INVESTMENT ADVISORY AGREEMENT
This INVESTMENT ADVISORY AGREEMENT, made this 31st day of December,
1999, by and between Addison Capital Shares, Inc., a Maryland corporation (the
"Fund"), and Independence Capital Management, Inc., a Pennsylvania corporation
(the "Adviser").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "1940 Act") and has
registered its shares of common stock for sale to the public under the
Securities Act of 1933 and various state securities laws; and
WHEREAS, the Fund wishes to retain the Adviser to provide investment
advisory services to the Fund; and
WHEREAS, the Adviser is willing to furnish such services on the terms
and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, and intending to be legally bound, the Fund and the Adviser
agree as follows:
1. The Fund shall at all times keep the Adviser fully informed with regard to
the securities owned by it, its funds available, or to become available, for
investment, and generally as to the condition of its affairs. It shall furnish
the Adviser with such other documents and information with regard to its affairs
as the Adviser may from time to time reasonably request.
2. (a) Subject to the direction and control of the Fund's Board of Directors,
the Adviser shall regularly provide the Fund with investment research, advice,
management and supervision and shall furnish a continuous investment program for
the Fund's portfolio of securities consistent with the Fund's investment goals
and policies. The Adviser shall determine from time to time what securities will
be purchased, retained or sold by the Fund, and shall implement those decisions,
all subject to the provisions of the Fund's Articles of Incorporation and
By-laws, the 1940 Act, the applicable rules and regulations of the Securities
and Exchange Commission, and other applicable federal and state laws, as well as
the investment goals and policies of the Fund.
(b) The Adviser will place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers the Adviser shall use its best efforts
to obtain for the Fund the best execution available. In using its best efforts
to obtain the best execution available, the Adviser, bearing in mind the Fund's
best interests at all times, shall consider all factors it deems relevant,
including by way of illustration, price, the size of the transaction, the nature
of the market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker or dealer involved and the
quality of service rendered by the broker or dealer in other transactions.
Subject to such policies as the Board of Directors of the Fund may determine,
the Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides brokerage and research
services to the Adviser an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Adviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Fund and to other clients
of the Adviser as to which the Adviser exercises investment discretion.
3. (a) The Adviser, at its expense, shall supply the Board of Directors and
officers of the Fund with all statistical information and reports reasonably
required by them and reasonably available to the Adviser. The Adviser shall
maintain and preserve all books and records with respect to the Fund's
securities and transactions in accordance with all applicable federal and state
laws and regulations. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Adviser agrees that all records which it maintains for the
Fund are the property of the Fund and further agrees to surrender promptly to
the Fund any of such records upon the Fund's request. The Adviser further agrees
to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the 1940 Act.
(b) Other than as herein specifically indicated, the Adviser shall not be
responsible for the Fund's expenses. Specifically, the Adviser will not be
responsible for any of the following expenses of the Fund, which expenses shall
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be the responsibility of the Fund: legal expenses; interest, taxes, governmental
fees or membership dues; brokerage commissions or charges, if any; fees of
custodians, transfer agents, registrars or other agents; expense of preparing
share certificates; expenses relating to the redemption or repurchase of the
Fund's shares; expenses of registering and qualifying Fund shares for sale under
applicable federal and state law; expenses of preparing, setting in print,
printing and distributing prospectuses, reports, notices and dividends to Fund
stockholders; costs of stationary; costs of stockholders and other meetings of
the Fund; traveling expenses of officers, directors and employees of the Fund,
if any; and the Fund's premiums on any fidelity bond and other insurance
covering the Fund and its officers and directors. The Adviser shall, however, be
responsible for all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including brokerage
commissions if any) purchased for the Fund.
4. No director, officer or employee of the Fund shall receive from the Fund any
salary or other compensation as such director, officer or employee while he is
at the same time a director, officer or employee of the Adviser or any
affiliated company of the Adviser. This paragraph shall not apply to directors,
executive committee members, consultants and other persons who are not regular
members of the Adviser's or any affiliated company's staff.
