Exhibit 5
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE XXXXXXXX FUND, INC.
AND
EDGEMONT ASSET MANAGEMENT CORPORATION
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AGREEMENT made this 14th day of January, 1993, by and between THE
XXXXXXXX FUND, INC., a Maryland corporation (hereinafter called the "Fund"),
and EDGEMONT ASSET MANAGEMENT CORPORATION, a New York corporation
(hereinafter called the "Advisor").
The Fund and the Advisor hereby agree as follows:
1. Duties of the Advisor. The Advisor shall, during the term and
subject to the provisions of this Agreement, (i) determine the composition
of the Fund's portfolio, the nature and timing of the changes therein and
the manner of implementing such changes and (ii) provide the Fund with such
investment advisory, research and related services as the Fund may, from
time to time, reasonably require for the investment of its funds. The
Advisor shall perform such duties in accordance with the applicable
provisions of the Fund's Certificate of Incorporation, By-laws and current
prospectus and current statement of additional information, and any
directions it may receive from the Fund's Board of Directors.
2. Expenses Payable by the Fund. Except as otherwise provided in
Paragraphs 1 and 3 hereof, the Fund shall be responsible for effecting
sales and redemptions of its shares, for determining the net asset value
thereof and for all of its other operations and shall pay all
administrative and other costs and expenses attributable to its operations
and transactions, including, without limitation, transfer agent and
custodian fees; legal, administrative and clerical services; rent not to
exceed fair market value for its office space and facilities; auditing;
preparation, printing and distribution of its prospectuses, proxy
statements, stockholders reports and notices; cost of supplies and postage;
Federal and state registration fees; Federal, state and local taxes;
non-affiliated directors' fees; interest on its bank loans; and brokerage
commissions.
3. Expenses Payable by the Advisor. The Advisor shall furnish, without
expense to the Fund, the services of those of the Advisor's officers and
full-time employees who may be duly elected executive officers or directors
of the Fund, subject to their individual consent to serve and to any
limitations imposed by Law, and shall pay all of the salaries and expenses
of the Fund's executive officers. For purposes of this Agreement, only the
President, any Vice President and the Treasurer of the Fund shall be deemed
to be executive officers of the Fund. The Advisor shall also pay (a) any
expenses incurred by the Fund in connection with its promoting the sale
of its
shares, including advertising, compensation of sales personnel, the
printing and mailing of prospectuses to other than current stockholders and
the printing and mailing of sales literature, except to the extent provided
under the Fund's Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, and (b) all expenses which it
may incur in performing its duties under Paragraph 1 hereof, and shall
reimburse the Fund for any space leased by the Fund and occupied by the
Advisor. In the event the Fund shall qualify its shares for sale in any
jurisdiction the applicable statutes or regulations of which expressly
limit the amount of the Fund's total annual expenses, the Advisor shall
reduce its annual investment advisory fee to the extent that the Fund's
total annual expenses (other than brokerage commissions and other capital
items, interest, taxes, extraordinary items and other excludable items,
charges, costs and expenses) exceed the regulations of any such
jurisdiction, so long as the Fund remains so qualified in such
jurisdiction.
4. Compensation of the Advisor. The Fund shall pay to the Advisor and
the Advisor shall accept as compensation for the services which it provides
by the Advisor hereunder, a fee equal to 1-1/2% per annum of the Fund's
average total net assets at the close of business on each day that the
value of its net assets is computed during each fiscal year. Such
compensation shall be accrued on the Fund's books at the close of business
on each day that the value of the Fund's net assets is computed during each
year and shall be payable to the Advisor monthly, on the last day of each
month, and adjusted as of year-end if required.
5. Brokerage Commissions. The Advisor is hereby authorized, to the
fullest extent now or hereafter permitted by law, to cause the Fund to pay
a member of a national securities exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount
of commission another member of such exchange, broker or dealer would have
charged for effecting that transaction, if the Advisor determines in good
faith that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by such member, broker or
dealer, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities with respect to the Fund.
6. Limitations on the Employment of the Advisor. The services of the
Advisor to the Fund shall not be deemed exclusive, and the Advisor may
engage in any other business or render similar or different services to
others so long as its services to the Fund hereunder are not impaired
thereby, and nothing in this Agreement shall limit or restrict the right of
any director, officer or employee of the Advisor to engage in any other
business or to devote his time and attention in part to any other business,
whether of a similar or dissimilar nature. So long as this Agreement or
any extension, renewal or amendment remains in effect, the Advisor shall be
the only investment adviser to the Fund, subject to the Advisor's right to
enter into sub-advisory agreements. The Advisor assumes no responsibility
under this Agreement other than to render the services called for
hereunder, and shall not be responsible for any action
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of or direction by the Fund's Board of Directors, or any committee
thereof, or any omission by any of them, unless such action or omission has
been caused by the Advisor's gross negligence, willful malfeasance, bad
faith or reckless disregard of its obligations and duties under this
Agreement.
