AMERISTOCK ETF TRUST INVESTMENT
ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 28th
day of June, 2007, by and between Ameristock ETF Trust, a statutory trust
organized and existing under the laws of the State of Delaware (the "Trust"),
and Ameristock Corporation (the "Investment Adviser"), a corporation organized
and existing under the laws of the State of California.
RECITALS
1. The Trust is a series-type, open-end management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), that currently consists of the investment portfolios listed in Appendix
A, attached hereto, (each, a "Fund");
2. The Trust issues shares of beneficial interest for each Fund only in
aggregations of one hundred thousand (100,000) shares (each a "creation unit")
which shares represent undivided interests in a Fund;
3. The Trust desires to retain the Investment Adviser to provide overall
management of the Trust and of each Fund, including investment advisory
services, in the manner and on the terms and conditions set forth in this
Agreement;
4. The Investment Adviser is willing to provide general management and
investment advisory services to the Trust and to each Fund on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises and the covenants
herein, the Trust and the Investment Adviser agree as follows:
ARTICLE I
Duties of the Investment Adviser
The Trust engages the Investment Adviser to act as the Trust's general
manager and investment adviser to provide investment advisory and general
management services to it and to each existing Fund, for the period and on the
terms and conditions set forth in this Agreement. This Agreement may be
extended to any additional Funds that the Trust may establish in the future on
the same terms and conditions. The Investment Adviser hereby accepts such
engagement and agrees during such period, at its own expense to provide or to
arrange to provide, such investment advisory and general management services,
and to assume the obligations set forth in this Agreement for the compensation
provided for herein.
The Investment Adviser shall, for all purposes herein, be an
independent contractor and shall, except as expressly provided or authorized
herein or otherwise, have no authority to act for
or represent the Trust or a Fund in any way or otherwise be deemed an agent of
the Trust or a Fund.
Subject to supervision by the Board, the Investment Adviser shall have
and exercise full investment discretion and authority to act as an agent for
the Trust in buying, selling or otherwise disposing of or managing the
investments of each Fund, directly or through investment subadvisers.
The Investment Adviser shall be subject to: (1) the restrictions of
the Trust's Declaration of Trust, as amended from time to time, (2) the
provisions of the 1940 Act and the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), (3) the statements relating to each Fund's investment
objectives, investment strategies and investment restrictions as set forth in
the currently effective (and as amended from time to time) registration
statement of the Trust (the "registration statement") under the Securities Act
of 1933, as amended, (4) any applicable provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), and (5) all other federal and state laws and
regulations applicable to the Trust and the Funds.
(a) General Management Services. The Investment Adviser shall
supervise and oversee all custody, distribution, transfer agency, dividend
disbursing, legal, accounting and administrative services by third parties that
have contracted with the Trust to provide such services ("Service Providers").
The Investment Adviser shall also be responsible for the performance of various
administrative functions for the Trust including:
(1) coordinate the efforts of the Trust's counsel and independent
auditors; assist in establishing accounting policies of each Fund;
assist in resolving of accounting and legal issues; establish and
monitor each Fund's operating budget;
(2) provide administrative services (not otherwise provided by third
parties) necessary for each Fund's operations as an exchange-traded
open-end investment company including, but not limited to, preparing
reports and notices to the Board of Trustees and shareholders, and
assist with investors and public relations matters;
(3) monitor state and federal laws as may apply to the Trust or the
Funds.
(b) Investment Advisory Services. The Investment Adviser shall provide
the Trust with such investment research, advice and supervision as the Trust
may from time to time consider necessary for the proper management of the
assets of each Fund, shall furnish continuously an investment program for each
Fund, shall determine from time to time which securities or other investments
shall be purchased, sold or exchanged for the various Funds, including
providing or obtaining such services as may be necessary in managing, acquiring
or disposing of securities, cash or other investments. The Investment Adviser
shall initially determine and make such modifications to the identity and
number of shares of the securities to be accepted in exchange for creation
units for each Fund and the securities that will be applicable that day to
redemption requests.
The Trust has furnished the Investment Adviser with copies of the
Trust's registration statement and Declaration of Trust as currently in effect
and agrees during the continuance of this Agreement to furnish the Investment
Adviser with copies of any amendments or
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supplements thereto before or at the time the amendments or supplements become
effective. The Investment Adviser and any Service Providers will be entitled to
rely on all documents furnished by the Trust.
