INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made this day of , 2000 by and
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between The Rightime Fund, Inc., a Maryland corporation (the
"Corporation"), for The Rightime OTC Plus Fund Series (the "Fund"), and
Rightime Econometrics, Inc., a Pennsylvania corporation (the "Advisor").
BACKGROUND
The Fund, a series of the Corporation, is organized and operated as an
open-end management investment company registered under the Investment
Company Act of 1940 as amended (the "1940 Act"). The Corporation desires
to retain the Advisor to render investment advisory services to the
Fund, and the Advisor is willing to render such services on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Corporation hereby appoints the Advisor to act as investment
advisor to the Fund for the period and on the terms set forth in the
Agreement. The Advisor accepts such appointment and agrees to render the
services herein described, for the compensation herein provided.
2. Subject to the supervision of the Board of Directors of the
Corporation, the Adviser shall manage the investment operations of the
Fund and the composition of the Fund's portfolio, including the
purchase, retention and disposition thereof, in accordance with the
Fund's investment objectives, policies and restrictions as stated in and
limited by the statements contained in the various documents filed with
the U.S. Securities and Exchange commission (the "Commission") as such
documents may from time to time be amended and subject to the following
understandings:
(a) The Advisor shall provide supervision of the Fund's investments and
determine from time to time what investments or securities, including
futures contracts, will be purchased, retained, sold or loaned by the
Fund, and what portion of the assets will be invested, hedged, or held
uninvested as cash.
(b) The Advisor shall use its best judgment in the performance of its
duties under this Agreement.
(c) The Advisor, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Articles of
Incorporation and By-Laws and the Prospectus of the Fund and with the
instructions and directions of the Board of Directors of the Corporation
and will conform to and comply with the requirements of the 1940 Act and
all other applicable federal and state laws and regulations.
(d) The Advisor shall determine the securities to be purchased or sold
by the Fund and will place orders pursuant to its determinations with or
through such persons, brokers or dealers in conformity with the policy
with respect to brokerage as set forth in the Corporation's Registration
Statement and Prospectus of the Fund or as the Board of Directors may
direct from time to time. In providing the Fund with investment
supervision, it is recognized that the Advisor will give primary
consideration to securing most favorable price and efficient execution.
Consistent with this policy, the Advisor may consider the financial
responsibility, research and investment information and other services
provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Adviser
may be a party. It is understood that neither the Fund nor the Advisor
has adopted a formula for allocation of the Fund's investment
transaction business. It is also understood that it is desirable for the
Fund that the Advisor have access to supplemental investment and market
research and security and economic analysis provided by brokers who may
execute brokerage transactions at a higher cost to the Fund than may
result when allocating brokerage to other brokers on the basis of
seeking the most favorable price and efficient execution. Therefore, the
Advisor is authorized to place orders for the purchase and sale of
securities for the Fund with such brokers, subject to review by the
Corporation's Board of Directors from time to time with respect to the
extent and continuation of this practice. It is understood that the
services provided by such brokers may be useful to the Advisor in
connection with its services to other clients.
On Occasions when the Advisor deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the
Advisor, to the extent permitted by applicable laws and regulations,
may, but shall be under no obligation to, aggregate the securities to be
so sold or purchased in order to obtain the most favorable price or
lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Advisor in the
manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients.
(e) The Advisor shall maintain all books and records with respect to the
Fund's securities transactions required by subparagraphs (b) (5), (6)
and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act and shall
render to the Fund's Board of Directors such periodic and special
reports as the Board may reasonably request.
(f) The Advisor shall provide the Fund's custodian and the Fund on each
business day with information relating to all transactions concerning
the Fund's assets.
(g) The investment management services provided by the Advisor hereunder
are not to be deemed exclusive, and the Advisor shall be free to render
similar services to others. While information and recommendations
supplied to the Fund shall, in the Advisor's judgment, be appropriate
under the circumstances in light of investment objectives and policies
of the Fund, they may be different from the information and
recommendations supplied to other investment companies and customers.
The Fund shall be entitled to equitable treatment under the
circumstances in receiving information, recommendations and any other
services, but the Fund shall not be entitled to receive preferential
treatment as compared with the treatment given to any other investment
company or customer.
