BLACK DIAMOND FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the __ day of ________, 2002, by
and between Black Diamond Funds, a Delaware business trust, with
its principal office and place of business at 0000 Xxxxx Xxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 (the "Trust"), and
Black Diamond Asset Management LLC, a Delaware limited liability
company, with its principal office and place of business at 0000
Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 (the
"Adviser").
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end,
management investment company and may issue its shares of
beneficial interest, no par value (the "Shares"), in separate
series; and
WHEREAS, the Trust desires that the Adviser perform
investment advisory services for each series of the Trust listed
in Appendix A hereto (each, a "Series" and collectively, the
"Series"), and the Adviser is willing to provide those services
on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual
covenants and agreements contained herein, the Trust and the
Adviser hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) 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 each Series and,
without limiting the generality of the foregoing, to provide
other services as specified herein. The Adviser accepts this
employment and agrees to render its services for the compensation
set forth herein.
(b) In connection therewith, the Trust has
delivered to the Adviser copies of: (i) the Trust's Trust
Instrument, as amended from time to time (the "Trust
Instrument"); (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the 1940 Act with respect to
the Series (the "Registration Statement"); (iii) the Trust's
current Prospectuses and Statements of Additional Information for
the Series (collectively, as currently in effect and as amended
or supplemented, the "Prospectus"); and (iv) all procedures
adopted by the Trust with respect to the Series, and shall
promptly furnish the Adviser with all amendments of or
supplements to the foregoing. The Trust shall deliver to the
Adviser: (x) a certified copy of the resolution of the Board of
Trustees of the Trust (the "Board") appointing the Adviser and
authorizing the execution and delivery of this Agreement; (y) a
copy of all proxy statements and related materials relating to
the Series; and (z) any other documents, materials or information
that the Adviser shall reasonably request to enable it to perform
its duties pursuant to this Agreement.
(c) The Adviser has delivered, or will deliver
within 45 days, to the Trust a copy of its code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act
(the "Code"). The Adviser shall promptly furnish the Trust with
all amendments of or supplements to the foregoing at least
annually.
SECTION 2. DUTIES OF THE TRUST
In order for the Adviser to perform the services
required by this Agreement, the Trust: (i) shall cause all
service providers to the Trust to furnish information to the
Adviser and to assist the Adviser as may be required; and (ii)
shall ensure that the Adviser has reasonable access to all
records and documents maintained by the Trust or any service
provider to the Trust.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser will make decisions with respect
to all purchases and sales of securities and other investment
assets in each Series. 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 Series. In all purchases, sales and
other transactions in securities and other investments for the
Series, 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.
Consistent with Section 28(e) of the
Securities Exchange Act of 1934, as amended, the Adviser may
allocate brokerage on behalf of the Series to broker-dealers who
provide research services. The Adviser may aggregate sales and
purchase orders of the assets of the Series with similar orders
being made simultaneously for other accounts advised by the
Adviser or its affiliates. Whenever the Adviser simultaneously
places orders to purchase or sell the same asset on behalf of a
Series and one or more other accounts advised by the Adviser, the
orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable over time to each
account.
(b) The Adviser will report to the Board at each
meeting thereof as requested by the Board all material changes in
each Series since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the
Series 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 Series'
holdings, the industries in which they engage, the economic,
social or political conditions prevailing in each country in
which the Series maintain investments, or otherwise. The Adviser
will also furnish the Board with such statistical and analytical
information with respect to investments of the Series as the
Adviser may believe appropriate or as the Board reasonably may
request. In making purchases and sales of securities and other
investment assets for the Series, 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 Instrument and Registration
Statement, the limitations in the 1940 Act, the Securities Act,
the Internal Revenue Code of 1986, as amended, and other
applicable laws and the investment objectives, policies and
restrictions of the Series.
(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 will report to the Board all
material matters related to the Adviser. On an annual basis, the
Adviser shall report on its compliance with its Code to the Board
and upon the written request of the Trust, the Adviser shall
permit the Trust, or its representatives to examine the reports
required to be made to the Adviser under the Code. The Adviser
will notify the Trust of any change of control of the Adviser and
any changes in the key personnel who are either the portfolio
manager(s) of the Series or senior management of the Adviser, in
each case prior to or promptly after such change.
(e) The Adviser will maintain records relating to
its portfolio transactions and placing and allocation of
brokerage orders as are required to be maintained by the Trust
under the 1940 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 Adviser or the Trust pursuant to applicable
law. To the extent required by law, 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 its
representatives, shall have access to such books and records at
all times 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
its representatives.
(f) The Adviser will cooperate with each Series'
independent public accountants and shall take reasonable action
to make all necessary information available to those accountants
for the performance of the accountants' duties.
(g) The Adviser will provide the Series' custodian
and fund accountant on each business day with such information
relating to all transactions concerning the Series' assets as the
custodian and fund accountant may reasonably require. In
accordance with procedures adopted by the Board, the Adviser is
responsible for assisting in the fair valuation of all Series
assets and will use its reasonable efforts to arrange for the
provision of prices from parties who are not affiliated persons
of the Adviser for each asset for which the Series' fund
accountant does not obtain prices in the ordinary course of
business.
