Form of New Advisory Contract
Investment Advisory and Administrative Contract
THIS AGREEMENT (this "Agreement") is made this 19th day of August, 1999, by and
between Texas Capital Value Fund, Inc., a Maryland corporation (the "Fund"),
and First Austin Capital Management, Inc., a Delaware corporation (the
"Investment Advisor").
WITNESSETH:
WHEREAS, the Fund engages in the business of investing and reinvesting its
assets and property in various stocks and securities and the Investment Advisor
engages in the business of providing investment advisory services; and
WHEREAS, the Fund has need for investment advisory services.
NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Advisory Services. The Investment Advisor shall render investment advisory
services (the "Advisory Services") to the Fund, subject to the supervision and
direction of the Board of Directors of the Fund, for the period set forth in
Paragraph 6 below on the terms set forth herein. The Investment Advisor shall
render such Advisory Services and assume the obligations herein set forth, for
the compensation provided in Paragraph 3(a) below. The Investment Advisor
shall, for the purposes herein, be deemed to be an independent contractor, and
shall, unless otherwise expressly provided and authorized, have no authority to
act for or represent the Fund in any way, or in any way be deemed an agent or
employee of the Fund.
2. Administrative Services. In addition to the Advisory Services, the
Investment Advisor shall provide certain administrative support services to the
Fund including establishing and maintaining shareholders' accounts and records,
processing purchase and redemption transactions, answering routine client
inquiries regarding the Fund, preparing all registration statements,
prospectuses, tax returns and proxy statements, valuing the Fund's portfolio
daily and calculating the daily net asset value per share, and providing such
other administrative services to the Fund as the Fund may reasonably request
(collectively, the "Administrative Services"). The Investment Advisor may
contract with third parties to perform all or part of the Administrative
Services. Notwithstanding anything contained in this Agreement to the contrary,
under no circumstances shall the execution of any such third party contract be
deemed an assignment by the Investment Advisor of an interest in this
Agreement.
3.(a) As compensation for the services to be rendered to the Fund by the
Investment Advisor under the provisions of this Agreement, the Fund shall pay
to the Investment Advisor:
(i) for Advisory Services a flat fee of one percent (1%) of the net assets of
the Fund; plus additional amounts as follows:
(ii)for Administrative Services a fee equal to the sum of (i) seven-tenths
percent (0.70%) of the amount of assets in the Fund between one dollar ($1.00)
and five million dollars ($5,000,000), inclusive, plus (ii) five-tenths percent
(0.50%) of the amount of assets in the Fund between five million and one
dollars ($5,000,001.00) and thirty million dollars ($30,000,000), inclusive,
plus (c) twenty-eight hundredths percent (0.28%) of the amount of assets in the
Fund between thirty million and one dollars ($30,000,001) and one hundred
million dollars ($100,000,000), inclusive, plus (d) twenty-five hundredths
percent (0.25%) of the amount of assets in the Fund between one hundred
million and one dollars ($100,000,001) and two hundred million dollars
($200,000,000), inclusive, plus (e) twenty hundredths percent (0.20%) of the
amount of assets in the Fund in excess of two hundred and one million dollars
($200,000,001), inclusive (all assets in the Fund for the purposes of this
Paragraph to be rounded to the nearest dollar prior to the computation of any
fee owed).
Such fees shall be accrued daily and be payable monthly in arrears on the first
day of each calendar month. Accruals of fees to the Investment Advisor shall
begin on the execution date of this Agreement. All fee accruals are accounted
separately for each series.
(b) Costs. All Fund costs, with the exception of extraordinary legal
expenses (as determined by the Board of Directors of the Fund), brokerage
commissions, custodial charges based upon transactions in the portfolio of the
Fund and marketing expenses, will be borne by the Investment Advisor as part of
this Agreement. In addition, the Investment Advisor shall absorb all the
organization costs for the Fund as determined by the Board of Directors of the
Fund.
In the conduct of the respective businesses of the parties hereto and in the
performance of this Agreement, the Fund and the Investment Advisor may share
common facilities and personnel common to each. The entire cost to the Fund
for the use of common facilities and personnel will be borne by the Advisor
as part of this Agreement.
