INVESTMENT ADVISORY AGREEMENT
Agreement made this ____ day of March, 1998 between Xxxxxxx
Funds, Inc., a Maryland corporation (the "Company"), and Xxxxxxx Asset
Management of Wisconsin, Inc., a Wisconsin corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Company is in the process of registering with the
Securities and Exchange Commission under the Investment Company Act of
1940 (the "Act") as an open-end management investment company consisting
as of the date hereof of four series, the Xxxxxxx Intermediate Fixed
Income Fund (the "Intermediate Fixed Income Fund"), the Xxxxxxx Small Cap
Equity Fund (the "Small Cap Equity Fund"), the Xxxxxxx Large Cap Equity
Fund (the "Large Cap Equity Fund") and the Xxxxxxx International Equity
Fund (the "International Equity Fund"); and
WHEREAS, the Company desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940,
as the investment adviser for the International Equity 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 International
Equity 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 International Equity Fund and,
subject to such policies as the directors of the Company may determine,
direct the purchase and sale of investment securities in the day-to-day
management of the International Equity 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 or the International Equity Fund in any
way or otherwise be deemed an agent of the Company or the International
Equity Fund. 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 or By-Laws or any applicable statute or regulation, or to
relieve or deprive the directors of the Company of their responsibility
for, and control of, the affairs of the International Equity Fund.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Company or the International Equity Fund, shall
furnish office space, and all necessary office facilities, equipment and
executive personnel for managing the investments of the International
Equity Fund. The International Equity Fund shall bear all expenses
initially incurred by it, provided that the total expenses borne by the
International Equity Fund, including the Adviser's fee but excluding all
federal, state and local taxes, interest, reimbursement payments to
securities lenders for dividend and interest payments on securities sold
short, brokerage commissions and extraordinary items, shall not in any
year exceed 2.5% of the average net assets of the International Equity
Fund for such year, as determined by valuations made as of the close of
each business day. The expenses of the International Equity Fund's
operations borne by the International Equity Fund include by way of
illustration and not limitation, director's fees paid to those directors
who are not officers of the Company, the costs of preparing and printing
its 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,
payments made pursuant to the Service and Distribution Plan, the printing
and distribution cost of prospectuses mailed to existing shareholders, the
cost of share certificates (if any), director and officer liability
insurance, reports to shareholders, reports to government authorities and
proxy statements, interest charges, reimbursement payments to securities
lenders for dividend and interest payments on securities sold short,
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 International Equity Fund's assets, expenses of calculating the net
asset value and repurchasing and redeeming shares, charges and expenses of
dividend disbursing agents, registrars and stock transfer agents and the
cost of keeping all necessary shareholder records and accounts.
The Company shall monitor the expense ratio of the International
Equity Fund on a monthly basis. If the accrued amount of the expenses of
the International Equity Fund exceeds the expense limitation established
herein, the Company shall create an account receivable from the Adviser
for 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 Company's fiscal year
if accrued expenses thereafter fall below the expense limitation.
4. Compensation of the Adviser. For the services and
facilities to be rendered and the charges and expenses to be assumed by
the Adviser hereunder, the Company, through and on behalf of the
International Equity Fund shall pay to the Adviser an advisory fee, paid
monthly, based on the average net assets of the International Equity 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 0.90% (0.90% per annum) of
such average net assets of the International Equity Fund. 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 assets of the business days during which it is so in effect.
5. Ownership of Shares of the International Equity Fund.
Except in connection with the initial capitalization of the International
Equity Fund, the Adviser shall not take, and shall not permit any of its
shareholders, officers, directors or employees to take, a long or short
position in the shares of the International Equity Fund, except for the
purchase of shares of the International Equity Fund for investment
purposes at the same price as that available to the public at the time of
purchase.
6. Exclusivity. The services of the Adviser to the
International Equity 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
permitted and is permitting the International Equity Fund and the Company
to use the name "Xxxxxxx," it is understood and agreed that the Adviser
reserves the right to use and has permitted and may permit other persons,
firms or corporations, including investment companies, to use such name,
and that the International Equity Fund and the Company will not use such
name if the Adviser ceases to be the International Equity Fund's sole
investment adviser. During the period that this Agreement is in effect,
the Adviser shall be the International Equity 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 International Equity Fund or to any shareholder of the
International Equity 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 shall have authority
and discretion to select brokers and dealers to exercise portfolio
transactions for the International Equity Fund and for the selection of
the markets on or in which the transactions will be executed. The Adviser
may cause the International Equity 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). The Adviser will provide such reports as the Company's Board of
Directors may reasonably request with respect to the International Equity
Fund's total brokerage and the manner in which that brokerage was
allocated.
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 directors of the Company in the manner
required by the Act, and, if required by the Act, by the vote of the
majority of the outstanding voting securities of the International Equity
Fund, as defined in the Act.
10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the directors of the Company or by
a vote of the majority of the outstanding voting securities of the
International Equity 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 two (2) years from the date hereof and indefinitely
thereafter, but only so long as the continuance after such two (2) year
period is specifically approved annually by (i) the directors of the
Company or by the vote of the majority of the outstanding voting
securities of the International Equity Fund, as defined in the Act, and
(ii) the 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.
XXXXXXX ASSET MANAGEMENT, INC. XXXXXXX FUNDS, INC.
(the "Adviser") (the "Company")
By: By:
