PORTFOLIO ADVISOR AGREEMENT
Agreement, made this 12th day of October, 1995, among The Palladian
Trust (the "Trust"), a Massachusetts business trust; and Palladian Advisors,
Inc. (the "Manager"), a Delaware corporation; and Tremont Partners, Inc. (the
"Portfolio Advisor"), a Connecticut corporation.
WHEREAS, the Trust is a diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of rendering
consulting and other services with respect to financial services and products;
and
WHEREAS, the Portfolio Advisor is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
rendering consulting and other services with respect to financial services and
products; and
WHEREAS, the Trust is authorized to issue shares of beneficial
interest in separate portfolios with each such portfolio representing interests
in a separate portfolio of securities and other assets; and
WHEREAS, the Trust currently intends initially to issue shares of six
portfolios designated as The Value Portfolio, The Growth Portfolio, The Balanced
Opportunity Portfolio, The International Growth Portfolio, The Global Strategic
Income Portfolio, and The Global Interactive/Telecomm Portfolio (collectively,
the "Fulcrum Portfolios"); and
WHEREAS, the Trust may establish additional portfolios with respect to
which the Manager desires to retain the Portfolio Advisor to render management
services hereunder and with respect to which the Portfolio Advisor is willing to
do so (those portfolios plus the Fulcrum Portfolios are collectively referred to
as the "Portfolios"); and
WHEREAS, the Trust desires to avail itself of the services of the
Manager for the provision of advice with respect to the selection and monitoring
of portfolio managers for the Portfolios and for the provision of other services
for the Trust; and
WHEREAS, the Manager desires to avail itself of the services of the
Portfolio Advisor to assist it in providing services to the Trust; and
WHEREAS, the Portfolio Advisor is willing to render such assistance to
the Manager.
Therefore, the parties agree as follows:
1. APPOINTMENT. The Manager hereby appoints the Portfolio Advisor to
provide consulting services with respect to the Fulcrum Portfolios for the
period and on the terms set forth in this Agreement. The Portfolio Advisor
accepts such appointment and agrees to render the services described herein for
the compensation provided in paragraph 11. In the event the Trust establishes
one or more portfolios other than the Fulcrum Portfolios with respect to which
the Manager desires to retain the Portfolio Advisor to render consulting
services pursuant to this Agreement, the Manager shall so notify the Portfolio
Advisor in writing. If the Portfolio Advisor is willing to render such services
it shall so notify the Manager in writing, whereupon such portfolio shall become
a Portfolio as that term is used in this Agreement.
2. SERVICES OF THE PORTFOLIO ADVISOR. Subject to the supervision of the
Manager, the Portfolio Advisor shall provide the following consulting services
with respect to the Portfolios:
(a) The Portfolio Advisor shall analyze and recommend for
consideration investment advisory firms to be retained by the Trust to provide
day-to-day investment management of the Portfolios (the "Portfolio Managers").
(b) The Portfolio Advisor shall continually monitor and evaluate the
performance of the Portfolio Managers and assist the Manager in fulfilling its
obligation to make recommendations to the Board of Trustees concerning the
renewal or termination of agreements with Portfolio Managers, although the
Portfolio Advisor is not authorized to make determinations with respect to the
investment of a Portfolio's assets or the purchase or sale of securities or
other investments for a Portfolio.
(c) The Portfolio Advisor shall provide the Manager and Board of
Trustees of the Trust (the "Board") such periodic and special reports as the
Manager or Board may reasonably request.
(d) The Portfolio Advisor shall make its officers and employees
available to the Board, the officers of the Trust, and the officers and
directors of the Manager for consultation and discussions regarding the
management of the Trust.
3. EMPLOYEES. In rendering the services required under this Agreement,
the Portfolio Advisor may, from time to time, employ such person or persons as
it believes necessary to assist it in carrying out its obligations under this
Agreement. The
Portfolio Advisor Agreement Page 2
Portfolio Advisor shall be responsible for making reasonable inquiries and for
reasonably ensuring that no employee of the Portfolio Advisor:
(a) has been convicted, in the last ten (10) years, of any felony or
misdemeanor arising out of conduct involving embezzlement, fraudulent
conversion, or misappropriation of funds or securities, or involving violations
of Sections 1341, 1342, or 1343 of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code; or
(b) has been found by any state regulatory authority, within the last
ten (10) years, to have violated or to have acknowledged violation of any
provision of any state insurance law involving fraud, deceit, or knowing
misrepresentation; or
(c) has been found by any federal or state regulatory authorities,
within the last ten (10) years, to have violated or to have acknowledged
violation of any provisions of federal or state securities laws involving fraud,
deceit, or knowing misrepresentation; or
(d) is ineligible by reason of Section 9 of the 1940 Act to serve as
an employee of an investment adviser to an investment company.
