EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
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AGREEMENT made as of the 5th day of November, 1997, as amended this 1st day of
February, 1998 and this 1st day of May 1999, and this 8th day of December 1999,
by and between OCC ACCUMULATION TRUST (formerly called Quest for Value
Accumulation Trust and before that, Quest for Value Asset Builder Trust), a
Massachusetts business trust (the "Fund") and OPCAP ADVISORS (formerly called
Quest for Value Advisors), a Delaware general partnership (the "Manager").
WHEREAS, the Fund is an open-end, diversified, management investment company,
organized in "series" form and comprised of twelve separate investment
portfolios (the "Portfolios" or the "Series") and is registered with the
Securities and Exchange Commission (the "Commission") pursuant to the Investment
Company Act of 1940 (the "1940 Act");
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the Fund and the Manager agree as follows:
1. General Provisions
------------------
The Fund hereby employs the Manager and the Manager hereby undertakes to act
as the investment adviser of the Fund in connection with and for the benefit of
each Portfolio, including any Portfolio hereafter created, and to perform for
the Fund and for each of the Portfolios such other duties and functions in
connection with each Portfolio for the period and on such terms as set forth in
this Agreement. The Manager shall, in all matters, give to the Fund and its
Board of Trustees (the "Trustees") the benefit of its best judgment, effort,
advice and recommendations and shall at all times conform to, and use its best
efforts to enable the Fund to conform to:
(a) the provisions of the 1940 Act and any rules or regulations thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Declaration of Trust and By-Laws of the Fund as
amended from time to time;
(d) the policies and determinations of the Trustees;
(e) the investment objectives and policies and investment restrictions of
each Portfolio as reflected in the registration statement of the Fund
under the 1940 Act or as such objectives, policies and restrictions
may from time to time be amended; and
(f) the prospectus, if any, of the Fund in effect from time to time.
The appropriate officers and employees of the Manager shall be available upon
reasonable notice for consultation with any of the Trustees or officers with
respect to any matters dealing with the Fund's business affairs, including the
valuation of any securities held by the Fund for the benefit of any Portfolio
that are either not registered for public sale or not being traded on any
securities market.
2. Investment Management
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(a) The Manager shall, subject to the direction and control by the
Trustees, separately with respect to each Portfolio: (i) regularly
provide investment advice and recommendations to the Fund with respect
to it's investments, investment policies, and the purchase and sale of
securities and commodities; (ii) supervise continuously and determine
the securities and commodities to be purchased or sold by the Fund and
the portion, if any, of the Fund's assets to be held uninvested; and
(iii) arrange, subject to the provisions of Section 6 hereof, for the
purchase and sale of securities, commodities and other investments by
the Fund.
(b) The Manager may obtain investment information, research or assistance
from any other person, firm or corporation to supplement, update or
otherwise improve its investment management services, including entering
into sub-advisory agreements with other affiliated or unaffiliated
registered investment advisers in order to obtain specialized services;
provided, however, that the Fund shall not be required to pay any
compensation other than as provided by the terms of this Agreement and
subject to the provisions of Section 5 hereof.
(c) So long as the Manager shall have acted with due care and in good
faith, the Manager shall not be liable to the Fund or its shareholders for
any error in judgment, mistake of law, or any other act or omission in the
course of or connected with, rendering services hereunder, including
without limitation, any losses which may be sustained by the Fund or its
shareholders as a result of the purchase, holding, redemption, or sale of
any security by the Fund irrespective of whether the determinations of the
Manager relative thereto shall have been based, in whole or in part, upon
the investigation, research or recommendation of any other individual, firm
or corporation believed by the Manager to be reliable. Nothing herein
contained shall, however, be construed to protect the Manager against any
liability to the Fund or its shareholders arising out of the Manager's
willful misfeasance, bad faith, or gross negligence in the performance of
its duties or reckless disregard of its obligations and duties under this
Agreement.
(d) Nothing in this Agreement shall prevent the Manager, any parent,
subsidiary or affiliate, or any director or officer thereof, from acting as
investment adviser for any other person, firm, or corporation, and shall
not in any way limit or restrict the Manager or any of its directors,
officers, stockholders or employees from buying, selling or trading any
securities or commodities for its or their own account or for the account
of others for whom it or they may be acting, if such activities will not
adversely affect or otherwise impair the performance by the Manager of its
duties and obligations under this Agreement.
