EXHIBIT 5(c) INVESTMENT ADVISORY AGREEMENT FOR SMALL-CAP VALUE FUND
INVESTMENT ADVISOR AGREEMENT
AGREEMENT, made this 19th day of October, 1998, between Quaker Investment
Trust (the "Trust") and Xxxxxxx + Partners., a Pennsylvania partnership (the
"Adviser"), registered as an investment adviser under the Investment Advisers
Act of 1940, as amended (the "Act").
BACKGROUND
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services to the Quaker Small-Cap Value Fund (the "Fund") series of the
Trust pursuant to the terms and conditions of this Agreement, and the Adviser is
willing to so furnish such services;
NOW THEREFORE, in consideration of the foregoing and the agreements and
covenants herein contained, the parties hereto, intending to be legally bound,
agree as follows:
1. Appointment
The Trust hereby appoints the Adviser to act as Investment Adviser to the
Quaker Core Equity Fund (the "Fund") for the periods and on the terms set forth
in this Agreement. The Adviser accepts the appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
2. Delivery of Documents
The Trust has furnished the Investment Adviser with copies properly
certified or authenticated copies of each of the following:
f. The Trust's Declaration of Trust, as filed with the Commonwealth of
Massachusetts (such Declaration, as presently in effect and as it
shall from time to time be amended, is herein called the
"Declaration");
g. The Trust's By-Laws (such By-Laws, as presently in effect and as they
may be from time to time amended, are herein called the "By-Laws")
h. Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Adviser and approving this Agreement;
i. The Trust's Registration Statement on form N-1A promulgated under the
1940 Act and under the Securities Act of 1933, as amended (the "1933
Act"), relating to shares of beneficial interest of the fund (herein
called the "Shares") as filed with the Securities and Exchange
Commission ("SEC") and all amendments thereto;
j. The Fund's Prospectus, Statement of Additional Information (such
Prospectus, together with the 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, properly
certified or authenticated, of all amendments of or supplements to the foregoing
at the same time as such documents are required to be filed with the SEC.
3. Management
Subject to the supervision of the Trust's Board of Trustees, the Adviser will
provide a continuous investment program for the Fund, including investment
research and management with respect to all securities, investments, cash and
cash equivalents in the Fund. The Advisor will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Fund. The Advisor will provide the services under this Agreement in accordance
with the Funds investment objectives, policies and restrictions as such are set
forth in the prospectus from time to time. The Advisor further agrees that it:
(d) Will conform its activities to all applicable rules and Regulations of
the SEC and will, in addition, conduct its activities under this
agreement in accordance with the regulations of any other Federal and
State agencies which may now or in the future have jurisdiction over
its activities under this Agreement.
(e) Will place orders pursuant to its investment determinations for the
Fund either directly with the respective issuers or with any broker or
dealer. In placing orders with brokers or dealers, the Advisor will
attempt to obtain the best net price and the most favorable execution
of its orders. Consistent with this obligation, when the Advisor
believes two or more brokers or dealers are comparable in price and
execution, the Advisor may prefer: (I) brokers and dealers who provide
the Fund with research advice and other services, or who recommend or
sell Trust shares, and (II) brokers who are affiliated with the Fund
or the Advisor; provided, however, that in no instance will portfolio
securities be purchased from or sold to the Advisor in principal
transactions;
(f) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities on
behalf of the fund.
4. Services not Exclusive
The advisory services to be furnished by the Advisor hereunder are not to be
considered exclusive, and the Advisor shall be free to furnish similar services
to others so long as its services under this Agreement are not impaired thereby;
provided, however, that without the written consent of the Trustees of the
Trust, the Advisor will not serve as an investment advisor to any other
investment company having a similar investment objective to that of the fund.
5. Books and Records
In compliance with Rule 31a-3 promulgated under the 1940 Act, that Advisor
hereby agrees that all records which it maintains for the benefit of the Fund
are the property of the Fund and further agrees to surrender promptly to the
Fund any of such records upon the Fund's request. The Advisor further agrees to
preserve for the periods prescribed by Rule 31a-2 promulgated under the 1940
Act. The records required to be maintained by it pursuant to Rule 31a-1
promulgated under the 1940 Act that are not maintained by others on behalf of
the Fund.
6. Expenses
During the term of this Agreement, the Advisor will pay all expenses incurred by
it in connection with its investment advisory services furnished to the Fund
other than the costs of securities and other investments (including brokerage
commissions and other transaction charges) purchased or sold for the Fund. In
addition, in accordance with the plan of Distribution adopted by the Fund under
the provisions of Rule 12b-1 promulgated under the 1940 Act, the Advisor agrees
to pay, from the Advisory fees paid to it hereunder, the amounts set forth in
Exhibit A attached hereto to qualified brokers and dealers who are authorized to
sell Fund shares and receive compensation therefore.
