INVESTA MANAGEMENT CO., INC.
FORM OF INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the __
day of __________, 1999, by and between INVESTA MANGEMENT CO., INC., a Maryland
corporation (the "Company"), on behalf of its series, Super Index Fund (the
"Fund") and INVESTA, INC., a Texas corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Company is an open-end management investment company,
registered as such under the Investment Company Act of 1940 (the "Investment
Company Act"); and
WHEREAS, the Fund is a series of the Company having separate assets and
liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Company desires to retain the Adviser to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties to this Agreement, intending to be
legally bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Company hereby employs the Adviser
and the Adviser hereby accepts such employment, to render
investment advice and related services with respect to the assets
of the Fund for the period and on the terms set forth in this
Agreement, subject to the supervision and direction of the Board
of Directors.
2. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as investment adviser
to the Fund and shall supervise investments of the Fund on
behalf of the Fund in accordance with the investment
objective, policies and restrictions of the Fund as set
forth in the Fund's and Company's governing documents,
including, without limitation, the Company's Articles of
Incorporation and By-Laws; the Fund's prospectus, statement
of additional information and undertakings, as in effect
from time to time; and such other limitations, policies and
procedures as the Directors may impose from time to time in
writing to the Adviser. In providing such services, the
Adviser shall at all times adhere to the provisions and
restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code,
the Uniform Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Adviser shall:
(i) furnish the Fund with advice and recommendations with respect to the
investment of the Fund's assets and the purchase and sale of portfolio
securities for the Fund, including the taking of such steps as may be necessary
to implement such advice and recommendations (e.g., placing the orders); (ii)
manage and oversee the investments of the Fund, subject to the ultimate
supervision and direction of the Board of Directors; (iii) vote proxies for the
Fund, file ownership reports under Section 13 of the Securities Exchange Act of
1934 for the Fund, and take other similar actions on behalf of the Fund; (iv)
maintain the books and records required to be maintained by the Fund except to
the extent arrangements have been made for such books and records to be
maintained by the administrator or another agent of the Fund; (v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets which the Fund's
administrator or distributor or the officers of the Company may reasonably
request; and (vi) render to the Board of Directors such periodic and special
reports with respect to the Fund's investment activities as the Board may
reasonably request, including at least one in-person appearance annually before
the Board of Directors. Notwithstanding the provisions of this Section 2(a), the
Adviser may delegate some or all of these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Directors. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Directors may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Adviser an amount of
commission for effecting a portfolio transaction in excess of the amount of
-2-
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Company. The Adviser is further authorized to allocate the orders placed by
it on behalf of the Fund to such brokers or dealers who also provide research or
statistical material, or other services, to the Company, the Adviser, or any
affiliate of either. Such allocation shall be in such amounts and proportions as
the Adviser shall determine, and the Adviser shall report on such allocations
regularly to the Company, indicating the broker-dealers to whom such allocations
have been made and the basis therefor. The Adviser is also authorized to
consider sales of shares as a factor in the selection of brokers or dealers to
execute portfolio transactions, subject to the requirements of best price and
execution.
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 of other clients, the Adviser,
to the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
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 Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the provisions of
Sections 2(a) and 2(b), respectively, the Adviser may delegate the performance
of investment advisory services for the Fund to one or more sub-advisers
approved by the Board of Directors, but such delegation will not relieve the
Adviser of the duty to supervise the performance of advisory services hereunder.
If the advisory functions are delegated to one or more sub-advisers, then the
obligations of each such sub-adviser shall be governed by a sub-advisory
agreement to be entered into between the Adviser and each such sub-adviser.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(b) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company Act
of 1940, and any other applicable state and/or self-regulatory organization laws
and regulations.
(d) The Adviser shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Directors in connection
with their approval of this Agreement.
