EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made and entered into on this 12th day of April,
1988, by and between XXXXXXX CAPITAL GROWTH FUND, INC., a Maryland
corporation (hereinafter sometimes referred to as the "Fund"), and XXXXXXX
INVESTMENTS, INC., an Illinois corporation (hereinafter sometimes called
the "Adviser");
W I T N E S S E T H :
WHEREAS, the Fund is in the process of registering with the
Securities and Exchange Commission as an open-end management investment
company under the Investment Company Act of 1940; and
WHEREAS, the Fund desires to retain Adviser, which is a
registered Investment Adviser under the Investment Advisers Act of 1940,
to act as investment adviser for and to manage its assets;
NOW, THEREFORE, in consideration of the foregoing and the terms,
conditions and covenants contained herein, the Fund and Adviser do
mutually promise and agree as follows:
1. Employment. The Fund hereby employs Adviser to act as
investment adviser for and to manage the investment and reinvestment of
the assets of the Fund subject to the supervision of the Board of
Directors of the Fund and subject to the terms of this Agreement. The
Adviser shall, at its expense, provide for the use of the Fund, office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Fund and maintaining its organization,
shall pay the salaries and fees of all officers of the Fund and of
directors of the Fund who are "interested persons" of the Adviser as such
term is defined under the Investment Company Act of 1940, and shall pay
for all clerical services relating to research, statistical and investment
work.
2. Allocation of Portfolio Brokerage. The Adviser is
authorized, subject to the supervision of the Board of Directors of the
Fund, to place orders for the purchase and sale of the Fund's portfolio
securities and to negotiate commissions to be paid on such transactions.
The Adviser may, on behalf of the Fund, pay brokerage commissions to a
broker which provides brokerage and research services to the Adviser in
excess of the amount another broker would have charged for effecting the
transaction, provided (i) the Adviser determines in good faith that the
amount is reasonable in relation to the value of the brokerage and
research services provided by the executing broker in terms of the
particular transaction or in terms of the Adviser's overall
responsibilities with respect to the Fund and the accounts as to which the
Adviser exercises investment discretion, (ii) such payment is made in
compliance with Section 28(e) of the Securities Exchange Act of 1934 and
other applicable state and federal laws, and (iii) in the opinion of the
Adviser, the total commissions paid by the Fund will be reasonable in
relation to the benefits to the Fund over the long term.
3. Expenses Borne by Fund. The Fund will pay all its expenses
other than those expressly stated to be payable by the Adviser hereunder,
which expenses payable by the Fund shall include, without limitation,
interest charges, taxes, brokerage commissions and similar expenses,
expenses of issue, sale, repurchase or redemption of shares, expense of
registering or qualifying shares for sale, expenses of printing and
distributing prospectuses to existing shareholders, charges of custodians
(including sums as custodian and for keeping books and similar services to
the Fund), transfer agents (including the printing and mailing of reports
and notices to shareholders), registrars, auditing and legal services,
clerical services related to recordkeeping and shareholder relations,
printing of stock certificates, fees for directors who are not "interested
persons" of Adviser, and other expenses not expressly assumed by Adviser
under Paragraph 1 above, provided, that in the event the expenses and
charges payable by the Fund, except interest charges, taxes, brokerage
commissions and similar fees, in any given fiscal year exceed that
percentage of the average net asset value of the Fund for such year, as
determined by valuations made as of the close of each business day of such
year, which is the most restrictive percentage expenses limitation
provided by the state laws of the various states in which Fund shares are
qualified for sale, or if the states in which the Fund's common stock is
qualified for sale impose no restrictions, then 2.0%. Adviser shall
reimburse the Fund for such excess. Reimbursement of expenses by Adviser
shall be made on a monthly basis and will be paid to the Fund by a
reduction in the Adviser's fee, subject to later adjustment month by month
for the remainder of the Fund's fiscal year.
4. Authority of Adviser. The Adviser shall for all purposes
herein be considered an independent contractor and shall not, unless
expressly authorized and empowered by the Fund, have authority to act for
or represent the Fund in any way, form or manner. Any authority granted
by the Fund to the Adviser shall be in the form of a resolution or
resolutions adopted by the Board of Directors of the Fund.
5. Compensation of Adviser. For the services to be furnished
during any month by the Adviser hereunder, the Fund shall pay the Adviser
as a basic advisory fee as soon as practical after the last day of such
month an amount equal to 1/12th of .7% (.0583%) of the average of the net
asset value of the Fund determined as of the close of business on each
business day throughout the month (hereinafter called "average asset
value").
