INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the ____ day of October, 1995, by and between
XXXXXXXXXXX/QUEST FOR VALUE FAMILY OF FUNDS, a Massachusetts business trust
(hereinafter referred to as the "Company"), and XXXXXXXXXXX MANAGEMENT
CORPORATION (hereinafter referred to as "OMC").
WHEREAS, the Company is an open-end, diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "Investment
Company Act"), and OMC is an investment adviser registered as such with the
Commission under the Investment Advisers Act of 1940;
WHEREAS, each of Growth and Income Fund, Small Capitalization Fund,
Opportunity Fund and Officers Fund is a separately capitalized Series (the
"Series") of the Shares of beneficial interest to be issued by the Company
("Shares") pursuant to the Company's registration statement;
WHEREAS, the Company desires that OMC shall act as its investment adviser
with respect to each Series pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. GENERAL PROVISIONS:
The Company hereby employs OMC and OMC hereby undertakes to act as the
investment adviser of the Company in connection with, and for the benefit of,
each Series(including any Series hereafter created) and to perform for the
Company such other duties and functions in connection with each Series for the
period and on such terms as set
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forth in this Agreement. OMC shall, in all matters, give to the Company and its
Board of Trustees (the "Trustees") the benefit of its best judgement, effort,
advice and recommendations and shall, at all times conform to, and use its best
efforts to enable the Company to conform to (i) the provisions of the Investment
Company Act and any rules or regulations thereunder; (ii) any other applicable
provisions of state or Federal law; (iii) the provisions of the Declaration of
Trust and By-Laws of the Company as amended from time to time; (iv) policies and
determinations of the Trustees; (v) the fundamental policies and investment
restrictions of each Series as reflected in the registration statement of the
Company under the Investment Company Act or as such policies may, from time to
time, be amended and (vi) the Prospectus and Statement of Additional Information
of each Series in effect from time to time. The appropriate officers and
employees of OMC shall be available upon reasonable notice for consultation with
any of the Trustees and officers of the Company with respect to any matters
dealing with the business and affairs of the Company including the valuation of
portfolio securities of the Company which are either not registered for public
sale or not traded on any securities market.
2. INVESTMENT MANAGEMENT:
(a) OMC shall, subject to the direction and control by the Trustees,
(i) regularly provide investment advise and recommendations to the Company with
respect to the investments, investment policies and the purchase and sale of
securities and other investments for each Series; (ii) supervise continuously
the investment program of each Series of the Company and the composition of its
portfolio and determine what securities shall be purchased or sold by; and(iii)
arrange, subject to the provisions of paragraph 7 hereof, for the
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purchase of securities and other investments for each Series of the Company and
the sale of securities and other investments held in the portfolio of each
Series.
(b) Provided that the Company shall not be required to pay any
compensation for services under this Agreement other than as provided by the
terms of the Agreement and subject to the provisions of paragraph 7 hereof, OMC
may obtain investment information, research or assistance from any other person,
firm or corporation to supplement, update or otherwise improve its investment
management services including entering into sub-advisory agreements with other
affiliated or unaffiliated registered investment advisors to obtain specialized
services.
(c) Provided that nothing herein shall be deemed to protect OMC from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, OMC shall not be liable for any loss sustained by reason of good
faith errors or omissions in connection with any matters to which this Agreement
relates.
(d) Nothing in this Agreement shall prevent OMC or any entity
controlling, controlled by or under common control with OMC or any officer
thereof from acting as investment adviser for any other person, firm or
corporation or in any way limit or restrict OMC or any of its directors,
officers, stockholders or employees from buying, selling or trading any
securities or other investments for its or their own account or for the account
of others for whom it or they may be acting, provided that such activities will
not adversely affect or otherwise impair the performance by OMC of its duties
and obligations under this Agreement.
3. OTHER DUTIES OF OMC:
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OMC shall, at its own expense, provide and supervise the activities of
all administrative and clerical personnel as shall be required to provide
effective corporate administration for the Company, including the compilation
and maintenance of such records with respect to its operations as may reasonably
be required; the preparation and filing of such reports with respect thereto as
shall be required by the Commission; composition of periodic reports with
respect to operations of each Series of the Company for its shareholders;
composition of proxy materials for meetings of the Company's shareholders; and
the composition of such registration statements as may be required by Federal
and state securities laws for continuous public sale of Shares of each Series of
the Company. OMC shall, at its own cost and expense, also provide the Company
with adequate office space, facilities and equipment. OMC shall, at its own
expenses, provide such officers for the Company as the Board of Trustees may
request.