-3-
(e) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Texas and has full corporate power and authority
to enter into this Agreement and to perform services hereunder, the execution
and delivery of this Agreement by the Adviser has been duly authorized by all
necessary corporate action, and this Agreement is a valid binding obligation of
the Adviser, enforceable against the Adviser in accordance with its terms.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized to do so, have
no authority to act for or represent the Company or the Fund in
any way, or in any way be deemed an agent for the Company or for
the Fund. It is expressly understood and agreed that the services
to be rendered by the Adviser to the Fund under the provisions of
this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar or different services to others
so long as its ability to render the services provided for in
this Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and
consult with such other persons as it shall from time to time
determine to be necessary to the performance of its obligations
under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Adviser shall be deemed
to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information,
advice regarding economic factors and trends, information with
respect to technical and scientific developments, and such other
information, advice and assistance as the Adviser or the Board of
Directors may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the Fund, the Adviser shall
be responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Directors meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's expenses, including but not limited to: investment sub-advisory
and administrative fees payable to any sub-adviser or administrator under the
appropriate agreements entered into with the Adviser or the Company, as the case
may be; fees and expenses incurred in connection with the issuance, registration
-4-
and transfer of Company shares; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Company for the benefit of the Fund including all fees and expenses of its
custodian, shareholder services agent and accounting services agent; interest
charges on any borrowings; costs and expenses of pricing and calculating the
Fund's daily net asset value and of maintaining the Fund's books of account
required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of the Fund's shareholders and the Company's Board of
Directors that are not paid by other third parties; salaries and expenses of
officers and fees and expenses of members of the Board of Directors or members
of any advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the administrator; insurance premiums on
property or personnel of the Fund which inure to its (a)benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder record-keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of the Fund's operation. Notwithstanding any other provision
of this Agreement to the contrary, however, the Adviser will not be responsible
for any brokerage commissions or extraordinary and non-recurring expenses,
except as specifically agreed to herein or as otherwise prescribed.
7. INVESTMENT ADVISORY AND MANAGEMENT FEE.
(a) The Fund shall pay to the Adviser, and the Adviser agrees to
accept, as full compensation for all investment management and advisory services
furnished or provided to the Fund pursuant to this Agreement, an annual
investment advisory fee at the rate of 1.00% of the Fund's average net assets.
(b) The investment advisory fee shall be accrued daily by the
Fund and paid to the Adviser on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the
first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated prior to the end of any month, the fee to the Adviser shall be
prorated for the portion of any month in which this Agreement is in effect which
is not a complete month according to the proportion which the number of calendar
days in the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(d) The fee payable to the Adviser under this Agreement will be
reduced to the extent of any receivable owed by the Adviser to the Fund and as
required under any expense limitation applicable to the Fund.
-5-
(e) The Adviser voluntarily may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the expenses which are the
responsibility of the Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Adviser hereunder or to continue future payments. Any such reduction will
be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any Fund expense
absorbed by the Adviser voluntarily or pursuant to an agreed upon expense cap
shall be reimbursed by the Fund to the Adviser, if so requested by the Adviser,
in the first, second or third (or any combination thereof) fiscal year next
succeeding the fiscal year of the withholding, reduction or absorption if the
aggregate amount actually paid by the Fund toward the operating expenses for
such fiscal year (taking into account the reimbursement) do not exceed the
applicable limitation on Fund expenses. Such reimbursement may be paid prior to
the Fund's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current Fund
expenses.
(g) The Adviser may agree not to require payment of any portion
of the compensation or reimbursement of expenses otherwise due to it pursuant to
this Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short
position in the shares of the Fund. This prohibition shall
not prevent the purchase of such shares by any of the
officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or
affiliates thereof, at a price not less than the net asset
value thereof at the time of purchase, as allowed pursuant
to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or
employees shall borrow from the Fund or pledge or use the
Fund's assets in connection with any borrowing not directly
for the Fund's benefit. For this purpose, failure to pay any
amount due and payable to the Fund for a period of more than
thirty (30) days shall constitute a borrowing.
