THE 00 XXXX XXXXXX FUND, INC.
INVESTMENT ADVISORY AGREEMENT
THE 00 XXXX XXXXXX OPPORTUNITIES FUND
AGREEMENT, made on the 10th day of August, 1999, between THE 00 XXXX
XXXXXX FUND, INC., a Maryland corporation (the "Corporation"), on behalf of The
00 Xxxx Xxxxxx Opportunities Fund (the "Fund"), and XXXXX BROTHERS XXXXXXXX &
CO., a New York limited partnership (the "Adviser"),
WHEREAS, the Corporation is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the " 1940
Act"); and
WHEREAS, the Corporation desires to retain the Adviser to render
investment advisory services to the Fund, and the Adviser is willing to render
such services;
NOW, THEREFORE, this Agreement
WITNESSETH:
that in consideration of the premises and mutual promises hereinafter set forth,
the parties hereto agree as follows:
1. The Corporation hereby appoints the Adviser to act as investment adviser to
the Fund for the period and on the terms set forth in this Agreement. The
Adviser accepts such appointment and agrees to render the services herein
set forth, for the compensation herein provided.
2. Subject to the general supervision of the Directors of the Corporation, the
Adviser shall manage the investment operations of the Fund and the
composition of the Fund's portfolio of securities and investments,
including cash, the purchase, retention and disposition thereof and
agreements relating thereto, in accordance with the Fund's investment
objective and policies as stated in the Prospectus (as defined in paragraph
3 of this Agreement) and subject to the following understandings:
(a) The Adviser shall have overall responsibility for the general
management and investment of the assets and securities
portfolios of the Fund.
(b) The Adviser may delegate its investment responsibilities under
sub-paragraph 2(a) with respect to the Fund, or such segments
thereof designated by the Adviser, to one or more persons or
companies ("Sub-Advisers") pursuant to an agreement between the
Adviser and each such Sub-Adviser (the "Investment Sub-Advisory
Agreement"). Each Investment Sub-Advisory Agreement may provide
that the Sub-Adviser, subject to the control and supervision of
the Corporation's Board of Directors and the Adviser, shall have
full investment discretion for the Fund and shall make all
determinations with respect to the investment of the Fund's
assets assigned to the Sub-Adviser and the purchase and sale of
portfolio securities with those assets, and such steps as may be
necessary to implement its decision. Any delegation of duties
pursuant to this paragraph shall comply with any applicable
provisions of Section 15 of the 1940 Act, except to the extent
permitted by any exemptive order of the Securities and Exchange
Commission or similar relief. The Adviser shall not be
responsible or liable for the investment merits of any decision
by a Sub-Adviser to purchase, hold or sell a security for the
Fund's portfolio. (c) The Adviser shall develop overall
investment programs and strategies for the Fund, or segments
thereof, shall revise such programs as necessary, and shall
monitor and report periodically implementation of the programs.
(d) The Adviser shall research and evaluate Sub-Advisers and shall
advise the Corporation's Directors of the Sub-Advisers which the
Adviser believes are best-suited to invest the assets of the
Fund; shall monitor and evaluate the investment performance of
each Sub-Adviser; shall recommend changes or additions of
Sub-Advisers when appropriate; and shall coordinate the
investment activities of the Sub-Advisers.
(e) The Adviser shall be solely responsible for paying the fees of
each Sub-Adviser.
(f) The Adviser shall render to the Corporation's Board of Directors
such periodic reports concerning the business and investments of
the Fund as the Board of Directors shall reasonably request.
(g) The Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the
Corporation's Articles of Incorporation and By-Laws and the
Prospectus of the Fund and with the instructions and directions
of the Directors of the Corporation and will conform to and
comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations including,
without limitation, the regulations and rulings of the New York
State Banking Department;
(h) Each Sub-Adviser shall determine a portion of the securities to
be purchased, sold or lent by the Corporation and as agent for
the Fund will effect portfolio transactions pursuant to its
determinations either directly with the issuer or with any broker
and/or dealer in such securities; in placing orders with brokers
and or dealers each Sub-Adviser intends to seek best price and
execution for purchases and sales; each Sub-Adviser shall also
make recommendations regarding whether or not the Corporation
shall enter into repurchase or reverse repurchase agreements and
interest rate futures contracts.