7. Compensation
The trust will pay the Advisor, and the Advisor will accept as full compensation
for its services rendered hereunder, an investment advisory fee, computed at the
end of each month and payable within five (5) business days thereafter, as
follows. Through the end of the period ending September 30, 1998 the fee will
continue to be equal to the annual rate of 0.75% of the average daily net assets
of the Fund. Beginning October 1, 1998 and continuing for one year thereafter,
the fee will rise to the annual rate of 0.90% of the average daily net assets of
the Fund. The Advisor hereby acknowledges that the expense ratio for the Fund
will be capped at 1.50% of the average daily net assets of the Fund for the year
following October 1, 1998 and hereby agrees to waive its fees to the extent
necessary to achieve such expense ratio, on a basis that is pro rata to the fees
charged by other providers of services to the Fund.
From October 1, 1999 forward, a performance fee concept will be implemented.
This will provide for an investment advisory fee (Base Fee) at an annual rate of
0.90% of the daily net assets of the Fund to be computed and paid quarterly when
the cumulative investment results for the Fund over the prior twelve (12) months
exceed the return for the Xxxxxxx 2000 Index for the same period by 3.0%. this
comparison will be repeated each quarter, using the data from the immediate
prior twelve (12) months. Adjustment factors will be applied to the investment
advisory fee according to the following formula.:
Cumulative 12 months Performance Fee
Return versus the Index Adjustment
Less than + 1.0% 0.3333 X Base Fee
Between +1.0 and +1.5% 0.4664 X Base Fee
Between +1.5 and +2.0% 0.5998 X Base Fee
Between +2.0 and +2.5% 0.7332 X Base Fee
Between +2.5 and + 3.0% 0.8666 X Base Fee
At +3.0% 1.0000 X Base Fee
Between +3.0 and + 3.5% 1.1334 X Base Fee
Between +3.5 and + 4.0% 1.2668 X Base Fee
Between +4.0 and + 4.5% 1.4002 X Base Fee
Between +4.5 and + 5.0% 1.5336 X Base Fee
More than +5.0% 1.667 X Base Fee
All parties to this Agreement do hereby authorize and instruct the Declaration
Group, the Fund's Administrator, to provide a calculation each month of the
gross amount due the Advisor and to deduct from such amount all applicable
amounts of fee waivers as well as the amounts set forth in Exhibit A, if
applicable, prior to remitting fee payments hereunder.
14. Limitation of Liability
The Advisor shall not be liable for any error of judgement, mistake of law or
for any other loss suffered by the Fund 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 malfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations or
duties under this Agreement.
15. Duration and Termination
This Agreement shall become effective upon the resignation of the existing
investment advisor to the Fund and, unless sooner terminated as provided herein,
shall continue in effect for two years. Thereafter, this Agreement shall be
renewable for successive periods of one year each, provided such continuance is
specifically approved annually:
(c) By the vote of a majority of those members of the Board of Trustees
who are not parties to the Agreement or interested persons of any such
party 9as that term is defined in the 1940 Act), cast in person at a
meeting called for the purpose of voting on such approval; and
(d) By vote of either the Board of Trustees or a majority (as that term is
defined in the 0000 Xxx) of the outstanding voting securities of the
Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the Fund or
by the Advisor at any time upon sixty (60) days written notice, without payment
of any penalty. Provided that termination by the Fund must be authorized by vote
of the Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund. This Agreement will automatically terminate in the event
of its assignment (as that term is defined in the 1940 Act).
16. Amendment of this Agreement
No provision of this Agreement may be changed, waived, discharged, or terminated
orally, but only by a written instrument signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. No
material amendment of this Agreement shall be effective until approved by vote
of the holders of a majority of the Fund's outstanding voting securities (as
defined in the 1940 Act).
17. Miscellaneous
The captions in this Agreement are included for convenience of reference only
and in no way define or limit 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 the Agreement shall not be affected thereby. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto and their respective
successors.
18. Counterparts
This Agreement may be executed in counterparts by the parties hereto, each of
which shall constitute and original, and all of which, together, shall
constitute one Agreement.
19. Governing Law
This Agreement shall be construed in accordance with, and governed by, the laws
of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
Attest: QUAKER INVESTMENT TRUST
By: _______________________ By: Xxxxx X. Xxxxxxxxxx
Title: Title: President
Attest: XXXXXXX + PARTNERS
By: ________________________ By: ____________________________
Title: Title: General Partner
Exhibit A
12b-1 Fees
For shares sold through the Xxxxxxx Xxxxxx Mutual Fund Marketplace,
Fidelity Brokerage Services, Inc., Waterhouse Securities, Inc., or Xxxx Xxxxx &
Company, the 12b-1 fees to be paid shall be equal to 0.20% of the purchase price
of such shares.
For shares sold through an authorized wholesaler, the 12b-1 fees to be paid
shall be equal to:
25% of management fee on amount of Fund shares sold for first 12 months
10% of management fee on such amount for succeeding 12 months
5% of management fee on such amount thereafter.
The foregoing shall be in effect with respect to Fund shares until such
shares are redeemed.
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