INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this 2nd day of November, 2005 between Kobren Insight
Funds, a Massachusetts business trust (the "Trust"), on behalf of its series
(each, a "Fund" and collectively, the "Funds"), and Kobren Insight Management,
Inc. (the "Adviser"), registered as an investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act").
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services to the Funds in the management of each Fund's assets, and the
Adviser is willing to furnish such services for the Trust on the terms
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints the Adviser to act as investment
adviser to each Fund for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided. In the event
that the Trust establishes one or more series other than the Funds with respect
to which it desires to retain the Adviser to act as investment adviser
hereunder, it shall notify the Adviser in writing. If the Adviser is willing to
render such services under this Agreement it shall notify the Trust in writing
whereupon such series shall become a Fund hereunder and shall be subject to the
provisions of this Agreement except to the extent that said provisions
(including those relating to the compensation payable by the Fund to the
Adviser) are modified with respect to such Fund in writing by the Trust and the
Adviser at the time.
2. DELIVERY OF DOCUMENTS. The Trust has furnished the Adviser with copies,
properly certified or authenticated, of each of the following:
(a) The Trust's Declaration of Trust as filed with the Secretary of
the Commonwealth of Massachusetts on September 13, 1996 (such Declaration
of Trust, as presently in effect and as it shall from time to time be
amended, is herein called the "Declaration of Trust");
(b) The Trust's By-Laws (such By-Laws, as presently in effect and as
they shall from time to time be amended, are herein called the "By-Laws");
(c) Votes of the Trust's Board of Trustees authorizing the
appointment of the Adviser and approving this Agreement;
(d) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933 (the "1933 Act"), and under the 1940 Act, relating
to shares of beneficial interest of the Trust (herein called the "Shares")
as filed with the Securities and Exchange Commission (the "SEC") and all
amendments thereto; and
(e) The most recent prospectus of the Trust relating to the Funds
(such prospectus together with the related Statement of Additional
Information, as presently in effect and all amendments and supplements
thereto, are herein called the "Prospectus").
The Trust will furnish the Adviser from time to time with copies of all
amendments of or supplements to the foregoing, if any.
3. MANAGEMENT. Subject to the supervision of the Trust's Board of
Trustees, the Adviser will provide a continuous investment program for each
Fund's assets entrusted to it for portfolio management purposes, including
investment research and management with respect to all securities, investments,
cash and cash equivalents in the Funds. The Adviser will determine from time to
time what securities and other investments will be purchased, retained or sold
with respect to the Funds and will place the daily purchase or sale orders. The
Adviser will provide the services rendered by it under this Agreement in
accordance with each Fund's investment objective, policies and restrictions as
stated in the Prospectus and votes of the Trust's Board of Trustees. The Adviser
agrees that it will supply the Trust and its Board of Trustees with reports and
statistical data as requested with respect to the securities that each Fund may
hold or contemplate purchasing.
4. OTHER COVENANTS. The Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of the SEC
and will, in addition, conduct its activities under this Agreement in
accordance with regulations of any other Federal and State agencies which
may now or in the future have jurisdiction over its activities under this
Agreement;
(b) will use its best efforts to seek the best overall terms
available in executing transactions for the Funds and soliciting brokers
or dealers. In assessing the best overall terms available for any
transaction, the Adviser shall consider all factors that it deems
relevant, including, but not limited to, the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in selecting
the brokers or dealers to execute a particular transaction, the Adviser
may consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended) provided to the Funds and/or other accounts over which the
Adviser or an affiliate of the Adviser exercises investment discretion.
The Adviser is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for a Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if, but only if, the Adviser determines in good faith that such commission
is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or in terms of all of the accounts over which the
Adviser or any affiliate of the Adviser exercises investment discretion;
(c) will provide certain executive personnel for the Trust as may be
mutually agreed upon from time to time with the Board of Trustees, the
salaries and expenses of such personnel to be borne by the Adviser unless
otherwise mutually agreed upon;
(d) will, at its own expense, maintain such staff and employ or
retain such personnel and consult with such other persons as may be
necessary to render the services required to be provided by the Adviser or
furnished to the Trust under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall
be deemed to include persons employed or otherwise retained by the Adviser
to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice and assistance as the
Adviser may desire. The Adviser will also provide such additional
management and administrative services as may be required in connection
with the business affairs and operations of the Trust beyond those
furnished by the Trust's administrator;
(e) will bear the cost of rendering the services to be performed by
it under this Agreement, and shall provide the Trust with such office
space, facilities, equipment, clerical help, and other personnel and
services as the Trust shall reasonably require in the conduct of its
business.
