EXHIBIT (D)(1)
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INVESTMENT ADVISORY AGREEMENT
WITH
QUESTAR CAPITAL CORPORATION
INVESTMENT ADVISORY AGREEMENT
This Agreement is made and entered into as of the 1st day of February,
2001, by and between The Avalon Fund of Maryland, Inc., a Maryland corporation
(the "Fund"), and Questar Capital Corporation, a Michigan corporation
(hereinafter referred to as "Questar).
WHEREAS, the Fund is a diversified, open-end management investment company,
registered under the Investment Company Act of 1940, as amended (the "Act"), and
presently authorized to issue shares representing interests in a single series
known as the Avalon Capital Appreciation Fund (the "Portfolio"); and
WHEREAS, Questar is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of asset
management; and
WHEREAS, the Fund desires to retain Questar to render certain investment
manage ment services to the Fund and Questar is willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows;
1. OBLIGATIONS OF INVESTMENT ADVISER
(a) SERVICES. Questar agrees to perform the following services (the
"Services") for the Fund:
(1) Manage the investment and reinvestment of the Portfolio's
assets;
(2) Continuously review, supervise, and administer the investment
program of the Portfolio;
(3) Determine, in its discretion, the securities to be purchased,
retained or sold (and implement those decisions);
(4) Provide the Fund with records concerning Questar's activities
which the Fund is required to maintain; and
(5) Render regular reports to the Fund's officers and directors
concerning Questar's discharge of the foregoing responsibilities.
Questar shall discharge the foregoing responsibilities subject to the
control of the officers and the directors of the Fund and in compliance with
such policies as the directors may from time to time establish, and in
compliance with the objectives, policies, and limitations of the Portfolio set
forth in the Fund's prospectus, as amended from time to time, and with all
applicable laws and regulations. All Services to be furnished by Questar
under this Agreement may be furnished through the medium of any directors,
officers or employees of Questar or through such other parties as Questar may
determine from time to time.
Questar agrees, at its own expense or at the expense of one or more of
its affiliates, to render the Services and to provide the office space,
furnishings, equipment and personnel as may be reasonably required in the
judgment of the Board of Directors of the Fund to perform the Services on the
terms and for the compensation provided herein. Questar shall authorize and
permit any of its officers, directors and employees, who may be elected as
directors or officers of the Fund, to serve in the capacities in which they are
elected.
Except to the extent expressly assumed by Questar herein and except to
the extent required by law to be: paid by Questar, the Fund shall pay all costs
and expenses in connection with its operation and organization.
(b) BOOKS AND RECORDS. All books and records prepared and maintained
by Questar for the Fund under this Agreement shall be the property of the Fund
and, upon request therefor, Questar shall surrender to the Fund such of the
books and records so requested.
2. PORTFOLIO TRANSACTIONS. Questar is authorized to select the brokers or
dealers that will execute the purchases and sales of portfolio securities for
the Portfolio and is directed to use its best efforts to obtain the best net
results as described in the Fund's prospectus from time to time. Questar may, in
its discretion, purchase and sell portfolio securities from and to brokers and
dealers who provide the Portfolio with research, analysis, advice and similar
services, and Questar may pay to these brokers and dealers, in return for
research and analysis, a higher commission or spread than may be charged by
other brokers and dealers, provided that Questar determines in good faith that
such commission is reasonable in terms either of that particular transaction or
of the overall responsibility of Questar to the Fund and its other clients and
that the total commission paid by the Fund will be reasonable in relation to the
benefits to the Portfolio over the long-term. Questar will promptly communicate
to the officers and the directors of the Fund such information relating to
portfolio transactions as they may reasonably request.
3. COMPENSATION OF QUESTAR. The Fund will pay to Questar on the last day of
each month an annual fee equal to .5 % of average net asset value of the
Portfolio, such fee to be computed daily based upon the net asset value of the
Portfolio as determined by a valuation made in accordance with the Fund's
procedure for calculating Portfolio net asset value as described in the Fund's
Prospectus and/or Statement of Additional Information. During any period when
the determination of a Portfolio's net asset value is suspended by the directors
of the Fund, the net asset value of a share of that Portfolio as of the last
business day prior to such suspension shall, for the purpose of this Paragraph
3, be deemed to be net asset value at the close of each succeeding business day
until it is again determined.
