Item 77Q1(e)
KELMOORE STRATEGIC TRUST
INTERIM INVESTMENT ADVISORY AGREEMENT
This Interim Investment Advisory Agreement (Agreement) effective as of August
5, 2008 (the Effective Date), is by and between Kelmoore Strategic Trust, a
Delaware statutory trust (the Trust), on behalf of each series of the Trust
listed in Schedule I attached hereto (individually, a Fund and collectively,
the Funds) and Xxxxxx & Associates Investment Counsel, Inc., a California
corporation (the Adviser or, at times, Xxxxxx).
WHEREAS, the Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the 1940 Act);
WHEREAS, Xxxxxx is registered as an investment adviser under the Investment
dvisers Act of 1940, as amended, and as a broker-dealer under the Securities
Exchange Act of 1934, as amended; and
WHEREAS, the Trust desires to retain the Adviser to render investment advisory
and other services to the Funds pursuant to the terms and provisions of this
Agreement, and the Adviser is interested in furnishing said services.
NOW THEREFORE, in consideration of the mutual agreements and covenants
contained in this Agreement, the parties hereto agree as follows:
SECTION 1. APPOINTMENT.
The Trust hereby appoints the Adviser to act as investment adviser to the Funds
listed on Schedule I hereto for the period and on the terms and subject to the
conditions set forth in this Agreement. The Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
SECTION 2. INVESTMENT ADVISORY AND OTHER SERVICES.
Subject to the supervision of the Trusts Board of Trustees (the Board), which
will satisfy the fund governance standards defined in Rule 0-1(a)(7) under the
1940 Act, the Adviser shall provide a continuous investment program for each of
the Funds, including investment, research and management with respect to all
securities and investments and cash equivalents in the Funds. The Adviser shall
determine from time to time what securities and other investments will be
purchased, retained or sold by the Trust with respect to the Funds. The Adviser
shall provide the services to each Fund under this Agreement in accordance with
its respective investment objective, policies, and restrictions as stated in
such Funds most current Prospectus and Statement of Additional Information,
including all amendments or supplements thereto, and in such resolutions of
the Board as may be adopted from time to time. In providing these services,
the Adviser shall be authorized to engage one or more
sub-advisers for each Fund to carry out the investment programs of the Funds
(subject to the approval of the Board). To the extent that the Adviser
does hire any sub-adviser, it will thereafter continuously review,
supervise and (where appropriate) administer the investment programs
of the Funds. The Adviser further agrees that it or its appointed sub-adviser:
(a) will use the same skill and care in providing such services as
it uses in providing
services to any fiduciary accounts for which it has investment
responsibilities;
(b) will conform with all applicable rules and regulations of the U.S.
Securities and Exchange Commission (the Commission) and, in addition,
will conduct its activities under this Agreement in accordance with
any applicable regulations of any governmental authority pertaining
to the investment advisory activities of the Adviser;
(c) may place orders pursuant to its investment determinations for the
Funds either directly with an issuer or with any broker-dealer, including
Xxxxxx, as broker. In placing orders with broker-dealers, the Adviser will
seek to obtain best execution and is hereby directed to seek prompt
execution of orders in an effective manner at the most favorable price
or overall proceeds. Consistent with this obligation, the Adviser
may, in its discretion, purchase and sell portfolio securities to and
from broker-dealers who provide the Adviser with brokerage and research
services (within the meaning of Section 28(e) of the Securities Exchange
Act of 1934) and any interpretations thereto. Subject to the Boards
review from time to time with respect to the extent and continuation
of this policy, the Adviser is authorized to pay a broker-dealer who
provides such brokerage and research services in connection with effecting
a securities transaction for any of the Funds a commission that may be in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Adviser
determines in good faith that such commission was reasonable in relation
to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or
the overall responsibilities of the Adviser with respect to the accounts
as to which it exercisesinvestment discretion. On occasions when the
Adviser deems the purchase or sale of a security to be in the best
interest of one or more of the Funds as well as of other clients,
the Adviser, to the extent permitted by applicable laws and regulations,
and consistent with its duty to seek best execution, may aggregate
the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most 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 Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Funds and to such other
clients in placing orders with Xxxxxx as broker for the Trust. Xxxxxx
will comply with the procedures adopted by the
Trusts Board pursuant to Rule 17e-1 under the 1940 Act.
(d) will maintain all books and records with respect to the securities
transactions of the Funds and will furnish the Trusts Board such periodic
and special reports with
respect to each Funds investment activities as the Board may reasonably
request; and
(e) will advise and assist the officers of the Trust in taking such
actions as may be necessary or appropriate to carry out the decisions
of the Board and of the appropriate committees of the Board regarding
the conduct of the business of the Funds.
SECTION 3. EXPENSES.
