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EXHIBIT 4
ADVISORY AGREEMENT
AGREEMENT made as of the 20th day of May, 1998 between FREEDOM CAPITAL
MANAGEMENT CORPORATION, a corporation organized under the laws of the
Commonwealth of Massachusetts and having its principal place of business in
Boston, Massachusetts (the "Manager"), and FREEDOM MUTUAL FUND, a Massachusetts
business trust having its principal place of business in Boston, Massachusetts
(the "Trust").
WHEREAS, the Trust engages in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Manager is engaged principally in the business of rendering
investment management services and is so registered under the Investment
Advisers Act of 1940; and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series, with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust presently offers shares in two series, the Freedom Cash
Management Fund and the Freedom Government Securities Fund (such series (the
"Initial Funds"), together with all other series subsequently established by the
Trust with respect to which the Trust desires to retain the Manager to render
investment advisory services hereunder and the manager is willing so to do,
being herein collectively referred to as the "Funds");
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF MANAGER.
(a) Initial Funds. The Trust hereby appoints the Manager to act as manager
and investment adviser to the Initial Funds for the period and on the terms
herein set forth. The Manager accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
(b) Additional Funds. In the event that the Trust establishes one or more
series of shares other than the Initial Funds with respect to which it desires
to retain the Manager to render management and investment advisory services
hereunder, it shall so notify the Manager in writing. If the Manager is willing
to render such services on the terms provided for herein, it shall notify the
Trust in writing, whereupon such series of shares shall become a Fund hereunder.
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2. DUTIES OF MANAGER.
The Manager, at its own expense, shall furnish the following services and
facilities to the Trust:
(a) Investment Program. The Manager will (i) furnish continuously an
investment program for each Fund, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the. Trust) what investments
shall be purchased, held, sold or exchanged by each Fund and what portion, if
any, of the assets of each Fund shall be held uninvested, and (iii) make changes
on behalf of the TrUst in the investments of each Fund. The Manager will also
manage, supervise and conduct the other affairs and business of the Trust and
each Fund thereof and all matters incidental thereto, subject always to the
control of the Board of Trustees of the Trust and to the provisions of the
Trust's Agreement and Declaration of Trust and Bylaws and the 1940 Act.
(b) Regulatory Reports. The Manager shall furnish to the Trust necessary
assistance in (i) the preparation of all reports now or hereafter required by
Federal or other laws, and (ii) the preparation of prospectuses, registration
statements, and amendments thereto that may be required by Federal or other laws
or by the rules or regulations of any duly authorized commission or
administrative body.
(c) Office Space and Facilities. The Manager shall furnish to the Trust
office space in the offices of the Manager or in such other place or places as
may be agreed upon from time to time, and all necessary office facilities,
simple business equipment, supplies, utilities, and telephone service.
(d) Services of Personnel. The Manager shall furnish to the Trust all
necessary executive and administrative personnel for managing the affairs and
investments of the Trust, including personnel to perform clerical, bookkeeping,
accounting and other office functions. These services are exclusive of the
necessary records or services of any dividend disbursing agent, transfer agent,
registrar or custodian. The Manager shall compensate all personnel, officers,
and directors of the Trust if such persons are also employees of the Manager or
its affiliates.
(e) Fidelity Bond. The Manager shall arrange for providing and maintaining
a bond issued by a reputable insurance company authorized to do business in the
place where the bond is issued, against larceny and embezzlement covering each
officer and employee of the Trust who may singly or jointly with others have
access to funds or securities of the Trust, with direct or indirect authority to
draw upon such funds or to direct generally the disposition of such funds. The
bond shall be in such reasonable amount as a majority of the Trustees who are
not "interested persons" of the Trust as defined in the 1940 Act, shall
determine, with due consideration to the aggregate assets of the Trust to which
any such officer or employee may have access. The premium for the bond shall be
payable by the Trust in accordance with paragraph 3(17).
