Exhibit 5(a)
XXXXXXX CAPITAL GROWTH FUND
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
March 31, 1986
Xxxxxxx, Xxxxxxx & Xxxxx Ltd.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Investment Advisory Agreement
Dear Sirs:
Xxxxxxx Capital Growth Fund (the "Fund") has been organized under the laws
of Massachusetts to engage in the business of an investment company. The shares
of beneficial interest of the Fund ("Shares") are of a single class; however,
Shares may be divided into additional series of the Fund ("Portfolios") that may
be established from time to time by action of the Trustees. The Fund has
selected you to act as the sole investment adviser of the Fund and to provide
certain other services, as more fully set forth below, and you are willing to
act as such investment adviser and to perform such services under the terms and
conditions hereinafter set forth. Accordingly, the Fund agrees with you as
follows:
1. Delivery of Fund Documents. The Fund has furnished you with copies
properly certified or authenticated of each of the following:
(a) Declaration of Trust of the Fund dated October 16, 1985, as amended
from time to time (the "Declaration of Trust").
(b) By-Laws of the Fund as in effect on the date hereof.
(c) Resolutions of the Trustees selecting you as investment adviser and
approving the form of this Agreement.
The Fund will furnish you from time to time with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing, if any.
2. Name of Fund. The Fund may use the name "Xxxxxxx Capital Growth Fund"
or any name derived from the name
"Xxxxxxx, Xxxxxxx & Xxxxx" only for so long as this Agreement or any extension,
renewal or amendment hereof remains in effect, including any similar agreement
with any organization which shall have succeeded to your business as investment
adviser. At such time as such an agreement shall no longer be in effect, the
Fund will (to the extent that it lawfully can) cease to use such a name or any
other name indicating that it is advised by or otherwise connected with you or
any organization which shall have so succeeded to your business.
3. Advisory Services. You will regularly provide the Fund with investment
research, advice and supervision and will furnish continuously an investment
program for the Fund consistent with the investment objectives and policies of
the Fund. You will determine what securities shall be purchased for the Fund,
what securities shall be held or sold by the Fund, and what portion of the
Fund's assets shall be held uninvested, subject always to the provisions of the
Fund's Declaration of Trust and By-Laws and of the Investment Company Act of
1940, as amended, and to the investment objectives, policies and restrictions of
the Fund, as each of the same shall be from time to time in effect, and subject,
further, to such policies and instructions as the Board of Trustees may from
time to time establish. You shall advise and assist the officers of the Fund in
taking such steps as are necessary or appropriate to carry out the decisions of
the Board of Trustees and the appropriate committees of the Board of Trustees
regarding the conduct of the business of the Fund.
4. Allocation of Charges and Expenses. You will pay the compensation and
expenses of all officers and executive employees of the Fund and will make
available, without expense to the Fund, the services of such of your partners
and employees as may duly be elected officers or trustees of the Fund, subject
to their individual consent to serve and to any limitations imposed by law. You
will pay the Fund's office rent and will provide investment advisory, research
and statistical facilities and all clerical services relating to research,
statistical and investment work. You will not be required to pay any expenses of
the Fund other than those specifically allocated to you in this paragraph 4. In
particular, but without limiting the generality of the foregoing, you will not
be required to pay: organization expenses of the Fund; clerical salaries; fees
and expenses incurred by the Fund in connection with membership in investment
company organizations; brokers' commissions; payment for portfolio pricing
services to a pricing agent, if any; legal, auditing or accounting expenses;
taxes or governmental fees; the fees and expenses of the transfer agent of the
Fund; the cost of preparing share certificates or any other expenses, including
clerical expenses of issue, redemption or repurchase of shares of beneficial
interest
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("Shares") of the Fund; the expenses of and fees for registering or qualifying
securities for sale; the fees and expenses of trustees of the Fund who are not
affiliated with you; the cost of preparing and distributing reports and notices
to shareholders; or the fees or disbursements of custodians of the Fund's
assets, including expenses incurred in the performance of any obligations
enumerated by the Declaration of Trust or By-Laws of the Fund insofar as they
govern agreements with any such custodian. You shall not be required to pay
expenses of activities which are primarily intended to result in sales of Shares
of the Fund if and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of the Fund's Shares
pursuant to an underwriting agreement which provides that the underwriter shall
assume some or all of such expenses, or (ii) the Fund shall have adopted a plan
in conformity with Rule 12b-1 under the Investment Company Act of 1940, as
amended, providing that the Fund (or some other party) shall assume some or all
of such expenses. You shall be required to pay such of the foregoing expenses as
are not required to be paid by the principal underwriter pursuant to the
underwriting agreement or are not permitted to be paid by the Fund (or some
other party) pursuant to such a plan.
