EXHIBIT 5
MILLENIUM TAX-FREE INCOME FUND, INC.
ADVISORY AGREEMENT
JANUARY 12, 1998
Millenium Advisors, Inc.
c/x Xxxxxx Securities, Inc.
00 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Dear Sirs:
We herewith confirm our agreement with you as follows:
1. We desire to employ the capital of Millenium Tax-Free Income Fund, Inc. (the
"Company") by investing and reinvesting the same in securities of the type and
in accordance with the limitations specified in the registration statement under
the Securities Act of 1933 and the Investment Company Act of 1940, of which we
enclose a copy, and in such manner and to such extent as may from time to time
be approved by our Board of Directors. We desire to employ you to supervise and
assist in the management of this business for us. You shall for all purposes
herein be deemed an independent contractor, and shall, unless otherwise
expressly provided for or authorized, have no authority to act or represent us.
2. In this connection it is understood that you will from time to time employ or
associate with yourselves such person or persons as you may believe to be
particularly fitted to assist you in the execution of this Agreement, it being
understood that the compensation of such person or persons shall be paid by you
and that no obligation may be incurred on our behalf in any such respect. This
does not apply to such individuals as we may in due course elect as officers of
our corporation, except that no officer, director, stockholder or employee of
your firm shall receive compensation from us for acting as director, officer or
employee of our corporation, and you agree to pay the compensation of all such
persons. We understand that, during the continuance of this agreement, officers
of your firm will, if elected, serve as directors of our corporation and as its
principal officers.
3. You are to have complete and exclusive authority to develop and handle for us
any business of the type above mentioned which you may consider advantageous for
us, subject to the direction and control of our officers and directors. You will
furnish us with such statistical information with respect to the securities
which we may hold or contemplate purchasing as we may request. We wish to be
kept in touch with important developments affecting our Company and shall expect
you on your own initiative to furnish us from time to time with such information
as you may believe appropriate for this purpose, whether concerning the
individual companies whose securities are included in our portfolio or the
industries in which they are engaged. We shall also expect you of your own
motion to advise us whenever in your opinion conditions are such as to make it
desirable that a specific security be eliminated from our portfolio.
4. We shall expect of you your best judgment in rendering these services to us,
and we agree as an inducement to your undertaking the same that you shall
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not be liable hereunder for any mistake of judgment or in any other event
whatsoever, except for lack of good faith, provided that nothing herein shall be
deemed to protect or purport to protect you against any liability to us or to
our security holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of your
duties hereunder, or by reason of your reckless disregard of your obligations
and duties hereunder.
5. Except as otherwise provided below in this paragraph, you will attend to, or
arrange for the performance, at your expense, of such clerical and accounting
work related to the investment and reinvestment of our capital for us as we may
specify. We shall, however, bear all costs and expenses of or attendant upon:
(i) preparation of our federal, state and local tax returns; (ii) preparation of
certain documents we must file with the Securities and Exchange Commission;
(iii) determination of the status and payment of dividends; (iv) reconciling and
reviewing output of our custodian bank, determining the adequacy of various
accruals, approving our expenses, authorizing our bank to receive and disburse
money and securities and verifications related thereto, and interfacing with our
auditors; (v) verification of our security ledger and preparation and
maintenance of other corporate books and records; (vi) brokerage fees and
commissions; (vii) stockholders' and Directors' meetings; (viii) corporate
reports and proxy materials, including their preparation, printing and
distribution; (ix) fees of disinterested Directors; (x) taxes and interest
expenses; (xi) reports to government authorities including all expenses and
costs relating to such reports and to state securities law compliance; (xii)
custodian and transfer agent fees; (xiii) association membership dues; (xiv)
premiums on all insurance and bonds maintained for us or on our behalf; (xv)
retention of the transfer agent and registrar for our shares and the disbursing
agent for our stock-holders, including costs and expenses attendant upon
repurchase and redemption of our shares; (xvi) our counsel; and (xvii) our
independent auditors. We may arrange for you to provide some or all of the
services relating to items (i) to (xvii) above, and any other services not
directly relating to investment and reinvestment of our capital, upon such terms
and conditions as we may agree and subject to the approval and review of our
Board of Directors.
6. In consideration of such services, we shall pay you a monthly fee as of the
last day of each month in each year based upon the average daily value of net
assets during a month for which the monthly fee is calculated, as follows:
VALUE OF AVERAGE DAILY
NET ASSETS OF THE FUND
MONTHLY RATE DURING THE MONTH
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1/12 of .650% of ............................ First $250 Million
1/12 of .600% of ............................ Next $250 Million
1/12 of .550% of ............................ In Excess of $500 Million
provided, however, that such fee for any period which shall not be a full
monthly period shall be prorated according to the proportion which such period
bears to the full month. For this purpose, the value of our net assets shall be
computed in the same manner as the value of such net assets are computed in
connection with the determination of the net asset value of our shares.