3. Other Duties of the Manager
---------------------------
The Manager shall, at its own expense, provide and supervise the activities of
all administrative and clerical personnel and shall be required to provide
effective corporate
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administration for the Fund, including (1) coordination of the functions of
accountants, counsel and other parties performing services for the Fund, (2) the
preparation and filing of such reports related to the Fund or to any Portfolio
as shall be required by federal securities laws and various state "blue sky"
laws, (3) composition of periodic reports with respect to its operations for
shareholders of the Fund and (4) composition of proxy materials for meetings of
the Fund's shareholders.
4. Allocation of Expenses
----------------------
The Manager will bear all costs and expenses of its employees and overhead
incurred by it in connection with its duties hereunder except as noted in
Section 5 below. All other expenses (other than those to be paid by the Fund's
distributor under a distribution agreement), shall be paid by the Fund,
including, but not limited to:
(a) interest expense, taxes and governmental fees;
(b) brokerage commissions and other expenses incurred in acquiring or
disposing of the Fund's securities and commodities holdings;
(c) insurance premiums for fidelity and other coverage requisite to the
Fund's operations;
(d) fees of the Trustees other than those who are interested persons
of the Fund and out-of-pocket travel expenses for all Trustees and other
expenses incurred by the Fund in connection with Trustees' meetings;
(e) outside legal, accounting and audit expenses;
(f) custodian, dividend disbursing, and transfer agent fees and expenses;
(g) expenses in connection with the issuance, offering, sale or
underwriting of securities issued by the Fund, including preparation of
stock certificates;
(h) fees and expenses, other than as herein above provided, incident to the
registration or qualification of the Fund's shares for sale with the
Commission and in various states and foreign jurisdictions;
(i) expenses of printing and mailing reports and notices and proxy material
to the Fund's shareholders;
(j) all other expenses incidental to holding meetings of the Fund's
shareholders;
(k) expenses of organizing the Fund; and
(l) such extraordinary non-recurring expenses as may arise, including
litigation affecting the Fund and the legal obligation the Fund may have to
indemnify its officers and Trustees with respect thereto.
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Notwithstanding the foregoing, the Manager shall pay all salaries and fees of
each of the Fund's officers and Trustees who are interested persons of the
Manager.
5. Compensation of the Manager
---------------------------
(a) The Fund agrees to pay the Manager, and the Manager agrees to accept as
full compensation for the performance of all its functions and duties to be
performed hereunder, a fee based on the total net assets of each Portfolio
at the end of each business day. Determination of net asset value of each
Portfolio will be made in accordance with the policies disclosed in the
Fund's registration statement under the 1940 Act. The fee is payable at the
close of business on the last day of each calendar month and shall be made
on the first business day following such last calendar day. The payment due
on such day shall be computed by (1) adding together the results of
multiplying (i) the total net assets of each Portfolio on each day of the
month by (ii) the applicable daily fraction of the annual advisory fee
percentage rate for such Portfolio as set forth on Schedule A hereto and
then (2) adding together the total monthly amounts computed for each
Portfolio.
(b) In the event the operating expenses (net of any expense offsets) of the
Fund, including any amounts payable to the Manager pursuant to subsection
(a) hereof, but excluding the amount of any interest, taxes, brokerage
commissions, distribution fees, 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 for any fiscal
year ending on a date during which this Agreement is in effect, exceed the
most restrictive state law provisions in effect in states where the Fund is
qualified to be sold, the Manager will pay or refund to the Fund any such
excess amount. In addition, the Manager shall waive any amounts payable to
the Manager pursuant to subsection (a) hereof, and reimburse the Fund such
that total operating expenses (net of any expense offsets) of each of the
Portfolios of the Fund except the Global Equity Portfolio do not exceed
1.00% of their respective average daily net assets and such that total
operating expenses (net of any expense offsets) of the Global Equity
Portfolio do not exceed 1.25% of its average daily net assets. Whenever the
expenses of a Portfolio exceed a pro rata portion of the expense
limitations stated above, the monthly amount payable to the Manager will be
reduced or postponed in the amount of such excess.