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3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the Manager set
forth in Paragraph 2 above, the Trust assumes and shall pay all expenses for all
other Trust operations and activities and shall reimburse the Manager for any
such expenses incurred by the Manager. The expenses to be borne by the Trust
shall include, without limitation:
(1) all expenses of organizing the Trust or a Fund thereof;
(2) all expenses (including information, materials and services other
than services of the Manager) of preparing, printing and mailing all annual,
semiannual and periodic reports, proxy materials and other communications
(including registration statements, prospectuses and amendments and revisions
thereto) furnished to existing shareholders of the Trust and/or regulatory
authorities;
(3) fees involved in registering and maintaining registration of the
Trust and its shares with the Securities and Exchange Commission and state
regulatory authorities;
(4) any other registration, filing or other fees in connection with
requirements of regulatory authorities;
(5) expenses, including printing of certificates, relating to issuance
of shares of the Trust;
(6) the expenses of maintaining a shareholder account and furnishing,
or causing to be furnished, to each shareholder a statement of his account
(which in the case of a shareholder whose statement of account is included on a
brokerage account statement of an affiliated distributor, may be a reasonable
portion of such expense), including the expense of mailing;
(7) taxes and fees payable by the Trust to Federal, state or other
governmental agencies;
(8) expenses related to the redemption of its shares, including
expenses attributable to any program of periodic redemption;
(9) all issue and transfer taxes, brokers' commissions and other costs
chargeable to the Trust in connection with securities transactions to which the
Trust is a party, including any portion of such commissions attributable to
research and brokerage services as defined by Section 28(e) of the Securities
Exchange Act of 1934, as amended from time to time;
(10) the charges and expenses of the custodian appointed by the Trust,
or any depository utilized by such custodian, for the safekeeping of its
property;
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(11) charges and expenses of any shareholder servicing agents, transfer
agents and registrars appointed by the Trust, including costs of serving
shareholder investment accounts;
(12) charges and expenses of independent accounts retained by the Trust;
(13) legal fees and expenses in connection with the affairs of the
Trust, including legal fees and expenses in connection with registering and
qualifying its shares with Federal and state regulatory authorities;
(14) compensation and expenses of Trustees of the Trust who are not
"interested persons" of the Trust (as defined in the 1940 Act);
(15) expenses of shareholders' and Trustees' meetings;
(16) membership dues in the Investment Company Institute or similar
organizations;
(17) insurance premiums on fidelity, errors and omissions and other
coverages; and
(18) such other non-recurring expenses of the Trust as may arise,
including expenses of actions, suits, or proceedings to which the Trust is a
party and the legal obligation which the Trust may have to indemnify its
Trustees with respect thereto.
4. ADVISORY FEE.
For the services and facilities to be provided by the Manager as provided
in Paragraph 2 hereof, the Trust shall pay to the Manager a monthly fee with
respect to each Fund as soon as practical after the last day of each calendar
month, which fee shall be paid at a rate equal to (i) one-half of one percent
(.50%) on an annual basis of the Monthly Average Net Assets of each such Fund
for such calendar month up to $500 million, and (ii) forty-five hundredths of
one percent (.45%) on an annual basis of the Monthly Average Net Assets of each
Fund for such calendar month in excess of $500 million.
The "Monthly Average Net Assets" of any Fund of the Trust for any calendar
month shall be equal to the quotient produced by dividing (i) the sum of the net
assets of such Fund, determining in accordance with procedures established from
time to time by or under the direction of the Board of Trustees of the Trust in
accordance with the Agreement and Declaration of Trust of the Trust, as of the
time of day on which net asset value per share is determined on each day during
such month on which such net asset value is determined, by (ii) the number of
such days.
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In the case of termination of this Agreement with respect to any Fund
during any calendar month, the fee with respect to such Fund for that month
shall be reduced proportionately based upon the number of calendar days during
which it is in effect and the fee shall be computed upon the average net assets
of such Fund for the days during which it is so in effect.
