FIRST INVESTORS EQUITY FUNDS
FIRST INVESTORS INCOME FUNDS
FIRST INVESTORS TAX EXEMPT FUNDS
FIRST INVESTORS LIFE SERIES FUNDS
INVESTMENT ADVISORY AGREEMENT
This Agreement is made as of January 27, 2006 by and between FIRST
INVESTORS EQUITY FUNDS, FIRST INVESTORS INCOME FUNDS, FIRST INVESTORS TAX EXEMPT
FUNDS and FIRST INVESTORS LIFE SERIES FUNDS, each a Delaware statutory trust
(each a "Trust"), and FIRST INVESTORS MANAGEMENT COMPANY INC., a New York
corporation ("Manager").
WHEREAS, the Manager is an investment adviser under the Investment
Advisers Act of 1940, as amended; and
WHEREAS, each Trust desires to retain the Manager as investment adviser
to furnish investment advisory and portfolio management services to each Series
of each Trust as now exists and to each such other Series of each Trust
hereinafter established as agreed to from time to time by the parties hereto
(hereinafter, "Series" shall refer to each Series of each Trust which is subject
to this Agreement), and the Manager is willing to furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. Each Trust hereby appoints the Manager as investment
adviser of each Trust and each Series listed on 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 Manager accepts such appointment and agrees to
render the services herein set forth for compensation as set forth on Schedule
A. In the performance of its duties, the Manager will act in the best interests
of each Trust and the Series and will comply with (a) applicable laws and
regulations, including, but not limited to, the Investment Company Act of 1940,
as amended (the "1940 Act"), (b) the terms of this Agreement, (c) each Trust's
Trust Instrument, By-Laws and currently effective registration statement under
the Securities Act of 1933, as amended, and the 1940 Act, and any amendments
thereto, (d) relevant undertakings to state securities regulators which also
have been provided to the Manager, (e) the stated investment objective(s),
policies and restrictions of each applicable Series, and (f) such other
guidelines as each Trust's Board of Trustees ("Board") reasonably may establish.
2. DUTIES OF THE MANAGER.
(a) INVESTMENT PROGRAM. Subject to supervision by the Board, the
Manager will provide a continuous investment program for each Series and shall
determine what securities and other investments will be purchased, retained or
sold by each Series. The Manager will exercise full discretion and act for each
Series in the same manner and with the same force and effect as such Series
itself might or could do 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.
(b) OTHER MANAGEMENT SERVICES. The Manager agrees to conduct the
business and details of the operation of the Series as shall be agreed to from
time to time by the parties hereto; provided, however, that the Manager shall
not act as custodian for Series assets. The Manager also agrees, at its own
cost, to provide the Series with certain executive, administrative and clerical
personnel and to provide the Series with office facilities and supplies.
(c) EXECUTION OF TRANSACTIONS. The Manager will place orders
pursuant to its investment determinations for each Series either directly with
the issuer or through any brokers or dealers. In the selection of brokers or
dealers and the placement of orders for the purchase and sale of portfolio
investments for each Series, the Manager shall use its best efforts to obtain
for each Series the most favorable price and execution available, except to the
extent that it may be permitted to pay higher brokerage commissions for
brokerage or research services as described below. In using its best efforts to
obtain the most favorable price and execution available, the Manager, bearing in
mind each Series' best interests at all times, shall consider all factors it
deems relevant, including by way of illustration, price, the size of the
transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the broker or
dealer involved and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Board may determine, the
Manager 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 Series to pay a broker that provides brokerage or research services to
the Manager 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 Manager determines in good faith
that such amount of commission is reasonable in relation to the value of the
brokerage or research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Manager's overall
responsibilities with respect to such Series and to other clients of the Manager
as to which the Manager exercises investment discretion.
(d) REPORTS TO THE BOARD. Upon request, the Manager will provide
the Board with economic and investment analyses and reports and make available
to the Board any economic, statistical and investment services normally
available to institutional or other customers of the Manager.