If any Fund costs which the Investment Advisor has agreed to bear
hereunder are incurred by the Fund pursuant to separate agreements with third
parties, the Fund shall provide the Investment Advisor with copies of such
agreements and any amendments thereto and shall either xxxx the Investment
Advisor for the costs insured by the Fund thereunder or direct the Investment
Advisor to pay any such costs incurred directly to the third parties involved
as provided by the applicable agreements.
4. Non-Exclusive. The services to be rendered by the Investment Advisor to
the Fund under this Agreement are not to be deemed to be exclusive, and the
Investment Advisor shall be free to render similar or different services to
others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby. If its ability becomes so impaired,
as determined by the Fund in its sole and absolute discretion, the Fund shall
notify the Investment Advisor of same and this Agreement shall automatically
terminate upon the receipt by the Investment Advisor of such notice. Such
automatic termination shall be upon the same terms and conditions as provided
for other terminations pursuant to the last sentence of Paragraph 7 below.
5. Interested Parties. It is understood and agreed that directors, officers,
employees, agents and shareholders of the Fund may be interested in the
Investment Advisor as directors, officers, employees, agents and shareholders
of the Investment Advisor. Similarly, directors, officers, employees, agents
and shareholders of the Investment Advisor may be interested in the Fund as
directors, officers, employees, agents and shareholders of the Fund.
Furthermore, the Investment Advisor itself may be interested in the Fund as a
shareholder or otherwise of the Fund. It is understood and agreed that
directors, officers, employees, agents and shareholders of the Investment
Advisor may continue as directors, officers, employees, agents and shareholders
of the Fund and vice versa; that the Investment Advisor, its directors,
officers, employees, agents and shareholders may engage in other business, may
render investment advisory services to other investment companies, or to any
other corporation, association, firm or individual, and may render underwriting
services to the Fund, or to any other investment company, corporation,
association, firm or individual, subject to the provisions of Paragraph 4 above.
The parties agree that the Investment Advisor has a proprietary interest in the
names "Texas Capital Value Funds, Inc." and "Value and Growth Portfolio", and
the Fund agrees to promptly take any and all necessary action to remove the
names "Texas Capital Value Funds, Inc." and "Value and Growth Portfolio" from
its corporate name and from the name of any of its funds upon receipt of
written request therefor from the Investment Advisor.
6. Term. Notwithstanding the date of this Agreement first above written, the
effective date of this Agreement (the "Effective Date") shall be the effective
date of that certain Registration Statement on Form N-1A of the Fund, filed by
the Fund with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, and the Investment Company Act of 1940, as amended.
Thereafter, this Agreement shall continue in effect for one year from the
Effective Date. Such term may be extended annually for additional periods of
one year provided that each such extension is approved at least annually by a
vote of the Fund's Board of Directors. Such vote shall be cast in person at a
meeting called for the purpose of voting on such approval, and shall include
the votes of a majority of the Directors who are not parties to this
Agreement or interested persons of any such party.
7. Termination. This Agreement may be terminated at any time upon sixty (60)
days prior written notice, without the payment of any penalty, by the Fund's
Board of Directors or by vote of a majority of the outstanding voting
securities of the Fund. This Agreement shall automatically terminate in the
event of its assignment by the Investment Advisor or the Fund (within the
meaning of the Investment Company Act of 1940 (the "1940 Act")), which shall
be deemed to include a transfer of control of the Investment Advisor or the
Fund, respectively, unless an exemption from such automatic termination is
granted by order or rule of the Securities and Exchange Commission. Upon the
termination of this Agreement, the obligations of all the parties hereunder
shall cease and terminate as of the date of such termination, except for (i)
any obligation to respond to a breach of this Agreement committed prior to
such termination, (ii) the obligation of the Fund to pay to the Investment
Advisor the fee provided in Paragraph 3(a) above, prorated to the date of
termination, and (iii) the obligation of the Investment Advisor to bear the
costs provided for in Paragraph 3(b) above, prorated to the date of
termination (if applicable).
8. Assignment. This Agreement shall terminate automatically in the event of
its whole or partial assignment by the Investment Advisor or the Fund as
provided in Paragraph 7 above.
