EXHIBIT 23(D)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
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This Agreement made and entered into as of ___________, 1999, by and
between The LEGACY FUNDS, INC., a Delaware business trust (the "Fund"), and
XXXXXXX & XXXXXX LLC, a New York limited liability company (the "Adviser"):
WHEREAS, the Fund is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory services to the Fund, and the Adviser is willing to render such
services;
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth the parties hereto agree as follows:
1. ADVISORY SERVICES. The Fund hereby appoints the Adviser to act as
investment adviser to the Fund with respect to the assets belonging to the
Fund's [Class A] stock, $[___] par value, and to provide administration of the
Fund not otherwise provided by third party service providers, subject to the
discretion of the Board of Trustees, for the period and on the terms set forth
in this Agreement. Shares of the Fund's [Class A] stock, $[___] par value, are
referred to herein as "Fund Shares." The Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided. The Fund, at its option, may also appoint the Adviser to act as
investment adviser to the Fund hereunder with respect to the assets belonging to
any other class of capital stock of the Fund from time to time created, but the
Adviser shall not be required to accept any such appointment. The Adviser shall
furnish investment research and advice to the Fund and shall manage the
investment and reinvestment of its assets and its business affairs and matters
incidental thereto, all subject to the supervision of the Board of Trustees of
the Fund and subject to the provisions of the Agreement and Declaration of Trust
(as defined in paragraph 3(a) of this Agreement), Certificate of Trust (as
defined in paragraph 3(b) of this Agreement) and By-Laws (as defined in
paragraph 3(c) of this Agreement) of the Fund and any resolution, rules or
regulations adopted by the Board of Trustees of the Fund. The Adviser shall for
all purposes herein provided be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Board of
Trustees of the Fund from time to time, have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent for the Fund. The
Fund shall also be free to retain, at its own expense, other persons to provide
it with any services whatsoever including, but not limited to, statistical,
factual or technical information or advice. The services of the Adviser herein
provided are not to be deemed exclusive and the Adviser shall be free to render
similar services or other services to others.
[It is understood that Adviser performs investment advisory services for
various clients and that several individuals perform advisory services on behalf
of Adviser for such clients (the "Advisory Representatives"). It is understood
that Adviser does not require that the same advice be given by all Advisory
Representatives with respect to a particular investment, and the Advisory
Representative acting with respect to the Fund may give advice with respect to a
particular investment different from other Advisory Representatives acting with
respect to other clients of Adviser, depending upon each Advisory
Representative's opinion with respect to the investment. The Fund agrees that
Adviser may give advice and take action with respect to any of its clients which
may differ from advice given or the timing or nature of action taken with
respect to the Fund, so long as it is Adviser's policy, to the extent practical,
to allocate investment opportunities to the Fund over a period of time on a fair
and equitable basis relative to other clients. In addition, Adviser believes it
to be proper that investment advisers invest their own personal funds in the
same securities that are recommended to clients. Adviser, and Directors and
employees of Adviser, do make investments for their own account, which may be in
securities purchased, sold or held for the Fund. The Fund does not object to the
fact that Adviser and Directors and employees of Adviser may purchase, sell or
hold securities that are purchased, sold or held for the Fund in a manner
(including timing, prices and quantities) that differs from action taken or
advice given for the Fund. It is understood that Adviser shall not have any
obligation to purchase or sell, or to recommend for purchase or sale, for the
Fund any security which Adviser, its principals, affiliates or employees may
purchase or sell for its or their own accounts or for the account of any other
client.]
2. DUTIES OF THE ADVISER. Subject to the general supervision of the
Board of Trustees of the Fund, the Adviser shall administer the Fund's corporate
affairs and, in connection therewith, shall furnish the Fund with office
facilities and with clerical, bookkeeping and recordkeeping services at such
office facilities and shall, employing its discretion, manage the investment
operations of the Fund and the composition of the portfolio of securities and
investments (including cash) belonging to the Fund, including the purchase,
retention and disposition thereof and the execution of agreements relating
thereto, in accordance with the investment objective, policies and restrictions
of the Fund as stated in the Prospectus (as defined in paragraph 3(f) of this
Agreement), Registration Statement (as defined in paragraph 3(d) of this
Agreement), Agreement and Declaration of Trust, Certificate of Trust and By-Laws
of the Fund and subject to the following understandings:
(a) The Adviser shall furnish a continuous investment program for the
Fund and determine from time to time what investments or securities will
be purchased, retained or sold by the Fund, and what portion of the assets
will be invested or held uninvested as cash.
