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EXHIBIT 99.d
CHOICE FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made effective as of October 31, 1999, by and between Choice
Funds, a Delaware business trust (the "Trust"), on behalf of trust's mutual fund
portfolios (each portfolio, a "Fund" and collectively, the "Funds"), as set
forth on attached Schedule A which may be amended from time to time to add new
Funds and Choice Investment Management, LLC, a Colorado Limited Liability
Company (the "Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Trust has been organized and operates as an investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") and engages in the business of investing and reinvesting its assets
in securities; and
WHEREAS, the Investment Adviser is a registered investment adviser
under the Investment Advisers Act of 1940, as amended (the "Advisers Act") and
engages in the business of providing investment management services; and
WHEREAS, the Trust has selected the Investment Adviser to serve as the
Investment Adviser for the Trust effective as to any Funds when listed on
attached Schedule A as of the date of this Agreement as may be amended from time
to time.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and each of the parties hereto intending to be legally bound, it is
agreed as follows:
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1. Appointment:
1.1 The Trust on behalf of each Fund hereby appoints the
Investment Adviser to provide either directly or through sub-advisers approved
by the Board of the Trust, a continuous investment management program for the
Trust's assets and to provide administration of the Trust not otherwise provided
by third party service providers, subject to the direction and supervision of
the trustees and officers of the Trust and in accordance with the Trust's
prospectus and Statement of Additional Information as may be amended or
supplemented from time to time and in accordance with all applicable rules and
regulations of the Securities Exchange Commission ("SEC") and with all other
applicable law, for the period and on the terms hereinafter set forth.
1.2. The Investment Adviser hereby accepts such appointment
and agrees during such period to render the services and assume the obligations
herein set forth for the compensation herein provided. The Investment Adviser
shall for all purposes herein, be deemed to be an independent contractor, and
shall, unless otherwise expressly provided and authorized, have no authority to
act for or to represent the Trust or any Fund in any way, or in any way be
deemed an agent of the Trust or a Fund.
2. Representations of the Investment Adviser:
The Investment Adviser represents and warrants that it:
2.1. upon the commencement of its provision of investment
advisory services to the Trust and its Funds, and continuing throughout the term
of this Agreement and any successive renewals thereof, is a registered
investment adviser under the
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Advisors Act; and that it meets all federal, state and other regulatory
requirements and will promptly notify the Trust in the event, it ceases to do
so;
2.2. has in place compliance procedures including a Code of
Ethics and agrees to provide to the Trust, periodic reports required thereunder;
2.3. certifies that it has obtained and will continue to
maintain the appropriate insurances, including Fidelity Bond and D&O/E&O, and
agrees to provide copies of such to the Trust;
2.4. agrees to give prompt notification to the Trust of
any material changes in its organizational structure or key personnel;
2.5. agrees to permit the Trust upon reasonable notice, to
conduct periodic onsite visits and formal reviews of the Adviser's operations
and procedures; and
2.6. will treat confidentially and as proprietary information
of the Trust all records and information relative to the Trust or/and Funds of
the Trust and the Trust's past, current or potential shareholders and will not
use such information for any purpose other than performance of its
responsibilities under this Agreement, except upon prior notification to and
written approval of the Trust, which approval shall not be unreasonably
withheld.
3. Services to be provided by Investment Adviser.
3.1. The Investment Adviser shall regularly make and implement
such decisions with respect to each Fund as to what securities and other
investments to
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purchase and sell on behalf of each Fund and shall effect the purchase and sale
of such investments in furtherance of each Fund's objectives and policies.
3.2. The Investment Adviser shall keep books and records with
respect to each Fund's securities transactions and shall furnish the Board of
Trustees of the Trust with such information and reports regarding the Funds'
investments as the Investment Adviser deems appropriate or as the Trustees of
the Trust may reasonably request.
3.3. The Investment Adviser hereby agrees that all records it
maintains for each Fund are the property of the Trust and further agrees to
surrender such records promptly to the Trust upon request. The Investment
Adviser further agrees to preserve such records for the periods proscribed under
the 1940 Act rules and regulations as may be amended from time to time.
3.4. The Investment Adviser shall place and execute Fund
orders for the purchase and sale of portfolio securities directly with
broker-dealers. Subject to obtaining the best price and execution, the
Investment Adviser is authorized to place orders for the purchase and sale of
portfolio securities for the Fund with such broker-dealers as it may select from
time to time. Subject to subparagraph 3.5 below, the Investment Adviser is also
authorized to place transactions with broker-dealers who provide research or
statistical information or analyses to a Fund, to the Investment Adviser, or to
any other client for which the Investment Adviser provides investment management
services. Subject to obtaining the best price and execution, the Investment
Adviser may also place brokerage transactions with broker-dealers who sell
shares of the Fund. Broker-dealers who sell shares of the Funds shall only
receive orders for the
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purchase or sale of portfolio securities to the extent that the placing of such
orders is in compliance with the rules of the U.S. Securities and Exchange
Commission ("SEC") and the National Association of Securities Dealers, Inc.