5. SERVICES NOT EXCLUSIVE. The advisory services furnished by the Adviser
hereunder are not to be deemed exclusive, and the Adviser shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. To the extent that the purchase or sale of securities
or other investments of the same issuer may be deemed by the Adviser to be
suitable for two or more accounts managed by the Adviser, the available
securities or investments may be allocated in a manner believed by the Adviser
to be equitable to each account. The Trust recognizes that in some cases this
procedure may adversely affect the price paid or received by a Fund or the size
of the position obtainable for or disposed of by that Fund.
6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the benefit of the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the Trust's
request. The Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by it
pursuant to Rule 31a-1 under the 1940 Act that are not maintained by others on
behalf of the Trust.
7. EXPENSES. During the term of this Agreement, the Adviser will pay all
expenses incurred by it in connection with its investment advisory services
under this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction charges, if
any) purchased or sold for a Fund. Each Fund will bear certain other expenses
incurred in its operation, including: organizational expenses; taxes, interest,
brokerage costs and commissions; fees of Trustees of the Trust who are not
officers, directors, or employees of the Adviser, the distributor or
administrator or any of their affiliates; Securities and Exchange Commission
fees; state Blue Sky qualification fees; charges of the administrator, the
custodian, any subcustodians, and transfer and dividend-paying agents; insurance
premiums; auditing, pricing and legal expenses; costs of maintenance of the
Trust's existence; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings of the
shareholders of the Funds and of the officers or Board of Trustees of the Trust;
membership fees in trade associations; litigation, indemnification and other
extraordinary or non-recurring expenses.
8. COMPENSATION. For the services provided by the Adviser pursuant to this
Agreement, the Trust will pay the Adviser and the Adviser will accept as full
compensation an
investment advisory fee, based upon the average daily net assets of each Fund,
accrued daily and paid monthly as soon as practicable after the end of each
month, at the annual rate set forth below. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. The
Adviser may, from time to time, waive certain amounts payable hereunder or
reimburse Fund expenses for such period or periods as the Adviser deems to be
advisable.
Kobren Growth Fund 0.75%
Delphi Value Fund 1.00%
The fees payable by a Fund to the Adviser under this Agreement shall be
paid into an interest-bearing escrow account at a bank or with the Funds'
custodian in the event that the holdings of a "majority of the outstanding
voting securities" (as defined in the 0000 Xxx) of such Fund have not voted to
approve this Agreement ("Fund Shareholder Approval") by the date of the closing
of the acquisition of the Adviser by E*TRADE FINANCIAL Corporation (the
"Acquisition"). If Fund Shareholder Approval has subsequently been obtained by
the date that is 150 days after the closing of the Acquisition, the fees paid by
such Fund held in the escrow account (and interest thereon) shall be paid to the
Adviser. If Fund Shareholder Approval has not been obtained by such date, this
Agreement shall terminate and the fees paid by the relevant Fund into the escrow
account (and interest thereon) shall be paid to such Fund; provided, however,
that the Adviser shall be entitled to be paid out of the escrow account the
lesser of (i) any costs incurred in performing its services during the period
from and after the date of the closing of the Acquisition through the date that
is 150 days after the closing of the Acquisition and (ii) the total amount in
the escrow account (plus interest earned).
9. REIMBURSEMENT OF THE FUND. If in any fiscal year the aggregate expenses
of a Fund (as defined under the securities regulations of any state having
jurisdiction over the merits of the offering of Fund Shares) exceed the expense
limitation of any such state, the Adviser will reimburse that Fund for such
excess expenses. The obligation of the Adviser to reimburse a Fund hereunder is
limited in any fiscal year to the amount of its fee hereunder for such fiscal
year, provided, however, that notwithstanding the foregoing, the Adviser shall
reimburse that Fund for such excess expenses regardless of the amount of fees
paid to it during such fiscal year to the extent that the securities regulations
of any state having jurisdiction over the over the merits of the offering of
Fund Shares so requires. Such expense reimbursement, if any, will be estimated,
reconciled and paid on a monthly basis.
