1
Exhibit 2.g.
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT (the "Agreement") made this ____
day of November, 1996, by and between XXXXXXXX CAPITAL CORPORATION, a Maryland
corporation (the "Company"), and XXXXXXXX CAPITAL MANAGEMENT, LTD., a Delaware
corporation (the "Adviser").
WHEREAS, the Company is a newly organized, non-diversified
closed-end management investment company that has elected status as a business
development company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), the shares of common stock of the Company ("Common
Stock") of which are registered under the Securities Act of 1933, as amended;
WHEREAS, the Company is authorized to issue shares of Common
Stock representing the interests in the assets of the Company;
WHEREAS, the Adviser is an investment adviser registered as
such under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"); and
WHEREAS, the Company desires at this time to retain the
Adviser to render investment advisory and management services to the Company,
and the Adviser is willing to render such services;
NOW THEREFORE, in consideration of the mutual promises and
covenants herein contained, it is agreed by and between the parties hereto as
follows:
1. Appointment. The Company hereby appoints the Adviser
to act as investment adviser of the Company for the period and on the terms set
forth in this Agreement. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. Investment Duties. Subject to the supervision of the
Company's board of directors (the "Board of Directors"), the Adviser will
provide a continuous investment program for the Company and will determine from
time to time what securities and other investments will be purchased, retained,
or sold by the Company. Subject to investment policies and guidelines
established by the Board of Directors, the Adviser will identify, evaluate, and
structure the investments to be made by the Company, arrange debt financing for
the Company, provide portfolio management and servicing of securities held in
the Company's portfolio, and administer the Company's day-to-day affairs.
3. Administrative Oversight Duties. The Adviser will be
responsible for overseeing administration of the affairs of the Company subject
to the supervision of the Board of Directors and the following understandings:
2
(a) The Adviser will supervise all aspects of the
operations of the Company, including oversight of transfer agency,
custodial, administrative and accounting services; provided, however,
that nothing herein contained shall be deemed to relieve or deprive
the Board of Directors of its responsibility for and control of the
conduct of the affairs of the Company.
(b) The Adviser will oversee, but not pay for, the
administrator's responsibilities with respect to the periodic
preparation, updating, filing and dissemination (as required) of the
Company's registration statement under the Securities Exchange Act of
1934, as amended, proxy material, tax returns, and required reports to
the Company's stockholders and the Securities and Exchange Commission
(the "Commission") and other appropriate federal or state regulatory
authorities.
(c) The Adviser will oversee the administrator's
responsibilities with respect to the maintenance of all books and
records of the Company and the furnishing to the Board of Directors of
such periodic and special reports as the Board of Directors reasonably
may request. In compliance with the requirements of Rule 31a-3 under
the Investment Company Act, the Adviser hereby agrees that any records
which it maintains for the Company are the property of the Company,
agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act any records which it maintains for the Company
and which are required to be maintained by Rule 31a-1 under the
Investment Company Act, and further agrees to surrender promptly to
the Company any records which it maintains for the Company upon
request by the Company.
(d) All cash, securities, and other assets of the Company
will be maintained in the custody of one or more banks in accordance
with the provisions of Section 17(f) of the Investment Company Act and
the rules thereunder; the authority of the Adviser to instruct the
Company's custodians to deliver and receive such cash, securities, and
other assets on behalf of the Company will be governed by a custodian
agreement between the Company and each such custodian, and by
resolution of the Board of Directors.
4. Use of Sub-Investment Adviser. The Adviser may,
subject to the approvals required under the Investment Company Act, employ a
sub-investment adviser to assist the Adviser in the performance of its duties
under this Agreement. Such use does not relieve the Adviser of any duty or
liability it would otherwise have under this Agreement. Compensation of any
such sub-investment adviser for services provided and expenses assumed under
any agreement between the Adviser and such sub-investment adviser permitted
under this paragraph is the sole responsibility of the Adviser.
5. Further Duties. In all matters relating to the
performance of this Agreement, the Adviser will act in conformity with the
Articles of Incorporation and Bylaws of the Company and with the instructions
and directions of the Board of Directors and will
-2-
3
comply with the requirements of the Investment Company Act, the rules
thereunder, and all other applicable federal and state laws and regulations.