4. CONFORMITY WITH APPLICABLE LAW. The Portfolio Advisor, in the
performance of its duties and obligations under this Agreement, shall act in
conformity with the Trust's registration statement under the Securities Act of
1933 and the 1940 Act as filed with the Securities and Exchange Commission
("SEC") and amended from time to time (the "Registration Statement") and with
the instructions and directions of the Board or the Manager and will conform to,
and comply with, the requirements of the 1940 Act and all other applicable
federal and state laws and regulations.
5. EXCLUSIVITY. For purposes of this paragraph, a "Fund" means a
registered investment company or a portfolio of a registered series investment
company. The services of the Portfolio Advisor under this Agreement are deemed
exclusive with respect to advising a Fund (or an adviser to a Fund) (1) which
serves as the underlying investment vehicle for variable life insurance policies
and/or variable annuity contracts and (2) which pays its adviser(s) fees based
on investment performance ("performance-based fees"). As long as this Agreement
is in effect, neither the Portfolio Advisor nor its affiliates may serve as an
adviser or consultant to a Fund (or an adviser to a Fund) (1) which serves as
the underlying investment vehicle for variable life insurance policies and/or
variable annuity contracts and (2) which pays performance-based fees to some or
all of its advisers. The services of the Portfolio Advisor under this Agreement
are also deemed exclusive with respect to advising
Portfolio Advisor Agreement Page 3
a Fund (or an adviser to a Fund) (1) which serves as the underlying investment
vehicle for variable life insurance policies and/or variable annuity contracts
and (2) shares of which are purchased by one or more of its advisers. As long
as this Agreement is in effect, neither the Portfolio Advisor nor its affiliates
may serve as an adviser or consultant to a Fund (or an adviser to a Fund) (1)
which serves as the underlying investment vehicle for variable life insurance
policies and/or variable annuity contracts and (2) shares of which are purchased
by one or more of its advisers. Notwithstanding the foregoing exclusivity,
nothing in this Agreement shall prevent the Portfolio Advisor (or its
affiliates) from engaging in the following activities, provided that the
Portfolio Advisor's services to the Portfolio are not impaired thereby: (1)
serving as adviser or consultant to a Fund (or an adviser to a Fund) which does
not serve as the underlying investment vehicle for variable life insurance
policies and/or variable annuity contracts; or (2) serving as adviser or
consultant to a Fund (or an adviser to a Fund) which does not pay any of its
advisers a performance-based fee and shares of which are not purchased by one or
more of its advisers, whether or not it serves as the underlying investment
vehicle for variable life insurance policies and/or variable annuity contracts;
or (3) serving as an adviser or consultant with respect to a portfolio which is
not registered as an investment company under the 1940 Act (and is not a
portfolio of a registered series investment company), whether or not that
portfolio serves as the underlying investment vehicle for privately-placed
variable life insurance policies and/or variable annuity contracts.
6. DOCUMENTS. The Manager has delivered copies of each of the following
documents to the Portfolio Advisor and will deliver to it all future amendments
and supplements thereto, if any:
(a) the Trust's Declaration of Trust and its by-laws;
(b) the Registration Statement; and
(c) the prospectus and statement of additional information of the
Trust as currently in effect and as amended and supplemented from time to time.
7. RECORDS. The Portfolio Advisor agrees to maintain and to preserve
records relating to the Trust as required by the 1940 Act. The Portfolio
Advisor further agrees that all records which it maintains for the Manager are
the property of the Manager and it will promptly surrender any such records upon
request by the Manager or the Trust.
8. DISCLOSURE BY PORTFOLIO ADVISOR. The Portfolio Advisor will not
disclose or use any records or information obtained pursuant to this Agreement
(excluding investment research and
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investment advice) in any manner whatsoever except as required to carry out its
duties under this Agreement, and will keep confidential any information obtained
pursuant to this Agreement, and disclose such information only if the Manager
has authorized such disclosure, or if such disclosure is expressly required by
applicable federal or state law or regulations or regulatory authorities having
the requisite authority.
9. DISCLOSURE ABOUT PORTFOLIO ADVISOR. The Portfolio Advisor has
reviewed pre-effective amendment number 1 to the Trust's registration statement
and represents and warrants that, with respect to the disclosure relating to the
Portfolio Advisor, such pre-effective amendment contains, as of the date hereof,
no untrue statement of any material fact and does not omit any statement of a
material fact which was required to be stated therein or necessary to make the
statements contained therein not misleading. The Portfolio Advisor further
represents and warrants that it is a duly registered investment adviser under
the Investment Advisers Act of 1940 and a duly registered investment adviser in
all states in which the Portfolio Advisor is required to be registered.