(e) DELEGATION OF AUTHORITY. Any of the foregoing duties specified
in this paragraph 2 with respect to one or more Series may be delegated by the
Manager, at the Manager's expense, to an appropriate party, subject to such
approval by the Board and shareholders of the applicable Series as may be
required by the 1940 Act. The Manager shall oversee the performance of delegated
duties by any such other party and shall furnish the Board with periodic reports
concerning the performance of delegated responsibilities by such party.
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3. SERVICES NOT EXCLUSIVE. The services furnished by the Manager
hereunder are not to be deemed exclusive and the Manager shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Manager, who may also be a
Trustee, officer, or employee of each Trust, 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.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Manager hereby agrees that all records which it
maintains for each Trust are the property of each Trust and further agrees to
surrender promptly to each Trust any of such records upon each Trust's request.
The Manager further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
5. EXPENSES.
(a) EXPENSES OF EACH TRUST. During the term of this Agreement, each
Series will bear all expenses not specifically assumed by the Manager incurred
in its operations and the offering of its shares. Expenses borne by each Series
will include, but not be limited to, the following (or each Series'
proportionate share of the following): brokerage commissions relating to
securities purchased or sold by the Series of any losses incurred in connection
therewith; fees payable to and expenses incurred on behalf of the Series by the
Manager; expenses of organizing the Series; filing fees and expenses relating to
the registration and qualification of the Series' shares under federal or state
securities laws and maintaining such registrations and qualifications;
distribution fees; fees and salaries payable to the members of the Board and
officers who are not officers or employees of the Manager; taxes (including any
income or franchise taxes) and governmental fees; costs of any liability,
uncollectible items of deposit and other insurance of fidelity bonds; any costs,
expenses or losses arising out of any liability of or claim for damage or other
relief asserted against each Trust or Series for violation of any law; legal,
accounting and auditing expenses, including legal fees of special counsel for
the independent trustees; charges of custodians, transfer agents and other
agents; costs of preparing share certificates; expenses of setting in type and
printing prospectuses and supplements thereto for existing shareholders, reports
and statements to shareholders and proxy materials; any extraordinary expenses
(including fees and disbursements of counsel) incurred by each Trust or Series;
and fees and other expenses incurred in connection with membership in investment
company organizations.
(b) FEE WAIVERS AND REIMBURSEMENTS. If the expenses borne by a
Series in any fiscal year exceed the applicable expense limitations imposed by
the securities regulations of any state in which shares are registered or
qualified for sale to the public, the Manager will waive its fee or reimburse
such Series for any excess up to the amount of the fee payable to it during that
fiscal year pursuant to paragraph 6 hereof.
6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement with respect to each Series, each Trust will pay the
Manager, effective from the date of this Agreement, a fee which is computed
daily and paid monthly from each Series' assets at the annual rates as
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percentages of that Series' 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 Series 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 Series 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.
7. LIMITATION OF LIABILITY OF THE MANAGER. The Manager shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
each Trust or any Series 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 Manager, who may
be or become an officer, Board member, employee or agent of each Trust shall be
deemed, when rendering services to each Trust or acting in any business of each
Trust, to be rendering such services to or acting solely for each Trust and not
as an officer, partner, employee, or agent or one under the control or direction
of the Manager even though paid by it.
8. DURATION AND TERMINATION.
(a) EFFECTIVENESS. This Agreement shall become effective upon the
date hereinabove written, provided that, with respect to a Series, this
Agreement shall not take effect unless, to the extent required by the 1940 Act,
it has first been approved (i) by a vote of a majority of those members of the
Board who are not parties to this Agreement or interested persons of any such
party ("Independent Board Members") cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by an affirmative vote of a
majority of the outstanding voting securities of such Series.
(b) RENEWAL. Unless sooner terminated as provided herein, this
Agreement shall continue in effect for two years from the above written date.
