EXHIBIT (d)
Investment Advisory Agreement
INVESTMENT ADVISORY AGREEMENT, made this 31st day of May, 1991, by and between
TAX FREE FUND OF VERMONT, INC., a corporation organized and existing under
the laws of the State of Vermont (hereinafter called the "Fund"), and
Vermont Fund Advisors, Inc., a corporation organized and existing under the
laws of the State of Vermont (hereinafter called the "Advisor").
WITNESSETH:
WHEREAS, the Fund is engaged in the business as an open-end management
investment company and is registered as such under the federal Investment
Company Act of 1940; and
WHEREAS, the Advisor is engaged in the business of rendering investment
supervisory services with respect to municipal securities and is registered
as an investment advisor under the federal Investment Advisers Act of 1940;
and
WHEREAS, the Fund desires to retain the Advisor to render investment supervisory
services and provide office space and facilities and corporate
administration to the Fund, in the manner and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the
parties hereto agree
as follows:
I. The Advisor shall act as investment advisor and render investment
supervisory services to the Fund and shall provide the Fund with office
space and facilities and corporate administration, subject to and upon the
terms and conditions set forth in this agreement.
2. The Advisor shall obtain and evaluate such information relating to the
economy, industries, businesses, municipal issuers, securities markets and
securities as it may deem necessary or useful in the discharge of its
obligations hereunder; shall formulate a continuing program for the
management of the assets and resources of the Fund in a manner consistent
with its investment objectives; shall determine the securities to be
purchased and sold by the Fund, and the portion of its assets to be held in
cash or cash equivalents, in order to carry out such program; and generally
shall take such other steps, including the placing of orders for the
purchase or sale of securities on behalf of the Fund, as the Advisor may
deem necessary or appropriate for the implementation of such program. The
Advisor shall also furnish to or place at the disposal of the
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Fund such of the information, reports, evaluations, analyses, and opinions
formulated or obtained by the Advisor in the discharge of its duties
hereunder as the Fund may, at any time or from time to time, reasonably
request or as the Advisor may deem helpful to the Fund. In discharging this
responsibility, the Advisor shall adhere specifically to the fundamental
investment objectives and to the investment restrictions contained in the
Bylaws of the Fund and the Registration Statement dated May 31, 1991, as
amended from time to time, which the Fund has filed with the Securities and
Exchange Commission. Such Bylaws and Registration Statement are attached to
this Agreement as Appendices A and B, respectively, and are hereby made a
part of this Agreement.
3.(a) The Advisor shall:
(i) Pay or provide for and furnish to the Fund such office space equipment,
facilities, personnel and services (exclusive of and in addition to those
provided by any custodian, transfer agent or other institutional agent
retained by the Fund) as the Fund may reasonably require in the conduct of
its business;
(ii) Maintain and preserve on behalf of the Fund, for such periods and in
such forms as are prescribed by rules and regulations of the Securities and
Exchange Commission (the "Commission"), all of the accounts, books and
other documents the Fund is required to maintain and preserve pursuant to
Section 31(a) of the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder which are not maintained and
preserved on the Fund's behalf by any custodian, transfer agent or other
institutional agent retained by the Fund;
(iii) Furnish the services and pay or provide for the compensation and
expenses of individuals competent (A) to perform for the Fund all executive
and administrative functions that are not assigned to any custodian,
transfer agent or other institutional agent retained by the Fund, and (B)
to supervise and coordinate the activities of such institutional agents and
the other agents (e.g., independent accountants and legal counsel) retained
by the Fund; and
(iv) Permit officers or employees of the Advisor who are duly elected or
appointed as officers, directors or members of any advisory board or
committee of the Fund to serve as such without remuneration from or other
cost to the Fund.
(b) The advisor shall pay all sales and promotional expenses incurred
in the distribution of shares of the Fund. The expenses to be assumed
and paid by the Advisor include the costs of:
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(i) Media and direct mail advertising;
(ii) Printing copies of the Fund's prospectus and shareholder reports which
are used in its sales or promotional efforts; it being understood that the
Fund will bear printing costs related to copies of its prospectus and
reports which are distributed to its shareholders;
(iii)Printing share purchase order forms to accompany the Fund's
prospectus, and
(iv) Corresponding and dealing with prospective investors, up to and
including receipt of their orders for the purchase of Fund shares.
