Exhibit 5
Investment Advisory and Administrative Contract
THIS AGREEMENT (this "Agreement") is made this ___day of___, 1997, by
and between Texas Capital Value Fund, Inc., a Maryland corporation (the
"Fund"), and First Austin Capital Management, Inc., a Delaware
corporation (the "Investment Advisor").
WITNESSETH:
WHEREAS, the Fund engages in the business of investing and reinvesting
its assets and property in various stocks and securities and the
Investment Advisor engages in the business of providing investment
advisory services; and
WHEREAS, the Fund has need for investment advisory services.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Advisory Services. The Investment Advisor shall render investment
advisory services (the "Advisory Services") to the Fund, subject to the
supervision and direction of the Board of Directors of the Fund, for
the period set forth in Paragraph 6 below on the terms set forth
herein. The Investment Advisor shall render such Advisory Services and
assume the obligations herein set forth, for the compensation provided
in Paragraph 3(a) below. The Investment Advisor shall, for the
purposes herein, be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority
to act for or represent the Fund in any way, or in any way be deemed an
agent or employee of the Fund.
2. Administrative Services. In addition to the Advisory Services, the
Investment Advisor shall provide certain administrative support
services to the Fund including establishing and maintaining
shareholders' accounts and records, processing purchase and redemption
transactions, answering routine client inquiries regarding the Fund,
preparing all registration statements, prospectuses, tax returns and
proxy statements, valuing the Fund's portfolio daily and calculating
the daily net asset value per share, and providing such other
administrative services to the Fund as the Fund may reasonably request
(collectively, the "Administrative Services"). The Investment Advisor
may contract with third parties to perform all or part of the
Administrative Services. Notwithstanding anything contained in this
Agreement to the contrary, under no circumstances shall the execution
of any such third party contract be deemed an assignment by the
Investment Advisor of an interest in this Agreement.
3.(a) As compensation for the services to be rendered to the Fund by
the Investment Advisor under the provisions of this Agreement, the Fund
shall pay to the Investment Advisor:
(i) for Advisory Services a flat fee of one percent (1%) of the net
assets of the Fund; plus additional amounts as follows:
(ii)for Administrative Services a fee equal to the sum of (i) seven-
tenths percent (0.70%) of the amount of assets in the Fund between one
dollar ($1.00) and five million dollars ($5,000,000), inclusive, plus
(ii) five-tenths percent (0.50%) of the amount of assets in the Fund
between five million and one dollars ($5,000,001.00) and thirty million
dollars ($30,000,000), inclusive, plus (c) twenty-eight hundredths
percent (0.28%) of the amount of assets in the Fund between thirty
million and one dollars ($30,000,001) and one hundred million dollars
($100,000,000), inclusive, plus (d) twenty-five hundredths percent
(0.25%) of the amount of assets in the Fund between one hundred million
and one dollars ($100,000,001) and two hundred million dollars
($200,000,000), inclusive, plus (e) twenty hundredths percent (0.20%)
of the amount of assets in the Fund in excess of two hundred and one
million dollars ($200,000,001), inclusive (all assets in the Fund for
the purposes of this Paragraph to be rounded to the nearest dollar
prior to the computation of any fee owed).
Such fees shall be accrued daily and be payable monthly in arrears on
the first day of each calendar month. Accruals of fees to the
Investment Advisor shall begin on the execution date of this Agreement.
(b) Costs. All Fund costs, with the exception of extraordinary
legal expenses (as determined by the Board of Directors of the Fund),
brokerage commissions, custodial charges based upon transactions in the
portfolio of the Fund and marketing expenses, will be borne by the
Investment Advisor as part of this Agreement. In addition, the
Investment Advisor shall absorb all the organization costs for the Fund
as determined by the Board of Directors of the Fund.
In the conduct of the respective businesses of the parties hereto
and in the performance of this Agreement, the Fund and the Investment
Advisor may share common facilities and personnel common to each. The
entire cost to the Fund for the use of common facilities and personnel
will be borne by the Advisor as part of this Agreement.
