sooner terminated as
provided herein, shall continue in effect for two years, and thereafter for
successive periods of twelve months, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Board of Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund. Notwithstanding, the
foregoing, this Agreement may be terminated at any time, without the payment of
any penalty, by the Fund (by vote of the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund) on sixty days'
written notice or by the Investment Adviser on ninety days' written notice. This
Agreement will immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning of such terms
in the 1940 Act).
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the parties hereto. No material amendment of this Agreement
shall be effective until approved by vote of a majority of the outstanding
voting securities of the Fund.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall insure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE AEGIS FUNDS, on behalf of
The Aegis High Yield Fund
By: _________________________
Name: ______________________
Title: _______________________
AEGIS FINANCIAL CORPORATION
By: _________________________
Name: ______________________
Title: _______________________
SK 23261 0002 768819
