INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 5th day of May, 1997, by and between OCC
ACCUMULATION TRUST (formerly called Quest for Value Accumulation Trust and
before that, Quest for Value Asset Builder Trust), a Massachusetts business
trust (the "Fund") and OPCAP ADVISORS (formerly called Quest for Value
Advisors), a Delaware general partnership (the "Manager").
WHEREAS, the Fund is an open-end, diversified, management investment
company, organized in "series" form and comprised of seven separate investment
portfolios (the "Portfolios" or the "Series") and is registered with the
Securities and Exchange Commission (the "Commission") pursuant to the Investment
Company Act of 1940 (the "1940 Act");
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the Fund and the Manager agree as follows:
1. GENERAL PROVISIONS
The Fund hereby employs the Manager and the Manager hereby undertakes to
act as the investment adviser of the Fund in connection with and for the benefit
of each Portfolio, including any Portfolio hereafter created, and to perform for
the Fund and for each of the Portfolios such other duties and functions in
connection with each Portfolio for the period and on such terms as set forth in
this Agreement. The Manager shall, in all matters, give to the Fund and its
Board of Trustees (the "Trustees") the benefit of its best judgment, effort,
advice and recommendations and shall at all times conform to, and use its best
efforts to enable the Fund to conform to:
(a) the provisions of the 1940 Act and any rules or regulations
thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Declaration of Trust and By-Laws of the Fund
as amended from time to time;
(d) the policies and determinations of the Trustees;
(e) the investment objectives and policies and investment restrictions
of each Portfolio as reflected in the registration statement of the
Fund under the 1940 Act or as such objectives, policies and
restrictions may from time to time be amended; and
(f) the prospectus, if any, of the Fund in effect from time to time.
The appropriate officers and employees of the Manager shall be available upon
reasonable notice for consultation with any of the Trustees or officers with
respect to any matters dealing with the Fund's business affairs, including the
valuation of any securities held by the Fund for the benefit of any Portfolio
that are either not registered for public sale or not being traded on any
securities market.
2. INVESTMENT MANAGEMENT
(a) The Manager shall, subject to the direction and control by the
Trustees, separately with respect to each Portfolio: (i) regularly
provide investment advice and recommendations to the Fund with respect
to it's investments, investment policies, and the purchase and sale of
securities and commodities; (ii) supervise continuously and determine
the securities and commodities to be purchased or sold by the Fund and
the portion, if any, of the Fund's assets to be held uninvested; and
(iii) arrange, subject to the provisions of Section 6 hereof, for the
purchase and sale of securities, commodities and other investments by
the Fund.
(b) The Manager may obtain investment information, research or
assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services,
including entering into sub-advisory agreements with other affiliated
or unaffiliated registered investment advisers in order to obtain
specialized services; provided, however, that the Fund shall not be
required to pay any compensation other than as provided by the terms
of this Agreement and subject to the provisions of Section 5 hereof.
(c) So long as the Manager shall have acted with due care and in good
faith, the Manager shall not be liable to the Fund or its shareholders
for any error in judgment, mistake of law, or any other act or
omission in the course of or connected with, rendering services
hereunder, including without limitation, any losses which may be
sustained by the Fund or its shareholders as a result of the purchase,
holding, redemption, or sale of any security by the Fund irrespective
of whether the determinations of the Manager relative thereto shall
have been based, in whole or in part, upon the investigation, research
or recommendation of any other individual, firm or corporation
believed by the Manager to be reliable. Nothing herein contained
shall, however, be construed to protect the Manager against any
liability to the Fund or its shareholders arising out of the Manager's
willful misfeasance, bad faith, or gross negligence in the performance
of its duties or reckless disregard of its obligations and duties
under this Agreement.
(d) Nothing in this Agreement shall prevent the Manager, any parent,
subsidiary or affiliate, or any director or officer thereof, from
acting as investment adviser for any other person, firm, or
corporation, and shall not in any way limit or restrict the Manager or
any of its directors, officers, stockholders or employees from buying,
selling or trading any securities or commodities for its or their own
account or for the account of others for whom it or they may be
acting, if such activities will not adversely affect or otherwise
impair the performance by the Manager of its duties and obligations
under this Agreement.