During the term of this Agreement, the Adviser will pay all expenses
incurred by it in connection with its activities, duties and obligations
under this Agreement, other than the costs of securities (including
brokerage fees, if any) purchased for the Funds. The Adviser will also
furnish the Funds with office space and equipment necessary for the
conduct of the Funds business.
SECTION 4. COMPENSATION.
For the services provided and the expenses assumed pursuant to this
Agreement, each of the Funds will pay the Adviser and the Adviser
will accept as full compensation therefore the annual fee set forth
on Schedule I hereto. However, in no event shall compensation paid to
the Adviser hereunder exceed the amount permitted by Rule 15a-4 under
the 1940 Act. The obligations of the Funds to pay the above described
fee to the Adviser will begin as of the Effective Date of this Agreemen
(as defined in Section 6 below). Such fee shall be paid monthly based
upon each respective Funds average daily net assets
calculated in the manner provided in the Prospectus and Statement of
Additional Information then in effect.
The fee shall be accrued daily by each Fund and paid within five
(5) business days after the end of each calendar month to the Adviser.
If this Agreement is terminated before the end of any month, the fee
to the Adviser shall be prorated for the portion of any month
in which this Agreement is in effect and shall be payable within ten
(10) days after the
date of termination.
The Adviser may voluntarily waive fees or reimburse expenses to a Fund
at any time. Any amounts waived or reimbursed by the Adviser are subject
to reimbursement by the Fund within the following three years, to
the extent such reimbursement by the Fund would not
cause the Fund to exceed any current expense limitation.
Notwithstanding any provisions of this Agreement, the fees earned by
the Adviser under this Agreement shall be held in an interest-bearing
escrow account with the Funds custodian or a bank. If a majority of the
Funds outstanding voting securities approves a long-term
advisory agreement with the Adviser within 150 days from the Effective
Date of this Agreement, the amount in the escrow account (including
interest earned) will be paid to the Adviser. If a majority of the
Funds outstanding voting securities does not approve a long-term
advisory agreement with the Adviser, the Adviser will be paid with
respect to such Fund, out of the escrow account, the lesser of (i) any
costs incurred in performing this Agreement (plus interest earned on
that amount while in escrow); or (2) the total amount in the escrow
account (plus interest earned).
SECTION 5. LIMITATION OF LIABILITY.
The Adviser shall not be liable for any error of judgment or mistake of
fact or law or for any loss suffered by the Funds in connection with the
performance of this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
SECTION 6. DURATION AND TERMINATION.
This Agreement shall become effective on the Effective Date and shall remain
in effect until the earlier of (i) 150 days after the Effective Date, (ii)
termination of the Agreement as provided herein, or (iii) approval of a
new long-term advisory agreement.
Notwithstanding the foregoing, this Agreement may be terminated with
respect to all or any of the Funds: (a) at any time without penalty of
payment upon the vote of a majority of the Funds board of trustees or by
vote of the majority of the Funds outstanding voting securities, upon ten
(10) days written notice to the Adviser, or (b) by the Adviser at any time
without penalty, upon sixty (60) days written notice to the applicable Fund or
Funds. This Agreement will also automatically terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed to the other party at the principal office
of such party.
As used in this Agreement, the terms majority of the outstanding voting
securities, interested persons and assignment shall have the same meanings
as ascribed to such terms in the 1940 Act.
SECTION 7. ADVISERS REPRESENTATIONS.
The Adviser hereby represents and warrants that it is willing, and possesses
all requisite legal authority, to provide the services contemplated by this
Agreement without violation of applicable laws and regulations.
SECTION 8. AMENDMENT OF THIS AGREEMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
SECTION 9. MISCELLANEOUS.
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. 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.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed
by the laws of the State of California.
All persons contracting with or having any claim against the Trust or a
particular Fund shall look only to the assets of all Funds or such particular
Fund for payment under such contract or claim; and neither the Board nor,
when acting in such capacity, any of the Trusts shareholders, officers,
employees or agents, whether past, present or future, shall be personally
liable therefore.
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.
KELMOORE STRATEGIC TRUST XXXXXX & ASSOCIATES
INVESTMENT COUNSEL, INC.
By: By:
Name: Name:
Title: Title:
SCHEDULE I
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NAME OF FUND ANNUAL FEE
Kelmoore Strategy Fund 1.00%
Kelmoore Strategy Eagle Fund 1.00%
Kelmoore Strategy Liberty Fund 1.00%
KELMOORE STRATEGIC TRUST XXXXXX & ASSOCIATES
INVESTMENT COUNSEL, INC.
