Foresight Funds, Inc.
Investment Advisory Agreement
Agreement made effective as of the 15th day of June, 2003 between Foresight
Funds, Inc., a Maryland corporation (the "Fund"), and Value Analytics, LLC,
a Maryland limited liability company (the"Adviser").
The Fund is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company. The Fund is
authorized to create separate series, each with its own separate investment
portfolio (each a "Fund" and collectively, the "Funds"), and beneficial
interest in each such series will be represented by a separate series of
shares (the "Shares"). The initial series is the Foresight Value Fund.
The Adviser is an investment adviser registered under the Investment
Advisers Act of 1940, as amended.
The Fund desires to retain the Adviser as investment adviser to furnish
investment advisory and portfolio management services to the Fund with
respect to its initial portfolio and such other portfolios as the Fund and
the Adviser shall agree upon (collectively, the "Portfolios"). The Adviser
is willing to furnish such services and to perform the functions assigned
to it under this Agreement for the consideration provided herein.
In consideration of the premises and mutual covenants herein contained, it
is agreed between the parties hereto as follows:
1. Appointment
The Fund hereby appoints the Adviser as investment adviser and
administrator of the Fund and each Portfolio listed in Schedule A of this
Agreement (as such schedule may be amended from time to time) for the
period and on the terms set forth in this Agreement. The Adviser accepts
such appointment and agrees to render the services set forth herein for the
compensation as listed in Schedule A. In the performance of its duties, the
Adviser will act in the best interests of the Fund and each Portfolio and
will comply with:
a) applicable laws and regulations, including, but not limited to, the
1940 Act
b) the terms of this Agreement
c) the Fund's Articles of Incorporation, By-Laws and currently effective
registration statement under the Securities Act of 1933, as amended,
and the 1940 Act, and any amendments thereto
d) the stated investment objective, policies and restrictions of each
applicable Portfolio
e) other guidelines as the Board of Directors of the Fund ("Board of
Directors") reasonably may establish.
2. Duties as Investment Adviser
Subject to the supervision of the Board of Directors, the Adviser will
provide a continuous investment program for each Portfolio, including
investment research and management with respect to all securities,
investments and cash equivalents in each Portfolio. The Adviser will
determine from time to time what securities and other investments will be
purchased, retained or sold by each Portfolio. The Adviser will exercise
full discretion with respect to 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.
The Adviser will place orders pursuant to its investment determinations for
each Portfolio either directly with the issuer or through other brokers. In
the selection of brokers and the placement of orders for the purchase and
sale of portfolio investments for the Portfolios, the Adviser shall use its
best efforts to obtain for the Portfolios the best qualitative
execution, taking into account such factors as price (including the
applicable brokerage commission or dealer spread), the execution
capability, financial responsibility and responsiveness of the broker or
dealer. 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 a Portfolio to pay a broker that provides brokerage
services to the Adviser an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another broker
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 services provided by such broker, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Fund and to other clients of the
Adviser as to which the Adviser exercises investment discretion. In no
instance will portfolio securities of any Portfolio be purchased from or
sold to the Adviser or any affiliated person of the Adviser.
3. Exclusivity of Services
The services furnished by the Adviser hereunder are not to be deemed
exclusive and the Adviser shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired
thereby.
4. Books and Records
In compliance with the requirements of Rule 3la-3 under the 1940 Act, the
Adviser hereby agrees that all records which it maintains for the Fund are
the property of the Fund and further agrees to surrender promptly to the
Fund any of such records upon the Fund's request. The Adviser further
agrees to preserve for the periods prescribed by Rule 3la-2 under the 1940
Act the records required to be maintained by Rule 3la-1 under the 1940 Act.
5. Expenses
During the term of this Agreement, the Fund will bear all expenses not
specifically assumed by the Adviser incurred in its operations and the
offering of its shares. Expenses borne by the Fund will include, but not be
limited to, the following (or each Portfolio's proportionate share of the
following):
a) brokerage commissions relating to securities purchased or sold by the
Fund or any losses incurred in connection therewith
b) fees payable to and expenses incurred on behalf of the Fund by the
Adviser
c) expenses of organizing the Fund and the Portfolios
d) filing fees and expenses relating to the registration and
qualification of the Fund's shares and the Fund under federal or state
securities laws and maintaining such registrations and qualifications
e) distribution fees
f) fees and salaries payable to the members of the Board of Directors and
officers who are not officers or employees of the Adviser or
interested persons (as defined in the 0000 Xxx) of any investment
adviser or distributor of the Fund
g) taxes (including any income or franchise taxes) and governmental fees
h) costs of any liability, uncollectible items of deposit and other
insurance or fidelity bonds
i) any costs, expenses or losses arising out of any liability of or claim
for damage or other relief asserted against the Fund for violation of
any law
j) legal, accounting and auditing expenses, including legal fees of
special counsel for the independent Directors
k) charges of custodians, transfer agents and other agents
l) expenses of setting in type and printing Prospectuses and supplements
thereto for existing shareholders, reports and statements to
shareholders and proxy material
m) any extraordinary expenses (including fees and disbursements of
counsel) incurred by the Fund
n) fees and other expenses incurred in connection with membership in
investment company organizations.