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3. OTHER DUTIES OF THE MANAGER
The Manager shall, at its own expense, provide and supervise the activities
of all administrative and clerical personnel and shall be required to provide
effective corporate administration for the Fund, including (1) coordination of
the functions of accountants, counsel and other parties performing services for
the Fund, (2) the preparation and filing of such reports related to the Fund or
to any Portfolio as shall be required by federal securities laws and various
state "blue sky" laws, (3) composition of periodic reports with respect to its
operations for shareholders of the Fund and (4) composition of proxy materials
for meetings of the Fund's shareholders.
4. ALLOCATION OF EXPENSES
The Manager will bear all costs and expenses of its employees and overhead
incurred by it in connection with its duties hereunder except as noted in
Section 5 below. All other expenses (other than those to be paid by the Fund's
distributor under a distribution agreement), shall be paid by the Fund,
including, but not limited to:
(a) interest expense, taxes and governmental fees;
(b) brokerage commissions and other expenses incurred in acquiring or
disposing of the Fund's securities and commodities holdings;
(c) insurance premiums for fidelity and other coverage requisite to
the Fund's operations;
(d) fees of the Trustees other than those who are interested persons
of the Fund and out-of-pocket travel expenses for all Trustees and
other expenses incurred by the Fund in connection with Trustees'
meetings;
(e) outside legal, accounting and audit expenses;
(f) custodian, dividend disbursing, and transfer agent fees and
expenses;
(g) expenses in connection with the issuance, offering, sale or
underwriting of securities issued by the Fund, including preparation
of stock certificates;
(h) fees and expenses, other than as hereinabove provided, incident to
the registration or qualification of the Fund's shares for sale with
the Commission and in various states and foreign jurisdictions;
(i) expenses of printing and mailing reports and notices and proxy
material to the Fund's shareholders;
(j) all other expenses incidental to holding meetings of the Fund's
shareholders;
(k) expenses of organizing the Fund; and
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(l) such extraordinary non-recurring expenses as may arise, including
litigation affecting the Fund and the legal obligation the Fund may
have to indemnify its officers and Trustees with respect thereto.
Notwithstanding the foregoing, the Manager shall pay all salaries and fees
of each of the Fund's officers and Trustees who are interested persons of the
Manager.
5. COMPENSATION OF THE MANAGER
(a) The Fund agrees to pay the Manager, and the Manager agrees to
accept as full compensation for the performance of all its functions
and duties to be performed hereunder, a fee based on the total net
assets of each Portfolio at the end of each business day.
Determination of net asset value of each Portfolio will be made in
accordance with the policies disclosed in the Fund's registration
statement under the 1940 Act. The fee is payable at the close of
business on the last day of each calendar month and shall be made on
the first business day following such last calendar day. The payment
due on such day shall be computed by (1) adding together the results
of multiplying (i) the total net assets of each Portfolio on each day
of the month by (ii) the applicable daily fraction of the annual
advisory fee percentage rate for such Portfolio as set forth on
Schedule A hereto and then (2) adding together the total monthly
amounts computed for each Portfolio.
(b) In the event the operating expenses of the Fund (net of any
expense offsets), including any amounts payable to the Manager
pursuant to subsection (a) hereof, but excluding the amount of any
interest, taxes, brokerage commissions, distribution fees, and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Fund for any fiscal year ending on a
date during which this Agreement is in effect, exceed the most
restrictive state law provisions in effect in states where the Fund is
qualified to be sold, the Manager will pay or refund to the Fund any
such excess amount. In addition, the Manager shall waive any amounts
payable to the Manager pursuant to subsection (a) hereof, and
reimburse the Fund such that total operating expenses of each of the
Portfolios of the Fund do not exceed 1.25% of their respective average
daily net assets. Whenever the expenses of a Portfolio exceed a pro
rata portion of the expense limitations stated above, the monthly
amount payable to the Manager will be reduced or postponed in the
amount of such excess.
6. PORTFOLIO TRANSACTIONS AND BROKERAGE
(a) The Manager is authorized, in arranging the purchase and sale of
the Fund's portfolio securities, to employ or deal with such members
of securities exchanges and brokers or dealers, including CIBC
Xxxxxxxxxxx Corp. ("CIBC Oppenheimer") ("broker/dealer"), as may, in
the Manager's best judgment based on all relevant factors, implement
the policy of the Fund to obtain, at reasonable expense, the "best
execution" (prompt and reliable execution of the Fund's securities
transactions at the most favorable security prices
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obtainable of the Fund's securities transactions) as well as to
obtain, consistent with the provisions of subparagraph (c) of this
Section 6, the benefit of such investment information or research as
will be of significant assistance to the Manager in the performance of
its functions and duties under this Agreement.