By: By:
Name: Name:
Title: Title:
INTERIM SUB-ADVISORY AGREEMENT
AGREEMENT dated July 23, 2008, and effective on or about August 1, 2008,
among XXXXXX & ASSOCIATES INVESTMENT COUNSEL, INC., a California
corporation (the Adviser), and WESTCHESTER CAPITAL MANAGEMENT, INC.,
a New York corporation (the Sub-Adviser) (each a Party, and together,
the Parties).WHEREAS, the Adviser and the Sub-Adviser are registered
with the Securities and Exchange Commission (SEC) as investment advisers
under the Investment Advisers Act of 1940, as amended (the Advisers Act)
and engage in the business of providing investment management
services; and
WHEREAS, the Adviser has entered into an Interim
Investment Advisory Agreement dated July 23, 2008 (the Advisory Agreement)
with Kelmoore Strategic Trust (the Trust), a Delaware business trust
registered with the SEC as an open-end management investment company
under the Investment Company Act of 1940, as amended (the 1940 Act),
currently consisting of several separate series of shares (each
a Series), each having its own investment objectives and policies and
which is authorized to create more Series, and each of which may be
issued in one or more classes; and WHEREAS, the Advisory Agreement
permits the Adviser, subject to the supervision and direction of the
Trusts Board of Trustees (the Board), to delegate certain of its duties
under the Advisory Agreement to other investment advisers, subject to
the requirements of the 1940 Act; and
WHEREAS, the Adviser desires to retain Sub-Adviser to assist it in the
provision of a continuous investment program for that portion of the assets
of one or more of the Trusts Series listed on Exhibit A hereto (as the same
may be amended from time to time by mutual written consent of the Parties)
(each, a Fund; collectively, the Funds), which assets the Adviser may from
time to time assign to the Sub-Adviser (the Sub-Adviser Assets), and
the Sub-Adviser is willing to render such services subject to the terms and
conditions set forth in this Agreement.
WHEREAS, the Board, including a majority of the Trustees who are not
interested persons of the Trust, have received and reviewed such information
as it believes to be reasonably necessary to evaluate the terms, scope and
quality of services to be provided to the Trust under this Agreement; and
WHEREAS, a majority of the Trustees of the Trust are not interested persons
of the Trust, and those Trustees select and nominate any other disinterested
Trustees of the Trust; and
WHEREAS, the legal counsel for the independent Trustees of the Trust is an
independent legal counsel; and
WHEREAS, the Adviser and Trust propose to seek and obtain shareholder
approval of a sub-advisory
agreement within the time limit specified in Rule 15a-4 under the 1940 Act;
andWHEREAS, the Board has voted in person to approve this Agreement. NOW,
THEREFORE, in consideration of mutual covenants recited below, the Parties
agree and promise as follows:
1. Appointment as Sub-Adviser. The Adviser hereby retains the Sub-Adviser
to actas investment adviser for and to manage the Sub-Adviser Assets, subject
to the supervision of the Adviser and the Board and subject to the terms of
this Agreement; and the Sub-Adviser hereby accepts such employment. In such
capacity, the Sub-Adviser shall be responsible for the investment management
of the Sub-Adviser Assets. The Sub-Adviser agrees to exercise the
same skill and care in performing its services under this Agreement as the
Sub-Adviser exercises in performing similar services with respect to other
fiduciary accounts for which the Sub-Adviser has investment responsibilities.
2. Duties of Sub-Adviser.
(a) Investments. The Sub-Adviser is hereby authorized and directed and
hereby agrees, subject to the stated investment policies and restrictions of
each Fund as set forth in such Funds prospectus and statement of additional
information as currently in effect and as supplemented or amended from time
to time (collectively referred to as the Prospectus) and subject to the
directions of the Adviser and the Board, as may be amended from time totime,
to purchase, hold and sell investments for the Sub-Adviser Assets and to
monitor on acontinuous basis the performance of the Sub-Adviser Assets.
In providing these services, the Sub-Adviser will conduct a continual
program of investment, evaluation and, if appropriate, sale and
reinvestment of the Sub-Adviser Assets. The Adviser
agrees to provide the Sub-Adviser information concerning a Fund, its assets
available or to become available for investment, and generally as to the
conditions of a Funds or the Trusts affairs.
(b) Compliance with Applicable Laws and Governing Documents. In the performance
of its duties and obligations under this Agreement, the Sub-Adviser shall with
respect to Sub-Adviser Assets, act in conformity with the Trusts Declaration of
Trust and By-Laws, the Prospectus(es), and with the instructions and directions
eceived in writing from the Adviser or the Board and will conform to and comply
with the requirements of the 1940 Act, the Advisers Act, the Internal Revenue
Code of 1986, as amended (the Code), and all other applicable federal and
state laws and regulations. The Adviser will provide the Sub-Adviser with a
copy of the minutes of the meetings of the Board to the extent they may
affect a Fund or the duties of the Sub-Adviser, and with the copies of any
financial statements or reports made by a Fund to its shareholders, and
any further materials or information which the Sub-Adviser may reasonably
request to enable it to perform its functions under this Agreement.