(h) The Advisor shall perform such other services as are reasonably
incidental to the foregoing duties.
3. The Fund has delivered to the Advisor copies of each of the following
documents and will deliver to it all future amendments and supplements,
if any:
(a) Articles of incorporation of the Corporation, filed with the
Secretary of the State of Maryland (such Articles of Incorporation, as
in effect on the date hereof and as amended from time to time, are
herein called the "Articles of Incorporation");
(b) By-Laws of the Corporation (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the
"By-Laws");
(c) Certified resolutions of the Board of Directors of the Corporation
authorizing the appointment of the Advisor and approving the form of
this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the "Registration Statement"), as filed
with the Commission relating to the Fund and shares of the Fund's common
stock and all amendments thereto;
(e) Notification of Registration of the Corporation under the 1940 Act
on Form N-8A as filed with the Commission and all amendments thereto;
and
(f) Prospectus of the Fund (such Prospectus, as currently in effect and
as amended or supplemented from time to time, being herein called the
"Prospectus").
(g) Any other documents filed with the Commission. The Advisor shall
have no responsibility or liability for the accuracy or completeness of
the Corporation's Registration Statement under the 1940 Act or the
Securities Act of 1933 except for information supplied by the Advisor
for inclusion therein. On behalf of the Fund, the Corporation agrees to
indemnify the Advisor to the full extent permitted by the Corporation's
governing instruments.
4. The Advisor shall authorize and permit any of its directors, officers
and employees who may be elected as directors or officers of the
Corporation to serve in the capacities in which they are elected.
Services to be furnished by the Advisor under this Agreement may be
furnished through the medium of any of such directors, officers or
employees.
5. The Advisor agrees that no officer or director of the Advisor, or of
any affiliate of the Advisor, will deal for or on behalf of the Fund
with himself as principal or agent, or with any corporation, partnership
or other person in which he may have a financial interest, except that
this shall not prohibit:
(a) Officers and directors of the Advisor, or of any affiliate of the
Advisor, from having a financial interest in the Fund, in the Advisor,
or of any affiliate of the Advisor.
(b) Officers and director of the Advisor, or of any affiliate of the
Advisor, from, providing services to the Fund of a type usually and
customarily provided to an investment company, pursuant to a written
agreement approved by the Board of Directors of the Fund, including a
majority of the disinterested directors of the Fund (as defined in the
1940 Act).
(c) The purchase of securities for the Fund, or the sale of securities
owned by the Fund, through a security broker or dealer, one or more of
whose partners, officers or directors is an officer or a director of the
Advisor, provided such transactions are handled in the capacity of
broker only and provided commissions charged do not exceed customary
brokerage charges for such services.
6. If any occasion should arise in which the Advisor or any of its
officers of directors advises persons concerning the shares of the Fund,
the Advisor or such officer or director will act solely on its, her of
his own behalf and not in any way on behalf of the Fund.
7. The Advisor agrees that, except as herein otherwise expressly
provided, neither it nor any of its officers or directors shall at any
time during the period of this Agreement make, accept or receive,
directly or indirectly, any fees, profits or emoluments of any character
in connection with the purchase or sale of securities (except securities
issued by the Fund) or other assets by or for the Fund.
8. The Advisor shall keep the Fund's books and records required to be
maintained by it pursuant to paragraph 2 hereof. The Advisor agrees that
all records which it maintains for the Fund are the property of the Fund
and it will surrender promptly to the Fund any of such records upon the
Fund's request. The Advisor further agree to preserve for the periods
prescribed by Rule 31a-2 of the Commission under the 1940 Act any such
records as are required to be maintained by the Advisor pursuant to
paragraph 2 hereof.