5. EXPENSE LIMITATION.
The Manager agrees that if the total expenses of any Fund (exclusive of
interest, taxes, brokerage expenses and extraordinary items) for any fiscal year
of the Trust exceed the lowest expense limitation imposed in any jurisdiction in
which that Fund is making sales of its shares or has qualified its shares for
sale, the Manager will pay or reimburse such Fund for that excess up to the
amount of its advisory fee payable with respect to that Fund during that fiscal
year. The amount of the monthly advisory fee payable under Paragraph 4 hereof
shall be reduced to the extent that the annualized expenses of any Fund for that
month exceed the foregoing limitation. At the end of each fiscal year of the
Trust, if the aggregate annual expenses chargeable to any Fund for that year
exceed the foregoing limitation based upon the average of the Monthly Average
Net Assets of that Fund for the year, the Manager will promptly reimburse that
Fund for the amount of such excess, but if such expenses are within the
foregoing limitation, any excess amount previously withheld from the advisory
fee during that fiscal year will be promptly paid over to the Manager.
In the event that this Agreement is terminated with respect to any one or
more Funds as of a date other than the last day of the fiscal year of the Trust,
the Manager shall pay to, or receive from, the Trust a pro rata portion of the
amount that the Manager would have been required to pay or would have received,
if any, had this Agreement remained in effect for the full fiscal year.
6. TRUST PORTFOLIO.
(a) In connection with the management of the investment and reinvestment
of the assets of the Trust, the Manager acting by its own officers, directors,
or employees or by a duly authorized subcontractor is authorized to select the
brokers or dealers that will execute purchase and sale transactions for the
Trust. In executing portfolio transactions and selecting brokers of dealers, if
any, the manager will use its best efforts to seek on behalf of a Fund the best
overall terms available. In assessing the best overall terms available for any
transaction, the Manager shall consider all factors it deems relevant, including
the breadth of the market in and the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any (for the specific transaction and on a
continuing basis). In evaluating the best overall terms available, and in
selecting the broker or dealer, if any, to execute a particular transaction, the
Manager may also consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to
the Fund and/or other accounts over which the Manager or an affiliate of the
Manager exercises investment discretion. With the prior approval of the
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Trustees, the Manager may pay to a broker or dealer who provides such brokerage
and research services a commission for executing a Fund portfolio transaction
which is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if, but only if, the Manager
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided.
(b) The Manager agrees that neither it nor any of its officers or
directors will take any long or short term position in the shares of the Trust;
provided, however, that such prohibitions: (i) shall not prevent any affiliate
of the Manager which acts as a distributor of Trust shares pursuant to a written
contract from purchasing shares of the Trust in such capacity; and (ii) shall
not prevent the purchase of shares of the Trust by any of the persons above
described for their own account and for investment at the price at which such
shares are available to the public at the time of purchase or as part of the
initial capitalization of the Trust.
7. RELATIONS WITH TRUST.
Subject to and in accordance with the Agreement and Declaration of Trust
and By-laws of the Trust and the Articles of Incorporation and By-laws of the
Manager, it is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Manager (or any successor thereof) as
directors, officers, or otherwise, that directors, officers, agents and
shareholders of the Manager are or may be interested in the Trust as trustees,
officers, shareholders or otherwise, that the Manager (or any such successor) is
or may be interested in the Trust as a shareholder or otherwise and that the
effect of any such adverse interests shall be governed by said Agreement and
Declaration of Trust, Articles of Incorporation and By-laws.
8. LIABILITY OF MANAGER.
The Manager shall not be liable to the Trust for any error of judgment or
mistake of law or, for any loss suffered by the Trust in connection with the
matters to which this Advisory Agreement relates; provided that no provision of
this Agreement shall be deemed to protect the Manager against any liability to
the Trust or its shareholders to which it might otherwise be subject by reason
of any willful misfeasance, bad faith or gross negligence in the performance of
its duties or the reckless disregard of its obligations and duties under this
Agreement. Nor shall any provision hereof be deemed to protect any Trustee or
Officer of the Trust against any such liability to which he might otherwise be
subject by reason of any willful misfeasance, bad faith or gross negligence in
the performance of his duties or the reckless disregard of his obligations and
duties. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, role or otherwise, the remainder of this Agreement
shall not be affected thereby.
