Exhibit 5
INVESTMENT ADVISORY AGREEMENT
The Highland Family of Funds
Highland Growth Fund
INVESTMENT ADVISORY AGREEMENT, dated as of March 14, 1997, by and between
The Highland Family of Funds, a Massachusetts business trust (the "Trust"), and
Highland Investment Group L.P., a Delaware limited partnership (the "Adviser").
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage the Adviser to provide certain
investment advisory services for the series of the Trust designated as Highland
Growth Fund (the "Fund"), and the Adviser is willing to provide such investment
advisory services for the Fund on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Adviser. The Adviser shall provide the Fund with such
investment advice and supervision as the Trust may from time to time consider
necessary for the proper supervision of the Fund's investment assets. Highland
Investment Group L.P. shall act as the investment adviser for the Fund and as
such shall furnish continuously an investment program and shall determine from
time to time what securities shall be purchased, sold or exchanged and what
portion of the assets of the Fund shall be held uninvested, subject always to
the restrictions of the Trust's Declaration of Trust, dated October 7, 1996,
and By-laws, as each may be amended from time to time (respectively, the
"Declaration" and the "By-Laws"), to the provisions of the 1940 Act, and to the
then-current Registration Statement of the Trust with respect to the Fund. The
Adviser shall also make recommendations as to the manner in which voting
rights, rights to consent to corporate action and any other rights pertaining
to the Fund's securities shall be exercised. Should the Board of Trustees of
the Trust at any time, however, make any definite determination as to
investment policy applicable to the Fund and notify the Adviser thereof in
writing, the Adviser shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination has been revoked. The Adviser shall take, on behalf of the Fund,
all actions which it deems necessary to implement the investment policies
determined as provided above, and in particular to place all orders for the
purchase or sale of securities for the Fund's account with the brokers or
dealers selected by it, and to that end the Adviser is authorized as the agent
of the Trust to give instructions to the custodian of the Fund as to deliveries
of securities and payments of cash for the account of the Fund. In connection
with the selection of such brokers or dealers and the placing of such orders,
the Adviser is directed to seek for the Fund, in its best judgment, prompt
execution in an effective manner at the most favorable price. Subject to this
requirement of seeking the most favorable price, securities may be bought from
or sold to broker-dealers who have furnished statistical, research and other
information or services to the Adviser or the Fund, subject to any applicable
laws, rules and regulations. In making purchases or sales of securities or
other property for the account of the Fund, the Adviser may deal with itself or
with the Trustees of the Trust or the Trust's underwriter or distributor, to
the extent such actions are permitted by the 1940 Act.
2. Allocation of Charges and Expenses. The Adviser shall furnish at its
own expense all necessary services, facilities and personnel in connection with
its responsibilities under Section 1 above. It is understood that the Trust
will pay from the assets of the Fund all of its own expenses allocable to the
Fund including, without limitation, compensation of Trustees not "affiliated"
with the Adviser; governmental fees; interest charges; taxes; membership dues
in the Investment Company Institute; fees and expenses of independent auditors,
of legal counsel and of any transfer agent, administrator, distributor,
shareholder servicing agent, registrar or dividend disbursing agent of the
Trust; expenses of issuing and redeeming shares and servicing shareholder
accounts; expenses of preparing, printing and mailing notices, proxy statements
and reports to governmental officers and commissions and to shareholders in the
Fund; expenses connected with the execution, recording and settlement of
security transactions; insurance premiums; fees and expenses of the custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of the Fund; and expenses of meetings of the Fund's shareholders.
3. Compensation of the Adviser. For the services to be rendered, the
Trust shall pay to the Adviser from the assets of the Fund an investment
advisory fee computed daily and paid monthly at an annual rate equal to 1.15%
of the Fund's average daily net assets for the Fund's then-current fiscal year.
If Highland Investment Group L.P. serves as Adviser for less than the whole of
any period specified in this Section 3, the compensation to Highland Investment
Group L.P., as Adviser, shall be prorated. The Adviser will not be compensated
on the basis of a share of capital gains upon or capital appreciation of the
Fund.