The Adviser shall provide the Sub-Adviser such information as may reasonably be
necessary for the Sub-Adviser to fulfill its compliance obligations under the
immediately previous paragraph.The Adviser will provide the Sub-Adviser with
reasonable (30 days) advance notice, in writing, of any change in a Funds
investment objectives, policies and restrictions as stated in the
Prospectus, and the Sub-Adviser shall, in the performance of its duties and
obligations under this Agreement, manage the Sub-Adviser Assets consistent with
such changes, provided the Sub-Adviser has actual receipt of such prior notice
from the Trust or Adviser at least five business days in advance of the
effectiveness of such changes. In addition to such notice, the Adviser shall
provide to the Sub-Adviser a copy of a modified Prospectus reflecting such
changes.The Sub-Adviser hereby agrees to provide to the Adviser in a
timely manner, in writing, such information relating to the Sub-Adviser
and its relationship to, and actions for, a Fund required by law to be
contained in the Prospectus or in the Trusts registration statement on
Form N-1A, as the same may be amended from time to time (Registration
Statement). The Sub-Adviser agrees that any such information provided
to the Adviser specifically for inclusion in the Prospectus
will be accurate in all material respects and not contain any omission of a
material fact known or which should have been known to the Sub-Adviser and was
required to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon
information furnished to the Sub-Adviser or to any affiliated person of the
Sub-Adviser by the Adviser or the Trust.
The Adviser shall provide the Sub-Adviser with complete copies of each
Registration Statement, application for exemptive relief, request for
no-action relief or any order or response thereafter made with the SEC
or the Internal Revenue Service with respect to the Trust, Sub-Adviser
Assets, or any Fund that has Sub-Adviser Assets, promptly after each
filing or document is made or submitted.
(c) Voting of Proxies. The Sub-Adviser shall have the power to vote, either
in person or by proxy, all securities in which the Sub-Adviser Assets may be
invested from time to time, and shall not be required to seek instructions
from the Adviser, the Trust or a Fund. At the request of the Trust, the
Sub-Adviser shall provide its recommendations as to the voting of such proxies.
If both the Sub-Adviser and another entity managing assets of a Fund have
invested in the same security, the Sub-Adviser and such other entity will
each have the power to vote those shares of such security
over which it has investment discretion. The Sub-Adviser agrees to provide
such reasonable assistance as may be necessary or appropriate to enable the
Adviser and the Trust to prepare and timely file with the SEC any required
disclosures of Sub-Advisers proxy voting policies and procedures and
Sub-Advisers voting record with respect to Sub-Adviser Assets.
(d) Agent. Subject to any other written instructions of the Adviser or
the Trust, the Sub-Adviser is hereby appointed the Advisers and the Trusts
agent and attorney-in-fact for the limited purposes of executing account
documentation, agreements, contracts and other documents as the
Sub-Adviser shall be requested by brokers, dealers, counterparties and
other persons in connection with its management of the Sub-Adviser Assets.
The Sub-Adviser agrees to provide the Adviser and the Trust with copies
of any such agreements intended to be executed on behalf of the Adviser
or the Trust, prior to the execution thereof. So long as the Sub-Adviser
has not acted in bad faith or in a manner which constitutes gross
negligence, it shall be fully indemnified by the Adviser and
the Trust, jointly and severally, against any and all losses (including
reasonableattorneys fees and expenses) in acting as agent and
attorney-in-fact underthis subsection (d).
(e) Brokerage. The Sub-Adviser will place orders pursuant to the
Sub-Advisers investment determinations for a Fund either directly with the
issuer or with any broker or dealer; provided, however, that in executing
portfolio transactions and selecting brokers or dealers, the Sub-Adviser
will use its best efforts to seek on behalf of a Fund the best overall
execution available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer,
and the reasonableness of the commission, if any,both for the specific
transaction and on a continuing basis. In evaluating the best overall terms
available, and in selecting the broker-dealer to execute a particular
transaction the Sub-Adviser may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to a Fund and/or other accounts
over which the Sub-Adviser may exercise investment discretion. The Sub-Adviser
is authorized, unless restricted in writing by the Board, to pay to a broker
or dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for any of the Funds that is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Sub-Adviser determines in good faith
that such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer viewed in terms of
that particular transaction or in terms of the overall responsibilities of
the Sub-Adviser to a Fund. In addition, the Sub-Adviser is authorized to
allocate purchase and sale orders for portfolio securities to brokers or
dealers (including brokers and dealers that are affiliated with the
Adviser, the Sub-Adviser, or the Trusts principal underwriter) to take
into account the sale of shares of the Trust if the Sub-Adviser believes
that the quality of the transaction and the commission are comparable
to what they would be with other qualified firms. In addition to the
above stated considerations, the Sub-Adviser will direct brokerage
commissions to brokers or dealers to finance the distribution of
Trust shares only to the extent permitted by applicable law and regulation.