5. Compensation of the Adviser. For all services to be rendered and
payments made as provided in paragraphs 3 and 4 hereof, the Fund will pay you on
the last day of each month a fee equal to the sum of 13/240 of 1% of the average
daily net assets as defined below of the Fund; provided that, for any calendar
month during which the average of such values exceeds $100,000,000, the fee
payable for that month based on the portion of the average of such values in
excess of $100,000,000 shall be 1/20 of 1% of such portion; and provided that,
for any calendar month during which the average of such values exceeds
$200,000,000, the fee payable for that month based on the portion of the average
of such values in excess of $200,000,000 shall be 11/240 of 1% of such portion;
and provided that, for any calendar month during which the average of such
values exceeds of $300,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $300,000,000 shall be 1/24 of
1% of such portion. The "average daily net assets" of the Fund are defined as
the average of the values placed on the net assets as of 4:00 p.m. (New York
time), on each day on which the net asset value of the Fund's portfolio is
determined consistent with the provisions of Rule 22c-1 under the Investment
Company Act of 1940 or, if the Fund lawfully determines the value of the net
assets of its portfolio as of some other time on each business day, as of such
time. The value of net assets of the Fund shall be determined pursuant to the
applicable provisions of the Declaration of Trust of the Fund. If, pursuant to
such provisions, the
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determination of net asset value is suspended for any particular business day,
then for the purposes of this paragraph 5, the value of the net assets of the
Fund as last determined shall be deemed to be the value of the net assets as of
the close of the New York Stock Exchange, or as of such other time as the value
of the net assets of the Fund's portfolio may lawfully be determined, on that
day. If the determination of the net asset value of the Shares of the Fund has
been suspended pursuant to the Declaration of Trust of the Fund for a period
including such month, your compensation payable at the end of such month shall
be computed on the basis of the value of the net assets of the Fund as last
determined (whether during or prior to such month). If the Fund determines the
value of the net assets of its portfolio more than once on any day, the last
such determination thereof on that day shall be deemed to be the sole
determination thereof on that day for the purposes of this paragraph 5. You
agree that your compensation for any fiscal year shall be reduced by the amount,
if any, by which the expenses of the Fund for such fiscal year exceed the lowest
applicable expense limitation established pursuant to the statutes or
regulations of any jurisdiction in which the Shares of the Fund may be qualified
for offer and sale. You shall refund to the Fund the amount of any reduction of
your compensation pursuant to this paragraph 5 as promptly as practicable after
the end of such fiscal year, provided that you will not be required to pay the
Fund an amount greater than the fee paid to you in respect of such year pursuant
to this Agreement. As used in this paragraph 5, "expenses" shall mean those
expenses included in the applicable expense limitation having the broadest
specifications thereof, and "expense limitation" means a limit on the maximum
annual expenses which may be incurred by an investment company determined (i) by
multiplying a fixed percentage by the average, or by multiplying more than one
such percentage by different specified amounts of the average, of the values of
an investment company's net assets for a fiscal year or (ii) by multiplying a
fixed percentage by an investment company's net investment income for a fiscal
year. The words "lowest applicable expense limitation" shall be construed to
result in the largest reduction of your compensation for any fiscal year of the
Fund.
6. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither you nor any
of your partners, directors, officers or employees will act as a principal or
agent or receive any commission. You or your agent shall arrange for the placing
of all orders for the purchase and sale of portfolio securities for the Fund's
account with brokers or dealers selected by you. In the selection of such
brokers or dealers and the placing of such orders, you are directed at all times
to seek for the Fund the most favorable execution and net price
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available. If any occasion should arise in which you give any advice to clients
of yours concerning the Shares of the Fund, you will act solely as investment
counsel for such clients and not in any way on behalf of the Fund. Your services
to the Fund pursuant to this Agreement are not to be deemed to be exclusive and
it is understood that you may render investment advice, management and other
services to others.
7. Limitation of Liability of Adviser. You shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his employment by the Fund, to be
acting in such employment solely for the Fund and not as your employee or agent.
8. Duration and Termination of this Agreement. This Agreement shall remain
in force until September 30, 1987 and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually by the vote
of a majority of the trustees who are not interested persons of you or of the
Fund, cast in person at a meeting called for the purpose of voting on such
approval and by a vote of the Board of Trustees or of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the Investment Company Act of 1940 and
the rules and regulations thereunder. This Agreement may, on 60 days' written
notice, be terminated at any time without the payment of any penalty, by the
Board of Trustees, by vote of a majority of the outstanding voting securities of
the Fund, or by you. This Agreement shall automatically terminate in the event
of its assignment. In interpreting the provisions of this Agreement, the
definitions contained in Section 2(a) of the Investment Company Act of 1940
(particularly the definitions of "interested person," "assignment" and "majority
of the outstanding voting securities"), as from time to time amended, shall be
applied, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
9. Amendment of this Agreement. No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
dis-
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charge or termination is sought, and no amendment of this Agreement shall be
effective until approved by vote of the holders of a majority of the outstanding
voting securities of the Fund and by the Board of Trustees, including a majority
of the trustees who are not interested persons of you or of the Fund, cast in
person at a meeting called for the purpose of voting on such approval.
10. Termination of Prior Agreement. This Agreement upon its effectiveness
terminates and supercedes all prior investment advisory contracts between the
parties.
11. Miscellaneous. It is understood and expressly stipulated that neither
the holders of shares of the Fund nor the Trustees shall be personally liable
hereunder. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
The name "Xxxxxxx Capital Growth Fund" is the designation of the Trustees
for the time being under a Declaration of Trust dated October 16, 1985, as
amended from time to time, and all persons dealing with the Fund must look
solely to the property of the Fund for the enforcement of any claims against the
Fund as neither the Trustees, officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the Fund.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract.
Yours very truly,
XXXXXXX CAPITAL GROWTH FUND
By /s/ Xxxxx X. Xxx
------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date thereof.
XXXXXXX, XXXXXXX & XXXXX LTD.
By /s/ Xxxxxx Xxxxxx
------------------------
Managing Director
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