7. Responsibility of Dual Directors, Officers and/or Employees. If
any person who is a director, officer or employee of the Advisor is or
becomes a director, officer and/or employee of the Fund and acts as such in
any business of the Fund pursuant to this Agreement, then such director,
officer and/or employee of the Advisor shall be deemed to be acting in such
capacity solely for the Fund, and not as a director, officer or employee of
the Advisor or under the control or direction of the Advisor, although paid
by the Advisor.
8. Protection of the Advisor. The Advisor shall not be liable to the
Fund for any action taken or omitted to be taken by the Advisor in
connection with the performance of any of its duties or obligations under
this Agreement or otherwise as an investment adviser of the Fund, and the
Fund shall indemnify the Advisor and hold it harmless from and against all
damages, liabilities, costs and expenses (including reasonable attorneys'
fees and amounts reasonably paid in settlement) incurred by the Advisor in
or by reason of any pending, threatened or completed action, suit,
investigation or other proceeding (including an action or suit by or in the
right of the Fund or its security holders) arising out of or otherwise
based upon any action actually or allegedly taken or omitted to be taken by
the Advisor in connection with the performance of any of its duties or
obligations under this Agreement or otherwise as an investment adviser of
the Fund. Notwithstanding the provisions of the preceding sentence of this
Paragraph 8, nothing contained herein shall protect or be deemed to protect
the Advisor against, or entitle or be deemed to entitle the Advisor to
indemnification in respect of, any liability to the Fund or its security
holders to which the Advisor 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 under this Agreement.
Determination of whether and the extent to which the Advisor is
entitled to indemnification hereunder shall be made by reasonable and fair
means, including (a) a final decision on the merits by a court or other body
before whom the action, suit or other proceeding was brought that the
Advisor was not liable by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties or (b) in the absence of such
a decision, a reasonable determination, based upon a review of the facts,
that the Advisor was not liable by reason of such misconduct by (i) the
vote of a majority of a quorum of the directors of the Fund who are neither
"interested persons" of the Fund (as defined in Section 2(a)(19) of the
Investment Company Act of 1940) nor parties to the action, suit or other
proceedings or (ii) an independent legal counsel in a written opinion.
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9. Effectiveness, Duration and Termination of Agreement. This
Agreement was approved by the Fund's Board of Directors, including by a
majority of the disinterested Directors, and by the Fund's sole shareholder
on January 14, 1993. This Agreement shall become effective on the first
day following the effective date of the merger by and between The Xxxxxxxx
Fund, Inc., a New York corporation and the Fund, as survivor of the merger.
This Agreement shall remain in effect until October 30, 1993, and
thereafter shall continue automatically for successive annual periods,
provided that such continuance is specifically approved at least annually
by (a) the vote of the Fund's Board of Directors, or (b) the vote of a
majority of the Fund's outstanding voting shares, provided that in either
event the continuance is also approved by a majority of such directors who
are not parties to this Agreement or "interested persons" (as such term is
defined in the Investment Company Act of 1940) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, on 60 days written notice by the vote of a majority of the Fund's
outstanding voting securities or by the vote of a majority of the Fund's
Board of Directors or by the Advisor, and will automatically terminate in
the event of its "assignment" (as such term is defined in the Investment
Company Act of 1940); provided, however, that the provisions of Paragraph 8
of this Agreement shall remain in full force and effect, and the Advisor
shall remain entitled to the benefits thereof, notwithstanding any such
termination. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed, postage prepaid, to the other party at
its principal office.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE XXXXXXXX FUND, INC.
Attest:
/s/ Xxxxxxxx Xxxxxxx By /s/ Xxxx X. Xxxxx
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Xxxxxxxx Xxxxxxx, Secretary Xxxx X. Xxxxx, President
EDGEMONT ASSET MANAGEMENT
CORPORATION
Attest:
/s/ Xxxx Xxxxxx By /s/ Xxxxxxxx Xxxxxxx
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Xxxx Xxxxxx, Secretary Xxxxxxxx Xxxxxxx, President
