INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of ____________________, 1996 between CAM
BALANCED FUND, INC., a Maryland corporation (the "Fund"), and CAM Investment
Advisors, Inc., a Delaware corporation (the "Investment Advisor").
WHEREAS, the Fund is registered as a closed-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Fund desires to retain the Investment Advisor to
furnish investment advisory services to the Fund and the Investment Advisor is
willing to so furnish such services;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Investment
Advisor to act as its investment advisor for the period and on the terms set
forth in this Agreement. The Investment Advisor accepts such appointment and
agrees to furnish the services herein set forth, for the compensation herein
provided.
2. Management. Subject to the supervision of the Fund's Board
of Directors, the Investment Advisor will perform the following services:
(i) Provide a continuous investment program
and strategy for the Fund, including investment research and
management with respect to all securities and investments and
cash equivalents in the Fund, determining from time to time
what securities and other investments will be invested,
reinvested, owned, held or traded by the Fund. The Investment
Advisor will provide this service under this Agreement in
accordance with the Fund's investment objective, policies and
restrictions as stated in the Prospectus and resolutions of
the Fund's Board of Directors adopted from time to time;
(ii) The Investment Advisor shall, to the
extent requested by the Board of Directors, provide the
personnel to act as officers of the Fund and pay the salaries
of such officers, and shall furnish office facilities and
equipment, and stenographic services necessary for the
operation of the Fund;
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(iii) Transmit information concerning purchases
and sales of the Fund's portfolio securities to the
custodian for proper settlement;
(iv) Supply the Fund and its Board of
Directors with reports and statistical data as requested; and
(v) Prepare a quarterly brokerage allocation
summary and monthly security transaction listing for the Fund.
3. Other Covenants.
The Investment Advisor further agrees that:
(i) It will conform with all applicable Rules
and Regulations of the Securities and Exchange
Commission;
(ii) It will place orders pursuant to its
investment determinations for the Fund either directly with
the issuer or with any broker or dealer. In executing
portfolio transactions and selecting brokers or dealers, the
Investment Advisor will use its best efforts to seek on behalf
of the Fund the best overall terms available. In assessing the
best overall terms available for any transaction, the
Investment Advisor shall consider all factors that it deems
relevant, including the breadth of the market in the security,
the price of the security, the financial condition and
execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the broker
dealer to execute a particular transaction, the Investment
Advisor may also consider the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided to the Fund and/or other
accounts over which the Investment Advisor or an affiliate of
the Investment Advisor exercises investment discretion. The
Investment Advisor is authorized to pay to a broker or dealer
who provides such brokerage and research services a commission
for executing a portfolio transaction for the Fund which is in
excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but only
if, the Investment Advisor determines in good faith that such
commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or
dealer, viewed in terms of that particular transaction or in
terms of the overall
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responsibilities of the Investment Advisor to the Fund. In
addition, the Investment Advisor is authorized to take into
account the sale of shares of the Fund in allocating to
brokers or dealers purchase and sale orders for the Fund's
portfolio securities, provided that the Investment Advisor
believes that the quality of the transaction and the
commission are comparable to what they would be with other
qualified firms. The Investment Advisor will make investment
decisions for the Fund independently from those of other
clients of the Investment Advisor. However, the same security
may be held in the portfolio of more than one client when the
same security is believed suited for the investment objectives
of more than one client. Should two or more clients of the
Investment Advisor simultaneously be engaged in the purchase
or sale of the same security, to the extent possible, the
transactions will be allocated as to price and amount in a
manner fair and equitable to each client;
(iii) It will maintain or supervise the
maintenance of all books and records with respect to the
securities transactions of the Fund and will furnish the
Fund's Board of Directors with such periodic and special
reports as the Board may request; and
(iv) It will treat confidentially and as proprietary
information of the Fund all records and other information
relative to the Fund and prior, present or potential
shareholders, and will not use such records and information
for any purpose other than performance of its responsibilities
and duties hereunder (except after prior notification to and
approval in writing by the Fund, which approval may not be
withheld where the Investment Advisor would be exposed to
civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund).