9. CONFLICTS WITH COMPANY'S GOVERNING DOCUMENTS AND APPLICABLE
LAWS. Nothing herein contained shall be deemed to require
the Company or the Fund to take any action contrary to the
Company's Articles of Incorporation, By-Laws, or any
applicable statute or regulation, or to relieve or deprive
the Board of Directors of the Company of its responsibility
for and control of the conduct of the affairs of the Company
and the Fund. In this connection, the Adviser acknowledges
that the Directors retain ultimate plenary authority over
the Fund and may take any and all actions necessary and
reasonable to protect the interests of shareholders.
-6-
10. Reports and Access. The Adviser agrees to supply such
information to the Fund's administrator and to permit such
compliance inspections by the administrator as shall be
reasonably necessary to permit the administrator to satisfy
its obligations and respond to the reasonable requests of
the Directors.
11. Adviser's Liabilities and Indemnification.
(a) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Company or another third party for inclusion therein.
(b) The Adviser shall be liable to the Fund for any loss
(including brokerage charges) incurred by the Fund as a result of any improper
investment made by the Adviser.
(c) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the
Company or the Fund or to any shareholder of the Fund for any act or omission in
the course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(d) Each party to this Agreement shall indemnify and hold
harmless the other party and the shareholders, directors, officers and employees
of the other party (any such person, an "Indemnified Party") against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating and defending any alleged loss, liability, claim, damage or
expenses and reasonable counsel fees incurred in connection therewith) arising
out of the Indemnified Party's performance or nonperformance of any duties under
this Agreement provided, however, that nothing herein shall be deemed to protect
any Indemnified Party against any liability to which such Indemnified Party
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be construed to protect
any Director or officer of the Company, or officer of the Adviser, from
liability in violation of Sections 17(h) and (i) of the Investment Company Act.
-7-
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Company's employment of the Adviser is not an exclusive
arrangement. The Company may from time to time employ other
individuals or entities to furnish it with the services
provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in
any way be limited or restricted from having, selling or
trading any securities for its or their own accounts or the
accounts of others for whom it or they may be acting,
provided, however, that the Adviser expressly represents
that it will undertake no activities which will adversely
affect the performance of its obligations to the Fund under
this Agreement; and provided further that the Adviser shall
adhere to a code of ethics governing employee trading and
trading for proprietary accounts that conforms to the
requirements of the Investment Company Act and the
Investment Advisers Act of 1940 and has been approved by the
Company's Board of Directors.
13. TERM. This Agreement shall become effective at the time the
Fund commences operations pursuant to an effective amendment
to the Company's Registration Statement under the Securities
Act of 1933 and shall remain in effect for a period of two
(2) years, unless sooner terminated as hereinafter provided.
This Agreement shall continue in effect thereafter for
additional periods not exceeding one (1) year so long as
such continuation is approved for the Fund at least annually
by (i) the Board of Directors of the Company or by the vote
of a majority of the outstanding voting securities of the
Fund and (ii) the vote of a majority of the Directors of the
Company who are not parties to this Agreement nor interested
persons thereof, cast in person at a meeting called for the
purpose of voting on such approval. The terms "majority of
the outstanding voting securities" and "interested persons"
shall have the meanings as set forth in the Investment
Company Act.
14. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Company are the property of the Company and further agrees to surrender
promptly to the Company any such records upon the Company's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
-8-
(b) The Adviser shall treat as confidential and proprietary
information of the Company all records and other information relative to the
Company and shareholders of the Company, or persons who respond to inquiries
concerning investment in the Company, and shall not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder or under any other agreement with the Company, except as
otherwise provided in writing by the Company (which approval shall not be
unreasonably withheld if the Adviser may be exposed to civil or criminal
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Company). However,
nothing herein shall be deemed to prohibit the Adviser or its affiliates from
using in any manner information provided by the Adviser or its affiliates to the
Company, or from advertising to or soliciting the public generally with respect
to other products and services, regardless of whether such advertisements or
solicitation may coincidentally include prior or present shareholders or persons
who have responded to inquiries regarding the Company.
15. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Company on behalf of
the Fund at any time without payment of any penalty, by the Board of Directors
or by vote of a majority of the outstanding voting securities of the Fund, upon
sixty (60) days' written notice to the Adviser, and by the Adviser upon sixty
(60) days' written notice to a Fund. In the event of a termination, the Adviser
shall cooperate in the orderly transfer of the Fund's affairs and, at the
request of the Board of Directors, transfer any and all books and records of the
Fund maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of
any transfer or assignment thereof, as defined in the Investment Company Act.
16. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement and understanding between the parties hereto. 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
thereof is sought. To the extent required by the Investment Company Act, no
amendment of this Agreement shall be effective until approved by a majority of
the outstanding voting securities of the Fund (as defined in such Act).
17. ARTICLES OF INCORPORATION. The Articles of Incorporation of
the Company is on file with the Secretary of the State of Maryland. In
accordance therewith, the Adviser acknowledges and agrees that this Agreement
was signed on behalf of the Company by the undersigned as officers of the
Company and not individually, and that the obligations of the Company under this
Agreement are not binding upon any officers, directors or shareholders of the
Company individually but are binding only upon the assets of the Fund.
18. SEVERABILITY. If any provision of this Agreement shall be
held or made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
-9-
19. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
20. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
-10-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
INVESTA MANGEMENT CO., INC. INVESTA, INC.
on behalf of its series, the
Super Index Fund
By: By:
---------------------------- ---------------------------
Name: Name:
Title: Title:
-11-
INVESTA MANAGEMENT CO., INC.
FORM OF INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of
the __ day of __________, 1999, by and between INVESTA MANGEMENT CO., INC., a
Maryland corporation (the "Company"), on behalf of its series, InvestmentWizard
Fund (the "Fund") and INVESTA, INC., a Texas corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Company is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act"); and
WHEREAS, the Fund is a series of the Company having separate
assets and liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Company desires to retain the Adviser to render
advice and services to the Fund pursuant to the terms and provisions of this
Agreement, and the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties to this Agreement, intending to be
legally bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Company hereby employs the
Adviser and the Adviser hereby accepts such employment, to
render investment advice and related services with respect
to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and
direction of the Board of Directors.
2. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as investment
adviser to the Fund and shall supervise investments of
the Fund on behalf of the Fund in accordance with the
investment objective, policies and restrictions of the
Fund as set forth in the Fund's and Company's governing
documents, including, without limitation, the Company's
Articles of Incorporation and By-Laws; the Fund's
prospectus, statement of additional information and
undertakings, as in effect from time to time; and such
other limitations, policies and procedures as the
Directors may impose from time to time in writing to
the Adviser. In providing such services, the Adviser
shall at all times adhere to the provisions and
restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue
Code, the Uniform Commercial Code and other applicable
law.
Without limiting the generality of the foregoing, the Adviser
shall: (i) furnish the Fund with advice and recommendations with respect to the
investment of the Fund's assets and the purchase and sale of portfolio
securities for the Fund, including the taking of such steps as may be necessary
to implement such advice and recommendations (e.g., placing the orders); (ii)
manage and oversee the investments of the Fund, subject to the ultimate
supervision and direction of the Board of Directors; (iii) vote proxies for the
Fund, file ownership reports under Section 13 of the Securities Exchange Act of
1934 for the Fund, and take other similar actions on behalf of the Fund; (iv)
maintain the books and records required to be maintained by the Fund except to
the extent arrangements have been made for such books and records to be
maintained by the administrator or another agent of the Fund; (v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets which the Fund's
administrator or distributor or the officers of the Company may reasonably
request; and (vi) render to the Board of Directors such periodic and special
reports with respect to the Fund's investment activities as the Board may
reasonably request, including at least one in-person appearance annually before
the Board of Directors. Notwithstanding the provisions of this Section 2(a), the
Adviser may delegate some or all of these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to
buy and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Directors. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Directors may determine,
the Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides (directly or indirectly)
brokerage or research services to the Adviser an amount of commission for
effecting a portfolio transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Adviser determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by such
-2-
broker or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Company. The Adviser is
further authorized to allocate the orders placed by it on behalf of the Fund to
such brokers or dealers who also provide research or statistical material, or
other services, to the Company, the Adviser, or any affiliate of either. Such
allocation shall be in such amounts and proportions as the Adviser shall
determine, and the Adviser shall report on such allocations regularly to the
Company, indicating the broker-dealers to whom such allocations have been made
and the basis therefor. The Adviser is also authorized to consider sales of
shares as a factor in the selection of brokers or dealers to execute portfolio
transactions, subject to the requirements of best price and execution.