5. (a) As compensation for the services performed by the Adviser, including the
services of any consultants retained by the Adviser, the Fund shall pay the
Adviser, as promptly as possible after the last day of each month, a fee,
calculated daily, of 0.75% annually of the Fund's first $100 million in average
daily net assets; 0.50% annually of average daily net assets in excess of $100
million but less than $250 million, and 0.25% annually of average daily net
assets in excess of $250 million. The first payment of the fee shall be made as
promptly as possible at the end of the month next succeeding the effective date
of this Agreement, and shall constitute a full payment of the fee due the
Adviser of all services prior to that date. If this Agreement is terminated as
of any date not the last day of a month, such fee shall be paid as promptly as
possible after such date of termination, shall be based on the average daily net
assets of the Fund in that period from the beginning of such month to such date
of termination, and shall be that proportion of such average daily net assets as
the number of business days in such period bears to the number of business days
in such month.
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(b) The average daily net assets of the Fund shall in all cases be based
only on business days and be computed as of the time of the regular close of
business of the New York Stock Exchange, or such other time as may be determined
by the Board of Directors of the Fund.
(c) Each payment due under this Section 5 shall be accompanied by a report
of the Fund prepared either by the Fund or by a reputable firm of independent
accountants which shall show the amount properly payable to the Adviser under
this Agreement and detailed computation thereof.
6. The Adviser assumes no responsibility under this Agreement other than to
render the services called for hereunder, in good faith, and shall not be
responsible for any action of the Board of Directors of the Fund in following or
declining to follow any advice or recommendations of the Adviser; provided, that
nothing in this Agreement shall protect the Adviser against any liability to the
Fund or its stockholders to which it would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
hereunder.
7. Nothing in this Agreement shall limit or restrict the right of any director,
officer, or employee of the Adviser who may also be a director, officer, or
employee of the Fund, to engage in any other business or to devote his time and
attention in part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature, or to limit or restrict the
right of the Adviser to engage in any other business or to render services of
any kind, including investment advisory and management services, to any other
corporation, firm, individual or association.
8. As used in this Agreement, the terms "securities", and "net assets", shall
have the meanings ascribed to them in the Articles of Incorporation of the Fund;
and the terms "assignment", "interested person", and "majority of the
outstanding voting securities" shall have the meanings given to them by Section
2(a) of the 1940 Act, subject to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
9. Subject to the provisions of paragraph 10 below, this Agreement will remain
in effect for two years from the date of its execution and from year to year
thereafter, provided that the Adviser does not notify the Fund in writing at
least sixty (60) days prior to the expiration date in any year that it does not
wish continuance of the Agreement for an additional year, and provided further
that such continuance is specifically approved at least annually (a) by the vote
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of a majority of the directors of the Fund who are not parties to this Agreement
or interested persons of such parties, cast in person at a meeting called for
that purpose, and (b) vote of the holders of a majority of the outstanding
voting securities of the Fund or by majority vote of the Fund's Board of
Directors.
10. This Agreement shall terminate automatically in the event of its assignment
by the Adviser and shall not be assignable by the Fund without the consent of
the Adviser. This agreement may also be terminated at any time, without the
payment of any penalty, by the Board of Directors of the Fund or by vote of a
majority of the outstanding voting securities of the Fund by sixty (60) days'
written notice addressed to the Adviser at its principal place of business.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized.
(SEAL) ADDISON CAPITAL SHARES, INC.
Attest:
/s/Xxxxx X. Xxxxxxxx By: /s/Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chairman
(SEAL) INDEPENDENCE CAPITAL MANAGEMENT, INC.
Attest:
/s/Xxxxxxx X. Xxxxxxxx By: /s/Xxxxxxxxxx X. Xxxxxxxx
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Name: Xxxxxxxxxx X. Xxxxxxxx
Title: Executive Vice President
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