INVESTMENT ADVISORY AGREEMENT
This
Agreement is made and entered into effective as of May 5, 2008, by
and between the Congressional Effect Family of Funds, a Delaware Statutory
Business Trust (the “Trust”) on behalf of the Congressional Effect Fund, a
series of shares of the Trust (the “Fund”), and Congressional Effect Management,
LLC, a Delaware limited liability company (the “Adviser”).
WHEREAS, the Trust is an
open-end management investment company, registered under the Investment Company
Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Trust has
designated the Fund as a series of interests in the Trust; and
WHEREAS, the Adviser is
registered as an investment adviser under the Investment Advisers Act of 1940
(the “Advisers Act”), and engages in the business of asset management;
and
WHEREAS, the Trust desires to
retain the Adviser to render certain investment management services to the Fund,
and the Adviser is willing to render such services;
NOW, THEREFORE, in
consideration of the mutual covenants herein contained, the parties hereto agree
as follows:
1. Obligations
of the Investment Adviser
(a) Services. The
Adviser agrees to perform the following services (the “Services”) for the
Trust:
(1) manage
the investment and reinvestment of the assets of the Fund;
(2) continuously
review, supervise, and administer the investment program of the
Fund;
(3) determine,
in its discretion, the securities to be purchased, retained or sold (and
implement those decisions) with respect to the Fund;
(4) provide
the Trust and the Fund with records concerning the Adviser’s activities under
this Agreement which the Trust and the Fund are required to maintain;
and
(5) render
regular reports to the Trust’s trustees and officers concerning the Adviser’s
discharge of the foregoing responsibilities.
The
Adviser shall discharge the foregoing responsibilities subject to the control of
the trustees and officers of the Trust and in compliance with (i) such policies
as the trustees may from time to time establish; (ii) the Fund’s objectives,
policies, and limitations as set forth in its prospectus and statement of
additional information, as the same may be amended from time to time; and (iii)
with all applicable laws and regulations. All Services to be
furnished by the Adviser under this Agreement may be furnished through the
medium of any directors, officers or employees of the Adviser or through such
other parties as the Adviser may determine from time to time.
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(b) Expenses and
Personnel. The Adviser agrees, at its own expense or at the
expense of one or more of its affiliates, to render the Services and to provide
the office space, furnishings, equipment and personnel as may be reasonably
required in the judgment of the trustees and officers of the Trust to perform
the Services on the terms and for the compensation provided
herein. The Adviser shall authorize and permit any of its officers,
directors and employees, who may be elected as trustees or officers of the
Trust, to serve in the capacities in which they are elected. Except
to the extent expressly assumed by the Adviser herein and except to the extent
required by law to be paid by the Adviser, the Trust shall pay all costs and
expenses in connection with its operation.
(c) Books and
Records. All books and records prepared and maintained by the
Adviser for the Trust and the Fund under this Agreement shall be the property of
the Trust and the Fund and, upon request therefor, the Adviser shall surrender
to the Trust and the Fund such of the books and records so
requested.
2. Fund Transactions. The Adviser
is authorized to select the brokers or dealers that will execute the purchases
and sales of portfolio securities for the Fund. With respect to
brokerage selection, the Adviser shall seek to obtain the best overall execution
for fund transactions, which is a combination of price, quality of execution and
other factors. The Adviser may, in its discretion, purchase and sell
portfolio securities from and to brokers and dealers who provide the Adviser
with brokerage, research, analysis, advice and similar services, and the Adviser
may pay to these brokers and dealers, in return for such services, a higher
commission or spread than may be charged by other brokers and dealers, provided
that the Adviser determines in good faith that such commission is reasonable in
terms either of that particular transaction or of the overall responsibility of
the Adviser to the Fund and its other clients and that the total commission paid
by the Fund will be reasonable in relation to the benefits to the Fund and its
other clients over the long-term. The Adviser will promptly
communicate to the officers and the trustees of the Trust such information
relating to portfolio transactions as they may reasonably request.
3. Compensation of the
Adviser. The Fund will pay to the Adviser an investment
advisory fee (the “Fee”) equal to an annualized rate of 1.0% of the average
daily net assets of the Fund. The Fee shall be calculated as of the
last business day of each month based upon the average daily net assets of the
Fund determined in the manner described in the Fund’s Prospectus and/or
Statement of Additional Information, and shall be paid to the Adviser by the
Fund within five (5) days after such calculation.
