INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , 1996, by and between
PRAGMA INVESTMENT TRUST (the "Trust"), an unincorporated business
trust organized under the laws of the State of Ohio, and PRAGMA, INC.
(the "Adviser"), a corporation organized under the laws of the State
of Texas.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end
management investment company and is so registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust currently consists of one series portfolio,
the PRAGMA Providence Fund (the "Fund"), and the Trustees have the power
to create additional series;
WHEREAS, the Adviser is engaged in the business of rendering
investment advisory and management services and is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended; and
WHEREAS, the Trust desires to retain the Adviser to furnish
investment advisory services to the Trust and the Fund and the Adviser
is willing to furnish such services to the Trust and the Fund;
NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:
1. Appointment of Adviser. The Trust hereby appoints the
Adviser to act as investment manager of the Fund for the period and on
the terms herein set forth. The Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation
herein provided.
2. Investment Advisory Services. The Adviser shall supervise
the investments of the Fund. In such capacity, the Adviser shall
maintain a continuous investment program for the Fund, determine what
securities shall be purchased or sold by the fund, secure and evaluate
such information as it deems proper and take whatever action is
necessary or convenient to perform its functions, including the
placing of purchase and sale orders.
The Adviser shall also provide or arrange for and supervise the
provision by third parties to the Fund of custody, transfer agency,
administrative, accounting, legal, audit and similar services.
In executing portfolio transactions and selecting brokers or
dealers, the Adviser will use its best efforts to seek on behalf of
the Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Adviser shall
consider all factors it deems relevant, including the breadth of the
market in the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any (for the specific transaction and on a continuing
basis). In evaluating the best overall terms available and in
selecting the broker or dealer to execute a particular transaction,
the Adviser may also 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 by such broker or dealer to the Fund
or other accounts over which the Adviser or any affiliate of the
Adviser exercised investment discretion. The Adviser may cause the
Fund to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction
for the 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.
3. Compliance with Laws. All functions undertaken by the
Adviser hereunder shall at all times conform to, and be in accordance
with, any requirements imposed by: (1) the 1940 Act, and any rules and
regulations promulgated thereunder; (2) any other applicable
provisions of law; (3) the Declaration of Trust of the Trust as
amended from time to time; (4) the Bylaws of the Trust as amended from
time to time; and (5) the registration statements of the Trust as
amended from time to time, filed under the Securities Act of 1933, as
amended and the 1940 Act.
4. Board Supervision. All of the functions undertaken by the
Adviser hereunder shall at all times be subject to the direction of
the Board of Trustees of the Trust, or any committee thereof or
officers of the Trust acting under the authority of the Board of
Trustees.
5. Payment of Expenses. The Adviser will pay all of the
expenses of the Fund (including the fees and charges of third-party
service providers engaged pursuant to paragraph (2) above) except the
following: interest; taxes; brokerage commissions; extraordinary
expenses; and the fees and expenses, including ordinary counsel fees,
of those Trustees who are not "interested persons" as defined in the
1940 Act (hereinafter referred to as the "Independent Trustees"). The
Adviser will provide the Trust with such facilities and personnel as
may, from time to time, be required to carry on the business of the
Fund including but not limited to office space, office furniture,
fixtures and equipment, office supplies, computer hardware and
software and salaried and hourly paid personnel. The Adviser may at
its expense employ others to provide all or any part of such
facilities and personnel.
6. Account Fees. The Trust, by resolution of the Board of
Trustees, including a majority of the Independent Trustees, may from
time to time authorize the imposition of a fee as a direct charge
against shareholder accounts of the Fund, such fee to be retained by
the Trust or to be paid to the Adviser to defray expenses which would
otherwise be paid by the Adviser in accordance with the provisions of
paragraph 5 of this Agreement. At least sixty (60) days' prior
written notice of the intent to impose such fee must be given to the
shareholders of the Fund.
7. Compensation of Adviser. (a) As full compensation for the
services and such facilities as may from time to time be furnished by
the Adviser under this Agreement, the Fund agrees to pay to the
Adviser a fee at the annual rate of 1.50% of the Fund's average daily
net asset value less the accrued fees and expenses, including ordinary
counsel fees, of the Independent Trustees of the Trust. Such fee
shall be accrued daily and payable monthly. For purposes of
calculating such fee, such net asset value shall be determined by
taking the average of all determinations of net asset value made in
the manner provided in the Fund's current Prospectus and Statement of
Additional Information.
(b) For any period less than a full month during which this
Agreement is in effect the compensation payable to the Adviser
hereunder shall be prorated according to the proportion which such
period bears to a full month.
(c) The Adviser agrees that if total expenses of the Fund for
any fiscal year exceed the permissible limits applicable to the Fund
in any state in which the Fund's shares are then qualified for sale,
the compensation due the Adviser for such fiscal year shall be reduced
by the amount of such excess by a reduction or refund thereof at the
time such compensation is payable after the end of each calendar month
during such fiscal year of the Fund, subject to readjustment during
the Fund's fiscal year.
8. Limitation of 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 any investment policy or the
purchase, sale, or retention of any investment on the recommendation
of the Adviser; provided, however, that nothing herein contained shall
be construed to protect the Adviser against any liability to the Fund
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties under this Agreement.
9. Term and Termination. (a) This Agreement shall become
effective on the date hereof. Unless terminated as herein provided,
this Agreement shall remain in full force and effect for two years
from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each
such continuance is approved (i) by either the Trustees of the Trust
or by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of the Fund, and, in either event, (ii) by
vote of a majority of the Trustees of the Trust who are not parties to
this Agreement or interested persons (as defined in the 0000 Xxx) of
any such party, cast in person at a meeting called for the purpose of
voting on such approval.
(b) This Agreement may be terminated at any time without the
payment of any penalty by vote of the Trustees of the Trust or by vote
of the holders of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of the Fund or by the Adviser, on sixty days'
written notice to the other party.
(c) This Agreement shall automatically and immediately terminate
in the event of its assignment (as defined in the 1940 Act).
PAGE
10. Limitation of Liability of Trustees and Shareholders. A
copy of the Declaration of Trust of the Trust is on file with the
Secretary of State of the State of Ohio and notice is hereby given
that this Agreement is executed on behalf of the Trustees of the Trust
as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or holders of shares of
the Trust individually but are binding only upon the assets and
property of the Trust.
11. Use of Name. The name "PRAGMA" is a property right of the
Adviser and may be used by the Adviser in other connections and for
other purposes, including in the name of other investment companies.
The Fund will discontinue any use of the name "PRAGMA" if the Adviser
ceases to be employed as the Fund's investment manager.
IN WITNESS WHEREOF the parties hereto have caused this Agreement
to be duly executed as of the date first written above.
PRAGMA INVESTMENT TRUST
ATTEST:
____________________
By:___________________________
President
PRAGMA, INC.
ATTEST:
____________________
By:___________________________
President
