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EXHIBIT D
ADVISORY AGREEMENT
UC Investment Trust (the "Trust") is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Act"), and subject to the rules and regulations promulgated thereunder. The
Trust currently offers one series of shares to investors, the UC Investment Fund
(the "Fund"). Each share of the Fund represents an undivided interest in the
assets, subject to the liabilities, of the Fund.
1. Appointment as Adviser. The Trust being duly authorized hereby
appoints and employs United Investment Corporation (the "Adviser") as
discretionary portfolio manager on the terms and conditions set forth herein of
the Fund.
2. Acceptance of Appointment; Standard of Performance. The Adviser
accepts the appointment as discretionary portfolio manager and agrees to use its
best professional judgement to make timely investment decisions for the Fund in
accordance with the provisions of this Agreement.
3. Portfolio Management Services of the Adviser. The Adviser is hereby
employed and authorized to select portfolio securities for investment by the
Trust on behalf of the Fund, to purchase and sell securities of the Fund, and,
upon making any purchase or sale decision, to place orders for the execution of
such portfolio transactions in accordance with paragraphs 5 and 6 hereof. In
providing portfolio management services to the Fund, the Adviser shall be
subject to such investment restrictions as are set forth in the Act and the
rules thereunder, the Internal
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Revenue Code of 1986, applicable state securities laws, the supervision and
control of the Trustees of the Trust, such specific instructions as the Trustees
may adopt and communicate to the Adviser and the investment objectives, policies
and restrictions of the Trust applicable to the Fund furnished pursuant to
paragraph 4. The Adviser is not authorized by the Trust to take any action,
including the purchase or sale of securities for the Fund, in contravention of
any restriction, limitation, objective, policy or instruction described in the
previous sentence. Within the framework of the investment objectives, policies
and restrictions of the Trust, the Adviser shall have the sole and exclusive
responsibility, subject to the oversight of the Trust, for portfolio management
and the making and execution of all investment decisions of the Fund. The
Adviser shall maintain on behalf of the Trust the records listed in Schedule A
hereto (as amended from time to time). The Adviser hereby acknowledges that all
such records are the property of the Trust, and in the event of a transfer of
portfolio management services to a person other than the Adviser, the Adviser
shall promptly, and at its own cost, take all steps necessary to segregate such
records and deliver them to the Trust. At the Trust's reasonable request, the
Adviser will consult with the Trust with respect to any decision made by it with
respect to the investments of the Fund.
4. Investment Objectives, Policies and Restrictions. The Trust will
provide the Adviser with the statement of investment
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objectives, policies and restrictions applicable to the Fund as contained in the
Trust's registration statement under the Act and the Securities Act of 1933, and
any instructions adopted by the Trustees supplemental thereto. The Trust will
provide the Adviser with such further information concerning the investment
objectives, policies and restrictions applicable thereto as the Adviser may from
time to time reasonably request. The Trust retains the right, on written notice
to the Adviser from the Trust, to modify any such objectives, policies or
restrictions in any manner at any time.
5. Transaction Procedures. All transactions will be consummated by
payment to or delivery by Fifth Third Bank or any successor custodian (the
"Custodian"), or such depositories or agents as may be designated by the
Custodian in writing, as custodian for the Trust, of all cash and/or securities
due to or from the Fund, and the Adviser shall not have possession or custody
thereof. The Adviser shall advise the Custodian and confirm in writing to the
Trust and to Countrywide Fund Services, Inc. or any other designated agent of
the Trust, all investment orders for the Fund placed by it with brokers and
dealers. The Adviser shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated by
the Adviser.
6. Allocation of Brokerage. The Adviser shall have authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Adviser and to select the markets on or in which the
transactions will be executed.
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In doing so, the Adviser will give primary consideration to securing
the best price and execution. Consistent with this policy, the Adviser may
consider the financial responsibility, research and investment information and
other services provided by brokers or dealers who may effect or be a party to
any such transaction or other transactions to which other clients of the Adviser
may be a party. It is understood that neither the Trust nor the Adviser has
adopted a formula for allocation of the Fund's investment transaction business.
It is also understood that it is desirable for the Trust that the Adviser have
access to supplemental investment and market research and security and economic
analyses provided by certain brokers who may execute brokerage transactions at a
higher commission to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the lowest commission. Therefore, the Adviser is
authorized to place orders for the purchase and sale of securities for the Fund
with such certain brokers, subject to review by the Trust's Trustees from time
to time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Adviser in connection with its services to other clients.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
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obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Trust and to such other clients.
