EXHIBIT 5(e)
XXXXXXX XXXXX EQUITY PORTFOLIOS, INC.
00 Xxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
August 10, 1992
Xxxxxxx Sachs Asset Management
a separate operating division
of Xxxxxxx, Xxxxx & Co.
00 Xxx Xxxx
Xxx Xxxx, XX 00000
INVESTMENT ADVISORY AGREEMENT
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GS SMALL CAP EQUITY FUND
Dear Sirs:
Xxxxxxx Sachs Equity Portfolios, Inc. (the "Company") has been organized as a
corporation under the laws of Maryland to engage in the business of an
investment company. The shares of common stock of the Company ("Shares") may
be divided into multiple series ("Series"), including the GS Small Cap Equity
Fund (the "Fund"). Each Series will represent the interests in a separate
portfolio of securities and other assets. Each Series may be terminated, and
additional Series established, from time to time by action of the Board of
Directors. The Company on behalf of the Fund has selected you to act as the
investment adviser of the Fund and to provide certain 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 Company agrees with you as follows:
1. Name of Company. The Company may use any name including or
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derived from the name "Xxxxxxx Xxxxx" in connection with the Fund 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. Upon the termination of this
Agreement, the Company (to the extent that it lawfully can) will cause the Fund
to 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.
2. Sub-Advisers. You may engage one or more investment advisers
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which are either registered as such or specifically exempt from registration
under the Investment Advisers Act of 1940, as amended, to act as sub-advisers
to provide with respect to the Fund certain services set forth in Paragraphs 3
and 6 hereof, all as shall be set forth in a written contract to which the
Company, on behalf of the Fund, and you shall be parties, which contract shall
be subject to approval by the vote of a majority of the Directors who are not
interested persons of you, the sub-adviser, or of the Company, cast in person
at a meeting called for the purpose of voting on such approval and by the vote
of a majority of the outstanding voting securities of the Fund and otherwise
consistent with the terms of the Investment Company Act of 1940 Act, as
amended, (the "1940 Act").
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3. Advisory Services.
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(a) 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 from time to time 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 as cash, subject always to the provisions of
the Company's Articles of Incorporation and By-Laws and of
the 1940 Act, 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 Directors of the
Company may from time to time establish.
(b) You will maintain all books and records with respect to the
Fund's securities transactions required by sub-paragraphs
(b)(5), (6), (9) and (10) and paragraph (f) of Rule 31a-1
under the 1940 Act (other than those records being maintained
by the Fund's custodian or transfer agent) and preserve such
records for the periods prescribed therefor by Rule 31a-2 of
the 1940 Act. You will also provide to the Company's Board
of Directors such periodic and special reports as the Board
may reasonably request. You shall for all purposes herein be
deemed to be an independent contractor and shall, except as
otherwise expressly provided or authorized, have no authority
to act for or represent the Company in any way or otherwise
be deemed an agent of the Company.
(c) You will notify the Company of any change in your membership
within a reasonable time after such change.
(d) Your services hereunder are not deemed exclusive and you
shall be free to render similar services to others.
4. Allocation of Charges and Expenses. You will pay all costs
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incurred by you in connection with the performance of your duties
under paragraph 3. You will pay the compensation and expenses of
all personnel of yours and will make available, without expense to
the Fund, the services of such of your partners, officers and
employees as may duly be elected officers or Directors of the
Company, subject to their individual consent to serve and to any
limitations imposed by law. 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: (i)
fees and expenses of any administrator of the Fund; (ii)
organization expenses of the Fund; (iii) fees and expenses incurred
by the Fund in connection with membership in investment company
organizations; (iv) brokers' commissions; (v) payment for
portfolio pricing services to a pricing agent, if any; (vi) legal,
auditing or accounting expenses (including an allocable portion of
the cost of your employees rendering legal and accounting services
to the Fund); (vii) taxes or governmental fees; (viii) the fees and
expenses of the transfer agent of the Company; (ix) the cost of
preparing stock certificates or any other expenses, including
clerical expenses of issue, redemption or repurchase of Shares of
the Fund; (x) the expenses of and fees for registering or
qualifying Shares for sale and of maintaining the registration of
the Fund and registering the Company as a broker or a dealer; (xi)
the fees and expenses of Directors of the Company who are not
affiliated with you; (xii) the cost of preparing and distributing
reports and notices to shareholders, the Securities and Exchange
Commission and other regulatory authorities; (xiii) the fees or
disbursements of custodians of the Fund's assets, including
expenses incurred in the performance of any obligations enumerated
by the Articles of Incorporation or By-Laws of the Company insofar
as they govern agreements with any such custodian; or (xiv)
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litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's
business. You shall not be required to pay expenses of activities
which are primarily intended to result in sales of Shares of the
Fund.
