CORNERCAP BALANCED FUND
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 6th day of December, 1996, by and between
CornerCap Balanced Fund (the "Fund"), a Massachusetts business trust,
and Cornerstone Capital Corp. (the "Advisor").
WITNESSETH:
In consideration of the mutual promises and agreements herein contained and
other good and valuable consideration the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as follows:
1. IN GENERAL
The Advisor agrees, all as more fully set forth herein, to act as
managerial investment advisor to the Fund with respect to the investment of its
assets and to supervise and arrange the purchase and sale of securities held in
the portfolio of the Fund and generally administer the attain of the Fund.
2. DUTIES AND OBLIGATION OF THE ADVISOR WITH RESPECT TO MANAGEMENT OF THE
FUND
(a) Subject to the succeeding provisions of this section and subject to
the direction and control of the Board of Trustees of the Fund, the Advisor
shall:
(i) Decide what securities shall be purchased or sold by the Fund and
when; and
(ii) Arrange for the purchase and the sale of securities held in the
portfolio of the Fund by placing purchase and sale orders for the
Fund.
(b) Any investment purchases or sales made by the Advisor shall at all
times conform to, and be in accordance with, any requirements imposed by: (1)
the provisions of the Investment Company Act of 1940 (the "Act") and any of the
rides or regulations in force thereunder, (2) any other applicable provisions of
law; (3) the provisions of the Declaration of Trust and By-Laws of the Fund as
amended from time to time, (4) any policies and determinations of the Board of
Trustees of the Fund; and (5) the fundamental policies of the Fund, as reflected
in its registration statement under the Act, or as amended by the shareholders
of the Fund.
(c) The Agreement states that the Advisor shall give the Fund the benefit
of its best judgment and effort in rendering services thereunder, but the
Advisor shall not be liable for any loss sustained by reason of the purchase,
sale or retention of any security, whether or not such purchase, sale or
retention shall have been based upon its own investigation and research or upon
investigation and research made by any other individual, firm or corporation
shall have been selected in good faith. The Agreement also states that nothing
contained therein shall, however, be construed to protect the Advisor against
any liability to the Fund or its security holders by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of its reckless disregard of its obligations and duties under the
Agreement.
(d) Nothing in this agreement shall prevent the Advisor or any affiliated
person (as defined in the Act) of the Advisor from acting as investment advisor
or manager and/or principal underwriter for any other person, firm or
corporation and shall not in any way limit or restrict the Advisor or any such
affiliated person from buying, selling, or trading any securities for its or
their own accounts or the accounts of others for whom it or they may be acting
provided, however, that the Advisor expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligation to the Fund under this Agreement.
(e) It is agreed that the Advisor shall have no responsibility or
liability for the accuracy or completeness of the Fund's Registration Statement
under the Act or the Securities Act of 1933 except for information supplied by
the Advisor for inclusion therein. The Fund agrees to indemnity the Advisor to
the full extent permitted by the Fund's Declaration of Trust.
3. BROKER-DEALER RELATIONSHIPS
In connection with its duties set forth in Section 2(a)(ii) of this
Agreement to arrange for the purchase and the sale of securities held in the
portfolio of the Fund by placing purchase and sale orders for the Fund, the
Advisor shall select such broker dealers ("broker") as shall in the Advisor's
judgment implement the policy of the Fund to achieve "best execution", i.e.
prompt and efficient execution at the most favorable securities price. In
making such selection, the Advisor is authorized to consider the reliability,
integrity and financial condition of the broker. The Advisor is also authorized
to consider whether the broker provides brokerage and/or research services to
the Fund and/or other accounts of the Advisor. The commissions paid to such
brokers may be higher than another broker would have charged if a good faith
determination is made by the Advisor that the commission is reasonable in
relation to the services provided, viewed in terms of either that particular
transaction or the Advisor's overall responsibilities as to the account as to
which it exercises investment discretion. the Advisor shall use its judgment in
determining the amount of commissions paid are reasonable in relation to the
value of brokerage and research services provided and need not place or attempt
to place a specific dollar value on such services or on the portion of
commission rates reflecting such services. To demonstrate that such
determinations were in good faith, and to show the overall reasonableness of
commissions paid, the Advisor shall be prepared to show that commissions paid
(i) were for purposes contemplated by this agreement; (ii) were not allocated or
paid for products or services which were readily and customarily available and
offered to the public on a commercial basis; and (iii) were within a reasonable
range as compared to the rates charged by qualified brokers to other
institutional investors as such rates may become known from available
information. The Fund recognizes that, on any particular transaction, a higher
than usual commission may be paid due to the difficulty of the transaction in
question. The Advisor is also authorized to consider sales of
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shares as a factor in the selection of brokers to execute brokerage and
Principal transactions, subject to the requirements of "best execution", as
defined above.
