AQUILA ROCKY MOUNTAIN EQUITY FUND
ADVISORY AND ADMINISTRATION AGREEMENT
THIS AGREEMENT, made as of November 10, 2009 by and between AQUILA ROCKY
MOUNTAIN EQUITY FUND (the "Fund"), a Massachusetts business trust, 000 Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 and AQUILA INVESTMENT MANAGEMENT
LLC (the "Manager"), a Delaware limited liability company, 000 Xxxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000.
W I T N E S S E T H:
WHEREAS, the Fund and the Manager wish to enter into an Advisory and
Administration Agreement referred to hereafter as "this Agreement," with respect
to the Fund;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. In General
The Manager shall perform (at its own expense) the functions set forth more
fully herein for the Fund.
2. Duties and Obligations of the Manager
(a) Investment Advisory Services. Subject to the succeeding provisions
of this Section and subject to the direction and control of the Board of
Trustees of the Fund, the Manager shall:
(i) supervise continuously the investment program of the Fund and
the composition of its portfolio;
(ii) determine what securities shall be purchased or sold by the
Fund;
(iii) arrange for the purchase and the sale of securities held in
the portfolio of the Fund; and
(iv) either keep the accounting records of the Fund, including the
computation of net asset value per share and the dividends
(provided that if there is a Sub-Adviser, daily pricing of the
Fund's portfolio shall be the responsibility of the
Sub-Adviser under the Sub-Advisory Agreement) or, at its
expense and responsibility, delegate such duties in whole or
in part to a company satisfactory to the Fund;
(v) at its expense provide for pricing of the Fund's portfolio
daily using a pricing service or other source of pricing
information satisfactory to the Fund and, unless otherwise
directed by the Board of Trustees, provide for pricing of the
Fund's portfolio at least quarterly using another such source
satisfactory to the Fund.
Subject to the provisions of Section 5 hereof, the Manager may at its own
expense delegate to a qualified organization ("Sub-Adviser"), affiliated or not
affiliated with the Manager, any or all of the above duties. Any such delegation
of the duties set forth in (i), (ii) or (iii) above shall be by a written
agreement (the "Sub-Advisory Agreement") approved as provided in Section 15 of
the Investment Company Act of 1940 (the "Act").
(b) Administration. Subject to the succeeding provisions of this
Section and subject to the direction and control of the Board of Trustees of the
Fund, the Manager shall provide all administrative services to the Fund other
than those relating to its investment portfolio delegated to a Sub-Adviser of
the Fund under a Sub-Advisory Agreement; as part of such administrative duties,
the Manager shall:
(i) provide office space, personnel, facilities and equipment for the
performance of the following functions and for the maintenance of the
headquarters of the Fund;
(ii) oversee all relationships between the Fund and any sub-adviser,
transfer agent, custodian, legal counsel, auditors and principal
underwriter, including the negotiation of agreements in relation
thereto, the supervision and coordination of the performance of such
agreements, and the overseeing of all administrative matters which
are necessary or desirable for the effective operation of the Fund
and for the sale, servicing or redemption of the Fund's shares;
(iii) maintain the Fund's books and records, and prepare (or assist counsel
and auditors in the preparation of) all required proxy statements,
reports to the Fund's shareholders and Trustees, reports to and other
filings with the Securities and Exchange Commission and any other
governmental agencies, and tax returns, and oversee the insurance
relationships of the Fund;
(iv) prepare, on behalf of the Fund and at the Fund's expense, such
applications and reports as may be necessary to register or maintain
the registration of the Fund and/or its shares under the securities
or "Blue-Sky" laws of all such jurisdictions as may be required from
time to time; and
(v) respond to any inquiries or other communications of shareholders of
the Fund and broker-dealers, or if any such inquiry or communication
is more properly to be responded to by the Fund's shareholder
servicing and transfer agent or distributor, oversee such shareholder
servicing and transfer agent's or distributor's response thereto.
(c) Compliance with Requirements. Any investment program furnished, and
any activities performed, by the Manager or by a Sub-Adviser under this Section
shall at all times conform to, and be in accordance with, any requirements
imposed by: (1) the Act and any rules or regulations in force thereunder; (2)
any other applicable laws, rules and regulations; (3) the Declaration of Trust
and By-Laws of the Fund as amended from time to time; (4) any policies and
determinations of the Board of Trustees of the Fund; and (5) the fundamental
policies of the Fund, as reflected in its Registration Statement under the Act
or as amended by the shareholders of the Fund.