(f) Securities Transactions. In no instance, however, will any Funds
portfolio securities be purchased from or sold to the Adviser, the
Sub-Adviser, the Trusts principal underwriter, or any affiliated person
of either the Trust, the Adviser, the Sub-Adviser or the Trusts principal
underwriter, acting as principal in the transaction, except to the extent
permitted by the SEC and the 0000 Xxx.Xxx Sub-Adviser, including its
Access Persons (as defined in subsection (e) of Rule 17j-1 under the
1940 Act), agrees to observe and comply with Rule 17j-1 and its Code of
Ethics (which shall comply in all material respects with Rule
17j-1), as the same may be amended from time to time. On at least an annual
basis, theSub-Adviser will comply with the reporting requirements of
Rule 17j-1, which may include either (i) certifying to the Adviser that
the Sub-Adviser and its Access Persons have complied with the Sub-Advisers
Code of Ethics with respect to the Sub-Adviser Assets, or (ii) identifying
any material violations which have occurred with respect to the Sub-Adviser
Assets and (iii) certifying that it has adopted procedures reasonably
necessary to prevent Access Persons from violating the Sub-Advisers
Code of Ethics. The Sub-Adviser will also submit its existing Code of
Ethics for initial approval by the Board and subsequently
within six months of any material change thereto.
The Sub-Adviser agrees to observe and comply with Rule 206(4)-7 of the Advisers
Act, as the same may be amended from time to time. On at least an
annual basis, the Sub-Adviser will comply with the review requirements
of Rule 206(4)-7, which may include either (i) certifying to the Adviser
that the Sub-Adviser has complied with its own compliance policies and
procedures, (ii) identifyingany material violations which have occurred
with respect to the Sub-Advisers compliance policies and procedures and
(iii) certifying that it has adopted or amended the policies and
procedures to prevent future violations of the Sub-Advisers
compliance policies and procedures. The Sub-Adviser will also submit its
existing compliance policies and procedures for initial approval by the Board
and subsequently within six months of any material change thereto.
(g) Books and Records. The Sub-Adviser shall maintain separate detailed
records of all matters pertaining to the Sub-Adviser Assets, including,
without limitation, brokerage and other records of all securities transactions.
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 Sub-Adviser on behalf of the Trust are the property of
the Trust and will be surrendered promptly to the Trust on request. The
Sub-Adviser further agrees to preserve for the periods prescribed in Rule
31a-2 under the 1940 Act the records required to be maintained under Rule
31a-1 under the 1940 Act.Notwithstanding the foregoing, maintenance and
preservation of the records required under the provisions
of Rule 31a-1 and Rule 31a-2 promulgated under the 1940 Act shall be the
responsibility of the Adviser.
(h) Information Concerning Sub-Adviser Assets and the Sub-Adviser.
From time to time as the Adviser, and any consultants designated by the
Adviser, or the Trust may request, the Sub-Adviser will furnish the
requesting party reports on portfolio transactions and reports on
Sub-Adviser Assets held in the portfolio, all in such detail as the
Adviser, its consultant(s) or the Trust may reasonably request. Reports which
are not routinely provided by the Sub-Adviser shall be provided or
caused to be provided by the Sub-Adviser at the expense of the Trust.
The Sub-Adviser also will inform the Adviser in a timely manner of material
changes in portfolio managers responsible for Sub-Adviser Assets, any
changes in the ownership or management of the Sub-Adviser, or of material
changes in the control of the Sub-Adviser. Upon reasonable request, the
Sub-Adviser will make available its officers and employees to meet at the
Sub-Advisers offices with the Trusts Board to review the Sub-Adviser Assets.
From time to time, as reasonably requested by the Adviser or the Fund,
the Sub-Adviser also will provide such information or perform such
additional acts as are customarily provided or performed by a Sub-Adviser,
that may be required for a Fund or the Adviser to comply with their
respective obligations under applicable laws, including, without
limitation, the Code, the 1940 Act, the Advisers Act, the Securities
Act of 1933, as amended (the Securities Act) and any federal or state
securities laws, and any rule or regulation thereunder.The Adviser
and the Trust will provide such information to the Sub-Adviser or
perform such additional acts as may be reasonably necessary in order
for the Sub-Adviser to provide the services under this Agreement.
(i) Custody Arrangements. The Sub-Adviser shall on each business
day provide the Adviser, its consultant(s),and the Trusts custodian
such information as the Adviser, consultant(s) and the Trusts custodian
may reasonably request relating to all transactions concerning the
Sub-Adviser Assets.
(j) Historical Performance Information. To the extent agreed upon
by the Parties, the Sub-Adviser will provide the Trust with historical
performance information on similarly managed investment companies or for
other similarly managed accounts to be included in the Prospectus or for
any other uses permitted by applicable law. Provided that the historical
performance information so provided is numerically accurate, the Sub-Adviser
assumes no liability for its inclusion in the Prospectus, sales literature
or advertising or other use by the Adviser or the Trust.