10. EXPENSES. During the term of this Agreement, the Portfolio Advisor
will pay all expenses incurred by it in connection with its activities under
this Agreement, including all rent and other expense involved in providing
office space and equipment required by the Portfolio Advisor and the salaries
and expenses of all personnel of the Portfolio Advisor. The Portfolio Advisor
further agrees to pay all salaries, fees and expenses of any officer or trustee
of the Trust who is an officer, director or employee of the Portfolio Advisor or
any of its affiliates. Nothing in this Agreement shall require the Portfolio
Advisor to bear the following expenses:
(a) Fees of the Manager and the Portfolio Managers;
(b) Charges for all audits by the Trust's independent public
accountants;
(c) Charges of the Trust's transfer agent, registrar, and/or dividend
disbursing agent;
(d) Charges of the Trust's custodian and/or accountant;
(e) Costs of obtaining quotations for calculating the value of each
Portfolio's net assets;
(f) Costs of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not
Portfolio Advisor Agreement Page 5
officers, directors, or employees of the Portfolio Advisor or any of its
affiliates;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with the purchase
and sale of portfolio securities for the Trust;
(j) Costs, including the interest expense, of borrowing by the Trust;
(k) Costs and/or fees incident to meetings of the Trust's
shareholders, the preparation and mailings of prospectuses, reports, proxy
statements and other communications by the Trust to its shareholders, the filing
of reports with regulatory bodies, the maintenance of the Trust's existence, and
the registration of shares with federal and state securities or insurance
authorities;
(l) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
(m) Costs of printing stock certificates representing shares of the
Trust;
(n) Trustees' fees and expenses of Trustees who are not officers,
directors, or employees of the Portfolio Advisor or any affiliates;
(o) Trust's pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
(p) Membership dues for any association of which the Trust is a
member;
(q) Extraordinary expenses of the Trust as may arise, including
expenses incurred in connection with litigation, proceedings, other claims
against the Trust (unless the Portfolio Advisor is responsible for such expenses
under paragraph 9 of this Agreement), and the legal obligations of the Trust to
indemnify its trustees, officers, employees, shareholders, distributors, and
agents with respect to such claims; and
(r) Organizational and offering expenses of the Trust and, if
applicable, reimbursement (with interest) of underwriting discounts and
commissions.
11. COMPENSATION. For the services provided and the expenses borne by the
Portfolio Advisor pursuant to this Agreement, the Manager (not the Trust or a
Portfolio) will pay
Portfolio Advisor Agreement Page 6
the Portfolio Advisor a monthly fee equal to 32.5% of the advisory fee received
by the Manager from the Trust for that month; provided, however, that the
Portfolio Advisor's fee will be capped at 0.32% of the Portfolios' average daily
net assets for the previous 12 months (including the month for which the fee is
being calculated). The Manager shall pay this monthly fee to the Portfolio
Advisor as soon as practicable after the Trust pays the Manager.
12. LIABILITY AND INDEMNIFICATION. The Portfolio Advisor, the Manager and
the Trust each may rely on information reasonably believed by it to be accurate
and reliable. The Portfolio Advisor shall not be liable to the Trust or its
shareholders for any loss suffered by the Trust as the result of any negligent
act or error of judgment of the Portfolio Advisor in connection with the matters
to which this Agreement relates, except a loss resulting from a breach by the
Portfolio Advisor of its fiduciary duty with respect to the 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 ▇▇▇▇ ▇▇▇) or
loss resulting from 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. The Trust shall indemnify the
Portfolio Advisor and hold it harmless from all cost, damage and expense,
including reasonable expenses for legal counsel, incurred by the Portfolio
Advisor resulting from actions for which it is relieved of responsibility by
this paragraph. The Portfolio Advisor shall indemnify the Trust and hold it
harmless from all cost, damage and expense, including reasonable expenses for
legal counsel, incurred by the Trust resulting from (i) a breach by the
Portfolio Advisor of its fiduciary duty with respect to compensation for
services paid by the Trust (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 1940 Act);
(ii) willful misfeasance, bad faith or gross negligence by the Portfolio Advisor
in the performance of its duties under this Agreement; or (iii) reckless
disregard by the Portfolio Advisor of its obligations and duties under this
Agreement.
