INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 21st day of December 1998, (as to the T.O. Xxxxxxxxxx
sector Rotation Fund) and September 28, 2000 (as to the T.O. Xxxxxxxxxx Focused
Trend Fund) by and between T. O. Xxxxxxxxxx Trust, a Massachusetts business
trust (the "Trust") created pursuant to that certain Declaration of Trust of
T.O. Xxxxxxxxxx Trust dated June 2, 1998, as amended from time to time (the
"Declaration"), and T.O. Xxxxxxxxxx Company, Inc., a Connecticut corporation
(the "Advisor").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended, (the
"1940 Act") consisting of an unlimited number of series or shares representing
beneficial interests in one of the separate series or classes of shares of the
Trust which are established and designated from time to time in accordance with
the Declaration (each a "Series" or "Class") and, each having its own
fundamental investment policies and restrictions;
WHEREAS, the "T.O. Xxxxxxxxxx Sector Rotation Fund" and the "T.O.
Xxxxxxxxxx Focused Trend Fund" (each a "Fund" and together, the "Funds") are
each Series of Shares established and designated under the Declaration;
WHEREAS, the Trust has retained Firstar Mutual Fund Services, LLC, a
Wisconsin corporation, (the "Administrator") to provide administration of the
Trust's operations in respect of the Funds, subject to the control of the Board
of Trustees of the Trust; and
WHEREAS, the Trust desires to retain the Advisor to render investment
management services with respect to each Fund and the Advisor is willing to
render such services.
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. Definitions. All capitalized terms used and not otherwise defined shall
have the meanings given such terms in the Declaration.
2. Investment Advisory Services. The Trust hereby engages the Advisor, on the
terms and conditions hereafter set forth to provide the investment advisory
and investment management services (collectively called "Investment Advisor
Services") to manage the investment and reinvestment of the assets, and to
continuously review, supervise, and administer the investment program of
the Funds to determine in its discretion the securities to be purchased or
sold to provide the Administrator and the Trust with copies of such records
concerning the Advisor's activities which the Trust shall request and that
it is required to maintain, provided that the Trust gives reasonable
advance notice of its request for such copies, and to render regular
reports to the Administrator and to the Trust's Officers and Trustees
concerning the Advisor's discharge of the foregoing responsibilities.
The Advisor shall provide the foregoing investment advisory services
subject to the control of the Board of Trustees of the Trust and in
compliance with such policies as the Trustees may from time to time
establish, and in compliance with the objectives, policies, and limitations
for the Fund set forth in a Fund's Prospectus and Statement of Additional
information, in each case as amended from time to time, and
applicable laws and regulations.
The Advisor accepts such engagement and agrees, at its own expenses, to
render the Investment Advisory Services required hereunder and to provide
the office space, furnishings and equipment and the personnel required by
it to perform such services on the terms and for the compensation provided
herein.
3. Portfolio Transactions. The Advisor is authorized to select the brokers or
dealers that will execute the purchases and sales of portfolio securities
for the Fund and is directed to use its best efforts to obtain the best net
results as described from time to time in the Funds' Prospectuses and
Statement of Additional Information. The Advisor will promptly communicate
to the Administrator and to the officers and the Trustees of the Trust such
information relating to the portfolio transactions as they may reasonably
request.
It is understood that the Advisor will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, by reason of its having directed a securities transaction on
behalf of the Trust to a broker-dealer in compliance with the provisions of
Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or as described from time to time by a Fund's Prospectuses
and Statement of Additional Information.
4. Compensation of the Advisor. For the Investment Advisory Services and the
related services to be rendered by the Advisor as provided in Sections 1
and 2 of this Agreement, the Trust shall pay to the Advisor compensation at
the rate specified in the Schedule(s) which are attached hereto and made a
part of this Agreement. Such compensation shall be paid to the Advisor at
the end of each month, and calculated by applying a daily rate, based on
the annual percentage rates as specified in the attached Schedule(s), to
the assets of the Fund. The fee shall be based on the average daily net
assets of the Fund for the month involved.
The Advisor 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 a 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 Advisor hereunder or to continue future payments. Any such
reduction will be agreed upon prior to accrual of the related expense or
fee and will be estimated daily. Any fee withheld shall be voluntarily
reduced and any Fund expense paid by the Advisor voluntarily or pursuant to
an agreed expense limitation shall be reimbursed by the appropriate Fund to
the Advisor in the first, second or third (or any combination thereof)
fiscal year next succeeding the fiscal year of the withholding, reduction,
or payment to the extent permitted by applicable law if the aggregate
expenses for the next succeeding fiscal year, second succeeding fiscal year
or third succeeding fiscal year do not exceed any limitation to which the
Advisor has agreed. Such reimbursement may be paid prior to a Fund's
payment of current expenses if so requested by the Advisor even if such
payment may require the Advisor to waive or reduce its fees hereunder to
pay current Fund expenses.