Except as instructed by the Board, the Investment Adviser shall make
decisions for the Trust as to the manner in which voting rights, rights to
consent to corporate action, and any other rights pertaining to the Trust's
securities shall be exercised. If the Board at any time makes any determination
as to investment policy and notifies the Investment Adviser of such
determination, the Investment Adviser shall be bound by such determination
until notified to the contrary.
The Investment Adviser shall take, on behalf of each Fund, all actions
which it considers necessary to implement the investment strategies of such
Fund, and in particular, to place all orders for the purchase or sale of
securities or other investments for the account of each Fund with brokers and
dealers selected by it, and to that end, the Investment Adviser is authorized
as the agent of the Trust to give instructions to the Trust's custodian as to
deliveries of securities or other investments and payments of cash for the
account of each Fund.
In connection with the selection of brokers or dealers and the placing
of purchase and sale orders, the Investment Adviser is directed to seek to
obtain best execution and price within the policy guidelines determined by the
Board from time to time. To the extent permitted by the policy guidelines, the
Investment Adviser is authorized to consider, in the selection of brokers and
dealers to execute Fund transactions, not only the available prices and rates
of brokerage commissions, but also other relevant factors which may include,
without limitation: (1) the execution capabilities of such brokers and dealers,
(2) research, brokerage and other services provided by such brokers and dealers
which the Investment Adviser believes will enhance its general Fund management
capabilities, (3) the size of the transaction, (4) the difficulty of execution,
(5) the operational facilities of such brokers and dealers, and (6) the risk to
such a broker or dealer of positioning a block of securities.
In connection with the foregoing, the Investment Adviser is
specifically authorized to pay those brokers and dealers who provide brokerage
and research services to it a higher commission than that charged by other
brokers and dealers if the Investment Adviser determines in good faith that the
amount of such commission is reasonable in relation to the value of such
services in terms of either the particular transaction or in terms of the
Investment Adviser's overall responsibilities with respect to the Trust, the
Fund and to any other client accounts or Funds which the Investment Adviser
advises. The execution of such transactions shall not be considered to
represent an unlawful breach of any duty created by this Agreement or
otherwise.
The Investment Adviser also is authorized to aggregate purchase and
sale orders for securities held (or to be held) in a Fund with similar orders
being made on the same day for other client accounts or Funds managed by the
Investment Adviser. When an order is so aggregated: (1) the actual prices
applicable to the aggregated transaction will be averaged and the Fund and each
other account or Fund participating in the aggregated transaction shall be
treated as having purchased or sold its portion of the securities at such
average price, and (2) all transaction costs incurred in effecting the
aggregated transaction shall be shared on a pro-rata basis among the accounts or
Funds (including the Funds) participating in the transaction. The Trust
recognizes
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that in some cases this procedure may adversely affect the size of the position
obtainable for the Fund.
Subject to applicable laws and regulations, the Investment Adviser may
attempt to allocate equitably portfolio transactions among the Funds and the
portfolios of its other clients purchasing or selling securities whenever
decisions are made to purchase or sell securities by a Fund and one or more of
such other clients simultaneously. In making such allocations the main factors
to be considered will be the respective investment objectives of the Fund and
such other clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Fund and
such other clients, the size of investment commitments generally held by the
Fund and such other clients and opinions of the persons responsible for
recommending investments to the Fund and such other clients.
As part of carrying out its obligations to manage the investment and
reinvestment of the assets of each Fund consistent with the requirements under
the 1940 Act, the Investment Adviser shall:
(1) Perform research and obtain and analyze pertinent economic,
statistical, and financial data relevant to the investment policies
of each Fund as set forth in the registration statement;
(2) Consult with the Board and furnish to the Board recommendations with
respect to an overall investment strategy for each Fund for
approval, modification, or rejection by the Board;
(3) Seek out and implement specific investment opportunities, consistent
with any investment strategies approved by the Board;
(4) Take such steps to implement any overall investment strategies
approved by the Board for each Fund, including making and carrying
out day-to-day decisions to acquire or dispose of securities,
managing investments and otherwise arranging for, the payment of
distributions and dividends;
(5) Regularly report to the Board with respect to the implementation of
any approved overall investment strategy and any other activities in
connection with management of the assets of each Fund;
(6) Maintain, in the form and for the periods required by Rule 31a-2 of
the 1940 Act, all records relating to each Fund's investments that
are required to be maintained by the Trust pursuant to paragraphs
(b)(5), (b)(6), (b)(7), (b)(9), (b)(10) and (f) of Rule 31a-1 of
the 1940 Act;
(7) Monitor the registration of shares of each Fund under applicable
federal and state securities laws;
(8) Assist in the preparation and filing of the Trust's and the Funds'
federal, state and local tax returns;
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(9) To the extent required by appropriate Service Providers, assist in
determining each business day the net asset value of the shares of
each Fund.