3. Independent Contractor. In the performance of its duties hereunder,
the Sub-Adviser is and shall be an independent contractor and unless
otherwise expressly provided herein or otherwise authorized in writing,
shall have no authority to act for or represent a Fund, the Trust or the
Adviser in any way or otherwise be deemed an agent of a Fund, the Trust or
the Adviser.
4. Expenses. During the term of this Agreement, except as otherwise
provided herein, Sub-Adviser will pay all expenses incurred by it in
connection with its activities under this Agreement other than the costs of
securities, commodities and other investments (including brokerage commissions,
other transaction charges and interest, if any) purchased or otherwise
acquired, or sold or otherwise disposed of for a Fund. The Sub-Adviser
shall, at its sole expense, employ or associate itself with such persons
as it believes to be particularly fitted to assist it in the execution
of its duties under this Agreement. The Trust or the Adviser, as the case
may be, shall reimburse the Sub-Adviser for any expenses as may be
reasonably incurred by the Sub-Adviser, at the request of and on behalf
of a Fund or the Adviser. The Sub-Adviser shall keep and supply to the Trust
and the Adviser reasonable records of all such expenses.
5. Compensation. For the services provided and the expenses
assumed with respect to a Fund pursuant to this Agreement, the Sub-Adviser
will be entitled to the fee as described and for the Fund(s) listed on
Exhibit A.
The fees earned under this Agreement will be computed daily and held
in an interest bearing escrow account with the Trusts custodian or bank.
If a majority of the Funds outstanding voting securities approve a
sub-advisory agreement with the Sub-Adviser by the end of the duration
of this Agreement, as defined in Section 11(a) below, the amount in the
escrow account, including interest earned, will be paid to the
Sub-Adviser. If a majority of the Funds outstanding voting securities
do not approve a sub-advisory agreement with the Sub-Adviser, the
Sub-Adviser will be paid, out of the escrow account, the lesser of:
any costs incurred in performing this Agreement (plus interest earned
on that amount while in escrow); or the total amount in the escrow
account (plus interest earned).
If this Agreement is terminated prior to the end of any calendar month,
the fee, subject to the escrow provisions in the preceding paragraph,
shall be prorated for the portion of any month in which this Agreement
is in effect
according to the proportion which the number of calendar days, during
which this Agreement is in effect, bears to the number of calendar days
in the month, and shall be payable within 10 business days after the date of
termination.
6. Representations and Warranties of the Sub-Adviser. The Sub-Adviser
represents and warrants to the
Adviser and the Trust as follows:
(a) The Sub-Adviser is and will remain registered as an investment
adviser under the Advisers Act to the extent required thereby;
(b) The Sub-Adviser is a corporation duly organized and validly
existing under the laws of the State of New York, with the power to own
and possess its assets and carry on its business as it is now being conducted;
(c) The execution, delivery and performance by the Sub-Adviser of
this Agreement are within the Sub-Advisers powers and have been duly
authorized by all necessary action on the part of its Board of Directors
and no action by or in respect of, or filing with, any governmental body,
agency or official is required on the part of the Sub-Adviser for the
execution, delivery and performance by the Sub-Adviser of this Agreement
(except for any necessary amendments of the Sub-Advisers Form ADV),
and the execution, delivery and performance by the Sub-Adviser of this
Agreement do not contravene or constitute a default under (i) any
provision of applicable law, rule or regulation, (ii) the Sub-Advisers
governing instruments, or (iii) any agreement, judgment, injunction,
order, decree or other instrument binding upon the Sub-Adviser; and
(d) The Form ADV of the Sub-Adviser previously provided to the
Adviser (a copy of which is attached as Exhibit B to this Agreement)
is a true and complete copy of the form as currently filed with the
SEC and the information contained therein is accurate and complete in
all material respects and does not omit to state ny material fact
necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading. The Sub-Adviser
will promptly provide the Adviser and the Trust with a complete copy of
all subsequent amendments to its Form ADV (including, without limitation,
any necessary amendments of the Sub-Advisers Form ADV to reflect the
execution, delivery and performance of this Agreement).