Thereafter, if not terminated, this Agreement shall continue automatically for
successive periods of twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of the
Independent Board Members cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board or, with respect to any given
Series, by an affirmative vote of a majority of the outstanding voting
securities of such Series.
(c) TERMINATION. Notwithstanding the foregoing, with respect to any
Series, this Agreement may be terminated at any time by vote of the Board or by
vote of a majority of the outstanding voting securities of such Series on 60
days' written notice delivered or mailed by registered mail, postage prepaid, to
the Manager. The Manager may at any time terminate this Agreement on 60 days'
written notice delivered or mailed by registered mail, postage prepaid, to each
Trust. This Agreement automatically and immediately will terminate in the event
of its assignment. Termination of this Agreement pursuant to this paragraph 8
shall be without the payment of any penalty. Termination of this Agreement with
respect to a given Series shall not affect the continued validity of this
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Agreement or the performance thereunder with respect to any other Series.
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
as to a given Series shall be effective until approved by vote of the holders of
a majority of the outstanding voting securities of such Series.
10. NAME OF TRUST. Each Trust or any Series may use the name "First
Investors" only for so long as this Agreement or any extension, renewal or
amendment hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of the Manager. At such
time as such an agreement shall no longer be in effect, each Trust and each
Series will (to the extent that it lawfully can) cease to use any name derived
from First Investors Management Company Inc. or any successor organization.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York, without giving effect to the conflicts of
laws principles thereof, and in accordance with the 1940 Act. To the extent that
the applicable laws of the State of New York conflict with the applicable
provisions of the 1940 Act, the latter shall control.
12. 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.
13. 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.
14. 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.
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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.
FIRST INVESTORS EQUITY FUNDS
Attest:
By: /s/ Xxxxx Xxxxxx Xxxxx By: /s/ Xxxxxxx X. Head
--------------------- -------------------
[____________] Xxxxxxx X. Head
Xxxxx Xxxxxx Xxxxx President
Assistant Secretary
FIRST INVESTORS MANAGEMENT
COMPANY, INC.
Attest:
By: /s/ Xxxxx Xxxxxx Xxxxx By: /s/ Xxxxxxx X. Head
--------------------- -------------------
[____________] Xxxxxxx X. Head
Xxxxx Xxxxxx Xxxxx Chief Executive Officer
Assistant Secretary
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SCHEDULE A
FIRST INVESTORS EQUITY FUNDS
----------------------------
With respect to BLUE CHIP FUND, TOTAL RETURN FUND, ALL-CAP GROWTH FUND,
FOCUSED EQUITY FUND, GROWTH & INCOME FUND, MID-CAP OPPORTUNITY FUND and VALUE
FUND, compensation pursuant to Paragraph 6 of this Agreement shall be calculated
in accordance with the following schedule:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
---------- ------------------------
Up to $300 million 0.75%
In excess of $300 million to $500 million 0.72%
In excess of $500 million to $750 million 0.69%
In excess of $750 million to $1.25 billion 0.66%
In excess of $1.25 billion to $1.75 billion 0.64%
In excess of $1.75 billion to $2.25 billion 0.62%
Over $2.25 billion 0.60%
With respect to GLOBAL FUND, compensation pursuant to Paragraph 6 of
this Agreement shall be calculated in accordance with the following schedule:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
---------- ------------------------
Up to $300 million 0.98%
In excess of $300 million to $600 million 0.95%
In excess of $600 million to $1 billion 0.92%
In excess of $1 billion to $1.5 billion 0.90%
Over $1.5 billion 0.88%
With respect to SPECIAL SITUATIONS FUND, compensation pursuant to
Paragraph 6 of this Agreement shall be calculated in accordance with the
following schedule:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
---------- ------------------------
Up to $200 million 1.00%
In excess of $200 million to $500 million 0.75%
In excess of $500 million to $750 million 0.72%
In excess of $750 million to $1 billion 0.69%
In excess of $1 billion to $1.5 billion 0.66%
Over $1.5 billion 0.64%
FIRST INVESTORS INCOME FUNDS
----------------------------
With respect to CASH MANAGEMENT FUND, compensation pursuant to
Paragraph 6 of this Agreement shall be 0.50% of its average daily net assets.
