EXHIBIT 23(d)(2)
FIRST PACIFIC MUTUAL FUND, INC.
FIRST PACIFIC LOW VOLATILITY FUND
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT made this ____ day of __________, 2011, by
and between First Pacific Mutual Fund, Inc., a Maryland corporation, (the
"Corporation") for the First Pacific Low Volatility Fund series (the "Fund") and
Xxx Financial Group Inc., a Hawaii corporation (the "Manager"). All references
to any series of the Corporation will be called the "Fund" unless expressly
noted otherwise.
BACKGROUND
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The Fund, a series of the Corporation, is organized and operated as an
open-end, non-diversified management investment company, registered under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Corporation
desires to retain the Manager to render investment management and advisory
services to the Fund, and the Manager is willing to render such services on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. The Corporation hereby appoints the Manager to act as investment
manager and advisor to the Fund, subject to the supervision and direction of
the Board of Directors of the Fund, for the period and on the terms set forth in
this Agreement. The Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided.
2. The Manager shall furnish the Fund investment management and
administrative services. Investment management shall include analysis, research
and portfolio recommendations consistent with the Fund's objective and policies.
Administrative services shall include the services and compensation
of such members of the Manager's organization as shall be duly elected officers
and/or directors of the Fund and such other personnel as shall be necessary to
carry out its normal operations.
3. The Manager shall manage the investment operations of the Fund and
the composition of the Fund's portfolio, including the purchase, retention and
disposition thereof, in accordance with the Fund's investment objective,
policies and restrictions as stated in and limited by the statements contained
in the various documents filed with the U.S. Securities and Exchange Commission
(the "Commission") as such documents may from time to time be amended and
subject to the following understandings:
(a) The Manager shall provide supervision of the Fund's
investments and determine from time to time what investments or securities,
including futures contracts, will be purchased, retained, sold or loaned by the
Fund, and what portion of the assets will be invested, hedged, or held
uninvested as cash.
(b) The Manager shall use its best judgment in the performance
of its duties under this Agreement.
(c) The Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Corporation's Articles of
Incorporation and By-Laws, and the Prospectus of the Fund and the instructions
and directions of the Board of Directors of the Corporation, and will conform to
and comply with the requirements of the 1940 Act and all other applicable
federal and state laws and regulations.
(d) The Manager shall determine the securities to be purchased
or sold by the Fund and will place orders pursuant to its determination with or
through such persons, brokers or dealers in conformity with the policy with
respect to brokerage as set forth in the Corporation's Registration
Statement and Prospectus of the Fund or as the Board of Directors may direct
from time to time. In providing the Fund with investment supervision, it is
recognized that the Manager will give primary consideration to securing the most
favorable price and efficient execution. Consistent with this policy, the
Manager may consider the financial responsibility, research and investment
information and other services provided by brokers or dealers who may effect or
be a party to any such transaction or other transactions to which other clients
of the Manager may be a party. It is understood that neither the Fund nor the
Manager has adopted a formula for allocation of the Fund's investment
transaction business. It is also understood that it is desirable, for the Fund,
that the Managers have access to supplemental investment and market research and
security and economic analysis provided by brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers by seeking the most favorable price and efficient
execution. Therefore, the Manager is authorized to place orders for the
purchase and sale of securities for the Fund with such brokers, subject
to review by the Corporation's Board of Directors, from time to time with
respect to the extent and continuation of this practice. It is understood that
the services provided by such brokers may be useful to the Manager in connection
with its services to other clients.
On occasions when the Manager deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Manager, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be so sold or purchased in order
to obtain the most favorable price or lower brokerage commissions and efficient
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 Manager in
the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients.
(e) The Manager shall maintain all books and records with
Respect to the Fund's securities transactions required by subparagraphs (b)(5),
(6) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act and shall render
to the Corporation's Board of Directors such periodic and special reports as the
Board may reasonably request.
(f) The Manager shall provide the Fund's custodian and the Fund
on each business day with information relating to all transactions concerning
the Fund's assets.
