EXHIBIT 5
COLUMBIA SMALL CAP FUND, INC.
INVESTMENT ADVISORY CONTRACT
This Agreement is made the 10th day of December, 1997 between COLUMBIA
SMALL CAP FUND, INC., an Oregon corporation, (the "Fund") and COLUMBIA FUNDS
MANAGEMENT COMPANY, an Oregon corporation having its principal place of business
in Portland, Oregon (the "Adviser"). The Fund is registered as an open-end
investment company pursuant to the Investment Company Act of 1940 (the "Act").
The Adviser is registered as an investment adviser pursuant to the Investment
Advisers Act of 1940. This Agreement relates to services to be performed by the
Adviser with respect to the Fund.
The parties agree as follows:
1. DUTIES OF ADVISER. The Adviser shall regularly provide the Fund with
research, advice, and supervision with respect to investment matters and shall
furnish continuously an investment program, recommend what securities shall be
purchased or sold and what portion of the Fund's assets shall be held invested
or uninvested, subject always to the provisions of the Act and the Fund's
Articles of Incorporation and Bylaws, and amendments thereto, which amendments
shall be furnished to the Adviser by the Fund. The Adviser shall take any steps
necessary or appropriate to carry out its decisions in regard to the foregoing
matters and the general conduct of the business of the Fund. The Adviser may
take into consideration receipt of research and statistical information and
other services rendered to the Fund in the allocation of commissions from
portfolio brokerage business.
2. ALLOCATION OF CHARGES AND EXPENSES.
(a) The Adviser shall pay or reimburse the Fund for payments made by
the Fund for all executive salaries and executive expenses, office rent of the
Fund, ordinary office expenses (other than the expense of clerical services
relating to the administration of the Fund), and for any other expenses that, if
otherwise borne by the Fund, would cause the Fund to "be deemed to be acting as
a distributor of securities of which it is the issuer, other than through an
underwriter," pursuant to Rule 12b-1 under the Act. The Adviser shall provide
investment advisory, statistical, and research facilities and all clerical
services relating to research, statistical, and investment work with respect to
the Fund.
(b) The Adviser shall not be required to pay any expenses of the Fund
other than those enumerated in this Agreement. The Fund will assume all other
costs, including the cost of its custodian, legal, auditing, and accounting
expenses, disinterested directors' fees, taxes, and governmental fees, interest,
brokers' commissions, transaction expenses, cost of stock certificates, and any
other expenses (including clerical expenses) of issue, sale, repurchase, or
redemption of shares, expenses of registering or qualifying shares for sale,
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transfer taxes, and all expenses of preparing the Fund's registration statement
and prospectus, and the cost of printing and delivering to shareholders
prospectuses and reports.
(c) At the request of the Fund, the Adviser shall pay all or a
portion of the direct and indirect costs, charges and expenses of or related to
the Fund's business and operations. The Adviser will submit to the Fund on a
monthly basis a statement setting forth the cost, charges and expenses paid by
the Adviser for the previous month. Upon receipt of the statement, the Fund
shall promptly reimburse the Adviser for the costs, charges and expenses.
3. COMPENSATION OF THE ADVISER. For the services to be rendered, the
facilities to be furnished, and the payments to be made by the Adviser, as
provided in Sections 1 and 2 hereof, for each calendar month the Fund shall pay
to the Adviser a fee computed at the annual rate of 1 percent of daily net
assets. If the asset value is not required to be determined on any particular
business day, then for the purposes of this Section 3, the asset value of a
share as last determined shall be deemed to be the asset value of a share as of
the close of business on that day. If there is no business day in any calendar
month, the fee shall be computed on the basis of the asset value of a share as
last determined, multiplied by the average number of shares outstanding on the
last day of the month.
4. COVENANTS OF THE ADVISER. In connection with purchases or sales of
portfolio securities for the account of the Fund, neither the Adviser nor any
officer, director, or employee of the Adviser shall act as a principal. The
Adviser covenants that it and its employees will comply with investment
restrictions of the Fund's Bylaws applicable to them. If the Adviser or any of
its affiliates give any advice to clients concerning the shares of the Fund, it
will act solely as investment counsel for the clients and not on behalf of the
Fund.
5. LIMITATION ON LIABILITY OF ADVISER. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this agreement relates, except a loss
resulting from willful malfeasance, bad faith, or gross negligence on the part
of the Adviser in the performance of its duties or from reckless disregard by
the Adviser of its obligations and duties under this Agreement. The federal
securities laws impose liabilities under certain circumstances on persons who
act in good faith, and therefore nothing herein shall in any way constitute a
waiver or limitation of any rights which the Fund may have under any federal
securities laws.
6. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) This Agreement shall remain in force for two years from the date
hereof, and it may be continued from year to year thereafter if approved
annually by a vote of a majority of the Fund's shareholders or by its Board of
Directors and in either case a vote of a majority of the Board of Directors 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.
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(b) This Agreement may be terminated at any time without the payment
of any penalty by vote of the Board of Directors of the Fund, by vote of a
majority of the outstanding shares of the Fund, or by the Adviser, on 60 days
written notice to the other party.
(c) This Agreement shall automatically terminate if it is assigned.
The Adviser shall notify the Fund of any change in the officers or directors of
the Adviser within a reasonable time after the change. The terms "assignment,"
"vote of a majority of the outstanding voting securities", and "interested
persons" shall have the meanings specified in the Act.
IN WITNESS WHEREOF the parties have caused this Agreement to be
executed as of the day and year first written above.
COLUMBIA SMALL CAP FUND, INC.
By J. XXXXX XXXXXXX, XX.
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Title: President
COLUMBIA FUNDS MANAGEMENT COMPANY
By XXXXXX X. XXXXXXX
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Title: Vice President
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