EXHIBIT 5
RESTATED INVESTMENT ADVISORY AND SERVICE CONTRACT
between
THE XXXXXX PORTFOLIO, INC.
and
XXXXXX INVESTMENT MANAGEMENT, INC.
This Agreement is entered into, effective July 13, 1993, as a restatement
of the Restated Investment Advisory and Service Contract, dated July 31, 1992,
by and between THE XXXXXX PORTFOLIO, INC., an Oregon corporation (the "Fund"),
and XXXXXX INVESTMENT MANAGEMENT, INC., an Oregon corporation (the "Adviser").
In consideration of the mutual covenants contained in this Agreement, it is
hereby agreed as follows:
1. The Fund hereby employs the Adviser to act as its investment adviser
and, as such, to manage the investment and reinvestment of the assets of the
Fund in accordance with the Fund's investment objectives, policies and
limitations, and to administer the Fund's affairs to the extent requested by the
Fund, subject to the supervision of the Board of Directors of the Fund, for the
period and upon the terms set forth in this Agreement. Investment of funds shall
be subject to all applicable restrictions of the Articles of Incorporation and
Bylaws of the Fund as may, from time to time, be in force and all applicable
provisions of the Investment Company Act of 1940, or any successor statute, as
amended from time to time (the "1940 Act").
The Adviser agrees to: (a) furnish the investment advisory services
specified above; (b) furnish, for the use of the Fund, office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Fund, maintaining its organization and assisting in providing
shareholder communications and information services; (c) permit any of its
officers and employees to serve, without compensation, as directors or officers
of the Fund if elected to such positions; and (d) pay all expenses of (i)
printing and distributing any prospectuses or reports prepared for its use or
the use of the Fund in connection with the offering of the shares of the Fund's
common stock for sale to the public; (ii) any other literature used by the Fund
or any broker in connection with such offering; and (iii) any advertising
employed in such offering. The Adviser shall pay the salaries and fees, if any,
of all officers of the Fund and of all directors of the Fund who are "interested
persons" (as defined in the 0000 Xxx) of the Fund or of the Adviser and of all
personnel of the Fund or Adviser performing services relating to research,
statistical and investment activities.
The Adviser shall, on behalf of the Fund, maintain the Fund's records and
books of account (other than those maintained by the Fund's transfer agent,
registrar, custodian and shareholder servicing agent). All books and records so
maintained shall be the property of the Fund and, upon request, the Adviser
shall surrender to the Fund any of such books and records requested.
The investment policies and all other actions of the Fund are, and shall at
all times be, subject to the control and direction of the Board of Directors of
the Fund. In acting under this Agreement, the Adviser shall be an independent
contractor and shall not be an agent of the Fund.
With respect to services performed in connection with the purchase and sale
of portfolio securities on behalf of the Fund, the Adviser may place transaction
orders for the Fund's account with brokers or dealers selected by the Adviser.
In connection with the selection of such brokers or dealers and the placing of
such orders, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty, created by this Agreement or otherwise, solely by reason of
its having caused the Fund to pay a broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Adviser has determined in good faith that the net price to the Fund of such
transaction was reasonable in relation to the net price for comparable
transactions engaged in by similarly situated investors.
2. For the services and facilities to be furnished, the Fund shall pay to
the Adviser monthly compensation equal to an annual rate of 0.50 percent of the
Fund's average daily net assets. The daily net asset value of the Fund shall be
computed in the manner and at the times set forth in the Fund's Articles of
Incorporation. On any day that the Fund's net asset value is not calculated, the
net asset value for such day shall be deemed to be the net asset value as of the
close of business on the last day on which such calculation was made for the
purposes of the foregoing computations. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued daily, and the
amounts of the daily accruals shall be paid monthly. Such calculations shall be
made by applying 1/365th of the annual rate to the Fund's net asset value each
day determined as of the close of business on that day.
For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year, respectively.
The services of the Adviser under this Agreement are not to be deemed
exclusive, and the Adviser shall be free to render similar services or other
services to others, including
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other investment companies, so long as its services under this Agreement are not
impaired by the delivery of such services.