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4. STATUS OF INVESTMENT ADVISER. The services of Questar to the Fund are
not to be deemed exclusive, and Questar shall be free to render similar services
to others so long as its services to the Fund are not impaired thereby. Questar
shall be deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or represent the
Fund in any way or otherwise be deemed an agent of the Fund. Nothing in this
Agreement shall limit or restrict the right of any director, officer or employee
of Questar, who may also be a director, officer, or employee of the Fund, to
engage in any other business or to devote his or her time and attention in part
to the management or other aspects of any other business, whether of a similar
nature or a dissimilar nature.
5. PERMISSIBLE INTERESTS. Directors, agents, and stockholders of the Fund
are or may be interested in Questar (or any successor thereof) as directors,
partners, officers, or stockholders, or otherwise; directors, partners,
officers, agents, and stockholders of Questar are or may be interested in the
Fund as directors, stockholders or otherwise; and Questar (or any successor) is
or may be interested in the Fund as a stockholder or otherwise.
6. LIABILITY OF INVESTMENT ADVISER. Questar assumes no responsibility under
this Agreement other than to render the services called for hereunder in good
faith. Questar shall not be liable for any error of judgment or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect to
receipt of compensation for services (in which case any award of damages shall
be limited to the period and the amount set forth in Section 36(b)(3) of the
Investment Company Act of 1940) or a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of, or from
reckless disregard by it of its obligations and duties under, this Agreement.
7. USE OF NAME "QUESTAR." Questar hereby grants to the Fund the right to
use the name "Questar" in connection with the Fund in the United States as long
as Questar continues to serve as investment adviser to the Fund. If, for any
reason, Questar no longer serves as investment adviser to the Fund or if this
Agreement is terminated as provided in Section (8) below, Questar hereby
reserves the right, upon 30 days' written notice to the Fund, to terminate the
Fund's right to use the name "Questar." Upon such notification by Questar, the
Fund will immediately commence to take all appropriate steps to discontinue use
of the name "Questar" and shall take all steps necessary under applicable laws
to change the name of the Fund to a name not confusingly similar to "Questar."
If within a reasonable period of time, but in no event longer than four months,
after receiving notification from Questar as provided in this paragraph, the
Fund does not discontinue the use of the name "Questar," Questar may seek such
legal and equitable relief as it may deem appropriate. Questar hereby reserves
the right also to grant the right to use the name "Questar" to another
investment company, business or enterprise. The Fund hereby acknowledges and
agrees that the name "Questar" is a valuable asset of Questar and that Questar
has established a property right to its use.
8. TERM. This Agreement shall remain in effect for a period of two years
from the date hereof, and from year to year thereafter provided such continuance
is approved at least
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annually by the vote of a majority of the directors of the Fund who are not
parties to this Agreement or "interested persons" (as defined in the Act) of any
such party, which vote must be cast in person at meeting called for the purpose
of voting on such approval; provided, however, that;
(a) The Fund may, at any time and without the payment of any penalty,
terminate this Agreement upon 60 days written notice to Questar;
(b) The Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rules thereunder); and
(c) Questar may terminate this Agreement without payment of penalty on
60 days written notice to the Fund; and
(d) the terms of paragraph 6 and 7 of this Agreement shall survive the
termination of this Agreement.
9. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by vote of the holders of a majority of the Fund's outstanding
voting securities.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and the year first written above.
THE AVALON FUND OF MARYLAND, INC. QUESTAR CAPITAL CORPORATION
By: By:
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Xxxxxx X. Xxxxx, President Xxxxxx X. Xxxxx, Chief Executive
Officer
ATTEST: ATTEST:
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Xxxx X. Xxxxxxxxxxx, Secretary Xxxx X. Xxxxxxxxxxx, Secretary
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