6. Portfolio Transactions and Brokerage
------------------------------------
(a) The Manager is authorized, in arranging the purchase and sale of the
Fund's portfolio securities, to employ or deal with such members of
securities exchanges and brokers or dealers, including CIBC Xxxxxxxxxxx
Corp. ("CIBC Oppenheimer") ("broker/dealer"), as may, in the Manager's best
judgment based on all relevant factors, implement the policy of the Fund to
obtain, at reasonable expense, the "best execution" (prompt and reliable
execution of the Fund's securities transactions at the most favorable
security prices obtainable of the Fund's securities transactions) as well
as to obtain, consistent with the provisions of subparagraph (c) of this
Section 6, the benefit of such investment information or research as will
be of significant
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assistance to the Manager in the performance of its functions and duties
under this Agreement.
(b) The Manager shall select broker/dealers to effect the Fund's securities
transactions on the basis of its estimate of the ability of such
broker/dealers to obtain best execution of particular and related
securities transactions. The ability of a broker/dealer to obtain best
execution of particular securities transaction(s) will be judged by the
Manager on the basis of all relevant factors and considerations, including,
insofar as feasible, the execution capabilities required by the
transactions; the ability and willingness of the broker/dealer to
facilitate the Fund's securities transactions by participating therein for
its own account; the importance to the Fund of speed, efficiency or
confidentiality; the broker/dealer's apparent familiarity with sources from
or to whom particular securities might be purchased or sold; and any other
matters relevant to the selection of a broker/dealer for particular and
related transactions of the Fund.
(c) The Manager shall have discretion, in the interests of the Fund, to
allocate brokerage on the Fund's securities transactions to broker/dealers
qualified to provide best execution of such transactions who provide
brokerage and/or research services (as such services are defined in Section
28(e)(3) of the Securities Exchange Act of 1934 (the "1934 Act")) for the
Fund and/or other accounts for which the Manager exercises investment
discretion (as that term is defined in Section 3(a)(35) of the 0000 Xxx)
and to cause the Fund to pay such broker/dealers (other than CIBC
Oppenheimer) a commission for effecting a securities transaction for the
Fund that is in excess of the amount of commission another broker/dealer
adequately qualified to effect such transaction would have charged for
effecting that transaction, if the Manager determines, in good faith, that
such commission is reasonable in relation to the value of the brokerage
and/or research services provided by such broker/dealer, viewed in terms of
either that particular transaction or the Manager's overall
responsibilities with respect to the accounts as to which it exercises
investment discretion. In reaching such determination, the Manager will not
be required to place or attempt to place a specific dollar value on the
brokerage and/or research services provided by such broker/dealer. In
demonstrating that such determinations were made in good faith, the Manager
shall be prepared to show that all commissions were allocated to such
broker/dealers for purposes contemplated by this Agreement and that the
total commissions paid by the Fund over a representative period selected by
the Trustees were reasonable in relation to the benefits received by the
Fund. Such research information may be in written form or through direct
contact with individuals, and may include information on particular
companies and industries as well as market, economic or institutional
activity areas.
(d) The Manager shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate applicable to
any particular securities transactions or to select any broker/dealer on
the basis of its purported or "posted" commission rate, although it will,
to the best of its ability, endeavor to be aware of the current level of
the charges of eligible broker/dealers and to minimize the expense incurred
by the Fund for effecting its securities transactions to the
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extent consistent with the interests and policies of the Fund as
established by the determinations of the Trustees and the provisions of
this Section 6.
(e) The Fund recognizes and intends that, subject to the foregoing
provisions of this Section 6, CIBC Oppenheimer will act as its regular
broker so long as it is lawful for it so to act and that CIBC Oppenheimer
may be a major recipient of brokerage commissions paid by the Fund. CIBC
Oppenheimer may effect securities transactions for the Fund only if (1) the
commissions, fees or other remuneration received or to be received by it
are reasonable and fair compared to the commissions, fees or other
remuneration received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time and (2) to the
extent required, the Trustees, including a majority of those Trustees who
are not interested persons, have adopted procedures pursuant to Rule 17e-1
under the 1940 Act for determining the permissible level of such
commissions.
(f) Sales of shares of the Fund and/or shares of the other investment
companies managed by the Manager or distributed by the Fund's distributor
may, subject to applicable rules covering the distributor's activities in
this area, also be considered as a factor in the direction of securities
transactions to dealers, but only in conformity with the price, execution
and other considerations and practices discussed above. Those other
investment companies may also give similar consideration relating to the
sale of the Fund's shares. The Fund will not purchase any securities from
or sell any securities to CIBC Oppenheimer acting as principal for its own
account.