13. CONTINUATION AND TERMINATION. This Agreement shall take effect on the
date first written above, and shall continue in effect, unless sooner terminated
as provided herein, for two years from such date and shall continue from year to
year thereafter with respect to each Portfolio so long as such continuance is
specifically approved at least annually (i) by the vote of a majority of the
Board of Trustees; or (ii) by vote of a majority of the outstanding voting
shares of the Portfolio; provided, further, in either event that continuance is
also approved by the vote of a majority of the Board of Trustees who are not
parties to this Agreement or "interested persons" (as defined in the ▇▇▇▇ ▇▇▇)
of the Trust, Manager, or Portfolio Advisor, cast in person
Portfolio Advisor Agreement Page 7
at a meeting called for the purpose of voting on such approval. Any approval of
this Agreement by the holders of a majority of the outstanding shares (as
defined in the ▇▇▇▇ ▇▇▇) of a Portfolio shall be effective to continue this
Agreement with respect to such Portfolio notwithstanding (i) that this Agreement
has not been approved by the holders of a majority of the outstanding shares of
any other Portfolio or (ii) that this Agreement has not been approved by the
vote of a majority of the outstanding shares of the Trust, unless such approval
shall be required by any other applicable law or otherwise. This Agreement may
be terminated (i) by the Trust at any time, without the payment of any penalty,
by vote of a majority of the entire Board of Trustees or by a vote of a majority
of the outstanding voting shares of the Trust, or with respect to a Portfolio,
by vote of a majority of the outstanding voting shares of such Portfolio, on
sixty (60) days' written notice to the Manager and the Portfolio Advisor,
(ii) by the Manager at any time, without the payment of any penalty, on ninety
(90) days' written notice to the Trust and the Portfolio Advisor, or (iii) by
the Portfolio Advisor at any time, without the payment of any penalty, on ninety
(90) days' written notice to the Trust and the Manager. This Agreement will
automatically and immediately terminate in the event of its "assignment" (as
defined in the 1940 Act).
14. INDEPENDENT CONTRACTOR. The Portfolio Advisor shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Manager from time to time, have
no authority to act for or represent the Manager in any way or otherwise be
deemed its agent. Furthermore, unless otherwise expressly provided herein or
authorized by the Board, the Portfolio Manager shall have no authority to act
for or represent the Trust in any way or otherwise be deemed its agent.
15. USE OF NAME. It is understood that the words "Palladian" and "Fulcrum
Fund," any derivative thereof and any design associated with those words
(collectively, the "Words and Designs") are the valuable property of the
Manager, and that the Portfolio Advisor shall have the right to use the Words
and Designs only with the approval of the Manager. Upon termination of this
Agreement, the Portfolio Advisor shall promptly discontinue all use of the Words
and Designs.
16. SALES LITERATURE. The Manager agrees to furnish to the Portfolio
Advisor all sales literature which refers to the Portfolio Advisor prior to use
thereof and not to use such sales literature if the Portfolio Advisor reasonably
objects in writing five business days (or such other time as may be mutually
agreed) after receipt thereof. Sales literature may be furnished to the
Portfolio Advisor by first class mail, overnight delivery service, facsimile
transmission equipment, or hand delivery.
Portfolio Advisor Agreement Page 8
17. NOTICE. Notices of any kind to be given to the Trust shall be in
writing and shall be duly given if sent by first class mail or delivered to the
Trust at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other
address or to such individual as shall be specified by the Trust (with proper
notice to the Manager and the Portfolio Advisor). Notices of any kind to be
given to the Manager shall be in writing and shall be duly given if sent by
first class mail or delivered to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇ or at such other address or to such individual as shall be specified by
the Manager (with proper notice to the Trust and the Portfolio Advisor).
Notices of any kind to be given to the Portfolio Advisor shall be in writing and
shall be duly given if sent by first class mail or delivered to One Corporate
Center at Rye, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇, ▇▇ ▇▇▇▇▇ or at such other address
or to such individual as shall be specified by the Portfolio Advisor (with
proper notice to the Trust and the Manager).
18. OBLIGATION. A copy of the Trust's Agreement and Declaration of Trust
is on file with the Secretary of the Commonwealth of Massachusetts. Notice is
hereby given that this Agreement has been executed on behalf of the Trust by a
trustee of the Trust in his or her capacity as trustee and not individually.
The obligations of this Agreement shall only be binding upon the assets and
property of the Trust and shall not be binding upon any trustee, officer, or
shareholder of the Trust individually.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
20. APPLICABLE LAW. This Agreement shall be governed by the laws of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of 1940, or any
rules or order of the SEC thereunder.
21. 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 and, to this extent, the provisions
of this Agreement shall be deemed to be severable.
22. CAPTIONS. The captions of this Agreement are included for convenience
only and in no way define or limit 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 on the day and year first above
written.
The Palladian Trust
__________________________ By:______________________
Witness H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
Palladian Advisors, Inc.
______________________ By:______________________
Witness H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
President
Tremont Partners, Inc.
______________________ By:______________________
Witness Name:
Title:
