FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___ day of May, 2001, by and between The Advisors'
Inner Circle Fund, a Massachusetts business trust (the "Trust"), and Prospect
Asset Management, Inc., a Hawaiian corporation (the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended, (the
"1940 Act") consisting of several series of shares, each having its own
investment policies; and
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to its The Japan Smaller Companies Fund and
such other portfolios as the Trust and the Adviser may agree upon (the
"Portfolios"), and the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. Duties of the Adviser. The Trust employs the Adviser to manage
the investment and reinvestment of the assets, and to
continuously review, supervise, and administer the investment
program of the Portfolios, to determine in its discretion the
securities to be purchased or sold, to provide the
Administrator and the Trust with records concerning the
Adviser's activities which the Trust is required to maintain,
and to render regular reports to the Administrator and to the
Trust's Officers and Trustees concerning the Adviser's
discharge of the foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities
subject to the control of the Board of Trustees of the Trust
and in compliance with such policies as the Trustees may from
time to time establish, and in compliance with the objectives,
policies, and limitations for each such Portfolio set forth in
the Portfolio's prospectus and statement of additional
information as amended from time to time, and applicable laws
and regulations.
The Adviser accepts such employment and agrees, at its own
expense, to render the services and to provide the office
space, furnishings and equipment and the personnel required by
it to perform the services on the terms and for the
compensation provided herein.
2. Portfolio Transactions. The Adviser is authorized to select
the brokers or dealers that will execute the purchases and
sales of portfolio securities for the Portfolios and is
directed to use its best efforts to obtain the best net
results as described from time to time in the Portfolios'
Prospectus(es) and Statement of Additional Information. The
Adviser will promptly communicate to the Administrator and to
the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably
request.
It is understood that the Adviser will not be deemed to have
acted unlawfully, or to have breached a fiduciary duty to the
Trust or be in breach of any obligation owing to the Trust
under this Agreement, or otherwise, by reason of its having
directed a securities transaction on behalf of the Trust to a
broker-dealer in compliance with the provisions of Section
28(e) of the Securities Exchange Act of 1934 or as described
from time to time by the Portfolios' Prospectuses and
Statement of Additional Information.
3. Compensation of the Adviser. For the services to be rendered
by the Adviser as provided in Sections 1 and 2 of this
Agreement, the Trust shall pay to the Adviser compensation at
the rate specified in the Schedule(s) which are attached
hereto and made a part of this Agreement. Such compensation
shall be paid to the Adviser at the end of each month, and
calculated by applying a daily rate, based on the annual
percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the average daily net
assets for the month involved.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the
termination of this Agreement.
4. Other Expenses. The Adviser shall pay all expenses, not
otherwise paid by third parties, of printing and mailing
reports, prospectuses, statements of additional information,
and sales literature relating to the solicitation of
prospective clients. The Trust shall pay all expenses relating
to mailing to existing shareholders prospectus(es),
statement(s) of additional information, proxy solicitation
material and shareholder reports.
5. Excess Expenses. If the expenses for any Portfolio for any
fiscal year (including fees and other amounts payable to the
Adviser, but excluding interest, taxes, brokerage costs,
litigation, and other extraordinary costs) as calculated every
business day would exceed the expense limitations imposed on
investment companies by any applicable statute or regulatory
authority of any jurisdiction in which shares of a Portfolio
are qualified for offer and sale, the Adviser shall bear such
excess cost.
However, the Adviser will not bear expenses of any Portfolio
which would result in the Portfolio's inability to qualify as
a regulated investment company under provisions of the
Internal Revenue Code. Payment of expenses by the Adviser
pursuant to this Section 5 shall be settled on a monthly basis
(subject to fiscal year end reconciliation) by a reduction in
the fee payable to the Adviser for such month pursuant to
Section 3 and, if such reduction shall be insufficient to
offset such expenses, by reimbursing the Trust.
6. Reports. The Trust and the Adviser agree to furnish to each
other, if applicable, current prospectuses, proxy statements,
reports to shareholders, certified copies of their financial
statements, and such other information with regard to their
affairs as each may reasonably request.
7. Status of the Adviser. The services of the Adviser to the
Trust are not to be deemed exclusive, and the Adviser shall be
free to render similar services to others so long as its
services to the Trust are not impaired thereby. The Adviser
shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
8. Certain Records. Any records required to be maintained and
preserved pursuant to the provisions of Rule 31a-1 and Rule
31a-2 promulgated under the 1940 Act which are prepared or
maintained by the Adviser on behalf of the Trust are the
property of the Trust and will be surrendered promptly to the
Trust on request.