(g) The investment management services provided by the Manager
hereunder are not to be deemed exclusive, and the Manager shall be free to
render similar services to others. While information and recommendations
supplied to the Fund shall, in the Manager's judgment, be appropriate
under the circumstances and in light of investment objective and policies of the
Fund, they may be different from the information and recommendations supplied to
other investment companies and customers. The Fund shall be entitled to
equitable treatment under the circumstances in receiving information,
recommendation and any other services, but the Fund shall not be entitled to
receive preferential treatment as compared with the treatment given to any other
investment company or customer.
(h) The Manager shall perform such other services as are
reasonably incidental to the foregoing duties.
4. The Fund has delivered to the Manager copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Articles of Incorporation of the Corporation, filed with the
Secretary of the State of Maryland (such Articles of Incorporation, as in effect
on the date hereof and as amended from time to time, are herein called the
"Articles of Incorporation");
(b) By-Laws of the Fund (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Board of Directors of the
Corporation authorizing the appointment of the Manager and approving the form of
this Agreement;
(d) 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 Commission relating to the Fund and shares of the Fund's common stock
and all amendments thereto;
(e) Notification of Registration of the Corporation under the
1940 Act on Form N-8A as filed with the Commission and all amendments thereto;
(f) Prospectus of the Fund (such Prospectus, as currently in
effect and as amended or supplemented from time to time, being herein called the
"Prospectus"); and
(g) Any other documents filed with the Commission. The Manager
shall have no responsibility or liability for the accuracy or completeness of
the Corporation's Registration Statement under the 1940 Act or the Securities
Act of 1933 except for information supplied by the Manager for inclusion
therein. On behalf of the Fund, the Corporation agrees to indemnify the Manager
to the full extent permitted by the Corporation's governing instruments.
5. The Manager shall authorize and permit any of its directors,
officers and employees who may be elected as directors or officers of the
Corporation to serve in the capacities in which they are elected. Services to
be furnished by the Manager under this Agreement may be furnished through the
medium of any of such directors, officers or employees.
6. The Manager agrees that no officer or director of the Manager, or of
any affiliate of the Manager, will deal for or on behalf of the Fund with
himself as principal or agent, or with any corporation, partnership or other
person in which he may have a financial interest, except that this shall
not prohibit:
(a) Officers and directors of the Manager or of any affiliate
of the Manager, from having a financial interest in the Fund, in the Manager
or any affiliate of the Manager.
(b) Officers and directors of the Manager, or of any affiliate
of the Manager, from providing services to the Fund of a type usually and
customarily provided to an investment company, pursuant to a written agreement
approved by the Board of Directors of the Fund, including a majority of the
disinterested directors of the Fund (as defined in the 1940 Act).
(c) The purchase of securities for the Fund, or the sale of
securities owned by the Fund, through a security broker or dealer, one or more
of whose partners, officers or directors is an officer or a director of the
Manager, provided such transactions are handled in the capacity of broker
only and provided commissions charged do not exceed customary brokerage charges
for such services.
7. If any occasion should arise in which the Manager or any of its
officers or directors advises persons concerning the shares of the Fund, the
Manager or such officer or director will act solely on its, her or his own
behalf and not in any way on behalf of the Fund.
8. The Manager agrees that, except as herein otherwise expressly
provided, neither it nor any of its officers or directors shall at any time
during the period of this Agreement make, accept or receive, directly or
indirectly, any fees, profits or emoluments of any character in connection with
the purchase or sale of securities (except securities issued by the Fund) or
other assets by or for the Fund.
9. The Manager shall keep the Fund's books and records required to be
maintained by it pursuant to paragraph 3 hereof. The Manager agrees that all
records which it maintains for the Fund are the property of the Fund and it will
surrender promptly to the Fund any of such records upon the Fund's request. The
Manager further agrees to preserve for the periods prescribed by Rule 31a-2 of
the Commission under the 1940 Act any such records as are required to be
maintained by the Manager pursuant to paragraph 2 hereof.