If at any time this Agreement is terminated, any fees or compensation for
services performed shall be pro rated to the effective date of termination,
and such pro rated fees or compensation shall be paid to the Advisor
promptly upon receipt of an invoice therefor. All rights of compensation
under this Agreement for services performed shall survive the termination
of this Agreement.
5. Excess Expenses. If the expenses for a Fund for any fiscal year (including
fees and other amounts payable to the Advisor, but excluding interest,
taxes, brokerage costs, litigation, and other extraordinary costs) as
calculated every business day would exceed the expense limitations imposed
on investment companies by any applicable statute or regulatory authority
of any jurisdiction in which shares of the Fund are qualified for offer and
sale, the Advisor shall bear such excess cost.
However, the Advisor will not bear expenses of the Fund which would result
in the Fund's inability to qualify as a regulated investment company under
provisions of the Internal Revenue Code of 1986, as amended. Payment of
expenses by the Advisor pursuant to this Section 5 shall be settled on a
monthly basis (subject to fiscal year end reconciliation) by a reduction in
the fee payable to the Advisor for such month pursuant to Section 4, and,
if such reduction shall be insufficient to offset such expenses, by
reimbursing the Trust.
6. Reports. The Trust and the Advisor agree to furnish to each other, if
applicable, current prospectuses, proxy statements and reports to
shareholders in respect of a Fund, certified copies of their financial
statements, and such other information with regard to their affairs as each
may reasonably request.
7. Status of the Advisor.
(a) Advisor's performance of its services required to be performed by it
hereunder shall be performed as Advisor to the Trust in respect of the
Funds. Nothing in this agreement shall be construed as creating an agency
relationship between the Trust or a Fund and the Advisor with respect to
any services or activities whether or not expressly provided for in this
Agreement. Nothing in this Agreement shall be construed as creating a
partnership, joint venture, co-venture, joint undertaking or employment
arrangement by or between the Trust and Advisor.
(b) It is understood that Advisor performs or may perform investment
advisory, investment management or consulting services for accounts and/or
clients other than the Trust. The Trust acknowledges that Advisor may
provide investment advice or consulting services to any of its other
accounts and/or clients that may differ from advice given to the Trust, or
take action with respect to any of its other clients accounts and/or that
may differ from the nature of action recommended with respect to the Trust.
It is understood that Advisor shall have no obligation to purchase or sell,
or to recommend for purchase or sale for the Trust, any security which
Advisor, its principals, affiliates, employees or agents may purchase or
sell for its own or their own accounts or for the account of any other
client, if, in the opinion of Advisor, such transaction or investment
appears unsuitable, impractical or undesirable for the Trust or does not
comply with the terms and provisions of the Fund's Prospectus and Statement
of Additional Information.
8. Certain Records. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under
the 1940 Act which are prepared or maintained by the Advisor on behalf of
the Trust are the property of the Trust and will be surrendered promptly to
the Trust on request.
9. Limitation of Liability and Indemnification of the Advisor. The duties of
the Advisor shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Advisor
hereunder. The Advisor shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act
or omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and
duties hereunder, except as may otherwise be provided under provisions of
applicable state law or Federal securities law which cannot be waived or
modified hereby. (As used in this Paragraph 9, the term "Advisor" shall
include directors, officers, employees and other corporate agents of the
Advisor as well as that corporation itself).
The Trust shall indemnify the Advisor (as such term is defined for purposes
of this paragraph 9) and hold it harmless from and against any and all
actions, suites and claims, whether groundless or otherwise, and from and
against any and all losses, damages, costs, charges, reasonable counsel
fees and disbursements, payments, expenses and liabilities (including
reasonable investigation expenses) arising directly or indirectly out of
the services rendered to the Trust hereunder except to the extent that
losses, damages, costs, charges, fees, disbursements, payments, expenses or
liabilities are found by a court of competent jurisdiction in a judgment
which has become final in that it is no longer subject to appeal or review
to have resulted primarily from the Advisor's willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder, or by
reason of reckless disregard of its obligations and duties hereunder,
except as may otherwise be provided under provisions of applicable state
law or federal securities laws which cannot be waived or modified hereby.