(b) The Adviser shall use its best judgment in the performance of its
duties under this Agreement.
(c) The Adviser, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Agreement and Declaration
of Trust, the Certificate of Trust, the By-Laws and Prospectus of the Fund
and with the instructions and directions of the Board of Trustees of the
Fund and will conform to and comply with the requirements of the
Investment Company Act of 1940, as amended from time to time, and the
rules and regulations of the Securities and Exchange Commission thereunder
(collectively, the "1940 Act") and all other applicable Federal and state
laws and regulations, including without limitation the provisions of the
Internal Revenue Code, as amended from time to time, applicable to the
Fund as a regulated investment company.
(d) The Adviser shall determine the securities and other investments to
be purchased or sold by the Fund and, as agent for the Fund, will effect
transactions pursuant to its determinations either directly with the
issuer or with any broker and/or dealer in such securities. In placing
orders with brokers and/or dealers the Adviser will comply with such
policies with respect to brokerage as are set forth in the Fund's
Registration Statement and Prospectus or as the Fund's Board of Trustees
may adopt from time to time. In providing the Fund with investment
supervision, it is recognized that the Adviser will give primary
consideration to securing the most favorable price and efficient
execution. Consistent with this policy, the Adviser may consider the
financial responsibility, research and investment information and other
services provided by brokers, dealers or futures commission merchants who
may effect or be a party to any such transaction or other transactions to
which other clients of the Adviser may be a party. It is understood that
Xxxxxxx & Xxxxxx LLC may be used as principal broker for securities
transactions but that no formula has been adopted for allocation of the
Fund's investment transaction business. The Adviser is authorized to
direct portfolio transactions to a broker-dealer which is an affiliated
person of the Adviser or the Fund in accordance with such standards and
procedures as may be approved by the Board in accordance with the 1940 Act
Rule 17e-1, or other rules promulgated by the Securities and Exchange
Commission. It is also understood that it is desirable for the Fund that
the Adviser have access to supplemental investment and market research and
security and economic analysis provided by brokers or futures commission
merchants and that such brokers may execute brokerage transactions at a
higher cost to the Fund than may result when allocating brokerage to other
brokers or futures commission merchants on the basis of seeking the most
favorable price and efficient execution. Therefore, the Adviser is
authorized to pay higher brokerage commissions for the purchase and sale
of securities and futures contracts for the Fund to brokers or futures
commission merchants who provide such research and analysis, subject to
review by the Fund's Board of Trustees from time to time with respect to
the extent and continuation of this practice. It is understood that the
services provided by such broker or futures commission merchant may be
useful to the Adviser in connection with its services to other clients. On
occasions when the Adviser deems the purchase or sale of a security to be
in the best interest of the Fund as well as other customers, the Adviser
may, to the extent permitted by applicable laws and regulations, but shall
not be obligated to, aggregate the securities to be sold or purchased in
order to obtain the best price and execution. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in
the transaction, will be made by the Adviser in a manner it considers to
be equitable and consistent with its fiduciary obligations to the Fund
and, if applicable, to such other customers.
(e) The Adviser shall maintain books and records with respect to the
portfolio transactions of the Fund and shall render to the Fund's Board of
Trustees such periodic and special reports as the Board of Trustees may
reasonably request.
(f) The Adviser shall be responsible for the financial and accounting
records to be maintained by the Fund (including those being maintained by
the Fund's custodian).
(g) The Adviser shall provide the Fund's custodian and administrator on
each business day with information relating to all transactions concerning
the assets of the Fund, except redemptions of and any subscriptions for
Fund Shares, and will provide on a timely basis to the Fund's
administrator and other persons providing services to the Fund such
information as the administrator or such other persons may reasonably
request in connection with the performance of their respective duties and
obligations with respect to the Fund.