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 of other clients, the
Adviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
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 Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the
provisions of Sections 2(a) and 2(b), respectively, the Adviser may delegate the
performance of investment advisory services for the Fund to one or more
sub-advisers approved by the Board of Directors, but such delegation will not
relieve the Adviser of the duty to supervise the performance of advisory
services hereunder. If the advisory functions are delegated to one or more
sub-advisers, then the obligations of each such sub-adviser shall be governed by
a sub-advisory agreement to be entered into between the Adviser and each such
sub-adviser.
3. REPRESENTATIONS OF THE ADVISER.
(a) The Adviser shall use its best judgment and efforts in
rendering the advice and services to the Fund as contemplated by this Agreement.
(b) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(c) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company Act
of 1940, and any other applicable state and/or self-regulatory organization laws
and regulations.
-3-
(d) The Adviser shall maintain errors and omissions insurance
in an amount at least equal to that disclosed to the Board of Directors in
connection with their approval of this Agreement.
(e) The Adviser is a corporation duly organized and in good
standing under the laws of the State of Texas and has full corporate power and
authority to enter into this Agreement and to perform services hereunder, the
execution and delivery of this Agreement by the Adviser has been duly authorized
by all necessary corporate action, and this Agreement is a valid binding
obligation of the Adviser, enforceable against the Adviser in accordance with
its terms.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and
shall, unless otherwise expressly provided and authorized to
do so, have no authority to act for or represent the Company
or the Fund in any way, or in any way be deemed an agent for
the Company or for the Fund. It is expressly understood and
agreed that the services to be rendered by the Adviser to
the Fund under the provisions of this Agreement are not to
be deemed exclusive, and the Adviser shall be free to render
similar or different services to others so long as its
ability to render the services provided for in this
Agreement shall not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense,
maintain such staff and employ or retain such personnel and
consult with such other persons as it shall from time to
time determine to be necessary to the performance of its
obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or
retained by the Adviser to furnish statistical information,
research, and other factual information, advice regarding
economic factors and trends, information with respect to
technical and scientific developments, and such other
information, advice and assistance as the Adviser or the
Board of Directors may desire and reasonably request.
6. EXPENSES.
(a) With respect to the operation of the Fund, the Adviser shall
be responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Directors meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's expenses, including but not limited to: investment sub-advisory
and administrative fees payable to any sub-adviser or administrator under the
appropriate agreements entered into with the Adviser or the Company, as the case
may be; fees and expenses incurred in connection with the issuance, registration
-4-
and transfer of Company shares; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash, securities and other property of the
Company for the benefit of the Fund including all fees and expenses of its
custodian, shareholder services agent and accounting services agent; interest
charges on any borrowings; costs and expenses of pricing and calculating the
Fund's daily net asset value and of maintaining the Fund's books of account
required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of the Fund's shareholders and the Company's Board of
Directors that are not paid by other third parties; salaries and expenses of
officers and fees and expenses of members of the Board of Directors or members
of any advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the administrator; insurance premiums on
property or personnel of the Fund which inure to its (a)benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder record-keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of the Fund's operation. Notwithstanding any other provision
of this Agreement to the contrary, however, the Adviser will not be responsible
for any brokerage commissions or extraordinary and non-recurring expenses,
except as specifically agreed to herein or as otherwise prescribed.
7. INVESTMENT ADVISORY AND MANAGEMENT FEE.
(a) The Fund shall pay to the Adviser, and the Adviser agrees
to accept, as full compensation for all investment management and advisory
services furnished or provided to the Fund pursuant to this Agreement, an annual
investment advisory fee at the rate of 1.00% of the Fund's average net assets.