10. During the term of this Agreement, the Manager will pay (i) the
salaries and expenses of all its personnel, and (ii) all expenses incurred by it
in the ordinary course of performing its duties hereunder. All costs and
expenses not expressly assumed by the Manager under this Agreement shall be
paid by the Fund, including, but not limited to: (i) interest and taxes,
including but not limited to all issue or transfer taxes chargeable to the Fund
in connection with its securities transactions; (ii) brokerage commissions;
(iii) insurance premiums; (iv) compensation and expenses of the Board of
Directors of the Fund; (v) legal and audit expenses; (vi) fees and expenses of
the Fund's distributor, transfer agent and accounting services agents; (vii)
expenses incident to the issuance of shares, including issuance on the payment
of, or reinvestment of, dividends; (viii) fees and expenses incident to
the registration under Federal or state securities laws of the Fund or its
shares; (ix) expenses of preparing, printing and mailing reports and notices
and proxy material to shareholders of the Fund; (x) all other expenses
incidental to holding meetings of the Corporation's directors and the Fund's
shareholders and all allocable communications expenses with respect to investor
services and to preparing, printing and mailing prospectuses and reports to
shareholders in the amount necessary for distribution to the shareholders; (xi)
dues or assessments of or contributions to any trade association of which the
Fund is a member; (xii) such non-recurring expenses as may arise, including
litigation affecting the Fund and the legal obligations which the Corporation
may have to indemnify its officers and directors with respect thereto; (xiii)
all expenses which the Corporation agrees to bear in any distribution agreement
or in any plan adopted by the Corporation on behalf of the Fund pursuant to Rule
12b-1 under the 1940 Act; and (xiv) all corporate fees payable by the Fund to
federal, state or other governmental agencies.
11. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Manager as full compensation therefore a fee
at an annualized rate of 1.00% of the Fund's average daily net assets. This fee
will be compounded daily as of the close of business and will be paid to the
Manager monthly within ten (10) business days after the last day of each month
and such management fee shall be adjusted, if necessary, at the time of the
payment due in the last month in the fiscal year of the Fund. The Management
fee shall be prorated for any fraction of a month at the commencement or
termination of this Agreement.
12. In the event the expenses of the Fund for any fiscal year (including
the fees payable to the Manager but excluding interest, taxes, brokerage
commissions, distribution fees, amortization of organization expenses and
litigation and indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Fund's business) exceed the limit set by
applicable regulation of state securities commissions, if any, the compensation
due to the Manager hereunder will be reduced by the amount of such excess of
postponed so that at no time will there be any accrued but unpaid liability
under this expense limitation. Any such reductions or payments are subject to
readjustment during the year, and the Manager's obligation hereunder will be
limited to the amount of its fee paid or accrued with respect to such fiscal
year.
13. The Manager shall give the Fund the benefit of its best judgment and
effort in rendering service hereunder, but the Manager shall not be liable for
any loss sustained by reason of the purchase, sale or retention of any
securities or hedging instrument, whether or not such purchase, sale or
retention shall have been based upon its own investigation or upon investigation
and research made by any other individual firm or corporation. The Manager
shall not be liable for any error of judgment or mistake of law 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) of 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. Any person
employed by the Manager, who may be or become an employee of and paid by any
other entity affiliated with the Fund, such as the administrator, distributor,
or custodian to the Fund, shall be deemed, when acting within the scope of his
employment by such other affiliated entity, to be acting in such employment
solely for such other affiliated entity and not as the Manager's employee or
agent.