(c) The Fund shall bear all expenses of its operation not specifically
assumed by the Advisor as hereinabove set forth or as provided
elsewhere in this Agreement. The Advisor, in its sole discretion, may
at any time or from time to time pay or assume any expense that the
Fund would or might otherwise be required to bear. However, the
Advisor's payment or assumption of any such expenses on one or more
occasions shall neither relieve the Advisor of any obligation to the
Fund pursuant to paragraph 6(b) hereof nor obligate the Advisor to pay
or assume the same or any similar expense of the Fund on any
subsequent occasion.
4. The Advisor may employ, retain or otherwise avail itself of the services or
facilities of other persons or organizations for the purpose of providing
the Advisor or the Fund with such statistical and other factual
information, such advice regarding economic factors and trends, such advice
as to occasional transactions in specific securities or such other
information, advice or assistance as the Advisor may deem necessary,
appropriate or convenient for the discharge of its obligations hereunder or
for the discharge of Advisor's overall responsibilities with respect to the
other accounts which it serves as investment advisor. The Advisor and any
individual performing executive or administrative functions for the Fund
whose services were made available to it by the Advisor are specifically
authorized to allocate brokerage and principal business to firms that
provide such services or facilities and to cause the Fund to pay a member
of a securities exchange, or any other securities broker or dealer, an
amount of commission for effecting a securities transaction in excess of
the amount of commission another member of an exchange or another broker or
dealer would have charged for effecting that transaction, if the Advisor or
the individual allocating such brokerage determines in good faith that such
amount of commission is reasonable in relation to the value of the
brokerage and research services (as such services are defined in Section
28(e) of the Securities Exchange Act of 1934) provided by such member,
broker or dealer, viewed in terms of either that particular transaction or
the overall responsibilities of the Advisor with respect to the accounts as
to which the Advisor exercises investment discretion (as such term is
defined in Section 3(a)(35) of the Securities Exchange Act of 1934).
5. All accounts, books and other documents maintained and preserved by the
Advisor on behalf of the Fund pursuant to paragraph 3(a)(i) hereof are the
property of the Fund and shall be surrendered by the Advisor promptly on
request by the Fund. The Fund shall furnish or otherwise make available to
the Advisor such financial reports, proxy statements and other information
relating to the business and affairs of the Fund as the Advisor may, at any
time or from time to time, reasonably require in order to discharge its
obligations under this Agreement.
6. As full compensation for all services rendered, facilities furnished and
expenses paid or assumed hereunder by Advisor, the Fund shall pay the
Advisor a fee at the annual rate of seven-tenths of one percent (7/10 of
1%) of the average daily net asset value of the Fund for average daily nest
assets of up to $10 million and at the annual rate of six-tenths of one
percent (6/10 of 1%) of the average daily net asset value of the Fund for
average daily nest assets in excess of $10 million, as determined in
accordance with its Bylaws. The amounts due the Advisor in payment of such
fees shall be accrued daily by the Fund on the basis of the net asset value
of the Fund applicable to the close of each business day, and, in the case
of any day which is not a business day, the net asset value of the Fund
applicable to the close of the last preceding business day; and the total
amount thus accrued with respect to each calendar month or portion thereof
during which this agreement remains in effect shall become due and payable
to the Advisor as accrued during such calendar month. The term "business
day" means a day for all or part of which the New York Stock Exchange is
open for unrestricted trading.
7. The Advisor agrees that neither it nor any of its officers or directors
shall take any long or short position in the shares of the Fund; but this
prohibition shall not prevent the purchase by or for the Advisor or any of
its officers or directors of shares of the Fund at the price at which such
shares are available to the public at the moment of purchase.
8. Nothing herein contained shall be deemed to require the Fund to take any
action to its Articles of Association or Bylaws, or any applicable
statutory or regulatory requirement to which it is subject or by which it
is bound, or to relieve or deprive the Board of Directors of the Fund of
its responsibility for and control of the conduct of the Fund.
9. The term of this Agreement shall begin on May 1, 1991, and, unless sooner
terminated as provided in paragraph 10 hereof, this Agreement shall remain
in effect through the close of business on April 30, 1993, and thereafter
subject to the termination provisions and other terms and conditions
hereof; if:
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(a) such continuation shall be specifically approved at least annually by
the Board of Directors, or by vote of a majority of the outstanding voting
securities of each class and series within each class of the Fund, and
concurrently with such approval by the Board of Directors or prior to such
approval by the holders of the outstanding voting securities of the Fund,
as the case may be, by the vote, cast in person at a meeting called for the
purpose of voting on such approval , of a majority of the Directors of the
Fund who are not parties to this Agreement or interested persons of any
such party; and (b) the Advisor shall have not notified the Fund, in
writing, at least sixty (60) days prior to April 30 of each year after 1993
that it does not desire such continuation. The Advisor shall furnish to the
Fund, promptly upon its request such information in the possession of or
readily available to the Advisor as the Directors of the Fund may at any
time or from time to time deem reasonably necessary to evaluate the terms
of this Agreement or any extension, renewal or amendment hereof.