4. ALLOCATION OF EXPENSES:
All other costs and expenses of each Series of the Company not
expressly assumed by OMC under this Agreement, or to be paid by the Distributor
of the Shares of each Series of the Company, shall be paid by the Company on
behalf of the appropriate Series, including, but not limited to: (i) interest,
taxes and governmental fees; (ii) brokerage commissions and other expenses
incurred in acquiring or disposing of the portfolio securities and other
investments of each Series; (iii) insurance premiums for fidelity and other
coverage requisite to its operations; (iv) compensation and expenses of its
Trustees other than those affiliated with OMC; (v) legal and audit expenses;
(vi) custodian and transfer agent fees and expenses; (vii) expenses incident to
the redemption of its Shares; (viii) expenses incident to
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the issuance of its Shares against payment therefor by or on behalf of the
subscribers thereto; (ix) fees and expenses, other than as hereinabove provided,
incident to the registration under Federal and state securities laws of Shares
of the Company and Series for public sale; (x) expenses of printing and mailing
reports, notices and proxy materials to shareholders of the Company and each
Series; (xi) except as noted above, all other expenses incidental to holding
meetings of the Company's shareholders; and (xii) such extraordinary non-
recurring expenses as may arise, including litigation, affecting the Company or
any Series thereof and any legal obligation which the Company, or any Series of
the Company, may have to indemnify its officers and Trustees with respect
thereto. Any officers or employees of OMC (or any entity controlling,
controlled by, or under common control with OMC) who also serve as officers,
Trustees or employees of the Company shall not receive any compensation from the
Company or any Series thereof for their services.
5. COMPENSATION OF OMC:
The Company agrees to pay OMC and OMC agrees to accept as full
compensation for the performance of all functions and duties on its part to be
performed pursuant to the provisions hereof, a fee computed on the total net
asset value of each Series of the Company as of the close of each business day
and payable monthly at the annual rate for each Series set forth on Schedule A
hereto.
6. USE OF NAME "XXXXXXXXXXX" OR "QUEST FOR VALUE":
OMC hereby grants to the Company a royalty-free, non-exclusive license
to use the name "Xxxxxxxxxxx" or "Quest For Value" in the name of the Company
for the duration of this Agreement and any extensions or renewals thereof. To
the extent necessary to protect OMC's rights to the name "Xxxxxxxxxxx" or "Quest
For Value" under applicable law, such
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license shall allow OMC to inspect and, subject to control by the Company's
Board, control the nature and quality of services offered by the Company under
such name and may, upon termination of this Agreement, be terminated by OMC, in
which event the Company shall promptly take whatever action may be necessary to
change its name and discontinue any further use of the name "Xxxxxxxxxxx" or
"Quest For Value" in the name of the Company or otherwise. The name
"Xxxxxxxxxxx" and "Quest For Value" may be used or licensed by OMC in connection
with any of its activities, or licensed by OMC to any other party.
7. PORTFOLIO TRANSACTIONS AND BROKERAGE:
(a) OMC (and any Sub Advisor) is authorized, in arranging the
purchase and sale of the portfolio securities and other investments of each
Series of the Company to employ or deal with such members of securities or
commodities exchanges, brokers or dealers (hereinafter "broker-dealers"),
including "affiliated" broker-dealers (as that term is defined in the Investment
Company Act), as may, in its best judgment, implement the policy of the Fund to
obtain, at reasonable expense, the "best execution" (prompt and reliable
execution at the most favorable security price obtainable) of the portfolio
transactions of each Series of the Company as well as to obtain, consistent with
the provisions of subparagraph (c) of this paragraph 7, the benefit of such
investment information or research as will be of significant assistance to the
performance by OMC (and any Sub Advisor) of its (their) investment management
functions.
(b) OMC (and any Sub Advisor) shall select broker-dealers to effect
the portfolio transactions of each Series of the Company on the basis of its
estimate of their ability to obtain best execution of particular and related
portfolio transactions. The abilities of a broker-dealer to obtain best
execution of particular portfolio transaction(s) will be judged by OMC (or any
Sub Advisor) on the basis of all relevant factors and considerations including,
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insofar as feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to facilitate the
portfolio transactions of each Series of the Company by participating therein
for its own account; the importance to each Series of the Company of speed,
efficiency or confidentiality; the broker-dealer's apparent familiarity with
sources from or to whom particular securities or other investments might be
purchased or sold; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of each Series of the
Company.
(c) OMC (and any Sub Advisor) shall have discretion, in the interest
of the Company and each Series, to allocate brokerage on the portfolio
transactions of each Series of the Company to broker-dealers, other than an
affiliated broker-dealers, qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as such services
are defined in Section 28(e)(3) of the Securities Exchange Act of 1934) for each
Series of the Company and/or other accounts for which OMC or its affiliates (or
any Sub Advisor) exercise "investment discretion" (as that term is defined in
Section 3(a)(35) of the Securities Exchange Act of 1934) and to cause the
Company or a Series to pay such broker-dealers a commission for effecting a
portfolio transaction for the Company or a Series that is in excess of the
amount of commission another broker-dealer adequately qualified to effect such
transaction would have charged for effecting that transaction, if OMC (or any
Sub Advisor) determines, in good faith, that such commission is reasonable in
relation to the value of the brokerage and/or research services provided by such
broker-dealer viewed in terms of either that particular transaction or the
overall responsibilities of OMC or its affiliates (or any Sub Advisor) with
respect to accounts as to which they exercise investment discretion. In reaching
such determination, OMC (or any Sub Advisor) will not be required to place
or attempt to place
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a specific dollar value on the brokerage and/or research services provided or
being provided by such broker-dealer. In demonstrating that such determinations
were made in good faith, OMC (and any Sub Advisor) shall be prepared to show
that all commissions were allocated for purposes contemplated by this Agreement
and that the total commissions paid by the Company and each Series over a
representative period selected by the Company's Trustees were reasonable in
relation to the benefits to the Company and each Series.