(d) Best Efforts; Responsibility. The Manager shall give the Fund the
benefit of its best judgment and effort in rendering services hereunder, but the
Manager shall not be liable for any loss sustained by reason of the adoption of
any investment policy or the purchase, sale or retention of any security,
whether or not such purchase, sale or retention shall have been based upon (i)
its own investigation and research or (ii) investigation and research made by
any other individual, firm or corporation, if such purchase, sale or retention
shall have been made and such other individual, firm or corporation shall have
been selected in good faith by the Manager or a Sub-Adviser.
(e) Other Customers. Nothing in this Agreement shall prevent the Manager or
any officer thereof from acting as investment adviser, sub-adviser,
administrator or manager for any other person, firm, or corporation, and shall
not in any way limit or restrict the Manager or any of its officers, members or
employees from buying, selling or trading any securities for its own or their
own accounts or for the accounts of others for whom it or they may be acting,
provided, however, that the Manager expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations under this Agreement.
(f) Order Allocation. In connection with any duties for which it may
become responsible to arrange for the purchase and sale of the Fund's portfolio
securities, the Manager shall select, and shall cause any Sub-Adviser to select,
such broker-dealers ("dealers") as shall, in the Manager's judgment, implement
the policy of the Fund to achieve "best execution," i.e., prompt, efficient, and
reliable execution of orders at the most favorable net price. The Manager shall
cause the Fund to deal directly with the selling or purchasing principal or
market maker without incurring brokerage commissions unless the Manager
determines that better price or execution may be obtained by paying such
commissions; the Fund expects that most transactions will be principal
transactions at net prices and that the Fund will incur little or no brokerage
costs. The Fund understands that purchases from underwriters include a
commission or concession paid by the issuer to the underwriter and that
principal transactions placed through dealers include a spread between the bid
and asked prices. In allocating transactions to dealers, the Manager is
authorized and shall authorize any Sub-Adviser, to consider, in determining
whether a particular dealer will provide best execution, the dealer's
reliability, integrity, financial condition and risk in positioning the
securities involved, as well as the difficulty of the transaction in question,
and thus need not pay the lowest spread or commission available if the Manager
determines in good faith that the amount of commission is reasonable in relation
to the value of the brokerage and research services provided by the dealer,
viewed either in terms of the particular transaction or the Manager's overall
responsibilities. If, on the foregoing basis, the transaction in question could
be allocated to two or more dealers, the Manager is authorized, in making such
allocation, to consider whether a dealer has provided research services, as
further discussed below. Such research may be in written form or through direct
contact with individuals and may include quotations on portfolio securities and
information on particular issuers and industries, as well as on market,
economic, or institutional activities. The Fund recognizes that no dollar value
can be placed on such research services or on execution services and that such
research services may or may not be useful to the Fund and may be used for the
benefit of the Manager or its other clients. The Manager shall cause the
foregoing provisions, in substantially the same form, to be included in any
Sub-Advisory Agreement.
(g) Registration Statement; Information. It is agreed that the Manager
shall have no responsibility or liability for the accuracy or completeness of
the Fund's Registration Statement under the Act and the Securities Act of 1933,
except for information supplied by the Manager for inclusion therein. The
Manager shall promptly inform the Fund as to any information concerning the
Manager appropriate for inclusion in such Registration Statement, or as to any
transaction or proposed transaction which might result in an assignment of the
Agreement.
(h) Liability for Error. The Manager shall not be liable for any error
in judgment or for any loss suffered by the Fund or its security holders in
connection with the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Nothing in this Agreement shall, or
shall be construed to, waive or limit any rights which the Fund may have under
federal and state securities laws which may impose liability under certain
circumstances on persons who act in good faith.
(i) Indemnification. The Fund shall indemnify the Manager to the full
extent permitted by the Fund's Declaration of Trust.
3. Allocation of Expenses
The Manager shall, at its own expense, provide office space, facilities,
equipment, and personnel for the performance of its functions hereunder and
shall pay all compensation of Trustees, officers, and employees of the Fund who
are affiliated persons of the Manager.
