INVESTMENT ADVISORY AGREEMENT
Agreement dated this 1st day of July, 2000 between The Xxxxxxx Funds,
Inc., a Maryland corporation (the "Company"), and Xxxxxxx Capital Management,
Inc., a California corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Company is an open-end management investment company
under the Investment Company Act of 1940 (the "Act") currently consisting of one
series The Xxxxxxx Growth Fund (the "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 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 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 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 Fund. The Adviser also
shall oversee all administrative and similar
services provided to the Fund by third parties. 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 Fund in any way or otherwise be deemed an agent of
the Company or the 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
Fund.
3. Expenses. The Adviser, at its own expense and without reimbursement
from the Company or the Fund, shall furnish office space, and all necessary
office facilities, equipment and executive personnel for managing the
investments of the Fund and overseeing all administrative and similar services
provided to the Fund by third parties. The Adviser also shall bear all expenses
of the Fund except the Adviser's fee, all federal, state and local taxes,
interest, brokerage commissions, reimbursement payments to securities lenders
for dividend and interest payments on securities sold short and extraordinary
items (including extraordinary litigation expenses). The expenses of the Fund's
operations borne by the Adviser 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, the printing and distribution cost of
prospectuses mailed to existing shareholders, the cost of
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share certificates (if any), director and officer liability insurance, reports
to shareholders, reports to government authorities and proxy statements,
non-extraordinary legal expenses, salaries of administrative and clerical
personnel, association membership dues, auditing and accounting services,
insurance premiums, fees and expenses of the custodian of the 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 Fund's expenses on a monthly basis. If
the Adviser fails to pay expenses of the Fund that it is obligated to pay
hereunder, the Company shall create an account receivable from the Adviser for
the amount of such unpaid expenses. In such a situation the monthly payment of
the Adviser's fee will be reduced by the amount of such unpaid expenses.
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 Fund shall pay to the Adviser, in
arrears, within ten calendar days after the end of each month, an advisory fee,
accrued each business day, based on the average net assets of the 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 1.90% (1.90% per annum) of such average net
assets. 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.
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5. Ownership of Shares of the Fund. Except in connection with the
initial capitalization of the 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 Fund, except for the purchase of shares
of the 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 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 Fund and the Company to
use the name "Xxxxxxx," it is understood and agreed that the Adviser reserves
the right to use and to permit other persons, firms or corporations, including
investment companies, to use such name, and that the Fund and the Company will
not use such name if the Adviser ceases to be the Fund's sole investment
adviser. During the period that this Agreement is in effect, the Adviser shall
be the 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 Fund or to
any shareholder of the 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 may cause the 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
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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).
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 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 Fund, as defined in the
Act, upon giving sixty (60) calendar days' written notice to the Adviser. This
Agreement may be terminated by the Adviser at any time upon the giving of sixty
(60) calendar 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 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) calendar days thereafter.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day first above written.
XXXXXXX CAPITAL MANAGEMENT, INC. THE XXXXXXX FUNDS, INC.
(the "Adviser") (the "Company")
By: By:
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Xxxxxx X. Xxxxxxx, President Xxxxxx X. Xxxxxxx, President
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