14. This Agreement shall continue in effect for a period of more than
two (2) years from the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by
the Fund at any time, without the payment of any penalty, by the Board of
Directors of the Fund or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Fund, or by the Manager at any
time, without the payment of any penalty, on not more than sixty (60) days nor
less than thirty (30) days written notice to the other party. This Agreement
shall terminate automatically in the event of its assignment (as defined in the
1940 Act).
15. Nothing in this Agreement shall limit or restrict the right of any
of the Manager's directors, officers, or employees who may also be a director,
officer or employee of the Fund to engage in any other business or to devote his
time and attention in part to the management or other aspects of any business,
whether of a similar or dissimilar nature, nor limit nor restrict the Manager's
right to engage in any other business or to render services of any kind to any
other corporation, firm, individual or association. Nothing in this Agreement
shall prevent the Manager or any affiliated person (as defined in the 0000 Xxx)
of the Manager from acting as investment advisor and/or principal underwriter
for any other person, firm or corporation and shall not in any way limit or
restrict the Manager or any such affiliated person from buying, selling, or
trading any securities or hedging instruments for its or their own accounts or
for the account of others for whom it or they may be acting, provided, however,
that the Manager expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of its obligations
to the Fund under the Agreement.
16. Neither this Agreement nor any transaction made pursuant hereto
shall be invalidated or in any way affected by the fact that directors,
officers, agents and/or shareholders of the Fund are or may be interested in the
Manager, or any successor or assignee thereof, as directors, officers,
shareholders or otherwise; that directors, officers, shareholders or agents of
the Manager are or may be interested in the Fund as directors, officers,
shareholders or otherwise; or that the Manager or any successor or assignee,
is or may be interested in the Fund as shareholders or otherwise; provided,
however, that neither the Manager nor any officer or director of the Manager or
of the Corporation shall sell to or buy from the Fund any property or security
other than a security issued by the Fund, except in accordance with an
applicable order or exemptive rule of the Commission.
17. Except as otherwise provided herein or authorized by the Board of
Directors of the Corporation from time to time, the Manager shall for all
purposes herein deemed to be an independent contractor, and, except as expressly
provided or authorized in this Agreement, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. The
Fund and the Manager are not partners or joint venturers with the other and
nothing herein shall be construed so as to make them such partners or joint
venturers or impose any liability as such on either of them.
18. During the term of this Agreement, the Corporation agrees to furnish
the Manager at its principal office with all prospectuses, proxy statements,
report to stockholders, sales literature, or other material prepared for
distribution to stockholders of the Fund or the public, which refer to the
Manager in any way, prior to use thereof and not to use such material if the
Manager reasonably objects in writing within five (5) business days (or such
other time as may be mutually agreed) after receipt thereof. In the event of
termination of this Agreement, the Corporation will continue to furnish to the
Manager copies of any of the above mentioned materials which refer in any way to
the Manager. The Corporation shall furnish or otherwise make available to the
Manager such other information relating to the business affairs of the
Corporation or of the Fund as the Manager at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder. The
Corporation agrees that, in the event that the Manager ceases to be the Fund's
investment manager for any reason, the Fund will (unless the Manager otherwise
agrees in writing) promptly take all necessary steps to propose to the
shareholders at the next regular meeting that the Fund change to a name not
including the words "First Pacific". The Corporation agrees that the words
"First Pacific" in its name is derived from the name of the Manager and is the
property of the Manager for copyright and all other purposes and that therefore
such word may be freely used by the Manager as to other investment activities or
other investment products.
19. This Agreement may be amended by mutual consent, but the consent of
the Fund must be obtained in conformity with the requirement of the 1940 Act.
20. This Agreement shall be subject to all applicable provisions of law,
including, without limitation, the applicable provisions of the 1940 Act.
21. This Agreement shall be governed by and construed in accordance with
the laws of the State of Hawaii.
22. Compensation to be paid to the Manager hereunder shall be separate
and distinct from organizational expenses, if any, to be reimbursed to the
Manager.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
FIRST PACIFIC MUTUAL FUND, INC.
By:
__________________________________________
Xxxxxxxx X.X. Xxx, President
[Corporate Seal]
Attest:
__________________________________________
Xxxxxx Xxxx Xxx, Secretary
XXX FINANCIAL GROUP INC.
By:
__________________________________________
Xxxxxxxx X.X. Xxx, President
[Corporate Seal]
Attest:
__________________________________________
Xxxxxx Xxxx Xxx, Secretary