The indemnity and defense provisions set forth in this Section 9 shall
indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances or
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In
order that the indemnification provision contained herein shall apply
however, it is understood that if in any case the Trust may be asked to
indemnify or hold the Advisor harmless, the Trust shall be fully and
promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the Advisor will use all
reasonable care to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present probability of such a
claim or indemnification against the Trust, but failure to do so in good
faith shall not affect the rights hereunder.
The Advisor may apply to the Trust at any time for instructions and may
consult counsel for the Trust or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Advisor's duties, and the Advisor shall not be liable or accountable for
any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other
experts.
10. Permissible Interests. Trustees, agents, and shareholders of the Trust are
or may be interested in the Advisor (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise; directors,
partners, officers, agents, and shareholders of the Advisor are or may be
interested in the Trust as Trustees, shareholders or otherwise; and the
Advisor (or any successor) is or may be interested in the Trust as a
shareholder or otherwise. In addition, broker transactions for the Trust
may be effected through affiliates of the Advisor if approved by the Board
of Trustees, subject to applicable provisions of the 1940 Act, the Exchange
Act and the rules and regulations promulgated thereunder
11. License of the Advisor's Name. The Advisor hereby agrees to grant a
non-exclusive license to the Trust for use of its name in the name of the
Funds for the term of this Agreement and such license shall terminate upon
termination of this Agreement.
12. Duration and Termination. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a) by
the vote of a majority of those Trustees of the Trust 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 (b) by
the Trustees of the Trust or by Majority Shareholder Vote; provided
however, that if the Shareholders of a Fund fail to approve the Agreement
as provided herein, the Advisor may continue to serve hereunder in the
manner and to the extent permitted by the 1940 Act and rules and
regulations thereunder. The foregoing requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
promulgated thereunder.
This Agreement may be terminated as to a Fund at any time, without the
payment of any penalty by vote of a majority of the Trustees of the Trust
or by Majority Shareholder Vote on not less than 30 days nor more than 60
days written notice to the Advisor, or by the Advisor at any time without
the payment of any penalty, on 90 days written notice to the Trust. This
Agreement will automatically and immediately terminate in the event of its
assignment.
As used in this Section 12, the terms "assignment", "interested persons",
and a "vote of a majority of the outstanding voting securities" shall have
the respective meanings set forth in the 1940 Act and the rules and
regulations promulgated thereunder, subject to such exemptions as may be
granted from time to time by the Securities and Exchange Commission under
said Act.
13. Change in the Advisor's Owners and Executive Officers. The Advisor agrees
that it shall notify the Trust of any change in the owners and executive
officers of the Advisor within a reasonable time after such change.
14. Notice. Any notice required or permitted to be given by either party to the
other shall be deemed sufficient if (i) delivered by overnight delivery by
a nationally recognized carrier service (ii) sent by telefax or (iii) sent
by registered or certified mail, postage prepaid, addressed by the party
giving notice to the other party at the last address furnished by the other
party to the party giving notice: if to the Trust, at and if to the
Advisor; at Two Xxxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000, Telefax
(000) 000-0000. Any notice shall be deemed given when received if sent by
Telefax or by courier server or 3 days after mailing, if mailed.
15. 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.
16. Governing Law. This Agreement shall be governed by the internal laws of the
Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
A copy of the Declaration is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trust as Trustees, and is not binding upon any of
the Trustees, officers, or shareholders of the Trust individually but binding
only upon the assets and property of the Trust.
The Fund shall not be liable for the obligations of any other Series or Class of
the Trust. Without limiting the generality of the foregoing, the Advisor shall
look only to the assets of the Fund for payment of fees for services rendered to
the Fund.
IN WITNESS WHEREOF, the Parties hereto have caused this agreement to be executed
as of the days and years first written above.
T.O. XXXXXXXXXX TRUST
By: /s/ Xxxxxx Xxxxxx, Jr.
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Xxxxxx Xxxxxx, Jr.
T.O. XXXXXXXXXX COMPANY, INC.
By: /s/ Xxxxxx Xxxxxx, Jr.
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Xxxxxx Xxxxxx, Jr.
FEE SCHEDULE
Fund Fee
T.O. Xxxxxxxxxx Sector Rotation Fund 1.50% of the Fund's average daily net assets. The
fee is accrued daily and payable monthly.
T.O. Xxxxxxxxxx Focused Trend Fund 1.25% of the Fund's average daily net assets. The
fee is accrued daily and payable monthly.
