THE MILESTONE FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___th day of ______, 2002, between The Milestone Funds
(the "Trust"), a business trust organized under the laws of the State of
Delaware with its principal place of business at Xxx Xxxxxxxxx Xxxxxxxxx,
Xxxxxxx, Xxx Xxxx 00000 and Xxxxxxxx Capital Management LLC (the "Adviser"), a
limited partnership organized under the laws of the State of _________ with its
principal place of business at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "Act") as an open-end management investment company and is
authorized to issue its shares of beneficial interest, no par value, in separate
series and classes;
WHEREAS, the Adviser is registered with the Securities and Exchange
Commission (the "Commission") as an investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act"); and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust listed in Appendix A (each a "Portfolio"
and collectively the "Portfolios") and the Adviser is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, the Trust and the Adviser agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Certificate of Trust, Trust Instrument, Bylaws and Registration
Statement filed with the Commission under the Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectuses
and statements of additional information relating to the Portfolio contained
therein and as may be supplemented from time to time, all in such manner and to
such extent as may from time to time be authorized by the Trust's Board of
Trustees (the "Board"). The Trust has delivered copies of the documents listed
in this Section 1 and will from time to time furnish the Adviser with any
amendments thereof.
SECTION 2. APPOINTMENT
The Trust hereby employs the Adviser, subject to the direction and control
of the Board, to manage the investment and reinvestment of the assets in the
Portfolio and, without limiting the generality of the foregoing, to provide
other services specified in Section 3 hereof.
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SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets in the Portfolio. To carry out
such decisions, the Adviser is hereby authorized, as agent and attorney-in-fact
for the Trust, for the account of, at the risk of and in the name of the Trust,
to place orders and issue instructions with respect to those transactions of the
Portfolio. In all purchases, sales and other transactions in securities for the
Portfolio, the Adviser is authorized to exercise full discretion and act for the
Trust in the same manner and with the same force and effect as the Trust might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions.
(b) The Adviser will report to the Board at each meeting thereof all
changes in the Portfolio since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Portfolio and the
Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Adviser may believe appropriate for this purpose,
whether concerning the individual companies whose securities are included in the
Portfolio's holdings, the industries in which they engage, or the economic,
social or political conditions prevailing in each country in which the
Portfolios maintain investments. The Adviser will also furnish the Board with
such statistical and analytical information with respect to securities in the
Portfolio as the Adviser may believe appropriate or as the Board reasonably may
request. In making purchases and sales of securities for the Portfolio, the
Adviser will bear in mind the policies set from time to time by the Board as
well as the limitations imposed by the Trust's Certificate of Trust, Trust
Instrument, Bylaws, Registration Statement under the Act and the Securities Act,
the limitations in the Act and in the Internal Revenue Code of 1986, as amended
in respect of regulated investment companies and the investment objectives,
policies and restrictions of the Portfolio.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(d) The Adviser shall maintain records relating to Portfolio transactions
and the placing and allocation of brokerage orders as are required to be
maintained by the Trust under the Act. The Adviser shall prepare and maintain,
or cause to be prepared and maintained, in such form, for such periods and in
such locations as may be required by applicable law, all documents and records
relating to the services provided by the Adviser pursuant to this Agreement
required to be prepared and maintained by the Trust pursuant to the rules and
regulations of any national, state, or local government entity with jurisdiction
over the Trust, including the Securities and Exchange Commission and the
Internal Revenue Service. The books and records pertaining to the Trust which
are in possession of the Adviser shall be the property of the Trust. The Trust,
or the Trust's authorized representatives, shall have access to such books and
records at all times
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during the Adviser's normal business hours. Upon the reasonable request of the
Trust, copies of any such books and records shall be provided promptly by the
Adviser to the Trust or the Trust's authorized representatives.
SECTION 4. EXPENSES
Except to the extent expressly assumed by the Adviser and except to any
extent required by law to be paid or reimbursed by the Adviser, the Adviser
shall have no duty to pay any ordinary operating expenses incurred in the
organization and operation of the Portfolios.
The Trust shall be responsible and shall assume the obligation for payment
of all the Trust's operating expenses, including: (i) interest charges, taxes,
brokerage fees and commissions; (ii) certain insurance premiums; (iii) fees,
interest charges and expenses of the Trust's custodian, transfer agent and
dividend disbursing agent; (iv) telecommunications expenses; (v) auditing, legal
and compliance expenses; (vi) costs of the Trust's formation and maintaining its
existence; (vii) costs of preparing and printing the Trust's prospectuses,
statements of additional information, account application forms and shareholder
reports and delivering them to existing and prospective shareholders; (viii)
costs of maintaining books of original entry for portfolio and fund accounting
and other required books and accounts and of calculating the net asset value of
shares of the Trust; (ix) costs of reproduction, stationery and supplies; (x)
compensation of the Trust's Trustees, officers, employees and other personnel
performing services for the Trust who are not officers of the Adviser, of the
Distributor or of affiliated persons of either; (xi) costs of corporate
meetings; (xii) registration fees and related expenses for registration with the
Commission and the securities regulatory authorities of other countries in which
the Trust's shares are sold; (xiii) state securities law registration fees and
related expenses; (xiv) the fee payable hereunder and fees and out-of-pocket
expenses payable to the Distributor, Administrator or Sub-Administrator under
any distribution, administration or similar agreement; and (xv) all other fees
and expenses paid by the Trust pursuant to any distribution or shareholder
service plan adopted pursuant to Rule 12b-1 under the Act or otherwise.