("NASD"). The Investment Adviser also agrees that it will cooperate with the
Trust to execute instructions that brokerage transactions be allocated to
broker-dealers who provide benefits directly to the Funds.
3.5. Notwithstanding the provisions of subparagraph 3.4 above
and subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Trust, the Investment Adviser is authorized to pay
a member of an exchange, broker or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
in such instances where the Investment Adviser has determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or the Investment
Adviser's overall responsibilities with respect to the Fund and to other funds
for which the Investment Adviser exercises investment discretion.
3.6. The Investment Adviser is authorized to direct portfolio
transactions to a broker-dealer which is an affiliated person of the Investment
Adviser or the Trust in accordance with such standards and procedures as may be
approved by the Board in accordance with 1940 Act Rule 17e-1, or other rules
promulgated by the Securities and Exchange Commission. Any transaction placed
with an affiliated broker-dealer must (i) be placed at the best available and
execution, and (ii) may not be a principal transaction.
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3.7. Subject to compliance with the requirements of the 1940
Act, the Investment Adviser may retain as a sub-adviser to a Fund, at the
Investment Adviser's own expense, any investment adviser registered under the
Advisers Act subject to the approval of the Trustees of the Trust.
4. Responsibilities of the Trust.
4.1. The Trust shall conduct its own business and affairs and
shall bear the expenses and salaries necessary and incidental thereto including,
but not in limitation of the foregoing, the costs incurred in: (a) the
maintenance of its corporate existence; (b) the maintenance of its own books,
records and procedures; (c) dealing with its own shareholders; (d) the payment
of dividends; (e) transfer of stock, including issuance, redemption and
repurchase of shares; (f) preparation of share certificates; (g) reports and
notices to shareholders; (h) calling and holding of shareholders' meetings; (i)
miscellaneous office expenses; (j) brokerage commissions; (k) custodian fees;
(l) legal and accounting fees; (m) taxes, and state and federal registration
fees.
4.2. Directors, officers, and employees of the Investment
Adviser may be trustees/directors, officers and employees of the Funds for which
the Investment Adviser serves as Investment Adviser. Directors, officers and
employees of the Investment Adviser who are trustees, officers and/or employees
of the Trust shall not receive any compensation from the Trust for acting in
such dual capacity.
4.3. In the conduct of the respective businesses of the
parties hereto and in the performance of this Agreement, the Trust and the
Investment Adviser may share facilities common to each, with appropriate
proration of expenses between them.
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4.4. To the extent the Investment Adviser incurs any costs by
assuming expenses which are an obligation of Trust and/or any Fund as set forth
herein, the respective Fund shall promptly reimburse the Investment Adviser for
such costs and expenses, except to the extent the Investment Adviser has
otherwise agreed to bear such expenses. To the extent the services for which a
Fund is obligated to pay are performed by the Investment Adviser, the Investment
Adviser shall be entitled to recover from that Fund to the extent of the
Investment Adviser's actual costs for providing such services.
5. Compensation.
5.1. As compensation for the services to be rendered to the
Funds by the Investment Adviser under the provisions of this Agreement, the
Trust on behalf of each of the respective Funds shall pay to the Investment
Adviser from each Fund's respective net assets an annual fee payable on a
monthly basis as set forth on attached Schedule A which may be amended from time
to time and which is incorporated herein by reference.
5.2. If this Agreement is terminated prior to the end of any
calendar month, the management fee 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 the Agreement is in effect, bears to the
number of calendar days in the month, and shall be payable within 10 days after
the date of termination.
5.3. The Investment Adviser may voluntarily reduce any portion
of the compensation or reimbursement of expenses due to it pursuant to this
Agreement and may agree to make payments to limit expenses which are the
responsibility of the Fund
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under this Agreement. Any such reduction or payment shall be applicable only to
such specific reduction or payment and shall not constitute an agreement to
reduce any future compensation or reimbursement due to the Investment Adviser
hereunder or to continue future payments. Any such reduction will be agreed upon
prior to accrual of the related expense or fee and will be estimated daily. Any
fee withheld shall be voluntarily reduced and any Fund expense paid by the
Investment Adviser voluntarily or pursuant to an agreed expense limitation shall
be reimbursed by the appropriate Fund to the Investment Adviser in the first,
second, or third (or any combination thereof) fiscal year next succeeding the
fiscal year of the withholding, reduction, or payment to the extent permitted by
applicable law if the aggregate expenses for the next succeeding fiscal year,
second fiscal year or third succeeding fiscal year do not exceed any limitation
to which the Investment Adviser has agreed.