4. Sub-Advisor. It is understood that the Investment Advisor
may, from time to time, employ or associate with itself such person or persons,
which may be affiliates of the Investment Advisor, as the Investment Advisor
believes to be fitted to assist it in the performance of this Agreement (each a
"Sub-Advisor"); provided, however, that the compensation of such person or
persons shall be paid by the Investment Advisor and that the Investment Advisor
shall be as fully responsible to the Fund for the acts and omissions of any such
person as it is for its own acts and omissions; and provided further, that the
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retention of any Sub-Advisor shall be approved as may be required by the 1940
Act. In the event that any Sub-Advisor appointed hereunder is terminated, the
Investment Advisor may provide investment management services pursuant to this
Agreement to the Fund without further shareholder approval.
5. Services Not Exclusive. The investment management services
furnished by the Investment Advisor hereunder are deemed not to be exclusive,
and the Investment Advisor shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby. The
Investment Advisor will for all purposes herein be deemed to be an independent
contractor and will, unless otherwise expressly authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed to be its agent.
6. Books and Records. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Investment Advisor hereby agrees that all
records which it maintains for the Fund are the property of the Fund and further
agrees to surrender promptly to the Fund any of such records upon the Fund's
request. The Investment Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act, and to permit the Fund access to
the Investment Advisor's records upon the Fund's request.
7. Expenses. During the term of this Agreement, the
Investment Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund.
8. Compensation. For the services provided to the Fund
pursuant to this Agreement, the Fund will pay to the Investment Advisor and the
Investment Advisor will accept as full compensation therefor, a fee, payable on
or before the tenth (10th) day of each calendar month, at the annual rate of
1.00% of the average of the first $100,000,000 of the Fund's average net asset
values and 0.75% of the Fund's average net asset values in excess of
$100,000,000 as of the close of the last business day in each calendar week
during the preceding calendar month. Such fees shall be reduced as required by
expense limitations imposed upon the Fund by any state in which shares of the
Fund are sold. Reductions shall be made at the time of each monthly payment on
an estimated basis, if appropriate, and an adjustment to reflect the reduction
on an annual basis shall be made, if necessary, in the fee payable with respect
to the last month in any calendar year of the Fund. The Investment Advisor shall
within ten (10) days after the end of each calendar year refund any amount paid
in excess of the fee determined to be due for such year.
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If this Agreement shall become effective subsequent to the
first day of a month, or shall terminate before the last day of a month, the
Investment Advisor's compensation for such fraction of the month shall be
determined by applying the foregoing percentage to the average of the weekly net
asset values of the Fund during such fraction of a month (or, if none, to the
asset value of the Fund as calculated on the last business day of the preceding
month) and in the proportion that such fraction of a month bears to the entire
month.
9. Limitation of Liability. The Investment Advisor 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 performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Advisor in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Any person, even though also an officer,
partner, employee, or agent of the Investment Advisor, who may be or become an
officer, director, employee or agent of the Fund, shall be deemed, when
rendering service to the Fund or acting on any business of the Fund (other than
services or business in connection with the Investment Advisor's duties as
investment advisor hereunder), to be rendering such services to or acting
solely, for, the Fund and not as an officer, partner, employee or agent or one
under the control or direction of the Investment Advisor even though paid by it.
10. Duration and Termination. This Agreement will become
effective on the date first written above, and unless sooner terminated as
provided herein, shall continue in effect for two (2) years. Thereafter, if not
terminated, this Agreement shall continue in effect for successive annual
periods, provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Fund's Board of Directors
who are not interested persons of any party to this Agreement, cast in person at
a meeting called for the purpose of voting on such approval, and (b) by the
Fund's Board of Directors or by vote of a majority of the outstanding voting
securities of the Fund. Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by the Fund (by vote
of the Fund's Board of Directors or by vote of a majority of the outstanding
voting securities of the Fund), or by the Investment Advisor on sixty days'
written notice. This Agreement will immediately and automatically terminate in
the event of its assignment. (As used in this Agreement, the terms "majority of
the outstanding voting securities," "interested persons" and "assignment" shall
have the same meaning of such terms in the 1940 Act.)
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11. Amendment of this Agreement. No provision of this
Agreement may be changed, 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 a majority of the
outstanding voting securities of the Fund.
12. Miscellaneous. Any notice made pursuant to this Agreement
shall be given in writing, addressed and delivered or mailed postage prepaid,
return-receipt requested, to the other party to this Agreement at its principal
place of business. Notice given by a party's attorney shall be deemed to be
notice given by the party. 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
provisions 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 and shall be
governed by Maryland law.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
CAM BALANCED FUND, INC.
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By:
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Title:
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CAM INVESTMENT ADVISORS, INC.
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By:
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Title:
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