CORNERCAP EMERGING GROWTH FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 27 day of July 2000, between the CornerCap Emerging
Growth Fund (the "Fund"), through the CornerCap Group of Funds, a Massachusetts
business trust, and CornerCap Investment Counsel, Inc. (the "Advisor").
In consideration of the mutual promises and agreements contained in
this Agreement and other valuable consideration, Fund and Advisor agree to the
following:
1. IN GENERAL
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The Advisor agrees to act as investment advisor to the Fund with
respect to the investment of its assets and to supervise, manage, and arrange
the purchase and sale of securities held in the Fund's portfolio and generally
administer the Fund's assets.
2. DUTIES AND OBLIGATION OF THE ADVISOR WITH RESPECT TO MANAGEMENT OF THE
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FUND
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(a) Subject to the provisions of this Agreement and 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) 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 Investment Company Act of 1940 (the "Act") and the rules and regulations
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 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 is based upon its own
investigation and research or upon investigation and research made by any other
individual, firm or corporation - selected in good faith. Nothing contained
herein 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
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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 for products or
services which provide lawful and appropriate assistance to the Advisor's
decision-making process; 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 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.
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4. ALLOCATION OF EXPENSES
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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
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(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 1.4%
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
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(a) This Agreement shall go into effect on the date set forth above and
shall, unless terminated as hereinafter provided, continue in effect until July
27, 2002, 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
defined in the Act).
7. AGREEMENT BINDING ONLY ON FUND PROPERTY
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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 EMERGING
GROWTH FUND
By: /s/ Xxxxxx Xxxxx
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Attest: /s/ Xxxx Xxxxx Xxxxxxx
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CORNERCAP INVESTMENT
COUNSEL, INC.
By: /s/ Xxxxxx Xxxxx
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Attest: /s/ Xxxx Xxxxx Xxxxxxx
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