(b) The investment advisory fee shall be accrued daily by the
Fund and paid to the Adviser on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on
the first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated prior to the end of any month, the fee to the Adviser shall be
prorated for the portion of any month in which this Agreement is in effect which
is not a complete month according to the proportion which the number of calendar
days in the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(d) The fee payable to the Adviser under this Agreement will
be reduced to the extent of any receivable owed by the Adviser to the Fund and
as required under any expense limitation applicable to the Fund.
-5-
(e) The Adviser voluntarily may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the [expenses which are the
responsibility of the Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Adviser hereunder or to continue future payments. Any such reduction will
be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis.
(f) Any fee withheld or voluntarily reduced and any Fund
expense absorbed by the Adviser voluntarily or pursuant to an agreed upon
expense cap shall be reimbursed by the Fund to the Adviser, if so requested by
the Adviser, in the first, second or third (or any combination thereof) fiscal
year next succeeding the fiscal year of the withholding, reduction or absorption
if the aggregate amount actually paid by the Fund toward the operating expenses
for such fiscal year (taking into account the reimbursement) do not exceed the
applicable limitation on Fund expenses. Such reimbursement may be paid prior to
the Fund's payment of current expenses if so requested by the Adviser even if
such practice may require the Adviser to waive, reduce or absorb current Fund
expenses.
(g) The Adviser may agree not to require payment of any
portion of the compensation or reimbursement of expenses otherwise due to it
pursuant to this Agreement. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Adviser hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither
it nor any of its officers or employees shall take any short
position in the shares of the Fund. This prohibition shall
not prevent the purchase of such shares by any of the
officers or employees of the Adviser or any trust, pension,
profit-sharing or other benefit plan for such persons or
affiliates thereof, at a price not less than the net asset
value thereof at the time of purchase, as allowed pursuant
to rules promulgated under the Investment Company Act. The
Adviser agrees that neither it nor any of its officers or
employees shall borrow from the Fund or pledge or use the
Fund's assets in connection with any borrowing not directly
for the Fund's benefit. For this purpose, failure to pay any
amount due and payable to the Fund for a period of more than
thirty (30) days shall constitute a borrowing.
-6-
9. CONFLICTS WITH COMPANY'S GOVERNING DOCUMENTS AND APPLICABLE
LAWS. Nothing herein contained shall be deemed to require
the Company or the Fund to take any action contrary to the
Company's Articles of Incorporation, By-Laws, or any
applicable statute or regulation, or to relieve or deprive
the Board of Directors of the Company of its responsibility
for and control of the conduct of the affairs of the Company
and the Fund. In this connection, the Adviser acknowledges
that the Directors retain ultimate plenary authority over
the Fund and may take any and all actions necessary and
reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply such
information to the Fund's administrator and to permit such
compliance inspections by the administrator as shall be
reasonably necessary to permit the administrator to satisfy
its obligations and respond to the reasonable requests of
the Directors.
11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(a) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Company or another third party for inclusion therein.
(b) The Adviser shall be liable to the Fund for any loss
(including brokerage charges) incurred by the Fund as a result of any improper
investment made by the Adviser.
(c) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the
Company or the Fund or to any shareholder of the Fund for any act or omission in
the course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(d) Each party to this Agreement shall indemnify and hold
harmless the other party and the shareholders, directors, officers and employees
of the other party (any such person, an "Indemnified Party") against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating and defending any alleged loss, liability, claim, damage or
expenses and reasonable counsel fees incurred in connection therewith) arising
out of the Indemnified Party's performance or nonperformance of any duties under
this Agreement provided, however, that nothing herein shall be deemed to protect
any Indemnified Party against any liability to which such Indemnified Party
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
-7-
(e) No provision of this Agreement shall be construed to protect
any Director or officer of the Company, or officer of the Adviser, from
liability in violation of Sections 17(h) and (i) of the Investment Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The
Company's employment of the Adviser is not an exclusive
arrangement. The Company may from time to time employ other
individuals or entities to furnish it with the services
provided for herein. Likewise, the Adviser may act as
investment adviser for any other person, and shall not in
any way be limited or restricted from having, selling or
trading any securities for its or their own accounts or the
accounts of others for whom it or they may be acting,
provided, however, that the Adviser expressly represents
that it will undertake no activities which will adversely
affect the performance of its obligations to the Fund under
this Agreement; and provided further that the Adviser shall
adhere to a code of ethics governing employee trading and
trading for proprietary accounts that conforms to the
requirements of the Investment Company Act and the
Investment Advisers Act of 1940 and has been approved by the
Company's Board of Directors.
