ADVISORY CONTRACT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Growth Opportunity Fund (the "Portfolio")
0 Xx. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
August 8, 1996
Bessemer Trust Company, N.A.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and
reinvesting our assets in securities of the type, and in accordance with the
limitations, specified in our Articles of Incorporation, By-Laws and
Registration Statement filed with the Securities and Exchange Commission under
the Investment Company Act of 1940 (the "1940 Act") and the Securities Act of
1933, including the Prospectus forming a part thereof (the "Registration
Statement"), all as from time to time in effect, and in such manner and to such
extent as may from time to time be authorized by our Board of Directors. We
enclose copies of the documents listed above and will furnish you such
amendments thereto as may be made from time to time.
2. (a) We hereby employ you to manage the investment and
reinvestment of our assets as above specified, and, without limiting the
generality of the foregoing, to provide the management and other services
specified below.
(b) Subject to the general control of our Board of Directors,
you will make decisions with respect to all purchases and sales of our
portfolio securities. To carry out such decisions, you are hereby authorized,
as our agent and attorney-in-fact, for our account and at our risk and in our
name, to place orders for the investment and reinvestment of our assets. In all
purchases, sales and other transactions in our portfolio securities you are
authorized to exercise full discretion and act for us in the same manner and
with the same force and effect as our corporation itself might or could do with
respect to such purchases, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions. In furtherance of such and subject
to applicable law and procedures adopted by the Fund's Board of Directors, you
may (i) pay commissions to brokers other than yourself which are
higher than such that might be charged by another qualified broker to obtain
brokerage and/or research services considered by you to be useful or desirable
for your investment management of the Portfolio and/or other advisory accounts
of yours and any investment advisor affiliated with you; and (ii) consider the
sales of shares of the Portfolio by brokers including your affiliates as a
factor in your selection of brokers for Portfolio transactions.
(c) You will report to our Board of Directors at each meeting
thereof all changes in our portfolio since your prior report, and will also
keep us in touch with important developments affecting our portfolio and, on
your own initiative, will furnish us from time to time with such information as
you may believe appropriate for this purpose, whether concerning the individual
entities whose securities are included in our portfolio, the activities in
which such entities engage, Federal income tax policies applicable to our
investments, or the conditions prevailing in the money market or the economy
generally. You will also furnish us with such statistical and analytical
information with respect to our portfolio securities as you may believe
appropriate or as we may reasonably request. In making such purchases and sales
of our portfolio securities, you will comply with the policies set from time to
time by our Board of Directors as well as the limitations imposed by our
Amended Articles of Incorporation, the provisions of the Internal Revenue Code
relating to regulated investment companies and the 1940 Act, and the
limitations contained in the Registration Statement.
(d) It is understood that you will from time to time employ,
subcontract with or otherwise associate yourself with, entirely at your expense
such persons as you believe to be particularly fitted to assist you in the
execution of your duties hereunder.
(e) You or your affiliates will also provide supervisory
personnel who will be responsible for supervising and monitoring the
performance of our Administrator in connection with its duties under our
Administrative Services Agreement and for supervising the performance of other
administrative services, accounting and related services, net asset value and
yield calculations, reports to and filings with regulatory authorities, and
services relating to such functions. Such personnel may be your employees or
employees of your affiliates or of other organizations. It is understood that
we have retained, at our expense, an Administrator to perform the operational
components of the functions and services listed herein.
(f) You or your affiliates will also furnish us such
additional administrative supervision and such office facilities as you may
believe appropriate or as we may reasonably
request subject to the requirements of any regulatory authority to which you
may be subject. We will reimburse you for all of our operating costs incurred
by you, including rent, depreciation of equipment and facilities, interest and
amortization of loans financing equipment used by us and all the expenses
incurred to conduct our affairs. The amounts of such reimbursements shall from
time to time be agreed upon between us.
3. We agree, subject to the limitations described below, to be
responsible for, and hereby assume the obligation for payment of, all our
expenses including: (a) brokerage and commission expenses; (b) foreign,
federal, state or local taxes, including issuance and transfer taxes incurred
by or levied on us; (c) commitment fees, certain insurance premiums and
membership fees and dues in investment company organizations; (d) interest
charges on borrowings; (e) charges and expenses of our custodian; (f) charges
and expenses relating to the issuance, redemption, transfer and dividend
disbursing functions for us; (g) telecommunications expenses; (h) recurring and
non-recurring legal, accounting and recordkeeping expenses; (i) costs of
organizing and maintaining the Fund's existence as a corporation; (j)
compensation, including directors' fees, of any of our directors, officers or
employees who are not your officers or officers employees of the Administrator
or their affiliates, and costs of other personnel Providing administrative and
clerical services to us; (k) costs of providing shareholders' services,
including charges and expenses of persons providing confirmations of
transactions in the Portfolio's shares, periodic statements to shareholders and
recordkeeping services, and costs of shareholders' reports, proxy
solicitations, and corporate meetings; (1) fees and expenses of registering our
shares under the appropriate federal securities laws and of qualifying our
shares under applicable state securities laws, including expenses attendant
upon the initial registration and qualification of these shares and attendant
upon renewals of, or amendment to, those registrations and qualifications; (m)
expenses of preparing, printing and delivering the initial registration
statement and of preparing, printing and delivering the Prospectus to existing
shareholders and of printing shareholder application forms for shareholder
accounts; (n) fees and expenses payable to the Advisor, Distributor,
Administrator, custodian, transfer agent and dividend agent; and (o) any other
distribution or promotional expenses contemplated by an effective plan adopted
by us pursuant to Rule 12b-1 under the Act. Our obligation for the foregoing
expenses is limited by your agreement to be responsible, while this Agreement
is in effect, for any amount by which our annual operating expenses, including
distribution expenses, (excluding taxes, brokerage, interest and extraordinary
expenses) exceed the limits on investment company expenses prescribed by any
state in which the Portfolio's shares are qualified for sale.