4. Covenants of the Adviser. The Adviser agrees that it will not deal
with itself, or with the Trustees of the Trust or the Trust's principal
underwriter or distributor, as principals in making purchases or sales of
securities or other property for the account of the Fund, except as permitted
by the 1940 Act, will not take a long or short position in shares of the Fund
except as permitted by the Declaration, and will comply with all other
provisions of the Declaration and By-Laws and the then-current Registration
Statement applicable to the Fund relative to the Adviser and its Trustees and
officers.
5. Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder. As used in this Section 5, the term
"Adviser" shall include officers and employees of the Adviser as well as the
Adviser itself.
6. Activities of the Adviser. The services of the Adviser to the Fund are
not to be deemed to be exclusive, the Adviser being free to render investment
advisory and/or other services to others. It is understood that Trustees,
officers, and investors of the Trust are or may be or may become interested in
the Adviser, as officers, employees, or otherwise and that officers and
employees of the Adviser are or may become similarly interested in the Trust
and that the Adviser may be or may become interested in the Trust as an
investor or otherwise.
7. Name. The Trust hereby acknowledges that any and all rights in or to
the names "Highland" and "The Highland Family of Funds" which exist on the date
of this Agreement or which may arise hereafter are, and under any and all
circumstances shall continue to be, the sole property of the Adviser; that the
Adviser may assign any or all of such rights to another party or parties
without the consent of the Trust; and that the Adviser may permit other
parties, including other investment companies, to use the word "Highland" or
the words "The Highland Family of Funds" in their names. If the Adviser, or its
assignee as the case may be, ceases to serve as the Adviser of the Trust, the
Trust hereby agrees to take promptly any and all actions which are necessary or
desirable to change its name and the name of the Fund so as to delete the word
"Highland" or the words "The Highland Family of Funds."
8. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written and shall
govern the relations between the parties hereto thereafter, and shall remain in
force until March 14, 1999 on which date it will terminate unless its
continuance after March 14, 1999 is "specifically approved at least annually"
(a) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust or of the Adviser at a meeting specifically
called for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Trust or by "vote of a majority of the outstanding voting
securities" of the Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Fund, or by the Adviser, in each case on not more than 60
days' nor less than 30 days' written notice to the other party. This Agreement
shall automatically terminate in the event of its "assignment."
Subject to the provisions of the 1940 Act and such exemptions or
exceptions as may be granted or permitted by the Securities and Exchange
Commission thereunder, this Agreement may be amended only if such amendment is
approved by the "vote of a majority of the outstanding voting securities" of
the Fund.
The terms "specifically approved at least annually", "vote of a majority
of the outstanding voting securities", "assignment", "affiliated person", and
"interested persons", when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust
under this Agreement are binding only with respect to the Fund; that any
liability of the Trust under this Agreement with respect to the Fund, or in
connection with the transactions contemplated herein with respect to the Fund,
shall be discharged only out of the assets of the Fund; and that no other
series of the Trust shall be liable with respect to this Agreement or in
connection with the transactions contemplated herein.
The undersigned Trustee or officer of the Trust has executed this
Agreement not individually, but as Trustee or officer under the Trust's
Declaration, and the obligations of this Agreement are not binding upon any of
the Trustees or officers of the Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
The Highland Family of Funds Highland Investment Group L.P.
TREGARGUS HOLDINGS LTD.
General Partner
By: Xxxxxxx X. Xxxxxxx By: Xxxxxxxxx X. Xxxxxx
Title: Secretary Title: President
INVESTMENT ADVISORY AGREEMENT
The Highland Family of Funds
Highland Aggressive Growth Fund
INVESTMENT ADVISORY AGREEMENT, dated as of March 14, 1997, by and between
The Highland Family of Funds, a Massachusetts business trust (the "Trust"), and
Highland Investment Group L.P., a Delaware limited partnership (the "Adviser").