The Fund may pay directly any expense incurred by it in its normal
operations and, if any such payment is consented to by the Adviser and
acknowledged as otherwise payable by the Adviser pursuant to this
Agreement, the Fund may reduce the fee payable to the Adviser pursuant to
this Agreement hereof by such amount. To the extent that such deductions
exceed the fee payable to the Adviser on any monthly payment date, such
excess shall be carried forward and deducted in the same manner from the
fee payable on succeeding monthly payment dates.
6. Compensation
For the services provided and the expenses assumed pursuant to this
Agreement with respect to each Portfolio, the Fund will pay the Adviser,
effective from the date of this Agreement, a fee which is computed daily
and paid monthly from each Portfolio's assets at the annual rates as
percentages of that Portfolio's average daily net assets as set forth in
the attached Schedule A, which schedule can be modified from time to time
to reflect changes in annual rates or the addition or deletion of a
Portfolio from the terms of this Agreement, subject to appropriate
approvals required by the 1940 Act. If this Agreement becomes effective or
terminates with respect to any Portfolio before the end of any month, the
fee for the period from the effective date to the end of the month or from
the beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proportion that such period bears to the
full month in which such effectiveness or termination occurs.
Adviser agrees to waive its fee and, to extent necessary, reimburse Fund
expenses (excluding taxes, interest and extraordinary expenses) so that the
total Fund operating expenses do not exceed 1.25%. In the event the ratio
of the Fund's total operating expenses, including organizational expenses
payable in a fiscal year, to average net assets
exceeds 1.25% on an annual basis as calculated monthly, Adviser agrees to
waive its investment advisory fee set forth on the schedule attributable to
such period and pay to the Fund any additional amount of such excess;
provided, however, there shall be excluded from such expenses the amount of
any interest, taxes, brokerage fees and commissions and extraordinary
expenses (including but not limited to legal claims and liabilities and
litigation costs and any indemnification related thereto) paid or payable
by the Fund.
7. Limitation of Liability of the Adviser
The Adviser shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund or any Portfolio in connection with
the matters to which this Agreement relate except a loss resulting from the
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though also
an officer, partner, employee, or agent of the Adviser, who may be or
become an officer, director, employee or agent of the Fund shall be deemed,
when rendering services to the Fund or acting in any business of the Fund,
to be rendering such services to or acting solely for the Fund and not as
an officer, partner, employee, or agent or one under the control or
direction of the Adviser even though paid by it.
8. Duration and Termination
This Agreement shall become effective upon its execution; provided, that
with respect to any Portfolio now existing or hereafter created, this
agreement shall not take effect unless it first has been approved (i) by a
vote of the majority of those Directors of the Fund who are not parties to
this Agreement or interested persons of such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by vote
of a majority of that Portfolio's outstanding voting securities. This
Agreement shall remain in full force and effect continuously thereafter
until terminated without the payment of any penalty as follows:
a) By vote of a majority of its Directors, or by the affirmative vote of
a majority of the outstanding Shares of such Portfolio, the Fund may
at any time terminate this Agreement with respect to any or all
Portfolios by providing not more than 60 days' written notice
delivered or mailed by registered mail, postage prepaid, to the
Adviser at its principal offices; or
b) With respect to any Portfolio, if (i) the Directors or the
shareholders of that Portfolio by the affirmative vote of a majority
of the outstanding shares of such Portfolio, and (ii) a majority of
the Directors who are not interested persons of the Fund or of the
Adviser or of any subadviser, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically
approve at least annually the continuance of this Agreement, then this
Agreement shall automatically terminate at the close of business on
the second anniversary of its execution, or upon the expiration of one
year from the effective date of the last such continuance, whichever
is later; provided, however, that if the continuance of this Agreement
is submitted to the shareholders of a Portfolio for their approval and
such shareholders fail to approve such continuance of this Agreement
as provided herein, the Adviser may continue to serve hereunder in a
manner consistent with the 1940 Act and the rules and regulations
thereunder with respect to that Portfolio; or
c) The Adviser may at any time terminate this Agreement with respect to
any or all Portfolios by not less than 60 days' written notice
delivered or mailed by registered mail, postage prepaid to the Fund.
d) This Agreement automatically and immediately will terminate in the
event of its assignment.
9. Amendment of This Agreement
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 material amendment of this Agreement with respect to any
Portfolio shall be effective until approved by vote of the holders of a
majority of that Portfolio's outstanding voting securities.
10. Governing Law
This Agreement shall be construed in accordance with the laws of the State
of Maryland, without giving effect to the conflicts of laws principles
thereof, and the 1940 Act. To the extent the laws of the State of Maryland
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. Definitions
As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person," and "assignment" shall have the same
meanings as such terms have in the 1940 Act.
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. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
13. Miscellaneous
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first
above written.
The Adviser:
Value Analytics, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxx, President
The Fund:
Foresight Funds, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxx, President
Schedule A
Investment Advisery Agreement
As compensation pursuant to section 6 of the Investment Advisery Agreement
between Value Analytics, LLC (the "Adviser") and Foresight Funds, Inc. (the
"Fund"), the Fund shall pay to the Adviser a fee, computed daily and paid
monthly, at the following annual rates as percentages of each Portfolio's
average daily net assets:
(1) For the Foresight Value Fund:
Advisery Fee as a percent of Average Daily Net Assets 1.0%
Dated: June 15, 2003