6. Services Not Exclusive.
6.1. The services to be rendered by the Investment Adviser to
the Trust on behalf of the Funds under the provisions of this Agreement are not
to be deemed to be exclusive, and the Investment Adviser shall be free to render
similar or different services to others so long as its ability to render the
services provided for in this Agreement shall not be impaired thereby.
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6.2. The Investment Adviser, its directors, officers,
employees, and agents may engage in other businesses, may render investment
management services to other investment companies, or to any other corporation,
association, firm or individual, and may render underwriting services to the
Trust on behalf of the Funds or to any other investment company, corporation,
association, firm or individual.
7. Limitation on Liability.
In the absence of willful misfeasance, bad faith, negligence,
or a reckless disregard of the performance of duties of the Investment Adviser
to the Trust or any Fund, the Investment Adviser shall not be subject to
liabilities to the Trust, a Fund or to any shareholder of a Fund for any action
or omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security, or otherwise.
8. Term and Termination.
8.1. This Agreement shall be executed and become effective as
to each Fund, listed on attached Schedule A (as may be amended from time to
time) as of the date specified adjacent to each Fund's name on Schedule A if
approved by the vote of a majority of the disinterested Trustees of each Fund
meeting in person at a meeting specifically called for the purpose of voting on
such approval and a vote of the majority of the outstanding voting securities of
each Fund. It shall continue in effect for a period of two years and may be
renewed thereafter only so long as such renewal and continuance is specifically
approved at least annually by the Board of Trustees for each Fund or by vote of
a majority of the outstanding voting securities of a Fund and only if
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the terms and the renewal hereof have been approved by the vote of a majority of
the Trustees of the Trust who are not parties hereto or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval.
8.2. Notwithstanding the foregoing, this Agreement may be
terminated by the Trust at any time, without the payment of a penalty, on sixty
(60) days written notice to the Investment Adviser of the Trust's intention to
do so, pursuant to action by the Board of Trustees of the Trust or pursuant to a
vote of a majority of the outstanding voting securities of a Fund or the Trust.
The Investment Adviser may terminate this Agreement at any time, with respect to
any Fund without the payment of any penalty or sixty (60) days written notice to
the Trust of its intention to do so.
8.3. Upon termination of this Agreement, the obligations of
all the parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond to a breach of this Agreement
committed prior to such termination, and except for the obligation of the Trust
to pay to the Investment Adviser the fee provided for in Section 5 hereof and as
set forth in Schedule A, prorated to the date of termination. Termination of the
Agreement with respect to one Fund will not, itself, cause termination with
respect to any other Fund.
8.4. This Agreement shall automatically terminate in the event
of its assignment.
8.5. This Agreement shall extend to and bind the heirs,
executors, administrators and successors of the parties hereto and cannot be
amended without shareholder approval unless permitted by the SEC.
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9. Miscellaneous.
9.1. This Agreement may be executed in counterparts, each of
which shall constitute an original counterpart, and all of which, when taken
together, shall constitute one Agreement.
9.2. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware. To the extent that the
applicable laws of the State of Delaware or any provisions therein conflict with
the applicable provisions of the 1940 Act, the 1940 Act shall control. Nothing
herein shall be construed in a manner inconsistent with the 1940 Act, or any
rule or order of the SEC thereunder.
9.3. If any provision of this Agreement is determined by
competent authority to be prohibited or unenforceable in any jurisdiction, it
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability and shall not invalidate or render unenforceable such person
in any other jurisdiction nor any other person of this Agreement.
9.4. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding voting securities"; "interested persons"; and
"assignment" shall have the meaning defined in the 1940 Act.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below and have caused their corporate
seals to be affixed and duly attested as of the 31st day of October, 1999.
Attest: CHOICE FUNDS
By:
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Title:
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Attest: CHOICE INVESTMENT MANAGEMENT, LLC
By:
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Xxxxxxx X. Xxxxx
Title:
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SCHEDULE A
FUND NAME ANNUAL INVESTMENT EFFECTIVE DATE
ADVISORY FEE*
Choice Balanced Fund 0.75% 10/31/99
Choice Focus Fund 1.00% 10/31/99
*As a % of the average daily net assets of each respective Fund.