3. The Fund shall pay all of its expenses other than those expressly stated
to be payable by the Adviser. The expenses payable by the Fund shall include,
without limitation: (a) interest and taxes; (b) brokerage fees and commissions
and other costs in connection with the purchase or sale of portfolio securities;
(c) fees and expenses of its directors other than those who are "interested
persons" (as defined in the 0000 Xxx) of the Fund or the Adviser; (d) legal and
audit expenses; (e) transfer agent expenses and expenses for servicing
shareholder accounts; (f) expenses of computing the net asset value of the
shares of the Fund and the amount of its dividends; (g) custodian fees and
expenses; (h) administrative fees and expenses; (i) fees and expenses related to
the registration and qualification of the Fund and its shares for distribution
under state and federal securities laws; (j) expenses of printing and mailing
reports, notices and proxy materials to shareholders of the Fund; (k) the cost
of issuing share certificates, if certificates are issued; (l) expenses for
reports, membership dues and other dues in the Investment Company Institute or
any similar trade organization; (m) expenses of preparing and typesetting
prospectuses; (n) expenses of printing and mailing prospectuses sent to existing
shareholders; (o) such nonrecurring expenses as may arise, including expenses
incurred in actions, suits or proceedings to which the Fund is a party and the
legal obligation that the Fund may have to indemnify its officers and directors
in respect thereto; (p) the organizational costs of the Fund and other Fund
expenses that are capitalized; (q) insurance premiums; (r) expenses of
maintaining the Fund's corporate existence, providing investor services and
corporate reports, and holding corporate meetings; and (s) such other expenses
as the directors of the Fund may, from time to time, determine to be properly
payable by the Fund.
The Adviser may, but has no obligation to, pay any or all of the expenses
of the Fund that are payable by the Fund. In such event, the Fund shall promptly
reimburse the Adviser for all such expenses so paid by the Adviser. With respect
to organizational expenses of the Fund paid or advanced by the Adviser, the Fund
shall reimburse the Adviser such amounts in equal monthly payments over 60
months beginning on the date the registration statement filed by the Fund with
the Securities and Exchange Commission was first declared effective; provided,
however, that all such organizational expenses then remaining unreimbursed shall
be reimbursed in full at the end of the first month in which the Fund's average
daily net assets exceed $50,000,000.
4. If the operating expenses of the Fund, including amounts payable to the
Adviser pursuant to Section 2 of the Agreement, for any fiscal year ending on a
date on which the Agreement is in effect exceed the expense limitations
applicable
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to the Fund imposed by any state securities laws, or regulations thereunder, as
such limitations may be raised or lowered from time to time, the Adviser shall
reduce its management fee to the extent of such excess and, if required,
pursuant to any such laws or regulations, will reimburse the Fund for annual
operating expenses (including, but not limited to, legal, audit, custodial,
printing and other regular Fund expenses) in excess of any expense limitation
that may be applicable. The obligation of the Adviser to reduce its management
fee or reimburse the Fund shall not apply to the following expenses paid or
payable by the Fund: brokerage commissions, taxes, interest, organizational
costs and other expenses that are capitalized, and all extraordinary items
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto).
For purposes of the first paragraph of this Section 4, should any such
applicable expense limitation be based upon the gross income of the Fund, such
gross income shall include, but not be limited to, interest on debt securities
in the Fund's portfolio accrued to and including the last day of the Fund's
fiscal year, the record dates for which fall on or prior to the last day of such
fiscal year, and dividends from common and preferred stock in the Fund's
portfolio including all dividends paid or receivable up to and including the
last day of the Fund's fiscal year, but shall not include gains from the sales
of securities.
