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EXHIBIT 2.g.
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT (the "Agreement") made this ____ day of
_______, 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 DUTIES. The Adviser will administer the affairs of the
Company subject to the supervision of the Board of Directors and the following
understandings:
(a) The Adviser will supervise all aspects of the operations of the
Company, including oversight of transfer agency, custodial, and accounting
services;
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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 arrange, but not pay, for 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 maintain or oversee the maintenance of all books
and records with respect to the Company, and will furnish the Board of
Directors with 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 all
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 comply with the requirements of the Investment Company
Act, the rules thereunder, and all other applicable federal and state laws and
regulations.
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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, 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.
(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
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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 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
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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.
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 Secretary of State of the
State of Maryland, and
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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.
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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:
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Name:
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Title:
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ATTEST:
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Name:
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Title:
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XXXXXXXX CAPITAL MANAGEMENT, LTD.
By:
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Name:
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Title:
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ATTEST:
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Name:
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Title:
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