9. Limitation of Liability of the Adviser. The duties of the
Adviser shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be
asserted against the Adviser hereunder. The Adviser shall
not be liable for any error of judgment or mistake of law or
for any loss arising out of any investment or for any
act or omission in carrying out its duties hereunder, except
a loss resulting from willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by
reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under
provisions of applicable state law or Federal securities law
which cannot be waived or modified hereby. (As used in this
Paragraph 9, the term "Adviser" shall include
directors, officers, employees and other corporate agents of
the Adviser as well as that corporation itself).
10. Permissible Interests. Trustees, agents, and shareholders of
the Trust are or may be interested in the Adviser (or any
successor thereof) as directors, partners, officers, or
shareholders, or otherwise; directors, partners, officers,
agents, and shareholders of the Adviser are or may be
interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor) is or may be
interested in the Trust as a shareholder or otherwise. In
addition, brokerage transactions for the Trust may be effected
through affiliates of the Adviser if approved by the Board of
Trustees, subject to the rules and regulations of the
Securities and Exchange Commission.
11. License of the Adviser's Name. The Adviser hereby agrees to
grant a license to the Trust for use of its name in the names
of the Portfolios for the term of this Agreement and such
license shall terminate upon termination of this Agreement.
12. Duration and Termination. This Agreement, unless sooner
terminated as provided herein, shall remain in effect until
two years from date of execution, and thereafter, for periods
of one year so long as such continuance thereafter is
specifically approved at least annually (a) by the vote of a
majority of those 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 approval, and (b) by the Trustees
of the Trust or by vote of a majority of the outstanding
voting securities of each Portfolio; provided, however, that
if the shareholders of any Portfolio fail to approve
the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent
permitted by the 1940 Act and rules and regulations
thereunder. The foregoing requirement that continuance of
this Agreement be "specifically approved at least annually"
shall be construed in a manner consistent with the 1940 Act
and the rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any
time, without the payment of any penalty by vote of a majority
of the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio on not less
than 30 days nor more than 60 days written notice to the
Adviser, or by the Adviser at any time without the payment of
any penalty, on 90 days written notice to the Trust. This
Agreement will automatically and immediately terminate in the
event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed
postpaid, to the other party at any office of such party.
As used in this Section 11, the terms "assignment",
"interested persons", and a "vote of a majority of the
outstanding voting securities" shall have the respective
meanings set forth in the 1940 Act and the rules and
regulations thereunder; subject to such exemptions as may be
granted by the Securities and Exchange Commission under said
Act.
14. Change in the Adviser's Ownership. The Adviser agrees that it
shall notify the Trust of any change in the ownership of the
Adviser within a reasonable time after such change.
15. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by
registered or certified mail, postage prepaid, addressed by
the party giving notice to the other party at the last address
furnished by the other party to the party giving notice: if to
the Trust, at Xxx Xxxxxxx Xxxxxx Xxxx, Xxxx, XX 00000 and if
to the Adviser, at 0000 Xxxxxxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxxx, XX 00000.
16. Severability. 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.
17. Governing Law. This Agreement shall be governed by the
internal laws of the Commonwealth of Massachusetts, without
regard to conflict of law principles; provided, however, that
nothing herein shall be construed as being inconsistent with
the 1940 Act.
A copy of the Agreement and Declaration of Trust of the Trust is on file with
the Secretary of the Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees, and is not binding upon any of the Trustees, officers, or shareholders
of the Trust individually but binding only upon the assets and property of the
Trust.
No portfolio of the Trust shall be liable for the obligations of any other
portfolio of the Trust. Without limiting the generality of the foregoing, the
Adviser shall look only to the assets of the Portfolios for payment of fees for
services rendered to the Portfolios.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the day and year first written above.
THE ADVISORS' INNER CIRCLE FUND
By: _________________________________
Attest: ______________________________
PROSPECT ASSET MANAGEMENT, INC.
By: _________________________________
Attest: ______________________________
Schedule
to the
Investment Advisory Agreement
between
The Advisors' Inner Circle Fund
and
Prospect Asset Management, Inc.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee
--------- -----
The Japan Smaller Companies Fund 1.00%