4. We will expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard
of your obligations and duties hereunder.
5. (a) In consideration of the foregoing we will pay you a fee
computed daily and payable monthly, in accordance with the following schedule:
.80% of the first $100 million of the Portfolio's average net assets; .75% of
the second $100 million of the Portfolio's average net assets; and .70% of the
Portfolio's average net assets exceeding $200 million. Your fee will be accrued
by us daily, and will be payable on the last day of each calendar month for
services performed hereunder during that month or on such other schedule as you
shall request of us in writing. You may waive your right to any fee to which
you are entitled hereunder, provided such waiver is delivered to us in writing.
Any reimbursement of our expenses, to which we may become entitled pursuant to
paragraph 3 hereof, will be paid to us at the end of the month for which those
expenses are accrued, at the same time as we pay you your fee.
(b) Pursuant to the Portfolio's Distribution and Service
Plan, the Advisor will also act as a shareholder servicing agent for the
Portfolio pursuant to which the Portfolio is permitted to pay the Advisor a
maximum of .25% per annum of the Portfolio's average daily net assets to
compensate it and to permit the Advisor to compensate banks, savings and loans
and other financial institutions (the Advisor with such other institutions,
each a "Shareholder Servicing Agent") whose clients are Portfolio shareholders
for providing shareholder services. In addition, the Advisor may use the
advisory fee for distribution and servicing purposes including defraying the
costs of performing shareholder servicing functions on behalf of the Portfolio,
compensating others, including banks, broker-dealers and other organizations
whose customers or clients are shareholders of the Portfolio for providing
assistance in distributing the Portfolio's shares and defraying the cost of
shareholder servicing and other promotional activities. To the extent that you
or your affiliates directly may make payments to banks, securities dealers and
other third parties who engage in the sale of our shares or who render
shareholder support services, and that such payments may be deemed indirect
financing of an activity primarily intended to result in the sale of shares of
the Portfolio within the context of Rule 12b-1 under the 1940 Act (the "Rule"),
then such payments by you shall be deemed to be authorized under the
Portfolio's Distribution and Service Plan
adopted pursuant to the Rule. You, will, in your sole discretion, determine the
amount of such payments and may from time to time in your sole discretion
increase or decrease the amount of such payments; provided, however, that no
such payment will increase the amount the Portfolio is required to pay you or
any person under this Agreement or any agreement. Any payments made by you for
such purposes are subject to compliance with the terms of written agreements in
a form satisfactory to the Fund's Board of Directors to be entered into by you
and the participating organization.
6. This Agreement will become effective on August 8, 1996 and shall
continue in effect until August 8, 1998 and thereafter for successive
twelve-month periods (computed from each August 1), provided that such
continuation is specifically approved at least annually by our Board of
Directors or by a majority vote of the holders of our outstanding voting
securities, as defined in the 1940 Act, and, in either case, by a majority of
those of our directors who are neither party to this Agreement nor, other than
by their service as directors of the corporation, interested persons, as
defined in the 1940 Act, of any such person who is party to this Agreement.
Upon the effectiveness of this Agreement, it shall supersede all previous
Agreements between us covering the subject matter hereof. This Agreement may be
terminated at any time, without the payment of any penalty, by vote of a
majority of our outstanding voting securities, as defined in the 1940 Act, or
by a vote of a majority of our entire Board of Directors, on sixty days'
written notice to you, or by you on sixty days' written notice to us.
7. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any-such transfer, assignment, sale,
hypothecation or pledge by you. The terms "transfer", "assignment" and "sale"
as used in this paragraph shall have the meanings ascribed thereto by governing
law and in applicable rules or regulations of the Securities and Exchange
Commission.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of
a similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
OLD WESTBURY FUNDS, INC.
Old Westbury Growth Opportunity Fund
By:
Name: Xxxxxx X. Xxxx
Title: Secretary
ACCEPTED: August 8, 1996
BESSEMER TRUST COMPANY, N.A.
By:
----------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Executive Vice President