10. This Agreement may not be amended, transferred, assigned, sold or in any
manner hypothecated or pledged, without the affirmative vote of a majority
of the outstanding voting securities of each class and series within each
class of the Fund, and this Agreement shall automatically and immediately
terminate in the event of its assignment.
11. This Agreement may be terminated by either party hereto, without the
payment of any penalty, upon sixty (60) days notice in writing to the other
party; provided, that in the case of termination by the Fund, such action
shall have been authorized by resolution of the Board of Directors or by
vote of a majority of the outstanding voting securities of each class and
series within each class of the Fund and further Provided, that in the case
of termination by the Advisor, a majority of the Board of Directors -of the
Fund who are not also Directors, Officers or employees of the Advisor shall
have voted to waive the right of the Fund, granted hereby, to require the
Advisor to provide six months, notice of intent to terminate. In the
absence of such a vote by the Fund, the Advisor shall be required to give
six months' written notice of intent to terminate.
12.Neither the Advisor, any affiliated person of the Advisor, nor any other
person performing executive or administrative functions for the Fund whose
services were made available to the Fund by the Advisor shall be liable to
the Fund for any error of judgement or mistake of law or for any loss
suffered by the Fund by reason of any action taken or omission to act
committed in connection with the matters to which this Agreement relates,
except that nothing herein contained shall be construed (i) to protect the
Advisor or any affiliated person of the Advisor (whether or not such
affiliated person is or was an officer, director or member of any advisory
board of the Fund)
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against any liability to the Fund or its security holders for any breach of
fiduciary duty with respect to the Advisor's receipt of compensation for
services to the Fund, (ii) to protect the Advisor or any affiliated person
of the Advisor who is or was an officer, director or member of any advisory
board of the Fund against any liability to the Fund or its security holders
for any act or practice (other than the Advisor's receipt of compensation
for services to the Fund) constituting a breach of fiduciary duty involving
personal misconduct in respect of the Fund, (iii) to protect the Advisor
against any liability to the Fund or its security holders to which the
Advisor would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office with the Fund. In the event that any affiliated
person of the Advisor shall become a director, officer or employee of the
Fund, then all actions taken or omissions to act made by such person in
connection with the discharge of his duties to the Fund shall be deemed to
have been taken or made by such person solely in his capacity as director,
officer or employee of the Fund, notwithstanding the fact that the services
of such person are being or have been furnished by the Advisor to the Fund
as provided in this Agreement or that the compensation and expenses of such
person are being or have been paid by the Advisor or any other affiliated
person of the Advisor.
13. Nothing herein contained shall limit the freedom of the Advisor or any
affiliated person of the Advisor to render investment supervisory services
and provide corporate administration to other investment companies, to act
as investment advisor or investment counsellor to other persons,, firms or
corporations or to engage in other business activities; but so long as this
Agreement or any extension, renewal or amendment hereof shall remain in
effect and until the Advisor shall otherwise consent, the Advisor shall be
the only investment advisor to the Fund.
14. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the Investment Company Act of 1940 shall be resolved by
reference to such term or provision of that Act and to interpretations
thereof, if any, by the United States courts, or in the absence of any
controlling decision of any such court, by rules, regulations or orders of
the Commission validly issued pursuant to said Act. Specifically, the terms
"vote of a majority of the outstanding voting securities", "interested
person", "assignment", and "affiliated person", as used in paragraphs
9,10,11,12 and 13 hereof, shall have the meanings assigned to them by
Section 2(a) of the Investment Company Act of 1940, as amended. In
addition, where the effect of a requirement of the Investment Company Act
of 1940, as amended, reflected in any provision of this Agreement is
relaxed by a rule, regulation or order of the Commission, whether of
special or of general application,, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
TAX FREE FUND OF VERMONT, INC.
By /s/Xxxx X. Xxxxxxx
President
Attest /s/Xxxxxxxxxx Xxxxx
VERMONT FUND ADVISORS, INC.
/s/Xxxx X. Xxxxxxx
President
Attest /s/Xxxxxxxxxx Xxxxx