(d) OMC (or any Sub Advisor) shall have no duty or obligation to
seek advance competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to select any broker-
dealer on the basis of its purported or "posted" commission rate but will, to
the best of its ability, endeavor to be aware of the current level of the
charges of eligible broker-dealers and to minimize the expense incurred by the
Company and each Series for effecting its portfolio transactions to the extent
consistent with the interests and policies of the Company and each Series as
established by the determinations of the Board of Trustees of the Company and
the provisions of this paragraph 7.
(e) The Company recognizes that an affiliated broker-dealer: (i) may
act as one of the Company's regular brokers for the Company or a Series thereof
so long as it is lawful for it so to act; (ii) may be a major recipient of
brokerage commissions paid by the Company or a Series thereof; and (iii) may
effect portfolio transactions for the Company or a Series thereof only if the
commissions, fees or other renumeration received or to be received by it are
determined in accordance with procedures contemplated by any rule, regulation or
order adopted under the Investment Company Act to be within the permissible
level of such commissions.
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(f) Subject to the foregoing provisions of this paragraph 7, OMC (and
any Sub Advisor) may also consider sales of Shares of the Company, each Series
thereof and the other funds advised by OMC and its affiliates as a factor in
the selection of broker-dealers for its portfolio transactions.
8. DURATION:
This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 10 hereof, this Agreement shall
remain in effect for a period of two (2) years and thereafter from year to year,
so long as such continuance shall be approved at least annually by the Company's
Board of Trustees, including the vote of the majority of the Trustees of the
Company who are not parties to this Agreement or "interested persons" (as
defined in the Investment Company Act) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, or by the holders of
a "majority" (as defined in the Investment Company Act) of the outstanding
voting securities of the Company, or each Series thereof, and by such a vote of
the Company's Board of Trustees.
9. DISCLAIMER OF SHAREHOLDER OR TRUSTEE LIABILITY:
OMC understands and agrees that the obligations of the Company under
this Agreement are not binding upon any shareholder or Trustee of the Company
personally, but bind only the Company and the Company's property; OMC represents
that it has notice of the provisions of the Declaration of Trust of the Company
disclaiming shareholder or Trustee liability for acts or obligations of the
Company.
10. TERMINATION.
This Agreement may be terminated (i) by OMC at any time without
penalty upon sixty days' written notice to the Company (which notice may be
waived by the Company); or (ii)
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by the Company at any time without penalty upon sixty days' written notice to
OMC (which notice may be waived by OMC) provided that such termination by the
Company shall be directed or approved by the vote of a majority of all of the
Trustees of the Company then in office or by the vote of the holders of a
"majority" of the outstanding voting securities of the Company (as defined in
the Investment Company Act).
11. ASSIGNMENT OR AMENDMENT:
This Agreement may not be amended, or the rights of OMC hereunder
sold, transferred, pledged or otherwise in any manner encumbered without the
affirmative vote or written consent of the holders of the "majority" of the
outstanding voting securities of the Company. This Agreement shall
automatically and immediately terminate in the event of its "assignment," as
defined in the Investment Company Act.
12. DEFINITIONS:
The terms and provisions of the Agreement shall be interpreted and
defined in a manner consistent with the provisions and definitions contained in
the Investment Company Act.
XXXXXXXXXXX/QUEST FOR VALUE
FAMILY OF FUNDS
Attest: ______________________ By: _______________________
Title: _______________________
XXXXXXXXXXX MANAGEMENT
CORPORATION
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Attest: ______________________ By: _______________________
Xxxxxxxxx X. Xxxx Xxxxxx X. Xxxxxxx
Secretary Executive Vice President
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SCHEDULE A
TO
INVESTMENT ADVISORY AGREEMENT
BETWEEN
XXXXXXXXXXX/QUEST FOR VALUE FAMILY OF FUNDS
AND
XXXXXXXXXXX MANAGEMENT CORPORATION
-------------------------------------------------------------------------------
NAME OF SERIES ANNUAL FEE AS A PERCENTAGE OF DAILY
TOTAL NET ASSETS
-------------------------------------------------------------------------------
Growth and Income Fund 0.85% of all net assets
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Officers Fund 1.00% of all net assets
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Small Capitalization Fund 1.00% of first $400 million of net assets
0.90% of next $400 million of net assets
0.85% of net assets over $800 million
-------------------------------------------------------------------------------
Opportunity Fund 1.00% of first $400 million of net assets
0.90% of next $400 million of net assets
0.85% of net assets of $800 million
-------------------------------------------------------------------------------
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