(h) The Adviser will report to the Board of Trustees of the Fund at each
meeting thereof all changes in the investments and other assets of the
Fund since the prior report, and will keep the Board of Trustees informed
of material developments affecting the Fund and the Adviser, and on its
own initiative, will furnish the Board of Trustees from time to time with
such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included
in the Fund's holdings, the industries in which they engage, or the
economic, social or political conditions prevailing in each country in
which the Fund maintains investments. The Adviser also will furnish the
Board of Trustees with such statistical and analytical information with
respect to securities and other investments of the Fund as the Adviser may
believe appropriate or as the Board of Trustees may reasonably request.
The Adviser shall prepare and furnish to the Board of Trustees all such
other written materials and documents as may be requested or as may
otherwise be necessary or appropriate in connection with meetings of the
Board of Trustees, and, if the Secretary of the Fund is an officer,
director, or employee of the Adviser or any of its affiliated persons, the
Adviser shall cause to be prepared and shall bear the costs of preparing
and keeping the minutes of the meetings of the Board of Trustees and
committees thereof and of meetings of the stockholders of the Fund.
(i) The Adviser shall furnish such office and other facilities as may be
required by the Fund.
(j) Services of Personnel. The Adviser shall provide all necessary
executive and administrative personnel for managing the affairs of the
Fund, including personnel to perform clerical, bookkeeping, accounting and
other office functions. These services are exclusive of the bookkeeping
and accounting services of any dividend disbursing agent, transfer agent,
registrar or custodian. The Adviser shall compensate all personnel,
officers and Trustees of the Fund if such persons are also employees of
the Adviser or its affiliates.
3. DELIVERY OF DOCUMENTS. The Fund has delivered, or will deliver
promptly, copies of each of the following documents to the Adviser and will
promptly notify and deliver to it all future amendments and supplements if any:
(a) Agreement and Declaration of Trust, as in effect on the date hereof
and as amended or restated from time to time (the "Agreement and
Declaration of Trust").
(b) Certificate of Trust of the Fund, as filed with the Secretary of
State of the State of Delaware and in effect on the date hereof and as
amended or restated from time to time (the "Certificate of Trust").
(c) By-Laws of the Fund, as in effect on the date hereof and as amended
or restated from time to time (the "By-Laws").
(d) Certified resolutions of the Board of Trustees of the Fund and of
the Fund's stockholders, respectively, authorizing the appointment of the
Adviser and approving the form of this Agreement.
(e) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the "Registration Statement") as filed
with the Securities and Exchange Commission (the "Commission") and in
effect on the date hereof relating to the Fund, and all subsequent
amendments thereto.
(f) Notification of Registration under the 1940 Act on Form N-8A as
filed with the Commission.
(g) Prospectus or Prospectuses and Statement or Statements of Additional
Information of the Fund, if any, as currently in effect and as amended or
supplemented from time to time, being herein called the "Prospectus".
4. EMPLOYEES OF THE ADVISER. The Adviser shall authorize and permit any
of its directors, officers and employees who may be elected as Trustees or
officers of the Fund to serve in the capacities in which they are elected.
5. BOOKS AND RECORDS. The Adviser shall keep the Fund's books and
records required to be maintained by it pursuant to paragraph 2(e) of this
Agreement. The Adviser agrees that all records which it maintains for the Fund
are the property to the Fund and it will promptly surrender any of such records
to the Fund upon the Fund's request. The Adviser further agrees to preserve for
the period prescribed by Rule 31a-2 of the Commission under the 1940 Act any
such records as are required to be maintained by the Adviser with respect to the
Fund hereunder or by Rule 31a-1 of the Commission under the 1940 Act, as such
rule may be amended from time to time, and any other applicable rule that may be
adopted by the Commission.