4. Status of Investment
Adviser. The services of the Adviser to the Trust and the Fund
are not to be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust and the Fund are not
impaired thereby. The Adviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust or the Fund in any way or otherwise
be deemed an agent of the Trust or the Fund. Nothing in this
Agreement shall limit or restrict the right of any director, officer or employee
of the Adviser, who may also be a trustee, officer or employee of the Trust, to
engage in any other business or to devote his or her time and attention in part
to the management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
5. Permissible
Interests. Trustees, agents, and stockholders of the Trust are
or may be interested in the Adviser (or any successor thereof) as directors,
partners, officers, or stockholders, or otherwise; and directors, partners,
officers, agents, and stockholders of the Adviser are or may be interested in
the Trust as trustees, stockholders or otherwise; and the Adviser (or any
successor) is or may be interested in the Trust as a stockholder or
otherwise.
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6. Limits of Liability;
Indemnification. The Adviser assumes no responsibility under
this Agreement other than to render the services called for
hereunder. The Adviser shall not be liable for any error of judgment
or for any loss suffered by the Trust or the Fund in connection with the matters
to which this Agreement relates, except a loss resulting from a breach of
fiduciary duty with respect to receipt of compensation for services (in which
case any award of damages shall be limited to the period and the amount set
forth in Section 36(b)(3) of the Investment Company Act of 1940) or a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of, or from reckless disregard by it of its obligations and
duties under, this Agreement. It is agreed that the Adviser shall have no
responsibility or liability for the accuracy or completeness of the Trust's
registration statement under the Act or the Securities Act of 1933, except for
information supplied by the Adviser for inclusion
therein. The Trust agrees to indemnify the Adviser to the full
extent permitted by the Trust's Declaration of Trust.
7. Term. This
Agreement shall remain in effect for an initial term of two years from the date
hereof, and from year to year thereafter provided such continuance is approved
at least annually by the vote of a majority of the trustees of the Trust who are
not “interested persons” (as defined in the Act) of the Trust, which vote must
be cast in person at a meeting called for the purpose of voting on such
approval; provided, however,
that:
(a) the
Trust may, at any time and without the payment of any penalty, terminate this
Agreement upon 30 days written notice of a decision to terminate this Agreement
by (i) the Trust’s trustees; or (ii) the vote of a majority of the outstanding
voting securities of the Fund;
(b) this
Agreement shall immediately terminate in the event of its assignment (within the
meaning of the Act and the Rules thereunder);
(c) the
Adviser may, at any time and without the payment of any penalty, terminate this
Agreement upon 60 days written notice to the Trust and the Fund;
and
(d) the
terms of paragraphs 6 and 7 of this Agreement shall survive the termination of
this Agreement.
8. Amendments. No
provision of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, and no
amendment of this Agreement shall be effective until approved by vote of the
holders of a majority of the Trust’s outstanding voting securities.
9. Applicable
Law. This Agreement shall be construed in accordance with, and
governed by, the laws of the State of Delaware.
10. Representations
and Warranties.
(a) Representations and Warranties of the
Adviser. The Adviser hereby represents and warrants to the
Trust as follows: (i) the Adviser is a limited liability company duly organized
and in good standing under the laws of the State of Delaware and is fully
authorized to enter into this Agreement and carry out its duties and obligations
hereunder; and (ii) the Adviser is registered as an investment adviser with the
SEC under the Advisers Act, and shall maintain such registration in effect at
all times during the term of this Agreement.
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(b) Representations and Warranties of the
Trust. The Trust hereby represents and warrants to the Adviser
as follows: (i) the Trust has been duly organized as a business trust under the
laws of the State of Delaware and is authorized to enter into this Agreement and
carry out its terms; (ii) the Trust is (or will be) registered as an investment
company with the Securities and Exchange Commission under the 1940 Act; (iii)
shares of each Trust are (or will be) registered for offer and sale to the
public under the 1933 Act; and (iv) such registrations will be kept in effect
during the term of this Agreement.
11. Structure of
Agreement. The Trust is entering into this Agreement solely on
behalf of the Fund. No breach of any term of this Agreement shall
create a right or obligation with respect to any series of the Trust other than
the Fund; (b) under no circumstances shall the Adviser have the right to set off
claims relating to the Fund by applying property of any other series of the
Trust; and (c) the business and contractual relationships created by this
Agreement, consideration for entering into this Agreement, and the consequences
of such relationship and consideration relate solely to the Trust and the
Fund.
12. 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 and, to this extent, the provisions of this Agreement shall
be deemed to be severable.
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the day and the
year first written above.
| CONGRESSIONAL EFFECT FAMILY OF FUNDS | CONGRESSIONAL EFFECT MANAGEMENT, LLC | |
| /s/ Xxxx X. Xxxxxx | /s/ Xxxx X. Xxxxxx | |
| By: Xxxx X. Xxxxxx | By: Xxxx X. Xxxxxx | |
| Title: Trustee | Title: Managing Member |
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