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage the Adviser to provide certain
investment advisory services for the series of the Trust designated as Highland
Aggressive Growth Fund (the "Fund"), and the Adviser is willing to provide such
investment advisory services for the Fund on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Adviser. The Adviser shall provide the Fund with such
investment advice and supervision as the Trust may from time to time consider
necessary for the proper supervision of the Fund's investment assets. Highland
Investment Group L.P. shall act as the investment adviser for the Fund and as
such shall furnish continuously an investment program and shall determine from
time to time what securities shall be purchased, sold or exchanged and what
portion of the assets of the Fund shall be held uninvested, subject always to
the restrictions of the Trust's Declaration of Trust, dated October 7, 1996,
and By-laws, as each may be amended from time to time (respectively, the
"Declaration" and the "By-Laws"), to the provisions of the 1940 Act, and to the
then-current Registration Statement of the Trust with respect to the Fund. The
Adviser shall also make recommendations as to the manner in which voting
rights, rights to consent to corporate action and any other rights pertaining
to the Fund's securities shall be exercised. Should the Board of Trustees of
the Trust at any time, however, make any definite determination as to
investment policy applicable to the Fund and notify the Adviser thereof in
writing, the Adviser shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination has been revoked. The Adviser shall take, on behalf of the Fund,
all actions which it deems necessary to implement the investment policies
determined as provided above, and in particular to place all orders for the
purchase or sale of securities for the Fund's account with the brokers or
dealers selected by it, and to that end the Adviser is authorized as the agent
of the Trust to give instructions to the custodian of the Fund as to deliveries
of securities and payments of cash for the account of the Fund. In connection
with the selection of such brokers or dealers and the placing of such orders,
the Adviser is directed to seek for the Fund, in its best judgment, prompt
execution in an effective manner at the most favorable price. Subject to this
requirement of seeking the most favorable price, securities may be bought from
or sold to broker-dealers who have furnished statistical, research and other
information or services to the Adviser or the Fund, subject to any applicable
laws, rules and regulations. In making purchases or sales of securities or
other property for the account of the Fund, the Adviser may deal with itself or
with the Trustees of the Trust or the Trust's underwriter or distributor, to
the extent such actions are permitted by the 1940 Act.
2. Allocation of Charges and Expenses. The Adviser shall furnish at its
own expense all necessary services, facilities and personnel in connection with
its responsibilities under Section 1 above. It is understood that the Trust
will pay from the assets of the Fund all of its own expenses allocable to the
Fund including, without limitation, compensation of Trustees not "affiliated"
with the Adviser; governmental fees; interest charges; taxes; membership dues
in the Investment Company Institute; fees and expenses of independent auditors,
of legal counsel and of any transfer agent, administrator, distributor,
shareholder servicing agent, registrar or dividend disbursing agent of the
Trust; expenses of issuing and redeeming shares and servicing shareholder
accounts; expenses of preparing, printing and mailing notices, proxy statements
and reports to governmental officers and commissions and to shareholders in the
Fund; expenses connected with the execution, recording and settlement of
security transactions; insurance premiums; fees and expenses of the custodian
for all services to the Fund, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of the Fund; and expenses of meetings of the Fund's shareholders.
3. Compensation of the Adviser. For the services to be rendered, the
Trust shall pay to the Adviser from the assets of the Fund an investment
advisory fee computed daily and paid monthly at an annual rate equal to 1.35%
of the Fund's average daily net assets for the Fund's then-current fiscal year.
If Highland Investment Group L.P. serves as Adviser for less than the whole of
any period specified in this Section 3, the compensation to Highland Investment
Group L.P., as Adviser, shall be prorated. The Adviser will not be compensated
on the basis of a share of capital gains upon or capital appreciation of the
Fund.
4. Covenants of the Adviser. The Adviser agrees that it will not deal
with itself, or with the Trustees of the Trust or the Trust's principal
underwriter or distributor, as principals in making purchases or sales of
securities or other property for the account of the Fund, except as permitted
by the 1940 Act, will not take a long or short position in shares of the Fund
except as permitted by the Declaration, and will comply with all other
provisions of the Declaration and By-Laws and the then-current Registration
Statement applicable to the Fund relative to the Adviser and its Trustees and
officers.
5. Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder. As used in this Section 5, the term
"Adviser" shall include officers and employees of the Adviser as well as the
Adviser itself.
6. Activities of the Adviser. The services of the Adviser to the Fund are
not to be deemed to be exclusive, the Adviser being free to render investment
advisory and/or other services to others. It is understood that Trustees,
officers, and investors of the Trust are or may be or may become interested in
the Adviser, as officers, employees, or otherwise and that officers and
employees of the Adviser are or may become similarly interested in the Trust
and that the Adviser may be or may become interested in the Trust as an
investor or otherwise.