SECTION 5. STANDARD OF CARE
The Trust shall expect of the Adviser, and the Adviser will give the Trust
the benefit of, the Adviser's best judgment and efforts in rendering its
services to the Trust, and as an inducement to the Adviser's undertaking these
services, the Adviser shall not be liable hereunder for any mistake of judgment
or law in any event whatsoever, except for lack of good faith, provided that
nothing herein shall be deemed to protect, or purport to protect, the Adviser
against any liability to the Trust or to the Trust's security holders to which
the Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of the Adviser's duties hereunder,
or by reason of the Adviser's reckless disregard of its obligations and duties
hereunder.
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SECTION 6. COMPENSATION
(a) In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each Portfolio, a fee at an annual rate set forth in Appendix A
hereto. These fees shall be accrued by the Trust daily and shall be payable
monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month.
(b) For purposes of calculating the Portfolio's daily net assets in
determining the fees payable hereunder, there shall be excluded all holdings
(and liabilities related to the purchase of holdings) in any registered open-end
management investment company for which the Adviser acts as investment adviser.
No fee shall be payable hereunder with respect to the Portfolio during any
period in which the Portfolio invests all of its investment assets in a
registered, open-end management investment company, or separate series thereof,
in accordance with Section 12(d)(1)(E) under the Act.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective immediately upon approval by a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement shall remain in effect for a period of twenty four
months from the date of its execution and shall continue in effect for
successive twelve-month periods (computed from each anniversary date of
execution). This Agreement will become effective with respect to each additional
Portfolio as of the date set forth on Appendix A when each such Portfolio is
added thereto. This Agreement shall continue in effect for a Portfolio after the
second anniversary of the effective date for successive annual periods ending on
each anniversary of such date, provided that such continuance is specifically
approved at least annually (i) by the Board or by the vote of a majority of the
outstanding voting securities of the Portfolio, and, in either case, (ii) by a
majority of the Trust's Trustees who are not parties to this Agreement or
interested persons of any such party (other than as Trustees of the Trust);
provided further, however, that if this Agreement or the continuation of this
Agreement is not approved, the Adviser may continue to render the services
described herein in the manner and to the extent permitted by the Act and the
rules and regulations thereunder.
(c) This Agreement may be terminated at any time, without the payment of
any penalty, (i) by the Board or by a vote of a majority of the outstanding
voting securities of the Portfolio on 60 days' written notice to the Adviser or
(ii) by the Adviser on 60 days' written notice to the Trust. This agreement
shall terminate upon assignment.
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SECTION 8. ACTIVITIES OF THE ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers, directors or employees who may also be a
Trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
SECTION 9. SUB-ADVISERS
At its own expense, the Adviser may carry out any of its obligations under
this agreement by employing, subject to the Adviser's supervision, one or more
persons who are registered as investment advisers pursuant to the Investment
Advisers Act of 1940, as amended, or who are exempt from registration thereunder
("Sub-advisers"). Each Sub-adviser's employment will be evidenced by a separate
written agreement approved by the Board and, if required, by the shareholders of
the Portfolio. The Adviser shall not be liable hereunder for any act or omission
of any Sub-adviser, except to exercise good faith in the employment of the
Sub-adviser and except with respect to matters as to which the Adviser assumes
responsibility in writing. In the event that any Sub-adviser appointed is
terminated, the Adviser may provide investment advisory services pursuant to
this Agreement through its own employees.
SECTION 10. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting securities of the Portfolio.
(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(c) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of Delaware.
(d) The terms "vote of a majority of the outstanding voting securities",
"interested person", "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE MILESTONE FUNDS
By: ________________________
Xxxxx Xxxxxxx Xxxxxx
Chair and President
XXXXXXXX CAPITAL MANAGEMENT LLC
By:__________________________
President
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THE MILESTONE FUNDS
INVESTMENT ADVISORY AGREEMENT
APPENDIX A
Fee as a % of
the Annual Average Daily
Portfolio of the Trust Net Assets of the Portfolio Effective Date
---------------------- --------------------------- --------------
Xxxxxxxx Capital Liquid Assets Fund 0.XX%
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