(b) The Manager shall select broker/dealers to effect the Fund's
securities transactions on the basis of its estimate of the ability of
such broker/dealers to obtain best execution of particular and related
securities transactions. The ability of a broker/dealer to obtain
best execution of particular securities transaction(s) will be judged
by the Manager on the basis of all relevant factors and
considerations, including, insofar as feasible, the execution
capabilities required by the transactions; the ability and willingness
of the broker/dealer to facilitate the Fund's securities transactions
by participating therein for its own account; the importance to the
Fund of speed, efficiency or confidentiality; the broker/dealer's
apparent familiarity with sources from or to whom particular
securities might be purchased or sold; and any other matters relevant
to the selection of a broker/dealer for particular and related
transactions of the Fund.
(c) The Manager shall have discretion, in the interests of the Fund,
to allocate brokerage on the Fund's securities transactions to
broker/dealers qualified to provide best execution of such
transactions who provide brokerage and/or research services (as such
services are defined in Section 28(e)(3) of the Securities Exchange
Act of 1934 (the "1934 Act")) for the Fund and/or other accounts for
which the Manager exercises investment discretion (as that term is
defined in Section 3(a)(35) of the 0000 Xxx) and to cause the Fund to
pay such broker/dealers (other than affiliated broker-dealers) a
commission for effecting a securities transaction for the Fund that is
in excess of the amount of commission another broker/dealer adequately
qualified to effect such transaction would have charged for effecting
that transaction, if the Manager determines, in good faith, that such
commission is reasonable in relation to the value of the brokerage
and/or research services provided by such broker/dealer, viewed in
terms of either that particular transaction or the Manager's overall
responsibilities with respect to the accounts as to which it exercises
investment discretion. In reaching such determination, the Manager
will not be required to place or attempt to place a specific dollar
value on the brokerage and/or research services provided by such
broker/dealer. In demonstrating that such determinations were made in
good faith, the Manager shall be prepared to show that all commissions
were allocated to such broker/dealers for purposes contemplated by
this Agreement and that the total commissions paid by the Fund over a
representative period selected by the Trustees were reasonable in
relation to the benefits received by the Fund. Such research
information may be in written form or through direct contact with
individuals, and may include information on particular companies and
industries as well as market, economic or institutional activity
areas.
(d) The Manager shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate applicable
to any particular securities transactions or to select any
broker/dealer on the basis of its purported or "posted" commission
rate, although it will, to the best of its ability, endeavor to be
aware of the current level of the
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charges of eligible broker/dealers and to minimize the expense
incurred by the Fund for effecting its securities transactions to the
extent consistent with the interests and policies of the Fund as
established by the determinations of the Trustees and the provisions
of this Section 6.
(e) The Fund recognizes and intends that, subject to the foregoing
provisions of this Section 6, CIBC Oppenheimer will act as its regular
broker so long as it is lawful for it so to act and that CIBC
Oppenheimer may be a major recipient of brokerage commissions paid by
the Fund. CIBC Oppenheimer may effect securities transactions for the
Fund only if (1) the commissions, fees or other remuneration received
or to be received by it are reasonable and fair compared to the
commissions, fees or other remuneration received by other brokers in
connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable
period of time and (2) to the extent required, the Trustees, including
a majority of those Trustees who are not interested persons, have
adopted procedures pursuant to Rule 17e-1 under the 1940 Act for
determining the permissible level of such commissions.
(f) Sales of shares of the Fund and/or shares of the other investment
companies managed by the Manager or distributed by the Fund's
distributor may, subject to applicable rules covering the
distributor's activities in this area, also be considered as a factor
in the direction of securities transactions to dealers, but only in
conformity with the price, execution and other considerations and
practices discussed above. Those other investment companies may also
give similar consideration relating to the sale of the Fund's shares.
The Fund will not purchase any securities from or sell any securities
to any affiliated broker/dealer acting as principal for its own
account.