7. Representations and Warranties of the Adviser. The Adviser
represents and warrants to the Sub-Adviser and the Trust as follows:
(a) The Adviser is and will remain registered as an investment a
dviser under the Advisers Act to the extent required thereby;
(b) The Adviser is a corporation duly organized and validly existing
under the laws of the State of California with the power to own and
possess its assets and carry on its business as it is now being conducted;
(c) The execution, delivery and performance by the Adviser of this
Agreement are within the Advisers powers and have been duly authorized by
all necessary action on the part of its Board of Directors, and no action
by or in respect of, or filing with, any governmental body, agency or
official is required on the part of the Adviser for the execution,
delivery and performance by the Adviser of this Agreement, and the execution,
delivery and performance by the Adviser of this Agreement do not contravene
or constitute a default under
(i) any provision of applicable law, rule or regulation, (ii) the
Advisers governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Adviser;
(d) The Form ADV of the Adviser as provided to the Sub-Adviser is
a true and complete copy of the form as currently filed with the SEC
and the information contained therein is accurate and complete in all material
respects and does not omit to state any material fact necessary in
order to make the statements made, in light of the circumstances under
which they were made, not misleading;
(e) The Adviser shall provide to the Sub-Adviser a complete
copy of each amendment to its Form ADV;
(f) The Adviser acknowledges that it received a copy of the
Sub-Advisers Form ADV (a copy of which is attached as Exhibit B) at
least 48 hours prior to the execution of this Agreement; and
(g) The Adviser and the Trust have duly entered into the Advisory
Agreement pursuant to which the Trust authorized the Adviser to enter
into this Agreement.
8. Use of Sub-Advisers Name and Logo. During the term of this
Agreement, the Adviser and the Trust shall have the non-exclusive and
non-transferable right to use Sub-Advisers name and logo in all materials
relating to the Funds, including all prospectuses, proxy statements,
reports to shareholders, promotional or sales literature and other
written materials prepared for distribution to shareholders of the Fund(s)
or the public. Upon termination of this Agreement, the Fund and the
Adviser shall forthwith cease to use such names (and logo), except as
provided for herein.
9. Survival of Representations and Warranties; Duty to Update
Information. All representations and warranties made by the Sub-Adviser
and the Adviser pursuant to Sections 6 and 7, respectively, shall survive
for the duration of this Agreement and the parties hereto shall promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
10. Liability and Indemnification.
(a) Liability. The duties of the Sub-Adviser shall be confined to
those expressly set forth herein, with respect to the Sub-Adviser Assets.
The Sub-Adviser shall not be liable for any loss arising out of any portfolio
investment or disposition 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 the Advisers Act which cannot be waived or modified hereby.
(b) Indemnification. The Sub-Adviser shall indemnify the Adviser,
the Trust and each Fund, and their respective affiliates and controlling
persons for any liability and expenses, including reasonable attorneys
fees, which the Adviser, the Trust or a Fund and their respective affiliates
and controlling persons may sustain as a result of the Sub-Advisers willful
misfeasance, bad faith, gross negligence, reckless disregard of its
duties hereunder or violation of applicable law, provided, however, that
neither the Adviser, the Trust nor any Fund shall be indemnified for any
liability or expenses which may be sustained as a result of the any one
of their breach of this Agreement, willful misfeasance, bad faith, gross
negligence, reckless disregard of its duties hereunder or violation of
applicable law.The Adviser shall indemnify the Sub-Adviser, its affiliates
and its control persons (who are not shareholders of the Trust), for any l
iability and expenses, including reasonable attorneys fees, howsoever
arising from, or in connection with, the Advisers breach of this Agreement
or its representations and warranties herein, willful misfeasance, bad faith,
gross negligence, reckless disregard of its duties hereunder or a violation
of applicable law; provided, however, that the Sub-Adviser shall not be
indemnified for any liability or expenses which may be sustained as a
result of the Sub-Advisers willful misfeasance, bad faith, gross negligence,
reckless disregard of its duties hereunder or violation of applicable law.
11. Duration and Termination.
(a) Duration. This Agreement, unless sooner terminated as provided
herein, shall become effective on or about August 1, 2008 or, if later,
the date the Board has voted in person to approve this Agreement (the
Effective Date) and shall continue in effect until a date no later than
150 days from the Effective Date.
(b) Termination. This Agreement may be terminated as to any Fund at
any time, without the payment of any penalty by: (1) the vote of a majority
of the Trustees of the Trust or by the Adviser, in each case, on not less
than 30 days nor more than 60 days written notice to the Sub-Adviser, or
(2) by any Party immediately upon written notice to the other Party in
the event of a breach of any provision to this Agreement by such other
Party, or (3) by the Sub-Adviser at any time without the payment of any
penalty, on not less than 30 days nor more than 60 days written notice
to the Adviser and the Trust.This Agreement shall not be assigned and
shall terminate automatically in the event of its assignment, except
as provided otherwise by any rule, exemptive relief, or no-action letter
provided or pursuant to the 1940 Act, or upon the termination of the
Advisory Agreement. In the event that there is a proposed change in control
of the Sub-Adviser which would act to terminate this Agreement, if a
vote of shareholders to approve continuation of this Agreement is at
that time deemed by counsel to the Trust to be required by the 1940 Act
or any rule or regulation thereunder, Sub-Adviser agrees to assume all
reasonable costs associated with soliciting shareholders of the appropriate
Fund(s) of the Trust, to approve continuation of this Agreement. Such
expenses include the costs of preparation and mailing of a proxy statement,
and of soliciting proxies. This Agreement shall extend to and bind the
successors and permitted assigns of the Parties.