6. EXPENSES. During the term of this Agreement the Adviser will pay all
expenses (including without limitation the compensation of all its directors,
officers and employees serving as Trustees or officers of the Fund pursuant to
paragraph 4 of this Agreement) incurred by it in connection with its activities
under this Agreement other than the cost of the securities and investments
purchased for the Fund (including taxes and brokerage commissions, if any). The
Adviser also shall pay the salaries, fees and expenses of Trustees, officers and
employees of the Fund who are affiliated persons of the Adviser or affiliated
persons of any affiliated person of the Adviser. The Adviser shall arrange for
providing and maintaining a bond issued by a reputable insurance company
authorized to do business in the place where the bond is issued against larceny
and embezzlement covering each officer and employee of the Fund and/or the
Adviser who may singly or jointly with others have access to funds or securities
of the Fund, with direct or indirect authority to draw upon such funds or to
direct generally the disposition of such funds. The bond shall be in such
reasonable amount as a majority of the Trustees who are not "interested persons"
of the Fund, as defined in the 1940 Act, shall determine, with due consideration
given to the aggregate assets of the Fund to which any such officer or employee
may have access. The insurance premiums on fidelity, errors and omissions and
other coverages including the expense of obtaining and maintaining a fidelity
bond as required by Section 17(g) of the 1940 Act shall be paid by the Fund. All
other expenses shall be borne by the Fund, subject to the limitations and
reimbursements provided for in paragraphs 7 and 8 hereof.
7. COMPENSATION AND GENERAL EXPENSE LIMITATION.
(a) For the services provided and expenses borne by the Adviser pursuant
to this Agreement, the Fund shall pay to the Adviser compensation of 1.00%
per annum of the Fund's average daily net assets paid monthly. The fee
payable to the Adviser pursuant to this paragraph 7 (the "Advisory Fee")
shall commence on the date hereof (the "Effective Date") and shall be
accrued daily, subject to adjustment as provided below in this paragraph 7
and subject to further adjustment as provided in paragraph 8, and the fee
for each month will be paid to the Adviser during the succeeding month.
[(b) In the event this Agreement becomes effective on a date other than
the first day of any fiscal year, solely for the purpose of computing the
amount of the Advisory Fee for such fiscal year, such first fiscal year
shall be deemed to begin on the Effective Date and to end on December 31
of such year. In the event this Agreement terminates on a date other than
the last day of any fiscal year, solely for the purpose of computing the
amount of the Advisory Fee for such fiscal year, such fiscal year shall be
deemed to begin on January 1 of such year and to end on the date of the
termination of this Agreement.]
[8. BLUE SKY LIMITATION ON EXPENSES.
(a) In the event the Expenses (as defined in paragraph 8(b) below) of
the Fund for any fiscal year exceed the lowest applicable annual expense
limitations, if any, established pursuant to the statutes or regulations
of any jurisdictions in which Fund Shares are then qualified for offer and
sale (such excess hereinafter called the "Blue Sky Excess Expense"), the
compensation due to the Adviser under paragraph 7 for the fiscal year in
question shall be reduced by an amount equal to the Blue Sky Excess
Expense of the Fund, and if the Blue Sky Excess Expense of the Fund
exceeds the fees of the Fund payable to the Adviser with respect to the
Fund for the fiscal year in question, the Adviser shall, to the extent
required by such statute or regulations, reimburse the Fund for the amount
of such excess. If for any month the Expenses shall exceed 1/12th of the
percentage of average daily net assets allowable as Expenses, the payment
to the Adviser for that month shall be reduced, and, if necessary, the
Adviser shall make a refund payment to the Fund so that the Expenses will
not exceed such percentage. As of the end of the fiscal year, however, the
foregoing computations shall be readjusted so that the aggregate
compensation payable to the Adviser for the year is equal to the amount
provided for in paragraph 7 hereof, reduced by an amount equal to the Blue
Sky Excess Expense of the Fund. The aggregate of the repayments, if any,
by the Adviser to the Fund for the year shall be the amount necessary to
reimburse the Fund for the amount of such excess.