For each fiscal quarter of the Trust, the Adviser shall prepare and
render reports to the Trust's Trustees of the total brokerage business placed
and the manner in which the allocation has been accomplished. Such reports shall
set forth at a minimum the information required to be maintained by Rule
3la-l(b)(9) under the Act.
7. Proxies. The Trust will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Fund may be invested
from time to time. At the request of the Trust, the Adviser shall provide the
Trust with its recommendations as to the voting of such proxies.
8. Reports to the Adviser. The Trust will provide the Adviser with
such periodic reports concerning the status of the Fund as the Adviser may
reasonably request.
9. Fees for Services. For all of the services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Adviser a
fee, computed and accrued daily and paid monthly, at the annual rate of 1.00% of
its average daily net assets.
10. Allocation of Charges and Expenses. The Adviser shall employ or
provide and compensate the executive, administrative,
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secretarial and clerical personnel necessary to provide the services set forth
herein, and shall bear the expense thereof. The Adviser shall compensate all
Trustees, officers and employees of the Trust who are also employees of the
Adviser. The Adviser will pay all expenses incurred in connection with the sale
or distribution of the Fund's shares to the extent such expenses are not assumed
by the Fund under the Trust's Distribution Expense Plan.
The Fund will be responsible for the payment of all operating expenses
of the Fund, including fees and expenses incurred by the Fund in connection with
membership in investment company organizations, brokerage fees and commissions,
legal, auditing and accounting expenses, expenses of registering shares under
federal and state securities laws, insurance expenses, taxes or governmental
fees, fees and expenses of the custodian, the transfer, shareholder service and
dividend disbursing agent and the accounting and pricing agent of the Fund,
expenses including clerical expenses of the issue, sale, redemption or
repurchase of shares of the Fund, the fees and expenses of Trustees of the
Trust who are not interested persons of the Trust, the cost of preparing,
printing and distributing prospectuses, statements, reports and other documents
to shareholders, expenses of shareholders' meetings and proxy solicitations, and
such extraordinary or non-recurring expenses as may arise, including litigation
to which the Trust may be a party and indemnification of the Trust's officers
and Trustees
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with respect thereto, or any other expense not specifically described above
incurred in the performance of the Trust's obligations. All other expenses not
expressly assumed by the Adviser herein incurred in connection with the
organization, registration of shares and operations of the Fund will be borne by
the Fund.
11. Other Investment Activities of the Adviser. The Trust acknowledges
that the Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"); provided, however, that performance by the Adviser of
such other services shall not impair or interfere with the Adviser's obligations
under this Agreement. Subject to the provisions of paragraph 2 hereof, the Trust
agrees that the Adviser or its affiliates may give advice or exercise investment
responsibility and take such other action with respect to other Affiliated
Accounts which may differ from the advice given or the timing or nature of
action taken with respect to the Fund, provided that the Adviser acts in good
faith, and provided further, that it is the Adviser's policy to allocate, within
its reasonable discretion, investment opportunities to the Fund over a period of
time on a fair and equitable basis relative to the Affiliated Accounts, taking
into account the investment objectives and policies of the Fund and
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any specific investment restrictions applicable thereto. The Trust acknowledges
that one or more of the Affiliated Accounts may at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with positions in investments
in which the Fund may have an interest from time to time, whether in
transactions which involve the Fund or otherwise. The Adviser shall have no
obligation to acquire for the Fund a position in any investment which any
Affiliated Account may acquire, and the Trust shall have no first refusal,
co-investment or other rights in respect of any such investment, either for the
Fund or otherwise.
12. Certificate of Authority. The Trust and the Adviser shall furnish
to each other from time to time certified copies of the resolutions of their
Trustees or Board of Directors or executive committees, as the case may be,
evidencing the authority of officers and employees who are authorized to act on
behalf of the Trust, the Fund and/or the Adviser.
13. Limitation of Liability. The Adviser shall not be liable for any
action taken, omitted or suffered to be taken by it in its reasonable judgment,
in good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement, or in accordance with (or
in the absence of) specific directions or instructions from the Trust, provided,
however, that such acts or omissions shall not have resulted from the Adviser's
willful misfeasance, bad faith or negligence, a violation of the standard of
care established by and applicable to the Adviser in its actions under this
Agreement or breach of its duty or of its obligations hereunder.
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Nothing in this paragraph 13 shall be construed in a manner inconsistent with
Sections 17(h) and (i) of the Act.
14. Confidentiality. Subject to the duty of the Adviser and the Trust
to comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of the Adviser and the
Trust in respect thereof.
15. Assignment. No assignment of this Agreement shall be made by the
Adviser, and this Agreement shall terminate automatically in the event of such
assignment. The Adviser shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Adviser.