ARTICLE II
The Investment Adviser
The Investment Adviser is registered with the SEC under the Advisers
Act. The Investment Adviser shall remain so registered throughout the term of
this Agreement and shall notify the Trust immediately if the Investment Adviser
ceases to be so registered. The Investment Adviser is a wholly-owned subsidiary
of Xxxxxxxxxx Holdings, Inc.
The Investment Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-l under the 1940 Act and will provide the
Trust with a copy of that code, together with evidence of its adoption. Within
90 days of the end of each calendar quarter during which this Agreement remains
in effect, an appropriate officer of the Investment Adviser shall certify to
the Trust that the Investment Adviser has complied with the requirements of
Rule 17j-l (as amended from time to time) during the previous quarter and that
there have been no violations of the Investment Adviser's code of ethics or, if
such a violation has occurred, that appropriate action has been taken in
response to such violation. Upon written request of the Trust, the Investment
Adviser shall permit representatives of the Trust to examine the reports (or
summaries of the reports) required to be made to the Investment Adviser by Rule
17j-1(c)(1) and other records evidencing enforcement of the code of ethics.
ARTICLE III
Allocation of Charges and Expenses
(a) The Investment Adviser. The Investment Adviser assumes the expense
of and shall pay for maintaining the staff and personnel necessary to perform
its obligations under this Agreement, and shall at its own expense provide the
office space, equipment and facilities for such personnel, and shall pay all
compensation of officers and trustees of the Trust who are affiliated persons of
the Investment Adviser.
With the exception of those expenses set forth in subsection (b)
below, the Investment Adviser will also assume all expenses of the Trust and
each Fund, including, without limitation, determination of daily price
computations, placement of securities orders (excluding brokerage commissions),
related bookkeeping, fees of the administrator, expenses for legal and auditing
services, costs of printing proxy materials, custody and transfer agency fees,
expenses of redemption of shares, SEC filing fees, expenses of registering the
shares under the federal securities laws, accounting fees, printing costs, and
insurance.
(b) The Trust. The Trust assumes and shall pay or cause to be paid the
following expenses of the Trust and each Fund: (i) brokerage commissions and
other expenses connected with the execution of portfolio transactions; (ii)
taxes; (iii) interest; (iv) independent trustee compensation, out-of-pocket
expenses of independent trustees in connection with attending board meetings,and
educational expenses for independent trustees; (v) "12b-1" fees (if any); and
(vi) extraordinary expenses (including, without limitation, litigation and
indemnification costs and expenses).
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ARTICLE IV
Compensation of the Investment Adviser
For the services rendered, the facilities furnished and expenses
assumed by the Investment Adviser, the Trust shall pay to the Investment
Adviser at the end of each calendar month a fee for each Fund calculated as a
percentage of the average daily net assets of each Fund at the annual rate of
0.15 percent (15 basis points). The Investment Adviser's fee is accrued daily
at l/365th of the applicable annual rate. For the purpose of the fee accrual,
the daily net assets of each Fund are determined in the manner and at the times
set forth in the Trust's current registration statement. On days for which the
values of a Fund's net assets are not determined, the fee shall be accrued on
the most recently determined net assets adjusted for subsequent daily income
and expense accruals.
In the event of termination of this Agreement, all compensation due
through the date of termination will be calculated on a pro-rated basis through
the date of termination and paid within fifteen business days of the date of
termination.
ARTICLE V
Limitation of Liability of the Investment Adviser
The Investment Adviser shall not be liable for any error of judgment
or mistake of law or for any loss arising out of any investment or for any act
or omission in the management of the Trust, except for (1) 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, and (2) to the
extent specified in Section 36(b) of the 1940 Act concerning loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation.
ARTICLE VI
Activities of the Investment Adviser
The Investment Adviser's services under this Agreement are not
exclusive. The Investment Adviser reserves the right to manage other investment
companies and other investment accounts for other clients, which may at times
invest in the same or similar securities to those invested in by the Funds.
It is further understood that trustees, officers, and shareholders of
the Trust are or may become interested persons of the Investment Adviser, as
directors, officers, employees or shareholders, and that directors, officers,
employees and shareholders of the Investment Adviser are or may become
similarly interested persons of the Trust, and that the Investment Adviser may
become interested in the Trust as a shareholder or otherwise.
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ARTICLE VII
Books and Records
The Investment Adviser hereby undertakes and agrees to maintain all
records not maintained by the Administrator pursuant to its agreements with the
Trust or with the Investment Adviser, in the form and for the period required
by Rule 3la-2 under the 1940 Act.
The Investment Adviser agrees that all books and records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such books, records or information upon the
Trust's request. All such books and records shall be made available, within
five business days of a written request, to the Trust's accountants or auditors
during regular business hours at the Investment Adviser's offices. The Trust or
its authorized representative shall have the right to copy any records in the
possession of the Investment Adviser or Administrator that pertain to the
Trust. Such books, records, information or reports shall be made available to
properly authorized government representatives consistent with state and
federal law and/or regulations. In the event of the termination of this
Agreement, all such books, records or other information shall be returned to
the Trust free from any claim or assertion of rights by the Investment Adviser.
The Investment Adviser further agrees that it will not disclose or use
any records or information obtained pursuant to this Agreement in any manner
whatsoever except as authorized in this Agreement and that it will keep
confidential any information obtained pursuant to this Agreement and disclose
such information only if the Trust has authorized such disclosure, or if such
disclosure is required by federal or state regulatory authorities.
ARTICLE VIII
Effectiveness, Duration and Termination of this Agreement
This Agreement shall not become effective unless and until it is
approved by the Board, including a majority of trustees who are not parties to
this Agreement or interested persons of any such party, and, to the extent
required by law, by the vote of a majority of the outstanding voting shares of
each Fund. This Agreement shall become effective on the date which it is so
approved. This Agreement may be extended to cover any investment Funds of the
Trust that may be created in the future. This agreement shall become effective
as to each such future Fund when it is approved by the Board, including a
majority of trustees who are not parties to this Agreement or interested
persons of any such party, and, to the extent required by law, by the vote of a
majority of the outstanding voting shares of such Fund.
As to each Fund of the Trust, this Agreement shall continue in
effect until July 1, 2008, and thereafter is subject to annual approval by (1)
the Board or (2) the vote of a majority of the outstanding voting securities of
the Fund, provided that in either event such continuance also is approved by a
majority of the independent trustees by a vote cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated at any time as to any Fund or as to
all Funds, without penalty, on 60 days' written notice by the Board or by vote
of a majority of the outstanding votes
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attributable to the applicable Fund, or on 60 days' notice by the Investment
Adviser. If this Agreement is terminated only with respect to one or more, but
less than all, of the Funds, or if a different investment adviser is appointed
with respect to a new Fund, the Agreement shall remain in effect with respect
to the remaining Funds. This Agreement will terminate automatically in the
event of its assignment.
A Fund may use the name Ameristock only so long as this Agreement
or any extension, renewal or amendment thereof remains in effect as to such
Fund and with the permission of the Investment Adviser.
ARTICLE IX
Amendments of this Agreement
This Agreement may be amended as to a Fund only if such amendment is
specifically approved by (1) the vote of a majority of outstanding votes
attributable to that Fund, and (2) 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, or as
otherwise permitted by law.
ARTICLE X
Definitions of Certain Terms
The terms "assignment," "affiliated person," and "interested person,"
when used in this Agreement, shall have the respective meanings specified in
the 1940 Act. The term "majority of the outstanding votes" attributable to the
shares of a Fund means the lesser of (1) 67% or more of the votes attributable
to such Fund present at a meeting if the holders of more than 50% of such votes
are present or represented by proxy, or (2) more than 50% of the votes
attributable to shares of the Fund.
ARTICLE XI
Governing Law
This Agreement shall be construed in accordance with laws of the State
of California, and applicable provisions of the Advisers Act and the 1940 Act.
ARTICLE XII
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.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date written above.
AMERISTOCK ETF TRUST
Signature: /s/ Xxxxxxxx X. Xxxxxx
By: Xxxxxxxx X. Xxxxxx
Title: President & Treasurer
ATTEST:
/s/ Xxxxxx Man
Xxxxxx Man
AMERISTOCK CORPORATION
Signature: /s/ Xxxxxxxx X. Xxxxxx
By: Xxxxxxxx X. Xxxxxx
Title: President
ATTEST:
/s/ Xxxxxx Man
Xxxxxx Man
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Appendix A
List of the Funds in the Ameristock ETF Trust
Ameristock/Xxxx 1 Year Treasury ETF
Ameristock/Xxxx 2 Year Treasury ETF
Ameristock/Xxxx 5 Year Treasury ETF
Ameristock/Xxxx 10 Year Treasury ETF
Ameristock/Xxxx 20 Year Treasury ETF
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