If any Fund costs which the Investment Advisor has agreed to bear
hereunder are incurred by the Fund pursuant to separate agreements with
third parties, the Fund shall provide the Investment Advisor with
copies of such agreements and any amendments thereto and shall either
xxxx the Investment Advisor for the costs insured by the Fund
thereunder or direct the Investment Advisor to pay any such costs
incurred directly to the third parties involved as provided by the
applicable agreements.
4. Non-Exclusive. The services to be rendered by the Investment
Advisor to the Fund under this Agreement are not to be deemed to be
exclusive, and the Investment Advisor shall be free to render similar
or different services to others so long as its ability to render the
services provided for in this Agreement shall not be impaired thereby.
If its ability becomes so impaired, as determined by the Fund in its
sole and absolute discretion, the Fund shall notify the Investment
Advisor of same and this Agreement shall automatically terminate upon
the receipt by the Investment Advisor of such notice. Such automatic
termination shall be upon the same terms and conditions as provided for
other terminations pursuant to the last sentence of Paragraph 7 below.
5. Interested Parties. It is understood and agreed that directors,
officers, employees, agents and shareholders of the Fund may be
interested in the Investment Advisor as directors, officers, employees,
agents and shareholders of the Investment Advisor. Similarly,
directors, officers, employees, agents and shareholders of the
Investment Advisor may be interested in the Fund as directors,
officers, employees, agents and shareholders of the Fund. Furthermore,
the Investment Advisor itself may be interested in the Fund as a
shareholder or otherwise of the Fund. It is understood and agreed that
directors, officers, employees, agents and shareholders of the
Investment Advisor may continue as directors, officers, employees,
agents and shareholders of the Fund and vice versa; that the Investment
Advisor, its directors, officers, employees, agents and shareholders
may engage in other business, may render investment advisory services
to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services
to the Fund, or to any other investment company, corporation,
association, firm or individual, subject to the provisions of Paragraph
4 above. The parties agree that the Investment Advisor has a
proprietary interest in the names "Texas Capital Value Funds, Inc." and
"Value and Growth Portfolio", and the Fund agrees to promptly take any
and all necessary action to remove the names "Texas Capital Value
Funds, Inc." and "Value and Growth Portfolio" from its corporate name
and from the name of any of its funds upon receipt of written request
therefor from the Investment Advisor.
6. Term. Notwithstanding the date of this Agreement first above
written, the effective date of this Agreement (the "Effective Date")
shall be the effective date of that certain Registration Statement on
Form N-1A of the Fund, filed by the Fund with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended. Thereafter, this
Agreement shall continue in effect for one year from the Effective
Date. Such term may be extended annually for additional periods of one
year provided that each such extension is approved at least annually by
a vote of the Fund's Board of Directors. Such vote shall be cast in
person at a meeting called for the purpose of voting on such approval,
and shall include the votes of a majority of the Directors who are not
parties to this Agreement or interested persons of any such party.
7. Termination. This Agreement may be terminated at any time upon
sixty (60) days prior written notice, without the payment of any
penalty, by the Fund's Board of Directors or by vote of a majority of
the outstanding voting securities of the Fund. This Agreement shall
automatically terminate in the event of its assignment by the
Investment Advisor or the Fund (within the meaning of the Investment
Company Act of 1940 (the "1940 Act")), which shall be deemed to include
a transfer of control of the Investment Advisor or the Fund,
respectively, unless an exemption from such automatic termination is
granted by order or rule of the Securities and Exchange Commission.
Upon the termination of this Agreement, the obligations of all the
parties hereunder shall cease and terminate as of the date of such
termination, except for (i) any obligation to respond to a breach of
this Agreement committed prior to such termination, (ii) the obligation
of the Fund to pay to the Investment Advisor the fee provided in
Paragraph 3(a) above, prorated to the date of termination, and (iii)
the obligation of the Investment Advisor to bear the costs provided for
in Paragraph 3(b) above, prorated to the date of termination (if
applicable).