16. Representation, Warranties and Agreements of the Trust. The Trust
represents, warrants and agrees that:
A. The Adviser has been duly appointed by the Trustees of the Trust
to provide investment advisory services to the Fund as contemplated hereby.
B. The Trust will deliver to the Adviser true and complete copies
of its then current prospectus and statement of additional information as
effective from time to time and such other documents or instruments governing
the investments of the Fund and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
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C. The Trust is currently in compliance and shall at all times
comply with the requirements imposed upon the Trust by applicable law and
regulations.
17. Representations, Warranties and Agreements of the Adviser. The
Adviser represents, warrants and agrees that:
A. The Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940.
B. The Adviser will maintain, keep current and preserve on behalf
of the Trust, in the manner and for the time periods required or permitted by
the Act, the records identified in Schedule A. The Adviser agrees that such
records (unless otherwise indicated on Schedule A) are the property of the
Trust, and will be surrendered to the Trust promptly upon request.
C. The Adviser will complete such reports concerning purchases or
sales of securities on behalf of the Fund as the Trust may from time to time
require to ensure compliance with the Act, the Internal Revenue Code of 1986 and
applicable state securities laws.
D. The Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the Act and will provide the Trust with a
copy of the code of ethics and evidence of its adoption. Within forty-five (45)
days of the end of the last calendar quarter of each year while this Agreement
is in effect, an executive officer of the Adviser shall certify to the Trust
that the Adviser has complied with the requirements of Rule 17j-1 during the
previous year and that there has been no
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violation of the Adviser's code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation. Upon the
written request of the Trust, the Adviser shall permit the Trust, its employees
or its agents to examine the reports required to be made to the Adviser by Rule
17j-l(c)(1).
E. The Adviser will, promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV, furnish a copy of such
amendment to the Trust.
F. Upon request of the Trust, the Adviser will provide assistance
to the Custodian in the collection of income due or payable to the Fund.
G. The Adviser will immediately notify the Trust of the occurrence
of any event which would disqualify the Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the Act or
otherwise.
18. Amendment. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Trustees and the
shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to approval
of amendments to this Agreement.
19. Effective Date; Term. This Agreement shall become effective on the
date of its execution and shall remain in force
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for a period of two (2) years from such date, and from year to year thereafter
but only so long as such continuance is specifically approved at least annually
by the vote of a majority of the Trustees who are not interested persons of the
Trust or the Adviser, cast in person at a meeting called for the purpose of
voting on such approval, and by a vote of the Board of Trustees or of a majority
of the outstanding voting securities of the Fund. The aforesaid requirement that
this Agreement may be continued "annually" shall be construed in a manner
consistent with the Act and the rules and regulations thereunder.
20. Termination. This Agreement may be terminated by either party
hereto, without the payment of any penalty, immediately upon written notice to
the other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other, but
any such termination shall not affect the status, obligations or liabilities of
any party hereto to the other. This Agreement may be terminated by the Trust at
any time without the payment of any penalty in the event that it is established
by a court of competent jurisdiction that the Adviser or any officer or director
thereof has taken an action which results in a breach of the covenants of the
Adviser set forth in this Agreement.
21. Obligations of the Trust. 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 bind only the trust property of the Trust. The execution and
delivery of this
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Agreement have been authorized by the Trustees of the Trust and signed by an
officer of the Trust, acting as such, and neither such authorization by such
trustees 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.
22. Definitions. As used in paragraphs 15 and 19 of this Agreement, the
terms "assignment," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations hereunder.
23. Applicable Law. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Virginia.
24. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
the Agreement shall not be affected thereby.
25. Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year written below.
UC INVESTMENT TRUST
By: Xxxx X. Xxxxxx
----------------------------
Title: President
-------------------------
Date: June 16 1998
--------------------,
UNITED INVESTMENT CORPORATION
By: Xxxxxx X. Xxxxxx
----------------------------
Title: Vice-President
-------------------------
Date: June 16 1998
--------------------,
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SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
1. (Rule 3la-l(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases or sales, given by the Adviser on behalf of
the Fund for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification
or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the
Trust.
2. (Rule 3la-l(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of portfolio securities to named brokers or dealers was effected,
and the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or
dealers to:
(a) The Trust;
(b) The Adviser; and,
(c) Any person affiliated with the foregoing
persons.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made
available.
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C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 3la-l(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is
made by a committee or group, a record shall be kept of the names of
its members who participate in the authorization. There shall be
retained as part of this record any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of portfolio
securities and such other information as is appropriate to support the
authorization.*
4. (Rule 3la-l(f)) Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Adviser's transactions with respect to the Fund.
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* Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms (including
their recommendation; i.e., buy, sell, hold) or any internal reports or
portfolio adviser reviews.
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