6. Services Not Exclusive. The services furnished by
the Adviser hereunder are not to be deemed exclusive and the Adviser shall be
free to furnish similar services to others so long as its services under this
Agreement are not impaired thereby. Nothing in this Agreement shall limit or
restrict the right of any director, officer, agent or employee of the Adviser,
who may also be a director, officer, agent or employee of the Company, to
engage in any other business or to devote his or her time and attention in part
to the management or other aspects of any other business, whether of a similar
nature or dissimilar nature.
7. Expenses.
(a) The Company will pay all expenses (including without
limitation accounting, legal, printing, clerical, filing, and other
expenses) incurred by the Company, the Adviser or its affiliates on
behalf of the Company in connection with the organization of the
Company and the initial offering of its shares of Common Stock (the
"Offering"); provided, however, that the Company shall have no
responsibility for any commissions or other fees paid to the
Underwriters in connection with the Offering or any borrowings
incurred by the Adviser in connection therewith. Except as otherwise
expressly provided for in Section 7(b) of this Agreement, during the
term of this Agreement the Company will bear all of its expenses
incurred in its operations including but not limited to the following:
(i) brokerage and commission expense and other transaction costs
incident to the acquisition and dispositions of investments, (ii)
federal, state, and local taxes and fees, including transfer taxes and
filing fees, incurred by or levied upon the Company, (iii) interest
charges and other fees in connection with borrowings by the Company,
(iv) fees and expenses payable to the Commission and any fees and
expenses of state securities regulatory authorities, (v) expenses of
printing and distributing reports and notices to stockholders, (vi)
costs of proxy solicitation, (vii) costs of meetings of stockholders
and the Board of Directors, (viii) charges and expenses of the
Company's custodian, administrator, transfer and dividend disbursing
agent, and Company accountant, (ix) compensation and expenses of the
Company's directors who are not interested persons of the Company or
the Adviser, and of any of the Company's officers who are not
interested persons of the Adviser, and expenses of all directors in
attending meetings of the Board of Directors or stockholders, (x)
legal and auditing expenses, including expenses incident to the
documentation for, and consummation of, transactions, (xi) costs of
certificates representing the shares of Common Stock, (xii) costs of
stationery and supplies, (xiii) the costs of membership by the Company
in any trade organizations, (xiv) expenses associated with litigation
and other extraordinary or non-recurring expenses, (xv) any insurance
premiums and (xvi) the costs of providing significant managerial
assistance offered to and accepted by the recipient of Company
investments.
-3-
4
(b) The expenses to be borne by the Adviser are limited
to the following: (i) all costs and fees incident to the selection
and investigation of prospective Company investments, including
associated due diligence expenses such as travel expenses and
professional fees (but excluding legal and accounting fees and other
costs incident to the closing, documentation, or consummation of such
transactions), (ii) the cost of adequate office space for the Company
and all necessary office equipment and services, including telephone
service, heat, utilities, and similar items, (iii) the costs of
providing the Company with such corporate, administrative, and
clerical personnel (including directors and officers of the Company
who are interested persons of the Adviser and are acting in their
respective capacities as directors and officers) as the Board of
Directors reasonably deems necessary or advisable to perform the
services required to be performed by the Adviser under this Agreement,
and (iv) all commissions and other fees payable to the Underwriters in
connection with the Offering and all costs and expenses relating to
any borrowings by the Adviser incurred in connection therewith.
(c) The Company may pay directly any expenses incurred by
it in its normal operations and, if any such payment is consented to
by the Adviser and acknowledged as otherwise payable by the Adviser
pursuant to this Agreement, the Company may reduce the fee payable to
the Adviser pursuant to Paragraph 8 thereof by such amount. To the
extent that such deductions exceed the fee payable to the Adviser on
any quarterly payment date, such excess shall be carried forward and
deducted in the same manner from the fee payable on succeeding
quarterly payment dates.
(d) The payment or assumption by the Adviser of any
expense of the Company that the Adviser is not required by this
Agreement to pay or assume shall not obligate the Adviser to pay or
assume the same or any similar expense of the Company on any
subsequent occasion.
8. Compensation.
(a) For the services provided and the expenses assumed
pursuant to this Agreement, the Company will pay to the Adviser an
annual management fee of 2.85% of the Company's net assets, determined
at the end of each calendar quarter and payable quarterly in arrears.
(b) If this Agreement becomes effective or terminates
before the end of any fiscal quarter, the annual management fee for
the period from the effective day to the end of the fiscal quarter or
from the beginning of such quarter to the date of termination, as the
case may be, shall be prorated according to the proportion which such
period bears to the full fiscal quarter in which such effectiveness or
termination occurs.