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7. (a) You are authorized to place purchase and sale orders for our portfolio
transactions with brokers and/or dealers which, in your best judgment are able
to achieve "best execution" of such orders. "Best execution" shall mean prompt
and reliable execution at the most favorable security price obtainable, taking
into account research and other services available and the reasonableness of
commission charges. Purchases and sales of securities not listed or traded on a
securities exchange shall ordinarily be executed with primary market makers,
acting as principal, except where, in your judgment, better prices and execution
may otherwise be obtained.
(b) You are authorized to allocate brokerage and principal business to
members of securities exchanges, brokers and dealers (such members, brokers and
dealers being hereinafter referred to as "brokers") who have provided brokerage
and research services, as such services are defined in Section 28(e) of the
Securities Exchange Act of 1934 (the "1934 Act") for us and/or other accounts,
if any, for which you exercise investment discretion (as defined in Section
3(a)(35) of the 0000 Xxx) and to cause us to pay a commission for effecting a
securities transaction in excess of the amount another broker would have charged
for effecting that transaction if you determine in good faith that such amount
of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker, viewed in terms of either that
particular transaction or your overall responsibilities with respect to us and
the other accounts, if any, as to which you exercise investment discretion.
In reaching such determination, you will not be required to place or attempt to
place a specific dollar value on the research or execution services of a broker
or on the portion of any commission reflecting either of said services. In
demonstrating that such determinations were made in good faith, you shall be
prepared to show that all commissions were allocated and paid in accordance with
this agreement, that commissions were not allocated or paid for products or
services which were readily and customarily available and offered to the public
on a commercial basis, and that the commissions were within a reasonable range
shall be based on any available information as to the level of commissions known
to be charged by qualified brokers on com-parable transactions, but taking into
account (i) the provisions of this agreement relating to obtaining the most
favorable securities price, since it is recognized by our Board of Directors and
shareholders that it usually is more beneficial to us to obtain a favorable
price than to pay the lowest commission; and (ii) that research from brokers is
useful to you in performing your advisory activities under this Agreement.
(c) Portfolio transactions may be allocated to any broker or dealer
taking into account the sale by such broker or dealer of our shares. Any such
allocation shall be made in accordance with the provisions of this agreement
relating to obtaining "best execution".
(d) In selecting brokers for our portfolio transactions, you shall make
use of a list of a number of brokers which you and we believe, based on past and
current experience, are qualified to execute our portfolio transactions. The
brokers on the list will ordinarily be used for our portfolio transactions, but
other brokers may be used in accordance with the principles of this agreement.
The brokers on the list may be changed from time to time and will include
members of the major and regional securities exchanges and certain non-member
brokers.
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8. You may act as investment adviser for any other person, firm or corporation.
We recognize that you have given us the right to use the name "Millenium" in our
corporate title. If for any reason you no longer act as our investment adviser,
we shall remove the name "Millenium" from our corporate title upon demand made
by you.
9. All of our expenses shall be paid by us except for those you specifically
agree to assume under this Agreement. If the total expense payable by us for any
fiscal year (inclusive of all fees payable under this agreement but exclusive of
interest, taxes, brokerage fees and payments under any Rule 12b-1 distribution
plan) shall exceed the most restrictive applicable expense limitation prescribed
by any statute or regulatory authority of any jurisdiction in which our shares
are qualified for offer and sale, you will pay or refund to us the amount by
which such expenses exceed the amount so computed.
10. This Agreement shall become effective for an initial period of not more than
two years from its effective date, and shall continue in full force and effect
continuously thereafter, if its continuance is approved at least annually as
required by the Investment Company Act of 1940. The effective date of this
Agreement shall be the later of (i) January 12, 1998, or (ii) the date this
Agreement has been approved as required by the Investment Company Act of 1940.
As of such effective date, this Agreement shall supersede all prior investment
advisory agreements between the parties. This Agreement may be terminated at any
time, without the payment of any penalty, by our Board of Directors or by vote
of a majority of our outstanding voting securities (as defined in the 1940 Act)
on 60 days' written notice to you, or by you on 60 days' written notice to us,
and it shall be automatically terminated in the event of its assignment (as
defined in said Act).
11. As of the date of this Agreement, the Company has only one series of shares
("Fund"). In the event that the Company shall create additional Funds, this
Agreement shall apply to and be effective as to each such Fund, provided that
the Agreement is approved as required by the Investment Company Act of 1940. The
effective date of the Agreement as to each such Fund shall be the date that it
is so approved or any later date as shall be agreed to by the parties.
If the foregoing is in accordance with your understanding, will you so kindly
indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
MILLENIUM TAX-FREE INCOME FUND, INC.
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
President
Accepted as of the day and year first above written.
MILLENIUM ADVISORS, INC.
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Chief Financial Officer
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