With respect to GOVERNMENT FUND, compensation pursuant to Paragraph 6
of this Agreement shall be calculated in accordance with the following schedule:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
---------- ------------------------
Up to $500 million 0.66%
In excess of $500 million to $1 billion 0.64%
In excess of $1 billion to $1.5 billion 0.62%
Over $1.5 billion 0.60%
With respect to INVESTMENT GRADE FUND AND FUND FOR INCOME, compensation
pursuant to Paragraph 6 of this Agreement shall be calculated in accordance with
the following schedule:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
---------- ------------------------
Up to $250 million 0.75%
In excess of $250 million to $500 million 0.72%
In excess of $500 million to $750 million 0.69%
In excess of $750 million to $1.25 billion 0.66%
In excess of $1.25 billion to $1.75 billion 0.64%
In excess of $1.75 billion to $2.25 billion 0.62%
Over $2.25 billion 0.60%
FIRST INVESTORS TAX EXEMPT FUNDS
--------------------------------
With respect to INSURED INTERMEDIATE TAX EXEMPT FUND, compensation
payable pursuant to Paragraph 6 of this Agreement shall be 0.60% of its average
daily net assets.
With respect to TAX-EXEMPT MONEY MARKET FUND, compensation payable
pursuant to Paragraph 6 of this Agreement shall be 0.50% of its average daily
net assets.
With respect to INSURED TAX EXEMPT FUND, INSURED TAX EXEMPT FUND II,
ARIZONA INSURED TAX FREE FUND, CALIFORNIA INSURED TAX FREE FUND, COLORADO
INSURED TAX FREE FUND, CONNECTICUT INSURED TAX FREE FUND, FLORIDA INSURED TAX
FREE FUND, GEORGIA INSURED TAX FREE FUND, MARYLAND INSURED TAX FREE FUND,
MASSACHUSETTS INSURED TAX FREE FUND, MICHIGAN INSURED TAX FREE FUND, MINNESOTA
INSURED TAX FREE FUND, MISSOURI INSURED TAX FREE FUND, NEW JERSEY INSURED TAX
FREE FUND, NEW YORK INSURED TAX FREE FUND, NORTH CAROLINA INSURED TAX FREE FUND,
OHIO INSURED TAX FREE FUND, OREGON INSURED TAX FREE FUND, PENNSYLVANIA INSURED
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TAX FREE FUND AND VIRGINIA TAX FREE FUND, compensation pursuant to Paragraph 6
of this Agreement shall be calculated in accordance with the following schedule:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
---------- ------------------------
Up to $500 million 0.66%
In excess of $500 million to $1.0 billion 0.64%
In excess of $1.0 billion to $1.5 billion 0.62%
Over $1.5 billion 0.60%
FIRST INVESTORS LIFE SERIES FUNDS
With respect to BLUE CHIP FUND, CASH MANAGEMENT FUND, DISCOVERY FUND,
FOCUSED EQUITY FUND, GOVERNMENT FUND, GROWTH FUND, HIGH YIELD FUND,
INTERNATIONAL SECURITIES FUND, INVESTMENT GRADE FUND, SPECIAL BOND FUND, TARGET
MATURITY 2007 FUND, TARGET MATURITY 2010 FUND, TARGET MATURITY 2015 FUND AND
VALUE FUND, compensation pursuant to Paragraph 6 of this Agreement shall be
calculated in accordance with the following schedule:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
---------- ------------------------
Up to $250 million 0.75%
In excess of $250 million to $500 million 0.72%
In excess of $500 million to $750 million 0.69%
In excess of $750 million to $1.25 billion 0.66%
In excess of $1.25 billion to $1.75 billion 0.64%
In excess of $1.75 billion to $2.25 billion 0.62%
Over $2.25 billion 0.60%
Dated: January 27, 2006