On occasions when a Sub-Adviser deems the purchase or sale of
a security to be in the best interest of the Fund as well as
other customers, that Sub-Adviser may, to the extent permitted
by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be so sold or purchased in
order to obtain the best execution and lower brokerage
commissions, if any. In such event, allocation of the
securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Sub-Adviser
in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to
such other customers;
Each Sub-Adviser shall select brokers or dealers that will
execute the purchases and sales of portfolio securities for
the Fund or portion thereof managed by such Sub-Adviser. In
making such selection, each Sub-Adviser shall use its best
efforts to obtain best execution, which includes most
favorable net results and execution of such Sub-Adviser's
orders, taking into account all appropriate factors, including
price, dealer spread or commission, size and difficulty of the
transaction and research or other services provided. It is
understood that no Sub-Adviser will be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Fund
or in respect of Fund assets, solely by reason of its having
caused the Fund to pay a member of a securities exchange, a
broker or a dealer a commission for effecting a securities
transaction of the Fund in excess of the amount of commission
another member of an exchange, broker or dealer would have
charged, if such Sub-Adviser determined in good faith that the
commission paid was reasonable in relation to the brokerage
and research services provided by such member, broker or
dealer, viewed in terms of that particular transaction or the
Sub-Adviser's overall responsibilities with respect to its
accounts, including the Fund, as to which it exercises
investment discretion.
Each Sub-Adviser is authorized to consider for investment by
the Fund or portion thereof managed by such Sub-Adviser
securities that may also be appropriate for other funds and/or
clients serviced by such Sub-Adviser. To assure fair treatment
of the Fund and all other clients of a Sub-Adviser in
situations in which two or more clients' accounts participate
simultaneously in a buy or sell program involving the same
security, such transactions shall be allocated among the Fund
and other clients in a manner deemed equitable by the
Sub-Adviser.
Notwithstanding the previous paragraph, to the extent directed
by management of the Corporation in writing, the Adviser shall
direct one or more of the Sub-Advisers to execute purchases
and sales of portfolio securities for the Fund through brokers
or dealers designated by management of the Corporation to
Adviser for the purpose of providing direct benefits to the
Fund, provided that such Sub-Adviser determines that such
brokers or dealers will provide reasonable execution in view
of such other benefits. The Corporation understands that the
brokerage commissions or transaction costs in such
transactions may be higher, and that the Fund may receive less
favorable prices, than those which any such Sub-Adviser could
obtain from another broker or dealer, in order to obtain such
benefits for the Fund.
(i) With respect to any assets of the Fund not being managed by a
Sub-Adviser, the Adviser shall determine from time to time
what securities and other investments will be purchased,
retained or sold by the Corporation with respect to the Fund
or portion thereof not served by a Sub-Adviser. The Adviser
shall provide services to the Fund in accordance with the
Fund's investment objectives, policies and restrictions as
stated in the Fund's then current registration statement and
resolutions of the Corporation's Board of Directors. This
shall be subject to paragraph (h) hereof in the same manner as
a Sub-Adviser.
(j) The investment management services of the Adviser to the Fund
under this Agreement are not to be deemed exclusive, and the
Adviser shall be free to render similar services to others.
3. The Corporation has delivered copies of each of the following documents to
the Adviser and will promptly notify and deliver to it all future
amendments and supplements, it any:
(a) Articles of Incorporation of the Corporation, filed with the State
of Maryland on July 16, 1990 (such Articles of Incorporation, as
presently in effect and as amended from time to time, are herein
called the "Articles of Incorporation");
(b) By-Laws of the Corporation (such By-Laws, as presently in effect
and as amended from time to time, are herein called the
"By-Laws");
(c) Certified resolutions of the Directors of the Corporation
authorizing the appointment of the Adviser and approving the form
of this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-1A (No. 33-#####) (the
"Registration Statement") as filed with the Securities and
Exchange Commission (the "Commission") on [DATE] relating to the
Corporation and the shares of common stock. Par value $.001 per
share (the "Shares"), of the Fund;
(e) Notification of Registration of the Corporation under the 1940
Act on Form N-8A as filed with the Commission on July 16, 1990;
and
(f) Prospectus of the Fund, dated [ 1999] (such prospectus, as
presently in effect and as amended or supplemented with respect to
the Fund from time to time, is herein called the "Prospectus").