9. During the term of this Agreement, the Advisor will pay (i) the
salaries and expenses of all its personnel, and (ii) all expenses
incurred by it in the ordinary course of performing its duties
hereunder, but not expenses assumed by the Administrator of the Fund or
the Fund pursuant to the Administration Agreement. All costs and
expenses not expressly assumed by the Advisor under this Agreement shall
be paid by the Administrator or the Fund, including but not limited to:
(i) interest and taxes, including but not limited to all issue or
transfer taxes chargeable to the Fund in connection with its securities
transactions; (ii) brokerage commission; (iii) insurance premiums; (iv)
compensation and expenses of the Board of Directors of the Fund; (v)
legal and audit expenses; (vi) fees and expenses of the Fund's
Administrator, custodian, distributor, transfer agent and accounting
services agents; (vii) expenses incident to the issuance of shares,
including issuance on the payment of, or reinvestment of, dividends;
(viii) fees and expenses incident to the registration under Federal or
State securities laws of the Fund or its shares; (ix) expenses of
preparing, printing, and mailing reports and notices and proxy material
to shareholders of the Fund; (x) all other expenses incidental to
holding meetings of the Fund's directors and shareholders and all
allocable communications expenses with respect to investor services and
to preparing, printing, and mailing prospectuses and reports to
shareholders in the amount necessary for distribution to the
shareholders; (xi) dues or assessments of or contributions to any trade
associations of which the Fund is a member; (xii) such non-recurring
expenses as may arise, including litigation affecting the Fund and the
legal obligations which the Fund may have to indemnify its officers and
directors with respect thereto; (xiii) all expenses which the Fund
agrees to bear in any distribution agreement or in any plan adopted by
the Fund pursuant to Rule 12b-1 under the Act; and (xiv) all corporate
fees payable by the Fund to federal, state or other government agencies.
10. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Advisor as full compensation
therefor a fee at an annualized rate of .50 of one percent (.50%) of the
Fund's average daily net assets (specifically 1/24th of 1% per month of
the average daily net assets). This fee will be computed daily as of the
close of business and will be paid to the Advisor monthly within ten
(10) business days after the last day of each month and such a fee shall
be adjusted, if necessary, at the time of the payment due in the last
month in the fiscal year of the Fund. The Advisory Fee shall be prorated
for any fraction of a month at the commencement or termination of the
agreement.
11. In the event the expenses of the Fund for any fiscal year (including
the fees payable to the Advisor and the Fund's administrator, but
excluding interest, taxes, brokerage commission, distribution fees,
amortization of organization expenses and litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary
course of the Fund's business) exceed the limit set by applicable
regulation of state securities commissions, if any, the compensation due
to the Advisor hereunder will be reduced by twenty percent (20%) of the
amount of such excess. If for any month such expenses exceed such
limitation after giving effect to the above reduction of the fees
payable to the Advisor and the Fund's administrator, the payment to the
Advisor for that month will be reduced or postponed so that at no time
will there be any accrued but unpaid liability under this expense
limitation. Any such reductions or payments are subject to readjustment
during the year, and the Advisor's obligation hereunder will be limited
to the amount of its fee paid or accrued with respect to such fiscal
year.
12. The Advisor shall give the Fund the benefit of its best judgment and
effort in rendering services hereunder, but the Advisor shall not be
liable for any loss sustained by reason of the purchase, sale or
retention of any securities or hedging instrument, whether or not such
purchase, sale or retention shall have been based upon its own
investigation or upon investigation and research made by any other
individual, firm or corporation. The Advisor shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund
in connection with matters to which this Agreement relates, except, a
loss resulting from a breach of 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 0000 Xxx) or a 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 obligation and duties under this
Agreement. Any person employed by the Advisor, who may be or become an
employee of and paid by any other entity affiliated with the Fund, such
as the administrator, distributor, or custodian to the Fund, shall be
deemed, when acting within the scope of his employment by such other
affiliated entity, to be acting in such employment solely for such other
affiliated entity and not as the Advisor's employee or agent.
13. This Agreement shall continue in effect for a period of more than
two (2) years form the date hereof only so long as such continuance is
specifically approved at least annually in conformity with the
requirements of the 1940 Act; provided, however, that this Agreement may
be terminated by the Fund at any time, without the payment of any
penalty, by the Board of Directors of the Corporation or by vote of a
majority of the outstanding voting securities (as defined in the 0000
Xxx) of the Fund, or by the Advisor at any time, without the payment of
any penalty, on not more than sixty (60) days' nor less than thirty (30)
days' written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment (as defined in the 1940
Act).