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9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
Initial Funds on the date hereof and, with respect to any additional Fund, on
the date of receipt by the Trust of notice from the Manager in accordance with
Paragraph l(b) hereof that the Manager is willing to serve as Manager with
respect to such Fund. Unless terminated as herein provided, this Agreement shall
remain in full force and effect (a) with respect to the Initial Funds, until the
second anniversary of its effectiveness, and (b) with respect to each Additional
Fund, until the second anniversary of the date on which such Fund becomes a Fund
hereunder. Unless terminated as herein provided, this Agreement shall continue
in full force and effect for periods of one year thereafter with respect to each
Fund so long as such continuance with respect to any such Fund is approved at
least annually (a) by either the Trustees of the Trust or by vote of a majority
of the outstanding voting securities (as defined in the 0000 Xxx) of such Fund,
and (b) in either event by the vote of a majority of the Trustees of the Trust
who are not parties to this Agreement or "interested persons" (as defined in the
0000 Xxx) of any such party, cast in person at a meeting called for the purpose
of voting on such approval; provided, however, that the continuance of this
Agreement with respect to any Additional Fund is subject to the approval of this
Agreement by a majority of the outstanding voting securities of that Fund at the
first annual or special meeting of shareholders after this Agreement becomes
effective with respect to that Fund.
(b) Amendment. Any amendment to this Agreement shall become effective with
respect to any Fund upon approval of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of that Fund.
(c) Termination. This Agreement may be terminated with respect to any Fund
at any time, without payment of any penalty, by vote of the Trustees or by vote
of a majority of the outstanding voting securities (as defined in the 0000 Xxx)
of that Fund, or by the Manager, on sixty (60) days' written notice to the other
party.
(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment.
(e) Approval, Amendment or Termination by Individual Fund. Any approval,
amendment or termination of this Agreement by the holders of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of any Fund shall be
effective to continue, amend or terminate this Agreement with respect to any
such Fund notwithstanding (A) that such action has not been approved by the
holders of a majority of the outstanding voting securities of any other Fund
affected thereby, and (B) that such action has not been approved by the vote of
a majority of the outstanding voting securities of the Trust, unless such action
shall be required by any applicable law or otherwise.
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10. NAME OF TRUST.
It is understood that the name "Freedom", and any logo associated with that
name, is the valuable property of Freedom Capital Management Corporation, and
that the Trust has the right to include "Freedom" as a part of its name only so
long as an affiliate of Freedom Capital Management Corporation or its successor
or assign is the investment adviser to the Trust. Upon termination of this
Agreement, the Trust shall forthwith cease to use the Freedom name and logos.
11. SERVICES NOT EXCLUSIVE.
The services of the Manager to the Trust hereunder are not to be deemed
exclusive, and the Manager shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
12. LIMITATION OF LIABILITY.
The term "Freedom Mutual Fund" means and refers to the Trustees from time
to time serving under the Agreement and Declaration of Trust of the Fund dated
December 22, 1980 as the same may subsequently thereto have been, or
subsequently hereto be, amended. It is expressly agreed that the obligations of
the Trust hereunder shall not be binding upon any of the Trustees, shareholders,
nominees, officers, agents or employees of the Trust personally, but shall bind
only the trust property of the Trust, as provided in the Agreement and
Declaration of Trust of the Trust. The execution and delivery of this Agreement
have been authorized by the Trustees and the initial shareholder of the Trust
and signed by the President of the Trust, acting as such, and neither such
authorization by such Trustees and shareholder nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in its Agreement and Declaration of Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
FREEDOM MUTUAL FUND FREEDOM CAPITAL MANAGEMENT
CORPORATION
By: /s/ Xxxx Xxxxxxx By: /s/ Xxxxxx X. Dodge
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Chief Executive Officer Chairman
ATTEST: ATTEST:
/s/ Xxxxxxx X. Xxxxx /s/ Xxxx Xxxxxxx
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Assistant Secretary Clerk
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