(c) If (i) the Adviser, (ii) a director, officer, agent
or employee of the Adviser, (iii) a company controlling, controlled
by, or under common control with
-4-
5
the Adviser, or (iv) a director, officer, agent or employee of any
such company receives any compensation from a company whose securities
are held in the Company's portfolio in connection with the provision
to that company of significant managerial assistance, the compensation
due to the Adviser hereunder shall be reduced by the amount of such
fee. If such amounts have not been fully offset at the time of
termination of this Agreement, the Adviser shall pay such excess
amounts to the Company upon termination.
9. Limitation of Liability of Adviser. The Adviser
shall not be liable for any loss suffered by the Company in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard by the Adviser
of its duties under this Agreement. Any person, even though agent of the
Adviser, who may be or become a director, officer, agent or employee of the
Company shall be deemed, when rendering services to the Company or acting with
respect to any business of the Company, to be rendering such service to or
acting solely for the Company and not as a director, officer, agent or employee
of the Adviser, or one under the control or direction of the Adviser even
though paid by it.
10. Duration and Termination.
(a) This Agreement shall become effective upon the date
hereabove written provided that this Agreement shall not take effect
unless it has first been approved (i) by a vote of a majority of those
directors of the Company who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval, and (ii) by a vote
of a majority of the Company's outstanding shares of Common Stock.
(b) Unless sooner terminated as provided herein, this
Agreement shall continue in effect for two years from the above
written date. Thereafter, if not terminated, this Agreement shall
continue automatically for successive periods of 12 months each,
provided that such continuance is specifically approved at least
annually (i) by a vote of a majority of those directors of the Company
who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting on such approval, or (ii) by vote of a majority of the
outstanding shares of Common Stock of the Company.
(c) Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by vote of
the Board of Directors or by a vote of a majority of the outstanding
shares of Common Stock of the Company on 60 days' written notice to
the Adviser or by the Adviser at any time, without the payment of any
penalty, on 60 days' written notice to the Company. This Agreement
will automatically terminate in the event of its assignment.
11. Notice. Any notice under this Agreement shall be in
writing, addressed and delivered or mailed, postage prepaid, to the other party
at such address as such other party may designate for the receipt of such
notice.
-5-
6
12. Notice of Filing of Articles of Incorporation. All
parties hereto are expressly put on notice of the Company's Articles of
Incorporation and all amendments thereto, all of which are on file with the
State Department of Assessments and Taxation of the State of Maryland, and the
limitation of director, officer, agent, employee and stockholder liability
contained therein. This Agreement has been executed by and on behalf of the
Company by its representatives as such representatives and not individually,
and the obligations of the Company hereunder are not binding upon any of the
directors, officers, agents, employees or stockholders of the Company
individually but are binding upon only the assets and property of the Company.
13. Amendment of this Agreement. No provision 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, discharge, or termination is sought, and no amendment of this
Agreement shall be effective until approved by vote of a majority of the
Company's outstanding shares of Common Stock.
14. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Maryland, without giving effect to the
conflicts of laws principles thereof, and in accordance with the Investment
Company Act. To the extent that the applicable laws of the State of Maryland
conflict with the applicable provisions of the Investment Company Act, the
Investment Company Act shall control.
15. Miscellaneous. 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. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule, or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors. As used
in this Agreement, the terms "majority of the outstanding voting securities",
"affiliated person", "interested person", "assignment", "broker", "investment
adviser", "national securities exchange", "net assets", "security", and
"significant managerial assistance" shall have the same meaning as such terms
have in the Investment Company Act, subject to such exemption as may be granted
by the Commission by any rule, regulation, or order. Where the effect of a
requirement of the Investment Company Act reflected in any provision of this
Agreement is relaxed by a rule, regulation, or order of the Commission, whether
of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation, or order.
16. Entire Agreement. This Agreement is the entire
contract between the parties relating to the subject matter hereof and
supersedes all prior agreements between the parties relating to the subject
matter hereof.
-6-
7
IN WITNESS WHEREOF, the Company and the Adviser have caused
this Agreement to be executed as of the day and year first above written.
XXXXXXXX CAPITAL CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ATTEST:
------------------------------
Name:
------------------------
Title:
-------------------------
XXXXXXXX CAPITAL MANAGEMENT, LTD.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
ATTEST:
------------------------------
Name:
------------------------
Title:
-------------------------
-7-