12. Amendment. This Agreement may be amended by mutual written
consent of the Parties, provided that the terms of any material amendment
shall be approved by: (a) the Trusts Board of Trustees and (b) the vote of a
majority of those Trustees of the Trust who are not interested persons of
any Party to this Agreement cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required by applicable
law, and unless otherwise permitted pursuant to exemptive relief granted
by the SEC or no-action position granted by the SEC or its staff, by a
vote of the majority of a Funds outstanding voting securities.
13. Limitation of Liability. It is expressly agreed that the
obligations of the Funds hereunder shall not be binding upon any of
the trustees, shareholders, officers, agents or employees of Funds
personally, but only bind the property of the Funds, as provided in the T
rusts Declaration of Trust.
14. Confidentiality. Subject to the duties of the Adviser, the Trust
(and each Fund), and the Sub-Adviser to comply with applicable law,
including any demand of any regulatory or taxing authority having jurisdiction,
the Parties hereto shall treat as confidential all information pertaining
to a Fund and the actions of the Sub-Adviser, the Adviser, the Trust, and
a Fund in respect thereof. In accordance with Section 248.11 of Regulation
S-P (17 CFR 248.1-248.30), Sub-Adviser will not directly, or indirectly
through an affiliate, disclose, except as permitted or required by law,
any non-public personal information, as defined in Reg. S-P, received from
the Trust or the Adviser, regarding any shareholder, to any person that
is not affiliated with the Trust or with Sub-Adviser, and, provided that,
any such information disclosed to an affiliate of Sub-Adviser shall be
under the same limitations on non-disclosure.
15. Notice. Any notice, advice or report to be given pursuant to
this Agreement shall be deemed sufficient if delivered or mailed by
registered, certified or overnight mail, postage prepaid addressed by the Party
giving notice to the other Party at the last address furnished by the other
Party:
(a) If to the Adviser:
Xxxxxxx X. Xxxxxx, President & CEO
Xxxxxx & Associates Investment Counsel, Inc.
X.X. Xxx 000000
Xxx Xxxxx, XX 00000
Phone: (000) 000-0000
(b) If to the Sub-Adviser:
Xxx Xxxxxx, CCO and Portfolio Manager
Westchester Capital Management, Inc.
000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Phone: (000) 000-0000
16. Governing Law. This Agreement shall be governed by the internal
laws of the State of California, without regard to conflict of law principles;
provided, however that nothing herein shall be construed as being inconsistent
with the 1940 Act. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Agreement is altered by a rule, regulation or order
of the SEC, whether of special or general application, such provision shall
be deemed to incorporate the effect of such rule, regulation or
order.
17. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the Parties, and supersedes all prior agreements and
understandings relating to this Agreements subject matter. This Agreement
may be executed in any number of counterparts, each of which shall be deemed
to be an original, but such counterparts shall, together, constitute only
one instrument.
18. 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.
19. Certain Definitions. For the purposes of this Agreement and except
as otherwise provided herein, interested person, affiliated person, affiliates,
controlling persons and assignment shall have their respective meanings as
set forth in the 1940 Act, subject, however, to such exemptions as may be
granted by the SEC.
20. Captions. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
day and year first written above.
ADVISER
XXXXXX & ASSOCIATES INVESTMENT
COUNSEL, INC.
By:
Name: Xxxxxxx X. Xxxxxx
Title: President
SUB-ADVISER
WESTCHESTER CAPITAL
MANAGEMENT, INC.
By:
Name: Xxx Xxxxxx
Title: CCO and Portfolio Manager
EXHIBIT A TO
INTERIM SUB-ADVISORY AGREEMENT
AMONG
XXXXXX & ASSOCIATES INVESTMENT COUNSEL, INC.
AND
WESTCHESTER CAPITAL MANAGEMENT, INC.
Effective on or about August 1, 2008 (subject to Board approval and as
instructed by Adviser)
Kelmoore Strategy Fund Class A
Ticker: KSAIX
Kelmoore Strategy Fund Class C
Ticker: KSOIX
Kelmoore Strategy Eagle Fund Class A
Ticker: KSEAX
Kelmoore Strategy Eagle Fund Class C
Ticker: KSECX
Kelmoore Strategy Liberty Fund Class A
Ticker: KSLAX
Kelmoore Strategy Liberty Fund Class C
Ticker: KSLCX
FEE SCHEDULE / COMPENSATION
50 basis points annual rate calculated daily based on the Sub-Adviser Assets
average daily net assets.
EXHIBIT B
WESTCHESTER CAPITAL MANAGEMENT, INC.
FORM ADV