In case of termination of this Agreement during any month, the
fee for that month shall be reduced proportionately on the basis of the
number of calendar days during which it is in effect and the fee computed
upon the average asset value of the business days during which it is so in
effect.
6. Rights and Powers of Adviser. Adviser's rights and powers
with respect to acting for and on behalf of the Fund, including the rights
and powers of Adviser's officers and directors, shall be as follows:
(a) Directors, officers, agents and stockholders
of the Fund are or may at any time or times be
interested in the Adviser as officers, directors,
agents, shareholders or otherwise. Correspondingly,
directors, officers, agents and stockholders of the
Adviser are or may at any time or times be interested
in the Fund as directors, officers, agents and as
shareholders or otherwise, but nothing herein shall be
deemed to require the Fund to take any action contrary
to its Articles of Incorporation or any applicable
statute or regulation. The Adviser shall, if it so
elects, also have the right to be a shareholder in the
Fund.
(b) Except for an initial investment in Fund
shares not in excess of $100,000, the Adviser shall
not take any long or short positions in the stock of
the Fund and that insofar as it can control the
situation it shall prevent any and all of its
officers, directors, agents or stockholders from
taking any long or short position in the stock of the
Fund. This prohibition shall not in any way be
considered to prevent the Adviser or any officer,
director, agent or stockholder of the Adviser from
purchasing and owning stock of the Fund for investment
purposes. The Adviser shall notify the Fund of any
sales of shares of the Fund made by the Adviser within
two months after purchase by the Adviser of shares of
the Fund.
(c) The services of the Adviser to the Fund are
not to be deemed exclusive and Adviser shall be free
to render similar services to others as long as its
services for others does not in any way hinder,
preclude or prevent the Adviser from performing its
duties and obligations under this Agreement. In the
absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or
duties 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 hereunder or for any losses that
may be sustained in the purchase, holding or sale of
any security.
7. Termination of Agreement. The following shall apply with
respect to the termination of this Agreement.
(a) This Agreement shall continue in force and
effect until the first meeting of shareholders of the
Fund following the effective date of its Registration
Statement on Form N-1A covering the initial offering
of shares of the Fund, at which time it shall be
submitted for approval to the shareholders of the
Fund, and subject thereafter to being continued in
force and effect from year to year if specifically
approved each year by the Board of Directors of the
Fund or by the affirmative vote of a majority of the
Fund's outstanding voting securities. In addition to
the foregoing, each renewal of this Agreement must be
approved by the vote of a majority of the Fund's
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. Prior to voting on the renewal of this
Agreement, the Board of Directors of the Fund shall
request and evaluate, and the Adviser shall furnish,
such information as may reasonably be necessary to
enable the Fund's Board of Directors to evaluate the
terms of this Agreement.
(b) Notwithstanding whatever may be provided
herein to the contrary, this Agreement may be
terminated at any time, without payment of any
penalty, by vote of a majority of the Board of
Directors of the Fund, or by vote of a majority of the
outstanding voting securities of the Fund, or by the
Adviser, in each case, upon sixty (60) days' written
notice to the other party and shall terminate
automatically in the event of its assignment.
8. Amendment. This Agreement may be amended by mutual consent
of the parties, provided that the terms of each such amendment shall be
approved by the Board of Directors or by a vote of a majority of the then
outstanding voting securities of the Fund. If such amendment is proposed
in order to comply with the recommendations or requirements of the
Securities and Exchange Commission or state regulatory bodies or other
governmental authority, or to obtain any advantage under state or federal
laws, the Fund shall notify the Adviser of the form of amendment which it
deems necessary or advisable and the reasons therefor, and if the Adviser
declines to assent to such amendment, the Fund may terminate this
Agreement forthwith.
9. Notice. Any notice that is required to be given by the
parties to each other under the terms of this Agreement shall be in
writing, addressed and delivered, or mailed postpaid to the other party at
the principal place of business of such party.
10. Assignment. This Agreement shall neither be assignable nor
subject to pledge or hypothecation and in the event of assignment, pledge
or hypothecation shall automatically terminate. For purposes of
determining whether an "assignment" has occurred, the definition of
"assignment" in Section 2(a)(4) of the Investment Company Act of 1940
shall control.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
XXXXXXX CAPITAL GROWTH FUND, INC.
By:___________________________
President
[CORPORATE SEAL] Attest:_______________________
Secretary
XXXXXXX INVESTMENTS, INC.
By:___________________________
President
[CORPORATE SEAL] Attest:_______________________
Secretary