4. ALLOCATION OF EXPENSES
The Advisor agrees that it will furnish the Fund, at the Advisor's expense,
with all office space and facilities, and equipment and clerical personnel
necessary for carrying out its duties under this Agreement The Advisor will also
pay all compensation of all Trustees, officers and employees of the Fund who are
affiliated persons of the Advisor. All costs and expenses not expressly assumed
by the Advisor under this Agreement shall be paid by the Fund, including, but
not limited to
(i) interest and taxes;
(ii) brokerage commissions;
(iii) insurance premiums;
(iv) compensation and expenses of its Trustees other than those
affiliated with the Advisor,
(v) legal and audit expenses;
(vi) fees and expenses of the Fund's custodian, shareholder
servicing or transfer agent and accounting services agent;
(vii) expenses incident to the issuance of its shares, including
stock certificates and issuance of shares on the payment of, or
reinvestment of dividends;
(viii) fees and expenses incident to the registration under Federal or
state securities laws of the Fund or its shares;
(ix) expenses of preparing, printing and mailing reports and notices
and proxy material to shareholders of the Fund;
(x) all other expenses incidental to holding meetings of the Fund's
shareholders;
(XI) dues or assessments of or contributions to the Investment
Company Institute or any successor;
(xii) such nonrecurring expenses as may arise, including litigation
affecting the Fund and the legal obligations which the Fund may
have to indemnify its officers and Trustees with respect
thereto; and
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(xiii) all expenses which the Fund agrees to bear in any distribution
agreement or in any plan adopted by the Fund pursuant to Rule
12b-1 under the Act.
5. COMPENSATION OF THE ADVISOR
(a) The Fund agrees to pay the Advisor and the Advisor agrees to
accept as full compensation for all services rendered by the Advisor hereunder,
and annual management fee payable monthly and computed on the net asset value of
the Fund as of the close of business each business day at the annual rate of 1%
of such net asset value.
(b) In the event the expenses of the Fund (including the fees of the
Advisor and amortization of organization expenses but excluding interest, taxes,
brokerage commission. extraordinary expenses and sales charges and distribution
fees) for any fiscal year exceed the limits set by applicable regulation of
state securities commission, the Advisor will reduce its fee by the amount of
such excess. Any such reductions are subject to readjustment during the year.
The payment of the management fee at the end of any month will be reduced or
postponed or, if necessary a refund will be made to the Fund so that at no time
will there by any accrued but unpaid liability under this expense limitation.
6. DURATION AND TERMINATION
(a) This Agreement shall go into effect on the date set forth above
and shall, unless terminated as hereinafter provided, continue in effect until
December 6, 1998 and thereafter from year to year, but only so long as
such continuance is specifically approved at least annually by the Fund's Board
Of Trustees, including the vote of a majority of the Trustees who are not
parties to this Agreement or "interested persons" (as defined in the Act) of any
such party cast in person at a meeting called by the purpose of voting on such
approval or by vote of the holders of a "majority" (as so defined) of the
outstanding voting securities of the Fund and by such a vote of the Trustees.
(b) This Agreement may be terminated by the Advisor at any time
without penalty upon giving the Fund sixty (60) days written notice (which
notice may be waived by the Fund), and may be terminated by the Fund at any time
without penalty upon giving the Advisor 60 days' written notice (which notice
may be waived by the Advisor), provided that such termination by the Fund shall
be directed or approved by the vote of a majority of all its Trustees in office
at the time or by the vote of the holders of a majority (as defined in the Act)
of the voting securities of the Fund at the time outstanding and entitled to
vote. This Agreement shall automatically terminate in the event of its
assignment (as so defined).
7. AGREEMENT BINDING ONLY ON FUND PROPERTY
The Advisor understands that the obligations of this Agreement are not
binding upon any shareholder of the Fund personally, but bind only the Fund's
property; the Advisor represents that it has notice of the provisions of the
Fund's Declaration of Trust disclaiming shareholder liability for acts or
obligations of the Fund.
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IN WITNESS WHEREOF, the parties hereto have caused the forgoing instrument
to be executed by duly authorized persons and their seals to be hereunto
affixed, all as of the day and year first above written.
CORNERCAP BALANCED FUND
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
CORNERSTONE CAPITAL CORP.
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