7. Name. The Trust hereby acknowledges that any and all rights in or to
the names "Highland" and "The Highland Family of Funds" which exist on the date
of this Agreement or which may arise hereafter are, and under any and all
circumstances shall continue to be, the sole property of the Adviser; that the
Adviser may assign any or all of such rights to another party or parties
without the consent of the Trust; and that the Adviser may permit other
parties, including other investment companies, to use the word "Highland" or
the words "The Highland Family of Funds" in their names. If the Adviser, or its
assignee as the case may be, ceases to serve as the Adviser of the Trust, the
Trust hereby agrees to take promptly any and all actions which are necessary or
desirable to change its name and the name of the Fund so as to delete the word
"Highland" or the words "The Highland Family of Funds".
8. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written and shall
govern the relations between the parties hereto thereafter, and shall remain in
force until March 14, 1999 on which date it will terminate unless its
continuance after March 14, 1999 is "specifically approved at least annually"
(a) by the vote of a majority of the Trustees of the Trust who are not
"interested persons" of the Trust or of the Adviser at a meeting specifically
called for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Trust or by "vote of a majority of the outstanding voting
securities" of the Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the outstanding voting
securities" of the Fund, or by the Adviser, in each case on not more than 60
days' nor less than 30 days' written notice to the other party. This Agreement
shall automatically terminate in the event of its "assignment."
Subject to the provisions of the 1940 Act and such exemptions or
exceptions as may be granted or permitted by the Securities and Exchange
Commission thereunder, this Agreement may be amended only if such amendment is
approved by the "vote of a majority of the outstanding voting securities" of
the Fund.
The terms "specifically approved at least annually", "vote of a majority
of the outstanding voting securities", "assignment", "affiliated person", and
"interested persons", when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust
under this Agreement are binding only with respect to the Fund; that any
liability of the Trust under this Agreement with respect to the Fund, or in
connection with the transactions contemplated herein with respect to the Fund,
shall be discharged only out of the assets of the Fund; and that no other
series of the Trust shall be liable with respect to this Agreement or in
connection with the transactions contemplated herein.
The undersigned Trustee or officer of the Trust has executed this
Agreement not individually, but as Trustee or officer under the Trust's
Declaration, and the obligations of this Agreement are not binding upon any of
the Trustees or officers of the Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
The Highland Family of Funds Highland Investment Group L.P.
TREGARGUS HOLDINGS LTD.
General Partner
By: Xxxxxxx X. Xxxxxxx By: Xxxxxxxxx X. Xxxxxx
Title: Secretary Title: President
Highland Investment Group L.P.
March 14, 1997
The Highland Family of Funds
Two Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Ladies and Gentlemen:
This letter will confirm the agreement of the undersigned, Highland
Investment Group, L.P. ("Highland"), to pay all of the operating expenses
(excluding interest, taxes, brokerage commissions, litigation costs or other
extraordinary costs or expenses and excluding organization expenses) of each of
Highland Growth Fund and Highland Aggressive Growth Fund (the "Funds")
described in the Prospectus or Statement of Additional Information with respect
to the Funds included as part of the Registration Statement on Form N-1A of The
Highland Family of Funds (the "Trust") filed with the Securities and Exchange
Commission on October 16, 1996, as amended from time to time, to the extent
that such operating expenses of each Fund on a per annum basis exceed 1.95% of
the Fund's average daily net assets, calculated monthly. Payment of these
expenses shall be made no less frequently than quarterly.
This agreement shall terminate on the first anniversary of the date
hereof unless sooner terminated by either party upon not less than 90 days
written notice.
If the foregoing correctly sets forth our agreement, kindly so confirm by
signing this letter in the space indicated for signature on behalf of the Trust
below.
Very truly yours.
Highland Investment Group L.P.
By: TREGARGUS HOLDINGS LTD.
General Partner
By: Xxxxxxxxx X. Xxxxxx
Name: Xxxxxxxxx X. Xxxxxx
Title: President, Tregargus Holdings Ltd.
Agreed:
The Highland Family of Funds
By: Xxxxxxx X. Xxxxxxx
____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Secretary