(b) For purposes of paragraph 8(a) of this Agreement, the term
"Expenses" means the general expenses of the Fund, including without
limitation fees payable to the Adviser, the Fund's administrator, if any,
the Fund's transfer agent, if any, and to the Fund's custodian; but the
Expenses shall exclude any interest, taxes, brokerage commissions and
litigation and indemnification expenses and other extraordinary expenses
not incurred in the ordinary course of the Fund's business.]
9. LIMITATION OF LIABILITY. 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 the matters to which this Agreement relates, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages shall be limited
to the period and the amount set forth in Section 36(b)(3) of the 0000 Xxx) or a
loss resulting
from willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
10. EFFECTIVE DATE AND TERM. This Agreement shall become effective on
the date hereof. This Agreement shall remain in effect until ________, 2000, and
shall continue in effect thereafter for successive twelve-month periods (or for
such shorter periods as may be specified by the Fund's Board of Trustees)
subject to termination as hereinafter provided, if such continuance is approved
at least annually (a) by vote of the Fund's Board of Trustees, cast in person at
a meeting called for the purpose of voting on such approval, and (b) by vote of
a majority of the Trustees of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the 0000 Xxx) of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. The annual approvals provided for herein shall be effective to
continue this Agreement from year to year (or for such shorter period referred
to above) if given within a period beginning not more than ninety (90) days
prior to (and including) the anniversary of the date upon which the most recent
previous continuance of this Agreement became effective, notwithstanding the
fact that more than three hundred sixty-five (365) days may have elapsed since
the date on which such approval was last given. This Agreement may be terminated
(i) by the Fund at any time, without the payment of any penalty, by the Board of
Trustees of the Fund or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Fund, on 30 (thirty) days'
written notice to the Adviser, or (ii) after [________, 2000], by the Adviser at
any time, without the payment of any penalty, on 90 (ninety) days' written
notice to the Fund. This Agreement will automatically and immediately terminate
in the event of its assignment (as defined in the 1940 Act).
11. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, provided that the amendment is approved (a) by vote of a majority of
those Trustees of the Fund 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 amendment, and (b), if required
by the 1940 Act, by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of the Fund.
12. NOTICES. Notices of any kind to be given to the Adviser by the Fund
shall be in writing and shall be duly given if mailed or delivered to the
Adviser at 00 Xxxxxxxx, Xxx Xxxx, XX 00000, Attention: [Executive Vice
President], or at such other address or to such other individual as shall be
specified by the Adviser to the Fund in accordance with this paragraph 12.
Notices of any kind to be given to the Fund by the Adviser shall be in writing
and shall be duly given if mailed or delivered to the Fund at [c/o Ingalls &
Xxxxxx, LLC, 00 Xxxxxxxx, Xxx Xxxx, XX 00000], Attention: [President], or at
such other address or to such other individual as shall be specified by the Fund
to the Adviser in accordance with this paragraph 12, with copies to each of the
Fund's Trustees at their respective addresses set forth in the Fund's
Registration Statement and to the legal counsel to the Fund.
13. AUTHORITY. The Trustees have authorized the execution of this
Agreement in their capacity as Trustees and not individually. The Adviser agrees
that neither the stockholders nor the Trustees nor any officer, employee,
representative or agent of the Fund shall be personally liable upon, nor shall
resort be had to their private property for the satisfaction of, obligations
given, executed or delivered on behalf of or by the Fund, that the stockholders,
Trustees, officers, employees, representatives and agents of the Fund shall not
be personally liable hereunder, and that the Adviser shall look solely to the
property of the Fund for the satisfaction of any claim hereunder.
14. CONTROLLING LAW. This Agreement shall be governed by the construed
in accordance with the laws of the state of New York.
15. MULTIPLE COUNTERPARTS. This Agreement may be executed simultaneously
in several counterparts, each of which shall be deemed to be an original, but
which together shall constitute one and the same instrument.
16. CAPTIONS. The captions of the paragraphs are for descriptive
purposes only and they are not intended to limit or otherwise affect the content
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
THE LEGACY FUNDS, INC.
By:
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Xxxxxxxx X. Xxxx, Esq.
Chairman of the Board of Trustees
XXXXXXX & XXXXXX LLC
By:
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Xxxxxx Xxxxxx
Managing Director