8. Assignment. This Agreement shall terminate automatically in the
event of its whole or partial assignment by the Investment Advisor or
the Fund as provided in Paragraph 7 above.
9. Fidelity Bond. As part of this Agreement, the Investment Advisor
shall bear the cost of the fidelity bond required to be maintained by
the Fund for employees, officers, or directors of the Investment
Advisor who have access to the Fund's securities or cash. Such bond
must protect the Fund against loss from larceny and embezzlement under
the Act, and, in compliance with Rule 17g-1 under the 1940 Act, must be
approved both in form and amount by a majority of the independent
directors of the Fund at least annually with due consideration given to
(a) the value of the Investment Advisor's aggregate assets, (b) the
type of custody arrangements employed, and (c) the nature of the
securities owned. Additionally, the Investment Advisor shall bear the
cost, if any, for Employee and Officer/Director and Officer (E&O/D&O)
liability insurance covering the Investment Advisor in favor of the
Fund. Under the terms of this Agreement, there is no initial
requirement that E&O/D&O insurance be purchased, but if the Board of
Directors of the Fund ever requires in its sole and absolute discretion
that it be carried, or if the Investment Advisor decides, unilaterally,
to carry it, then such cost shall be borne by the Investment Advisor
and such insurance, if required to be carried by the Fund's Board of
Directors, shall be in such amount and for such a term as the Board may
reasonably require. The Investment Advisor shall not be liable for any
error of judgement or of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except
loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Investment Advisor in the performance of its
obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
10. Notices. Any notice required or permitted to be given hereunder
must be in writing and may be given by personal delivery or by mail,
and if given by mail shall be deemed sufficiently given if sent by
registered or certified mail addressed to the party to be notified at
the following applicable address:
The Fund:
Texas Capital Value Funds, Inc.
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
The Investment Advisor:
First Austin Capital Management, Inc.
0000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Either party may specify a different address for notice purposes
by written notice to the other.
11. Governing Law. This Agreement is executed and delivered in the
State of Texas and shall be governed by the laws of Texas and the 1940
Act.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and terminates and supersedes all prior
understandings or agreements on the subject matter hereof. No
conditions or warranties shall be implied herefrom unless expressly set
forth herein. The Fund and the Investment Advisor each acknowledge
that the terms and conditions of this Agreement, and each of them, are
reasonable and fair and equitable. This Agreement may be modified only
by a future writing that is duly executed by both parties.
13. Severability. If any term of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, then this
Agreement, including all of the remaining terms, will remain in full
force and effect as if such invalid or unenforceable term had never
been included.
14. Waiver. Waiver by either party of any breach of any term,
covenant or condition in this Agreement shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant
or condition herein contained, nor shall any custom or practice which
may grow up between the parties in the administration of the terms
hereof be deemed a waiver of or in any way affect the right of each
party to insist on the performance of the other party in strict
accordance with said terms.
15. Time Is of the Essence. Time is of the essence of this Agreement.
16. Attorneys' Fees. In the event of any litigation or arbitration
between the parties with respect to this Agreement, all costs and
expenses, including, without limitation, actual professional fees such
as accountants' and attorneys' fees, incurred by the prevailing party,
shall be paid by the other party, which obligation on the part of the
other party shall be deemed to have accrued on the date of the
commencement of such action and shall be enforceable whether or not the
action is prosecuted to judgement.
17. Mandatory Arbitration. All disputes arising under this Agreement
shall be arbitrated pursuant to the Commercial Arbitration Rules of the
American Arbitration Association.
18. Independent Counsel. The parties acknowledge that they have had
the opportunity to consult with independent counsel of their own
choosing in the negotiation and execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date and year first above written.
Texas Capital Value Fund, Inc.,
a Maryland corporation
/s/ Xxxx X Xxxxxxx
By______________________________
Xxxx X. Xxxxxxx, President
First Austin Capital Management, Inc.,
a Delaware corporation
/s/ Xxxx X Xxxxxxx
By_____________________________
Xxxx X. Xxxxxxx, President