(g) When orders to purchase or sell the same security on identical terms
are placed by more than one of the funds and/or other advisory accounts
managed by the Manager or its affiliates, the transactions are generally
executed as received, although a fund or advisory account that does not
direct trades to a specific broker ("free trades") usually will have its
order executed first. Purchases are combined where possible for the purpose
of negotiating brokerage commissions, which in some cases might have a
detrimental effect on the price or volume of the security in a particular
transaction as far as the Fund is concerned. Orders placed by accounts that
direct trades to a specific broker will generally be executed after the
free trades. All orders placed on behalf of the Fund are considered free
trades. However, having an order placed first in the market does not
necessarily guarantee the most favorable price.
7. Duration
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This Agreement will become effective as of the date hereof. This Agreement
will continue in effect for two years from the date hereof and thereafter
(unless sooner terminated in accordance with this agreement) for successive
periods of twelve months so long as each continuance shall be specifically
approved at least annually with respect to each Portfolio by (1) the vote of a
majority of those Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (2) a majority of the
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Trustees or of a majority of the outstanding voting securities of the respective
Portfolios of the Fund.
8. Termination
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This Agreement may be terminated (i) by the Manager at any time, without
payment of any penalty upon giving the Fund ninety (90) days' written notice
(which notice may be waived by the Fund); or (ii) by the Fund at any time,
without payment of any penalty upon sixty (60) days' written notice to the
Manager (which notice may be waived by the Manager), provided that such
termination by the Fund shall be directed or approved by the vote of the
majority of all of the Trustees or by the vote of a majority of the outstanding
voting securities of the Portfolios of the Fund with respect to which notice of
termination has been given to the Manager.
9. Amendment or Assignment
-----------------------
This Agreement may be amended with respect to a Portfolio only if such
amendment is specifically approved by (i) the vote of the outstanding voting
securities of such Portfolio and (ii) a majority of the Trustees, including a
majority of those Trustees 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, provided that this Agreement may be amended to add a
new Portfolio or delete an existing Portfolio without a vote of the shareholders
of any other Portfolio covered by this Agreement. This Agreement shall
automatically and immediately terminate in the event of its assignment, as that
term is defined in the 1940 Act and the rules thereunder provided.
10. Governing Law
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This Agreement shall be interpreted in accordance with the laws of the State
of New York and the applicable provisions of the 1940 Act, other securities laws
and rules thereunder. To the extent that the applicable laws of the State of
New York, other securities laws or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
11. Severability
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If any provisions of this Agreement shall be held or made unenforceable by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
12. Definitions
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As used in this Agreement, the terms "interested person" and "vote of a
majority of the outstanding securities" shall have the respective meanings set
forth in Sections 2(a)(19) and 2(a)(42) of the 1940 Act.
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13. No Liability of Shareholders
----------------------------
This Agreement is executed by the Trustees of the Fund, not individually, but
rather in their capacity as Trustees under the Declaration of Trust made May 12,
1994. None of the Shareholders, Trustees, officers, employees, or agents of the
Fund shall be personally bound or liable under this Agreement, nor shall resort
be had to their private property for the satisfaction of any obligation or claim
hereunder but only to the property of the Fund and, if the obligation or claim
relates to the property held by the Fund for the benefit of one or more but
fewer than all Portfolios, then only to the property held for the benefit of the
affected Portfolio.
14. Notice of Change in Partnership of Manager
------------------------------------------
The Manager agrees to notify the Fund within a reasonable period of time
regarding a material change in the membership of the Manager.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
OCC ACCUMULATION TRUST
Attest:
_______________________ By:____________________________
Title:
OPCAP ADVISORS
Attest:
______________________ By:____________________________
Title:
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Schedule A
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to
Investment Advisory Agreement between OCC Accumulation Trust and OpCap Advisors
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Annual Fee as a Percentage of
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Name of Series Daily Net Assets
-------------- ----------------
Equity Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Mid Cap Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Small Cap Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Managed Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Global Equity Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Balanced Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Blended Equity Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Large Cap Growth Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Small Cap Growth Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Innovation Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
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Schedule A
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Cont'd
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Annual Fee as a Percentage of
-----------------------------
Name of Series Daily Net Assets
-------------- ----------------
U.S. Government Income Portfolio .60%
Bond Portfolio .50%
Money Market Portfolio .40%
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