14. Nothing in this Agreement shall limit or restrict the right of any
of the Advisor's directors, officers, or employees who may also be a
director, officer, or employee of the Fund to engage in any other
business or to devote his time and attention in part to the management
or other aspects of any business, whether of a similar or a dissimilar
nature, nor limit or restrict the Advisor's right to engage in any other
business or to render services of any kind to any other corporation,
firm, individual or association. Nothing in this Agreement shall prevent
the Advisor or any affiliated person (as defined in the 0000 Xxx) of the
Advisor from acting as investment advisor and/or principal underwriter
for any other person, firm or corporation and shall not in any way limit
or restrict the Advisor or any such affiliated person from buying,
selling, or trading and securities or hedging instruments for its or
their own accounts or for the account of others from whom it or they may
be acting, provided, however, that the Advisor expressly represents that
is will undertake no activities which, in its judgment, will adversely
affect the performance of its obligations to the Fund under the
Agreement.
15. Neither this Agreement nor any transaction made pursuant hereto
shall be invalidated or in any way affected by the fact that directors,
officers, agents, and/or shareholders of the Fund are or may be
interested in the Advisor, or any successor or assignee thereof, as
directors, officers, shareholders or otherwise; that directors,
officers, shareholders or agents of the Advisor are or may be interested
in the Fund as directors, officers, shareholders or otherwise; or that
the Advisor or any successor or assignee, is or may be interested in the
Fund as shareholders or otherwise; provided, however, that neither the
Advisor nor any officer or director of the Advisor or of the Corporation
shall sell to or buy from the Fund any property or security other than a
security issued by the Fund, except in accordance with an applicable
order or exemptive rule of the Commission.
16. Except as otherwise provided herein or authorized by the Board of
Directors of the Corporation from time to time, the Advisor shall for
all purposes herein be deemed to be an independent contractor and.,
except as expressly provided or authorized in this Agreement, shall have
no authority to act for or represent the Fund in any way or otherwise be
deemed an agent of the Fund. The Fund and the Advisor are not partners
or joint venturers with each other and nothing herein shall be construed
to make them such partners or joint venturers or impose any liability as
such on either of them.
17. During the term of this Agreement, the Fund agrees to furnish the
Advisor at its principal office with all prospectuses, proxy statements,
reports to stockholders, sales literature, or other material prepared
for distribution to stockholders of the Fund or the public, which refer
to the Advisor in any way, prior to use thereof and not to use such
material if the Advisor reasonably objects in writing within five (5)
business days (or such other time as may be mutually agreed) after
receipt thereof. In the event of termination of this Agreement, the Fund
will continue to furnish to the Advisor copies of any of the above
mentioned materials which refer in any way to the Advisor. The Fund
shall furnish or otherwise make available to the Advisor such other
information relating to the business affairs of the Fund as the Advisor
at any time, or from time to time, reasonably requests in order to
discharge its obligation hereunder. The Corporation agrees that, in the
event that the Advisor ceases to be the Fund's investment advisor for
any reason, the Fund will (unless the Advisor otherwise agrees in
writing) promptly take all necessary steps to propose to the
shareholders at the next regular meeting that the Fund change to a name
not including the word "Rightime." The Corporation agrees that the word
"Rightime" in its name is derived from the name of the Advisor and is
the property of the Advisor for copyright and all other purposes and
that therefore such word may be freely used by the Advisor as to other
investment activities or other investment products.
18. This Agreement may be amended by mutual consent, but the consent of
the Fund must be obtained in conformity with the requirements of the
1940 Act.
19. This Agreement shall be subject to all applicable provisions of the
law, including, without limitation, the applicable provisions of the
1940 Act.
20. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania.
21. Compensation to be paid to the Advisor hereunder shall be separate
and distinct from organizational expenses, if any, to be reimbursed to
the Advisor.
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.
THE RIGHTIME FUND, INC.
By: --------------------------
President
[Corporate Seal] Attest: --------------------------
Assistant Secretary
RIGHTIME ECONOMETRICS, INC.
By: --------------------------
President
[Corporate Seal] Attest: --------------------------
Secretary