If the Fund's regular operating expenses in any fiscal year exceed the
applicable limit specified below (expressed as a percentage of average daily net
assets of the Fund on an annual basis), the Adviser will reduce its management
fee or reimburse the Fund in an amount equal to the amount of the excess:
Average Daily Net Annual
Assets for the Year Expense Limit
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$ 100,000 - $ 10,000,000 2.00%
$ 10,000,001 - $ 15,000,000 1.75
$ 15,000,001 - $ 25,000,000 1.50
$ 25,000,001 - $ 50,000,000 1.25
$ 50,000,001 - $ 100,000,000 1.00
$ 100,000,001 and above 0.75
Any reduction in management fees or reimbursement of expenses by the
Adviser required by this Section 4 shall be computed and accrued daily, paid
monthly and adjusted annually on the basis of the Fund's average daily net
assets for the year. Should two or more such expense limitations be applicable
as of the end of the last business day of the fiscal year, that expense
limitation which results in the largest reduction in the Adviser's fee shall be
applicable.
5. In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties
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hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Fund or to any shareholder of the Fund for any act or omission
in the course of, or connected with, rendering services under this Agreement or
for any losses that may be sustained by the Fund or its shareholders in the
purchase, holding or sale of any security.
6. Subject to all applicable statutes and regulations, it is understood
that directors, officers or agents of the Fund are or may be interested in the
Adviser as officers, directors, agents, shareholders or otherwise and that the
officers, directors, shareholders and agents of the Adviser may be interested in
the Fund as officers, directors, agents, shareholders or otherwise.
7. The Adviser shall have the right to grant the use of a name similar to
the Fund's name to another investment company or business enterprise without the
approval of the Fund's shareholders and shall have the right to withdraw from
the Fund the use of the Fund's name. However, the Adviser may not withdraw from
the Fund the use of the Fund's name without submitting to the Fund's
shareholders the question of whether the shareholders wish the Fund to continue
this Agreement.
8. This Agreement became effective on April 20, 1992, and shall remain in
full force and effect until the second anniversary of such date, unless sooner
terminated as hereinafter provided. This Agreement shall continue in force from
year to year thereafter, but only as long as such continuance is specifically
approved at least annually in the manner required by the 1940 Act.
This Agreement shall automatically terminate in the event of its
assignment, and may be terminated at any time without payment of any penalty by
the Fund or by the Adviser on 60 days' written notice to the other party. The
Fund may effect termination by action of its Board of Directors or by vote of a
majority of the outstanding shares of the common stock of the Fund (as defined
in the 1940 Act), accompanied by the appropriate notice. In the event of the
death or disability of any of the principal officers of the Adviser, or if, for
any other reason, there is a material change in the management or ownership of
the Adviser, the Board of Directors of the Fund shall be required to meet as
soon as practicable after such event to consider whether another investment
adviser should be selected for the Fund. If the Fund's Board determines, at such
meeting, that this Agreement should be terminated, this Agreement may be
terminated without the payment of any penalty and without any required prior
notice; provided, however, that any change in the ownership of the Adviser that
constitutes an assignment (within the meaning of the 0000 Xxx) shall require the
automatic termination of this Agreement.
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This Agreement may be terminated at any time by the Board of Directors of
the Fund or by vote of a majority of the outstanding shares of common stock of
the Fund, and such termination shall be without the payment of any penalty and
without any required prior notice, if it shall have been established by a court
of competent jurisdiction that the Adviser or any officer or director of the
Adviser has taken any action that results in a breach of the covenants of the
Adviser set forth in this Agreement. In addition, the Adviser agrees to inform
the Board of Directors of the Fund if the Adviser learns that it or any of its
officers or directors has taken any action that results in a breach of the
Adviser's covenants set forth in this Agreement. The Board of Directors of the
Fund shall meet as soon as practicable after it receives such notification to
consider whether another investment adviser should be selected for the Fund. If
the Fund's Board determines, at such meeting, that this Agreement should be
terminated, this Agreement may be terminated without the payment of any penalty
and without any required prior notice.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in Section
2 earned prior to such termination.
9. 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 thereby be affected.
10. 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.
11. If any action or suit is instituted to enforce or interpret this
Agreement, the prevailing party shall be entitled to recover from the other
party, in addition to all other rights and remedies, the prevailing party's
reasonable attorney fees at trial and on appeal.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed as of the date first written above.
THE XXXXXX PORTFOLIO, INC. XXXXXX INVESTMENT MANAGEMENT, INC.
By By
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President President
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