AMENDMENT NUMBER ONE
TO THE
INVESTMENT ADVISORY AGREEMENT
This Amendment Number One, dated November 1, 2004,
to the Investment Advisory Agreement dated
October 31, 1996 (the "Agreement") by and
between ▇▇▇ ▇▇▇▇▇▇ Exchange Fund, (the "Fund"), a California Limited
Partnership and ▇▇▇ ▇▇▇▇▇▇ Asset Management (the "Adviser," successor
in interest of ▇▇▇ ▇▇▇▇▇▇ Asset Management Inc.), a Statutory Trust,
hereby amends the terms and conditions of the Agreement in the manner
specified herein.
W I T N E S S E T H
WHEREAS, the Board of Managing General Partners of the Fund at a
meeting held on September 23, 2004 has approved a reduction in the
investment management fee payable by the Fund to the Adviser; and
WHEREAS, the parties desire to amend and restate Section 3 of the
Agreement relating to the investment management fee.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, the parties hereby
agree to amend the Agreement, as follows:
Section 3 of the Agreement is hereby deleted in its entirety and
replaced with the following:
3. Compensation Payable to the Adviser.
The Fund shall pay to the Adviser, as compensation for the services
rendered, facilities furnished and expenses paid by the Adviser, a
monthly fee computed at the annual rate of 0.30% of the Funds average
net assets. The Adviser hereby agrees that it shall look for payment of
such compensation solely to the Funds assets and not to any personal
assets of any partner of the Fund.
Such average net assets shall be determined by taking the average of
all of the determinations of net asset value, made in the manner
provided in the Funds Certificate and Agreement of Limited
Partnership, for each business day during a given calendar month. Such
fee shall be payable for each calendar month as soon as practicable
after the end of that month.
The fees payable to the Adviser by the Fund pursuant to this Section
3 shall be reduced by any commissions, tender solicitation and other
fees, brokerage or similar payments received by the Adviser, or any
other direct or indirect majority owned subsidiary of ▇▇▇ ▇▇▇▇▇▇
Investments Inc. or its successor, in connection with the purchase and
sale of portfolio investments of the Fund, less any direct expenses
incurred by such person, in connection with obtaining such commissions,
fees, brokerage or similar payments. The Adviser shall use its best
efforts to recapture all available tender offer solicitation fees and
exchange offer fees in connection with the Funds portfolio
transactions and shall advise the Managing General Partners of any
other commissions, fees, brokerage or similar payments which may be
possible for the Adviser, or any other direct or indirect majority
owned subsidiary of ▇▇▇ ▇▇▇▇▇▇ Investments Inc. or its successor, to
receive in connection with Funds portfolio transactions or other
arrangements which may benefit the Fund.
In the event that the ordinary business expenses of the Fund for any
fiscal year should exceed 1 1/2% of the first $30 million of the Funds
average daily net assets determined in the manner described in Section
3. plus 1% of any excess over $30 million of such average daily net
assets so taken, the compensation due the Adviser for such fiscal year
shall be reduced by the amount of such excess. The Advisers
compensation shall be so reduced by a reduction or a refund thereof, at
the time such compensation is payable after the end of each calendar
month during such fiscal year of the Fund, and if such amount should
exceed such monthly compensation, the Adviser shall pay the Fund an
amount sufficient to make up the deficiency, subject to readjustment
during the Funds fiscal year. For purposes of this paragraph, all
ordinary business expenses of the Fund shall exclude expenses incurred
by the Fund (i) for interest and taxes; (ii) brokerage commissions;
(iii) as a result of litigation in connection with a suit involving a
claim for recovery by the Fund; (iv) as a result of litigation
involving a defense against a liability asserted against the Fund,
provided that, if the Adviser made the decision or took the actions
which resulted in such claim, it acted in good faith without negligence
or misconduct; (v) any indemnification paid by the Fund to its officers
and Managing General Partners and the Adviser in accordance with
applicable state and federal laws as a result of such litigation. If
the Adviser shall serve for less than the whole of any month, the
foregoing compensation shall be prorated.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
▇▇▇ ▇▇▇▇▇▇ EXCHANGE FUND ▇▇▇ ▇▇▇▇▇▇ ASSET MANAGEMENT
By:
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇, III
Executive Vice President
Managing Director
and Principal Executive Officer