(g) When orders to purchase or sell the same security on identical
terms are placed by more than one of the funds and/or other advisory
accounts managed by the Manager or its affiliates, the transactions
are generally executed as received, although a fund or advisory
account that does not direct trades to a specific broker ("free
trades") usually will have its order executed first. Purchases are
combined where possible for the purpose of negotiating brokerage
commissions, which in some cases might have a detrimental effect on
the price or volume of the security in a particular transaction as far
as the Fund is concerned. Orders placed by accounts that direct
trades to a specific broker will generally be executed after the free
trades. All orders placed on behalf of the Fund are considered free
trades. However, having an order placed first in the market does not
necessarily guarantee the most favorable price.
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7. DURATION
This Agreement will become effective as of the date hereof. This Agreement
will continue in effect for two years from the date hereof and thereafter
(unless sooner terminated in accordance with this agreement) for successive
periods of twelve months so long as each continuance shall be specifically
approved at least annually with respect to each Portfolio by (1) the vote of a
majority of those Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (2) a majority of the Trustees or of a majority of
the outstanding voting securities of the respective Portfolios of the Fund.
8. TERMINATION
This Agreement may be terminated (i) by the Manager at any time, without
payment of any penalty upon giving the Fund ninety (90) days' written notice
(which notice may be waived by the Fund); or (ii) by the Fund at any time,
without payment of any penalty upon sixty (60) days' written notice to the
Manager (which notice may be waived by the Manager), provided that such
termination by the Fund shall be directed or approved by the vote of the
majority of all of the Trustees or by the vote of a majority of the outstanding
voting securities of the Portfolios of the Fund with respect to which notice of
termination has been given to the Manager.
9. AMENDMENT OR ASSIGNMENT
This Agreement may be amended with respect to a Portfolio only if such
amendment is specifically approved by (i) the vote of the outstanding voting
securities of such Portfolio and (ii) a majority of the Trustees, including a
majority of those Trustees who are not parties to this Agreement or interested
persons of such party, cast in person at a meeting called for the purpose of
voting on such approval, provided that this Agreement may be amended to add a
new Portfolio or delete an existing Portfolio without a vote of the shareholders
of any other Portfolio covered by this Agreement. This Agreement shall
automatically and immediately terminate in the event of its assignment, as that
term is defined in the 1940 Act and the rules thereunder.
10. GOVERNING LAW
This Agreement shall be interpreted in accordance with the laws of the
State of New York and the applicable provisions of the 1940 Act, other
securities laws and rules thereunder. To the extent that the applicable laws of
the State of New York, other securities laws or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. SEVERABILITY
If any provisions of this Agreement shall be held or made unenforceable by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
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12. DEFINITIONS
As used in this Agreement, the terms "interested person" and "vote of a
majority of the outstanding securities" shall have the respective meanings set
forth in Sections 2(a)(19) and 2(a)(42) of the 1940 Act.
13. NO LIABILITY OF SHAREHOLDERS
This Agreement is executed by the Trustees of the Fund, not individually,
but rather in their capacity as Trustees under the Declaration of Trust made May
12, 1994. None of the Shareholders, Trustees, officers, employees, or agents of
the Fund shall be personally bound or liable under this Agreement, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim hereunder but only to the property of the Fund and, if the obligation
or claim relates to the property held by the Fund for the benefit of one or more
but fewer than all Portfolios, then only to the property held for the benefit of
the affected Portfolio.
14. NOTICE OF CHANGE IN PARTNERSHIP OF MANAGER
The Manager agrees to notify the Fund within a reasonable period of time
regarding a material change in the membership of the Manager.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
OCC ACCUMULATION TRUST
Attest:
s/ Xxxxxx Xxxxx
-------------------
By: s/ Xxxxxxx Xxxxxx
----------------------------
Title:
OPCAP ADVISORS
Attest:
s/ Xxxxxx Xxxxx
----------------------
By: s/ Xxxxxxx X. Xxxxx
----------------------------
Title:
8
SCHEDULE A
to
Investment Advisory Agreement
between
OCC Accumulation Trust and OpCap Advisors
ANNUAL FEE AS A
PERCENTAGE OF DAILY
NAME OF SERIES NET ASSETS
-------------- --------------------
Equity Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Small Cap Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Managed Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Global Equity Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
U.S. Government Income Portfolio .60%
Bond Portfolio .50%
Money Market Portfolio .40%
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