Investment Advisory Agreement
AGREEMENT made this ____ day of ______________, 1998 by and
between The Sports Funds Trust (the "Trust"), a Delaware business
trust and Pegasus Advisory Group, Inc., (the "Advisor") a corporation
operating as a registered investment adviser and duly organized and
existing under the laws of the State of North Carolina
1. Duties of Advisor. The Trust hereby appoints the Advisor
to act as investment adviser to the Fund for the period and on such
terms set forth in this Agreement. The Trust employs the Advisor to
manage the investment and reinvestment of the assets of the Fund, to
determine in its discretion the assets to be held uninvested, to
provide the Trust with records concerning the Advisor's activities
which the Trust is required to maintain, and to render regular
reports to the Trust's officers and Board of Trustees concerning the
Advisor's discharge of the foregoing responsibilities. The Advisor
shall discharge the foregoing responsibilities subject to the control
of the Board of Trustees of the Trust, and in compliance with the
objectives, policies and limitations set forth in the Trust's
Prospectus and Statement of Additional Information. The Advisor
accepts such employment and agrees to render the services and to
provide, at its own expense, the office space, furnishings, equipment
and the personnel required by it to perform the services on the terms
and for the compensation provided herein.
The Advisor may employ or contract with other persons to assist
it in the performance of this Agreement (herein, a "Subadvisor");
provided that the retention of any Subadvisor shall be approved as
may be required by the Investment Company Act of 1940 Act, as
amended, (the "Act"). A Subadvisor may perform under the supervision
of the Advisor any or all services described herein. Subadvisors may
include other investment advisory or management firms and officers or
employees who are employed by the Advisor and the Trust. The fees or
other compensation of any Subadvisor shall be paid by the Advisor and
no obligation may be incurred on the Trust's behalf to any such
person.
2. Portfolio Transactions. The Advisor shall provide the
Fund with a trading department. The Advisor shall select the brokers
or dealers that will execute the purchases and sales of securities
for the Fund, and is directed to use its best efforts to ensure that
the best available price and most favorable execution of securities
transactions for the Fund are obtained. The Fund will bear all
expenses, not specifically assumed by the Advisor, incurred in its
operations and offering of its shares, including, without limitation,
brokerage commissions and custody expenses. Subject to policies
established by the Board of Trustees of the Trust and communicated to
the Advisor, it is understood that the Advisor will not be deemed to
have acted unlawfully, or to have breached a fiduciary duty to the
Trust or in respect of the Fund, or be in breach of any obligation
owing to the Trust or in respect of the Fund under this Agreement, or
otherwise, solely by reason of its having caused the Fund to pay a
member of a securities exchange, a broker or a dealer a commission
for effecting a securities transaction for the Fund in excess of the
amount of commission that another member of an exchange, broker or
dealer would have charged, if the Advisor determines in good faith
that the commission paid was reasonable in relation to the brokerage
or research services provided by such member, broker or dealer,
viewed in terms of that particular transaction or the Advisor's
overall responsibilities with respect to the accounts, including the
Fund, as to which it exercises investment discretion. The Advisor
will promptly communicate to the officers and Trustees of the Trust
such information relating to Fund transactions as they may reasonably
request.
3. Compensation of the Advisor. For the services to be
rendered by the Advisor as provided in Section 1 and 2 of this
Agreement, the Fund shall pay to the Advisor within five business
days after the end of each calendar month, a monthly fee of one
twelfth of 0.95% of the average daily net assets. The net asset
value shall be calculated in the manner provided in the Fund's
Prospectus and Statement of Additional Information then in effect.
In the event of termination of this Agreement, the fee provided
in this Section 3 shall be paid on a pro rata basis, based on the
number of days when this Agreement was in effect.
Any amounts waived or reimbursed by the Advisor are subject to
reimbursement by the Fund within the following three years, provided
the Fund is able to effect such reimbursement and remain in
compliance with the expense limitations stated in the Prospectus.
4. Reports. The Fund and the Advisor agree to furnish to
each other such information regarding their operations with regard to
their affairs as each may reasonably request.
5. Status of Advisor. The services of the Advisor to the
Fund are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others so long as its services to the Fund
are not impaired thereby.
6. Liability of Advisor. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard by the
Advisor of its obligations and duties hereunder, the Advisor shall
not be subject to any liability whatsoever to the Fund, or to any
shareholder of the Fund, for any error of judgement, mistake of law
or any other act or omission in the course of, or connected with,
rendering services hereunder including, without limitation, for any
losses that may be sustained in connection with the purchase,
holding, redemption or sale of any security on behalf of the Fund.
7. Duration and Termination. This Agreement shall become
effective on the date that the Trust's registration statement is
declared effective by the U.S. Securities and Exchange Commission,
provided that first it is approved by the Board of Trustees of the
Trust, including a majority of those Trustees who are not parties to
this Agreement or interested persons of any party hereto, in the
manner provided in Section 15(c) of the Act, and by the holders of a
majority of the outstanding voting securities of the Fund; and shall
continue in effect for two years. Thereafter, this Agreement may
continue in effect only if such continuance is approved at least
annually by: (i) the Trust's Board of Trustees or, (ii) by the vote
of a majority of the outstanding voting securities of the Fund; and
in either event by a vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of
any such party in the manner provided in Section 15(c) of the Act.
This Agreement may be terminated by the Trust, at any time, without
the payment of any penalty, by the Board of Trustees of the Trust or
by vote of the holders of a majority of the outstanding voting
securities of the Fund on 60 days' written notice to the Advisor.
This Agreement may be terminated by the Advisor at any time, without
the payment of any penalty, upon not more than 60 days' written
notice to the Trust. This Agreement will automatically terminate in
the event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered or mailed postage
prepaid, to the other party at the principal office of such party.
As used in this Section 7, the terms "assignment", "interested
person", and "a vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in Section
2(a)(4), Section 2(a)(19) and Section 2(a)(42) of the Act and Rule
18f-2 thereunder.
8. Name of Fund. The parties agree that the Advisor has a
proprietary interest in the name "The Sports Funds Trust," and the
Trust agrees to promptly take such action as may be necessary to
delete from its name and/or the name of the Fund any reference to
such name promptly after receipt from the Advisor of a written
request therefore.
9. Severability. If any provisions 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.
10. Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to the conflicts of law principles
thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of Delaware conflict with the applicable
provisions of the 1940 Act, the latter shall control..
11. Records. All records held by the Advisor which are
required to be maintained and preserved by the Fund in order to
comply with Rules 31 a-1 and 31 a-2 of the Act remain the property of
the Fund and will be surrendered promptly by the Advisor upon the
request of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of this ______ day of ____________, 1997.
The Sports Funds Trust Pegasus Advisory Group,Inc.
Xxxx X. Xxxxxxx, Sole Trustee Xxxx X. Xxxxxxx,
President