The Fund agrees to bear the costs of preparing and setting in type its
prospectuses, statements of additional information and reports to its
shareholders, and the costs of printing or otherwise producing and distributing
those copies of such prospectuses, statements of additional information and
reports as are sent to its shareholders. All costs and expenses not expressly
assumed by the Manager under this sub-section or otherwise by the Manager,
administrator or principal underwriter or by any Sub-Adviser shall be paid by
the Fund, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation of its Trustees other
than those affiliated with the Manager or such adviser, administrator or
principal underwriter and expenses of all its Trustees; (v) legal and audit
expenses; (vi) custodian and transfer agent, or shareholder servicing agent,
fees and expenses; (vii) expenses incident to the issuance of its shares
(including issuance on the payment of, or reinvestment of, dividends); (viii)
fees and expenses incident to the registration under Federal or State securities
laws of the Fund or its shares; (ix) expenses of preparing, printing and mailing
reports and notices and proxy material to shareholders of the Fund; (x) all
other expenses incidental to holding meetings of the Fund's shareholders; and
(xii) such non-recurring expenses as may arise, including litigation affecting
the Fund and the legal obligations for which the Fund may have to indemnify its
officers and Trustees.
4. Compensation of the Manager
The Fund agrees to pay the Manager, and the Manager agrees to accept as
full compensation for all services rendered hereunder, a fee payable monthly and
computed on the net asset value of the Fund at the end of each business day at
the annual rate of 1.50% of such net asset value on net assets of the Fund up to
$15,000,000, 1.20% on net assets of the Fund above $15,000,000 to $50,000,000
and 0.90 of 1% of the Fund's net assets above $50,000,000.
5. Termination of Sub-Advisory Agreement
The Sub-Advisory Agreement may provide for its termination by the
Manager upon reasonable notice, provided, however, that the Manager agrees not
to terminate the Sub-Advisory Agreement except in accordance with such
authorization and direction of the Board of Trustees, if any, as may be in
effect from time to time.
6. Duration and Termination of this Agreement
(a) Duration. This Agreement shall become effective as of the date
first written above following approval by the shareholders of the Fund and
shall, unless terminated as hereinafter provided, continue in effect until the
June 30 next preceding the first anniversary of the effective date of this
Agreement, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (1) by a vote of the
Fund's Board of Trustees, including a vote of a majority of the Trustees who are
not parties to this Agreement or "interested persons" (as defined in the Act) of
any such party, with votes cast in person at a meeting called for the purpose of
voting on such approval, or (2) by a vote of the holders of a "majority" (as so
defined) of the outstanding voting securities of the Fund and by such a vote of
the Trustees.
(b) Termination. This Agreement may be terminated by the Manager at any
time without penalty upon giving the Fund sixty days' written notice (which
notice may be waived by the Fund) and may be terminated by the Fund at any time
without penalty upon giving the Manager sixty days' written notice (which notice
may be waived by the Manager), provided that such termination by the Fund shall
be directed or approved by a vote of a majority of its Trustees in office at the
time or by a vote of the holders of a majority (as defined in the Act) of the
voting securities of the Fund outstanding and entitled to vote. The portions of
this Agreement which relate to providing investment advisory services (Sections
2(a), (c), (d) and (e)) shall automatically terminate in the event of the
assignment (as defined in the Act) of this Agreement, but all other provisions
relating to providing services other than investment advisory services shall not
terminate, provided however, that upon such an assignment the annual fee payable
monthly and computed on the net asset value of the Fund as of the close of
business each business day shall be reduced to the annual rate of 0.30 of 1% of
such net asset value.
7. Disclaimer of Shareholder Liability
The Manager understands that the obligations of this Agreement are not
binding upon any shareholder of the Fund personally, but bind only the Fund's
property; the Manager represents that it has notice of the provisions of the
Fund's Declaration of Trust disclaiming shareholder liability for acts or
obligations of the Fund.
8. Notices of Meetings
The Fund agrees that notice of each meeting of the Board of
Trustees of the Fund will be sent to the Manager and that the Fund will make
appropriate arrangements for the attendance (as persons present by invitation)
of such person or persons as the Manager may designate.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers and their seals to be hereunto
affixed, all as of the day and year first above written.
ATTEST AQUILA ROCKY MOUNTAIN EQUITY FUND
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxx X. Childs III
________________________ By:_______________________________
ATTEST AQUILA INVESTMENT MANAGEMENT LLC
/s/ Xxxxx X. Xxxxxxxx
________________________ By:_______________________________