10. CORPORATE NAME. The Trust acknowledges that it uses the name "KOBREN"
in connection with the Funds and the Trust by consent of the Adviser, which
consent was given in reliance upon the provisions hereafter contained. The Trust
agrees that if the Adviser should cease to be the investment adviser of the
Funds, the Trust will, upon written demand of the Adviser, forthwith delete from
the Funds' name and from the Trust's name the word "KOBREN" or any approximation
thereof. The Trust further agrees that the Adviser may permit other persons,
partnerships (general or limited), associations, trusts, corporations or other
incorporated or unincorporated groups of persons, including without limitation
any investment company or companies of any type which may be initially sponsored
or organized by the Adviser in the future, to use the word "KOBREN" or any
approximation thereof as part of their names. As used in this section, "KOBREN"
and "Kobren Insight Management, Inc." and "Adviser" shall include any successor
corporation, partnership, limited partnership, trust or person.
11. LIMITATION OF LIABILITY. The Adviser shall not be liable for any error
of judgment, mistake of law or for any other loss whatsoever suffered by the
Trust in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Adviser in the performance of its
duties or from reckless disregard by it of its obligation and duties under this
Agreement. The Trust and the Adviser agree that the obligations of the Trust
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Trust, individually, but are binding only upon the assets and
property of the Trust, as provided in the Declaration of Trust. No Fund shall be
liable for the obligations incurred by any other Fund hereunder. The execution
and delivery of this Agreement have been authorized by the Board of Trustees and
a majority of the holders of each Fund's outstanding voting securities, and
signed by an authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
assets and property of the Trust as provided in the Declaration of Trust.
12. DURATION AND TERMINATION. This Agreement shall become effective with
respect to a Fund as of the closing date of the Acquisition and, unless sooner
terminated as provided herein, shall continue in effect until the second
anniversary of the effective date of this Agreement; PROVIDED, HOWEVER, that if
Fund Shareholder Approval with respect to a Fund has not been obtained prior to
the 150th day after the closing of the Acquisition, this Agreement shall
terminate with respect to that Fund on the 150th day after the closing of the
Acquisition. Thereafter, this Agreement shall be renewable as to any Fund for
successive periods of one year each, provided such continuance is specifically
approved annually:
(a) by the vote of a majority of those members of the Trust's Board
of Trustees who are not interested persons of any such party (as that term
is defined in the 1940 Act), cast in person at a meeting called for the
purpose of voting on such approval; and
(b) by the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Fund; PROVIDED, HOWEVER, that if the
holders of any one Fund fail to approve the Agreement, the Adviser may
continue to act as investment manager of the Fund(s) which did approve the
Agreement, and may continue to act as investment manager for the Fund
which did not approve the Agreement until new arrangements are made by
such Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to a
Fund at any time, without the payment of any penalty, by the Trust (by vote of
the Trust's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund), or by the Adviser, in each case, on sixty days' prior
written notice. This Agreement will immediately terminate in the event of its
assignment; PROVIDED, HOWEVER, that if Fund Shareholder Approval with respect to
a Fund has not been obtained prior to the closing of the Acquisition, this
Agreement may be terminated with respect to that Fund by any of the foregoing
persons in the manner so provided on ten days' prior written notice. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meanings as such terms
have in the 1940 Act.)
13. AMENDMENT OF AGREEMENT. This Agreement may be amended as to any Fund
by mutual written consent, but the consent of the Trust must be approved (a) by
vote of a majority of those members of the Board of Trustees of the Trust 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 amendment, and
(b) if required by the 1940 Act, by vote of a majority of the outstanding voting
securities of that Fund. However, the provisions of this Section 13 shall not
restrict or limit the Adviser's ability to waive its fees or reimburse any
Fund's expenses in accordance with Section 8 of this Agreement.
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and shall be
governed by the laws of the Commonwealth of Massachusetts. This Agreement may be
executed in one or more counterparts, all of which taken together shall be
deemed one original.
ATTEST: KOBREN INSIGHT FUNDS
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxx Xxxxx
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Name: Xxxxx X. Xxxxxxx Name: Xxxx Xxxxx
Title: Chief Compliance Officer Title: V.P., Secretary
ATTEST: KOBREN INSIGHT MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxx
----------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxx X. Xxxxxx
Title: Chief Compliance Officer Title: President