5. Compensation of the Adviser.
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(a) For all services to be rendered and payments made as provided
in paragraphs 3 and 4 hereof, the Company on behalf of the
Fund will pay you each month a fee at an annual rate equal to
.75% per annum of the average daily net assets of the Fund.
The "average daily net assets" of the Fund shall be
determined on the basis set forth in the Fund's prospectus or
otherwise consistent with the 1940 Act and the regulations
promulgated thereunder.
(b) If, in any fiscal year, the sum of the Fund's expenses
(including the fee payable pursuant to this paragraph 5, but
excluding taxes, interest, brokerage commissions relating to
the purchase or sale of portfolio securities, distribution
expenses and extraordinary expenses such as for litigation)
exceeds the expense limitations, if any, applicable to the
Fund imposed by state securities administrators, as such
limitations may be modified from time to time, you shall
reimburse the Fund in the amount of 3/4% of such excess to
the extent required by such expense limitations, provided
that the amount of such reimbursement shall not exceed the
amount of your fee during such fiscal year.
(c) In addition to the foregoing, you may from time to time agree
not to impose all or a portion of your fee otherwise payable
hereunder (in advance of the time such fee or portion thereof
would otherwise accrue) and/or undertake to pay or reimburse
the Fund for all or a portion of its expenses not otherwise
required to be borne or reimbursed by you. Any such fee
reduction or undertaking may be discontinued or modified by
you at any time.
6. Avoidance of Inconsistent Position. In connection with
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purchases or sales of portfolio securities for the account of the
Fund, neither you nor any of your partners, officers or employees
will act as a principal, except as otherwise permitted by the 1940
Act. 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 (including Xxxxxxx, Sachs & Co.)
selected by you. In the selection of such brokers or dealers
(including Xxxxxxx, Xxxxx & Co.) and the placing of such orders,
you are directed at all times to seek for the Fund the most
favorable execution and net price available. It is also understood
that it is desirable for the Fund that you have access to
supplemental investment and market research and security and
economic analyses provided by brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when
allocating brokerage to other brokers on the basis of seeking the
most favorable price and efficient execution. Therefore, you are
authorized to place orders for the purchase and sale of securities
for the Fund with such brokers, subject to review by the Company's
Board of Directors from time to time with respect to the extent and
continuation of this practice. It is understood that the services
provided by such brokers may be useful to you in connection with
your services to other clients. If any occasion should arise in
which you give any advice to your clients 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. You may, on
occasions when you deem the purchase or sale of a security to be in
the best interests of the Fund as well as your other customers
(including any other Series or any other investment company or
advisory account for which you or any of your affiliates acts as an
investment adviser), aggregate, to the extent permitted by
applicable laws and regulations, the securities to be sold or
purchased in order to obtain the best net
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price and the most favorable execution. In such event, allocation
of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by you in the manner you
consider to be the most equitable and consistent with your
fiduciary obligations to the Fund and to such other customers.
7. Limitation of Liability of Adviser and Fund. You shall not be
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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 Company or 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. The Fund shall not be liable for any claims against any
other Series of the Company.
8. Duration and Termination of this Agreement. This Agreement
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shall remain in force until June 30, 1994 and shall continue for
periods of one year thereafter, but only so long as such
continuance is specifically approved at least annually (a) by the
vote of a majority of the Directors who are not interested persons
(as defined in the 0000 Xxx) of the Company and have no financial
interest in this Agreement, cast in person at a meeting called for
the purpose of voting on such approval and (b) by a vote of a
majority of the Board of Directors of the Company 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 1940 Act and the rules and regulations
thereunder. This Agreement may, on 60 days' written notice to the
other party, be terminated at any time without the payment of any
penalty, by the Board of Directors of the Company, 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 1940 Act
(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
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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. 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 a majority of the Board of
Directors of the Company, including a majority of the Directors who
are not interested persons (as defined in the 0000 Xxx) of the
Company and have no financial interest in this Agreement, cast in
person at a meeting called for the purpose of voting on such
amendment.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
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CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
11. Miscellaneous. The captions in this Agreement are included for
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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.
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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 Company, whereupon this letter shall become a binding
contract.
Yours very truly,
XXXXXXX XXXXX EQUITY PORTFOLIOS, INC.
(on behalf of the GS Small Cap Equity Fund)
Attest: Xxxxxxxx X. Xxxxxxxxx By: Xxxxxxx Xxxxx Xxxxx
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Xxxxxxxx X. Xxxxxxxxx Xxxxxxx Xxxxx Xxxxx
Secretary of the Company President of the Company
The foregoing Agreement is hereby accepted as of the date thereof.
XXXXXXX SACHS ASSET MANAGEMENT
a separate operating division of Xxxxxxx, Xxxxx & Co.
Attest: Xxxxxxxx X. Xxxxxxxxx By: Xxxx X. Xxxxx
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Xxxxxxxx X. Xxxxxxxxx Xxxx X. Xxxxx
Counsel to the Funds Group President and Chief Operating
Officer
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