(h) The Adviser shall authorize and permit any of
its directors, officers and employees who may be duly elected as
Trustees or officers of the Trust to serve in the capacities in
which they are elected.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Trust
shall pay the Adviser, with respect to each Series, a fee at an
annual rate as listed in Appendix A hereto. Such 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. If fees
begin to accrue in the middle of a month or if this Agreement
terminates before the end of any month, all fees for the period
from that date to the end of that month or from the beginning of
that month to the date of termination, as the case may be, shall
be prorated according to the proportion that the period bears to
the full month in which the effectiveness or termination occurs.
Upon the termination of this Agreement with respect to a Series,
the Trust shall pay to the Adviser such compensation as shall be
payable prior to the effective date of termination.
(b) The Trust shall be responsible for and assumes
the obligation for payment of all of its expenses, including: (i)
the fee payable under this Agreement; (ii) the fees payable to
each administrator under an agreement between the administrator
and the Trust; (iii) expenses of issue, repurchase and redemption
of Shares; (iv) interest charges, taxes and brokerage fees and
commissions; (v) premiums of insurance for the Trust, its
trustees and officers, and fidelity bond premiums; (vi) fees and
expenses of third parties, including the Trust's independent
public accountant, custodian, transfer agent, dividend disbursing
agent and fund accountant; (vii) fees of pricing, interest,
dividend, credit and other reporting services; (viii) costs of
membership in trade associations; (ix) telecommunications
expenses; (x) funds' transmission expenses; (xi) auditing, legal
and compliance expenses; (xii) costs of forming the Trust and
maintaining its existence; (xiii) costs of preparing, filing and
printing the Trust's Prospectuses, subscription application forms
and shareholder reports and other communications and delivering
them to existing shareholders, whether of record or beneficial;
(xiv) expenses of meetings of shareholders and proxy
solicitations therefor; (xv) costs of maintaining books of
original entry for portfolio and fund accounting and other
required books and accounts, of calculating the net asset value
of Shares and of preparing tax returns; (xvi) costs of
reproduction, stationery, supplies and postage; (xvii) fees and
expenses of the Trust's trustees and officers; (xviii) the costs
of personnel (who may be employees of the Adviser, an
administrator or their respective affiliated persons) performing
services for the Trust; (xix) costs of Board, Board committee,
shareholder and other corporate meetings; (xx) SEC registration
fees and related expenses; (xxi) state, territory or foreign
securities laws registration fees and related expenses; and
(xxii) all fees and expenses paid by the Trust in accordance with
any distribution or service plan or agreement related to similar
matters.
SECTION 5. STANDARD OF CARE
(a) 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. The
Adviser shall not be liable hereunder for mistake of judgment or
mistake of law or 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.
(b) The Adviser shall not be responsible or liable
for any failure or delay in performance of its obligations under
this Agreement arising out of or caused, directly or indirectly,
by circumstances beyond its reasonable control including, without
limitation, acts of civil or military authority, national
emergencies, labor difficulties (other than those related to the
Adviser's employees), fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of
the mails, transportation, communication or power supply.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with
respect to a Series on the date above after approval by (1) a
majority of the outstanding voting securities of that Series (if
required) and (2) a majority of the Board who are not interested
parties of the Trust.
(b) This Agreement shall remain in effect with
respect to a Series for a period of two years from the date of
its effectiveness and shall continue in effect for successive
annual periods with respect to the Series; 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 Series, 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 the continuation
of this Agreement is not approved as to a Series, the Adviser may
continue to render to that Series the services described herein
in the manner and to the extent permitted by the 1940 Act and the
rules and regulations thereunder.
(c) This Agreement may be terminated with respect
to a Series 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 Series 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 immediately upon its
assignment.
SECTION 7. 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 directors, officers or employees 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 8. REPRESENTATIONS OF ADVISER.
The Adviser represents and warrants that: (i) it is
either registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act") (and will
continue to be so registered for so long as this Agreement
remains in effect) or exempt from registration under the Advisers
Act; (ii) is not prohibited by the 1940 Act or the Advisers Act
from performing the services contemplated by this Agreement;
(iii) has met, and will seek to continue to meet for so long as
this Agreement remains in effect, any other applicable federal or
state requirements, or the applicable requirements of any
self-regulatory agency, necessary to be met in order to perform
the services contemplated by this Agreement; and (iv) will
promptly notify the Trust of the occurrence of any event that
would disqualify the Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the
1940 Act or otherwise.
SECTION 9. SUBADVISERS
At its own expense, the Adviser may carry out any of its
obligations under this Agreement by employing, subject to the
direction and control of the Board, one or more persons who are
registered as investment advisers pursuant to the Advisers Act or
who are exempt from registration thereunder ("Subadvisers"). Each
Subadviser's employment will be evidenced by a separate written
agreement approved by the Board and, if required, by the
shareholders of the applicable Series. The Adviser shall not be
liable hereunder for any act or omission of any Subadviser,
except to exercise good faith in the employment of the Subadviser
and except with respect to matters as to which the Adviser
assumes responsibility in writing.