13. TERM. This Agreement shall become effective at the time the
Fund commences operations pursuant to an effective amendment
to the Company's Registration Statement under the Securities
Act of 1933 and shall remain in effect for a period of two
(2) years, unless sooner terminated as hereinafter provided.
This Agreement shall continue in effect thereafter for
additional periods not exceeding one (1) year so long as
such continuation is approved for the Fund at least annually
by (i) the Board of Directors of the Company or by the vote
of a majority of the outstanding voting securities of the
Fund and (ii) the vote of a majority of the Directors of the
Company who are not parties to this Agreement nor interested
persons thereof, cast in person at a meeting called for the
purpose of voting on such approval. The terms "majority of
the outstanding voting securities" and "interested persons"
shall have the meanings as set forth in the Investment
Company Act.
14. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Company are the property of the Company and further agrees to surrender
promptly to the Company any such records upon the Company's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
-8-
(b) The Adviser shall treat as confidential and proprietary
information of the Company all records and other information relative to the
Company and shareholders of the Company, or persons who respond to inquiries
concerning investment in the Company, and shall not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder or under any other agreement with the Company, except as
otherwise provided in writing by the Company (which approval shall not be
unreasonably withheld if the Adviser may be exposed to civil or criminal
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Company). However,
nothing herein shall be deemed to prohibit the Adviser or its affiliates from
using in any manner information provided by the Adviser or its affiliates to the
Company, or from advertising to or soliciting the public generally with respect
to other products and services, regardless of whether such advertisements or
solicitation may coincidentally include prior or present shareholders or persons
who have responded to inquiries regarding the Company.
15. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Company on behalf of
the Fund at any time without payment of any penalty, by the Board of Directors
or by vote of a majority of the outstanding voting securities of the Fund, upon
sixty (60) days' written notice to the Adviser, and by the Adviser upon sixty
(60) days' written notice to a Fund. In the event of a termination, the Adviser
shall cooperate in the orderly transfer of the Fund's affairs and, at the
request of the Board of Directors, transfer any and all books and records of the
Fund maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of
any transfer or assignment thereof, as defined in the Investment Company Act.
16. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the
entire agreement and understanding between the parties hereto. 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
thereof is sought. To the extent required by the Investment Company Act, no
amendment of this Agreement shall be effective until approved by a majority of
the outstanding voting securities of the Fund (as defined in such Act).
17. ARTICLES OF INCORPORATION. The Articles of Incorporation of
the Company is on file with the Secretary of the State of Maryland. In
accordance therewith, the Adviser acknowledges and agrees that this Agreement
was signed on behalf of the Company by the undersigned as officers of the
Company and not individually, and that the obligations of the Company under this
Agreement are not binding upon any officers, directors or shareholders of the
Company individually but are binding only upon the assets of the Fund.
-9-
18. SEVERABILITY. If any provision of this Agreement shall be
held or made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
19. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
20. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to the conflict of laws principles thereof; provided that nothing herein
shall be construed to preempt, or to be inconsistent with, any federal law,
regulation or rule, including the Investment Company Act and the Investment
Advisers Act of 1940 and any rules and regulations promulgated thereunder.
-10-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
INVESTA MANGEMENT CO., INC. INVESTA, INC.
on behalf of its series, the
InvestmentWizard Fund
By: By:
---------------------------- ---------------------------
Name: Name:
Title: Title:
-11-