4. The Adviser shall keep the Fund's books and records with respect to its
services hereunder. The Adviser agrees that all records which it maintains
for the Fund are the property of the Corporation and it will promptly
surrender any of such records to the Corporation upon the Corporation's
request. The Adviser further agrees to preserve for the periods prescribed
by Rule 31a-2 of the Commission under the 1940 Act any such records as are
required to be maintained by the Adviser with respect to the Fund by Rule
31a-1 of the Commission under the 1940 Act. The Corporation acknowledges
and agrees that Sub-Advisers will be responsible for maintenance of books
and records with respect to the securities transactions of the Fund managed
by them.
5. During the term of this Agreement the Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement
(including without limitation all compensation of Sub-Advisers to the Fund
pursuant to agreements with such Sub-Advisers) other than the cost of
securities and investments purchased for the Fund (including taxes and
brokerage commissions, if any).
6. For the services provided and the expenses borne pursuant to this
Agreement, the Adviser will receive from the Fund as full compensation
therefor a fee at an annual rate equal to 1.00% of the Fund's average daily
net assets. This fee will be computed based on net assets at 4:00 P.M. New
York time on each day the New York Stock Exchange is open for trading and
will be paid to the Adviser monthly during the succeeding calendar month.
7. The 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 matters to
which this Agreement relates, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the
amount set forth in Section 36(b)(3) of the 0000 Xxx) or a loss resulting
from wilful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
8. This Agreement shall continue in effect for two years from the date of its
execution and thereafter, but only so long as its continuance is
specifically approved at least annually in conformity with the requirements
of the 1940 Act; provided, however, that this Agreement may be terminated
with respect to the Fund by the Corporation at any time, without the
payment of any penalty, by vote of a majority of all the Directors of the
Corporation or by "vote of a majority of the outstanding voting securities"
of the Fund on 60 days written notice to the Adviser, or by the Adviser at
any time, without the payment of any penalty, on 90 days written notice to
the Corporation. This Agreement will automatically and immediately
terminate in the event of its "assignment".
9. The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided herein or
authorized by the Directors of the Corporation from time to time, have no
authority to act for or represent the Fund or the Corporation in any way or
otherwise be deemed an agent of the Fund or the Corporation.
10. This Agreement may be amended by mutual consent, but the consent of the
Corporation must be approved (a) by vote of a majority of those Directors
of the Corporation who are not parties to this Agreement or "interested
persons" of any such party, cast in person at a meeting called for the
purpose of voting on such amendment, and (b) by "vote of a majority of the
outstanding voting securities" of the Fund.
11. As used in this Agreement, the terms "assignment", "interested persons" and
"vote of a majority of the outstanding voting securities" shall have the
meanings assigned to them respectively in the 1940 Act.
12. Notices of any kind to be given to the Adviser by the Corporation shall be
in writing and shall be duly given if mailed or delivered to the Adviser at
00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Treasurer, or at such
other address or to such other individual as shall be specified by the
Adviser to the Corporation. Notices of any kind to be given to the
Corporation by the Adviser shall be in writing and shall be duly given if
mailed or delivered to the Corporation at The 00 Xxxx Xxxxxx Fund, Inc., 00
Xxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Secretary, or at such
other address or to such other individual as shall be specified by the
Corporation to the Adviser.
13. The Directors have authorized the execution of this Agreement in their
capacity as Directors and not individually and the Adviser agrees that
neither the shareholders nor the Directors nor any officer, employee,
representative or agent of the Corporation shall be personally liable upon,
nor shall resort be had to their private property for the satisfaction of,
obligations given, executed or delivered on behalf of or by the
Corporation, that the shareholders, Directors, officers, employees,
representatives and agents of the Corporation shall not be personally
liable hereunder, and the Adviser shall look solely to the property of the
Corporation for the satisfaction of any claim hereunder.
14. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original.
15. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers or Partners designated below on the day and year
first above written.
THE 00 XXXX XXXXXX FUND, INC.
By
Xxxxxx X. Xxxxxxx, Xx., Chairman
Xxxxxxxxx X. Xxxxxxx
Assistant Secretary
XXXXX BROTHERS XXXXXXXX & CO.
By
Xxxx X. Xxxxxxx, Partner
ATTEST:
Xxxxxxxxx X. Xxxxxxx
Assistant Secretary