9. Fidelity Bond. As part of this Agreement, the Investment Advisor shall
bear the cost of the fidelity bond required to be maintained by the Fund for
employees, officers, or directors of the Investment Advisor who have access to
the Fund's securities or cash. Such bond must protect the Fund against loss
from larceny and embezzlement under the Act, and, in compliance with Rule 17g-1
under the 1940 Act, must be approved both in form and amount by a majority of
the independent directors of the Fund at least annually with due consideration
given to (a) the value of the Investment Advisor's aggregate assets, (b) the
type of custody arrangements employed, and (c) the nature of the securities
owned. Additionally, the Investment Advisor shall bear the cost, if any, for
Employee and Officer/Director and Officer (E&O/D&O) liability insurance
covering the Investment Advisor in favor of the Fund. Under the terms of this
Agreement, there is no initial requirement that E&O/D&O insurance be purchased,
but if the Board of Directors of the Fund ever requires in its sole and
absolute discretion that it be carried, or if the Investment Advisor decides,
unilaterally, to carry it, then such cost shall be borne by the Investment
Advisor and such insurance, if required to be carried by the Fund's Board of
Directors, shall be in such amount and for such a term as the Board may
reasonably require. The Investment Advisor shall not be liable for any error
of judgement or of law or for any loss suffered by the Fund in connection with
the matters to which this Agreement relates, except loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Investment
Advisor in the performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
10. Notices. Any notice required or permitted to be given hereunder must be
in writing and may be given by personal delivery or by mail, and if given
by mail shall be deemed sufficiently given if sent by registered or certified
mail addressed to the party to be notified at the following applicable address:
The Fund:
Texas Capital Value Funds, Inc.
0000 X. Xxxxxxx xx Xxxxx Xxx Xxxx X-000
Xxxxxx, Xxxxx 00000
The Investment Advisor:
First Austin Capital Management, Inc.
0000 X. Xxxxxxx xx Xxxxx Xxx Xxxx X-000
Xxxxxx, Xxxxx 00000
Either party may specify a different address for notice purposes by
written notice to the other.
11. Governing Law. This Agreement is executed and delivered in the State of
Texas and shall be governed by the laws of Texas and the 1940 Act.
12. Entire Agreement. This Agreement constitutes the entire agreement between
the parties and terminates and supersedes all prior understandings or
agreements on the subject matter hereof. No conditions or warranties shall be
implied herefrom unless expressly set forth herein. The Fund and the
Investment Advisor each acknowledge that the terms and conditions of this
Agreement, and each of them, are reasonable and fair and equitable. This
Agreement may be modified only by a future writing that is duly executed by
both parties.
13. Severability. If any term of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, then this Agreement,
including all of the remaining terms, will remain in full force and effect as if
such invalid or unenforceable term had never been included.
14. Waiver. Waiver by either party of any breach of any term, covenant or
condition in this Agreement shall not be deemed to be a waiver of any
subsequent breach of the same or any other term, covenant or condition herein
contained, nor shall any custom or practice which may grow up between the
parties in the administration of the terms hereof be deemed a waiver of or
in any way affect the right of each party to insist on the performance of the
other party in strict accordance with said terms.
15. Time Is of the Essence. Time is of the essence of this Agreement.
16. Attorneys' Fees. In the event of any litigation or arbitration between
the parties with respect to this Agreement, all costs and expenses, including,
without limitation, actual professional fees such as accountants' and
attorneys' fees, incurred by the prevailing party, shall be paid by the other
party, which obligation on the part of the other party shall be deemed to have
accrued on the date of the commencement of such action and shall be enforceable
whether or not the action is prosecuted to judgement.
17. Mandatory Arbitration. All disputes arising under this Agreement shall be
arbitrated pursuant to the Commercial Arbitration Rules of the American
Arbitration Association.
18. Independent Counsel. The parties acknowledge that they have had the
opportunity to consult with independent counsel of their own choosing in the
negotiation and execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date and year first above written.
Texas Capital Value Fund, Inc.,
a Maryland corporation
By______________________________
Xxxx X. Xxxxxxx, President
First Austin Capital Management, Inc.,
a Delaware corporation
By_____________________________
Xxxx X. Xxxxxxx, President