SECTION 10. LIMITATION OF SHAREHOLDER AND
TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each
Series shall not be liable for any obligations of the Trust or of
the Series under this Agreement, and the Adviser agrees that, in
asserting any rights or claims under this Agreement, it shall
look only to the assets and property of the Trust or the Series
to which the Adviser's rights or claims relate in settlement of
such rights or claims, and not to the Trustees of the Trust or
the shareholders of the Series.
SECTION 11. RIGHTS TO NAME
If the Adviser ceases to act as investment adviser to
the Trust or any Series whose name includes the term "Black
Diamond" (the "Xxxx") or if the Adviser requests in writing, the
Trust shall take prompt action to change the name of the Trust or
any such Series to a name that does not include the Xxxx. The
Adviser may from time to time make available without charge to
the Trust for the Trust's use any marks or symbols owned by the
Adviser, including marks or symbols containing the Xxxx or any
variation thereof, as the Adviser deems appropriate. Upon the
Adviser's request in writing, the Trust shall cease to use any
such xxxx or symbol at any time. The Trust acknowledges that any
rights in or to the Xxxx and any such marks or symbols which may
exist on the date of this Agreement or arise hereafter are, and
under any and all circumstances shall continue to be, the sole
property of the Adviser. The Adviser may permit other parties,
including other investment companies, to use the Xxxx in their
names without the consent of the Trust. The Trust shall not use
the Xxxx in conducting any business other than that of an
investment company registered under the 1940 Act without the
permission of the Adviser.
SECTION 12. 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 1940 Act, by a vote of a majority of the outstanding
voting securities of any Series thereby affected.
(b) No amendment to this Agreement or the
termination of this Agreement with respect to a Series shall
affect this Agreement as it pertains to any other Series, nor
shall any such amendment require the vote of the shareholders of
any other Series.
(c) Neither party to this Agreement shall be
liable to the other party for consequential damages under any
provision of this Agreement.
(d) This Agreement shall be governed by, and the
provisions of this Agreement shall be construed and interpreted
under and in accordance with, the laws of the State of Delaware.
(e) This Agreement constitutes the entire
agreement between the parties hereto and supersedes any prior
agreement between those parties with respect to the subject
matter hereof, whether oral or written.
(f) This Agreement may be executed by the parties
hereto on any number of counterparts, and all of the counterparts
taken together shall be deemed to constitute one and the same
instrument.
(g) If any part, term or provision of this
Agreement is held to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions shall be
considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if
the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
(h) Section headings in this Agreement are
included for convenience only and are not to be used to construe
or interpret this Agreement.
(i) Notices, requests, instructions and
communications received by the parties at their respective
principal places of business, or at such other address as a party
may have designated in writing, shall be deemed to have been
properly given.
(j) Notwithstanding any other provision of this
Agreement, the parties agree that the assets and liabilities of
each Series of the Trust are separate and distinct from the
assets and liabilities of each other Series and that no Series
shall be liable or shall be charged for any debt, obligation or
liability of any other Series, whether arising under this
Agreement or otherwise.
(k) No affiliated person, employee, agent,
director, officer or manager of the Adviser shall be liable at
law or in equity for the Adviser's obligations under this
Agreement.
(l) The terms "vote of a majority of the
outstanding voting securities", "interested person", "affiliated
person," "control" and "assignment" shall have the meanings
ascribed thereto in the 1940 Act.
(m) Each of the undersigned warrants and
represents that they have full power and authority to sign this
Agreement on behalf of the party indicated and that their
signature will bind the party indicated to the terms hereof and
each party hereto warrants and represents that this Agreement,
when executed and delivered, will constitute a legal, valid and
binding obligation of the party, enforceable against the party in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured
parties.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed all as of the day and year
first above written.
BLACK DIAMOND FUNDS
By: ________________________
Name:
Title:
BLACK DIAMOND ASSET MANAGEMENT LLC
By: _________________________
Name:
Title:
APPENDIX A
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BLACK DIAMOND FUNDS
INVESTMENT ADVISORY AGREEMENT
Fee as a % of the
Annual Average
Daily Net Assets
Series of the Trust of the Series
------------------------------------------------ ----------------
Black Diamond Principal Protected 500 Series I 1.35%
Black Diamond Principal Protected 100 Series I 1.35
Black Diamond Principal Protected 2000 Series I 1.35
Black Diamond Principal Protected 400 Series I 1.35
Black Diamond Principal Protected HT Series I 1.35
Black Diamond Principal Protected BT Series I 1.35
Black Diamond Principal Protected FS Series I 1.35
04088.0001 #323919
