INVESTMENT ADVISORY AGREEMENT
1-800-MUTUALS ADVISOR SERIES
AGREEMENT made this 14th day of June, 2001, by and between 1-800-MUTUALS
Advisor Series, a Delaware business trust (the "Trust"), and 1-800-Mutuals,
Inc., or XXXXXXX.xxx, Inc., a Texas corporation (the "Advisor").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust
is authorized to create and currently consists of several separate series of
shares, each having its own investment objectives and policies; and
WHEREAS, the Advisor is a registered investment advisor under the
Investment Advisers Act of 1940, as amended and engages in the business of
providing investment management services; and
WHEREAS, the Trust desires to retain the Advisor to render investment
management services with respect to the series listed on Schedule A, as may be
amended from time to time, attached hereto and made a part of this Agreement
(each a "Fund" and collectively the "Funds"), and the Advisor is willing to
render such services on the following terms and conditions.
NOW, THEREFORE, in consideration of mutual covenants recited below, the
parties agree as follows:
1. DUTIES OF THE TRUST.
(a) The Trust, except as otherwise provided in this Agreement, is
responsible for conducting its own business and affairs and for all necessary
and incidental expenses and salaries including, but not limited to, the costs
incurred in: the maintenance of its corporate existence; the maintenance of its
own books, records and procedures; dealing with its own shareholders; the
payment of dividends; transfer of stock, including issuance, redemption and
repurchase of shares; preparation of share certificates; preparation and filing
of such forms as may be required by the various jurisdictions in which the
Trust's shares may be sold; preparation, printing and mailing of reports and
notices to shareholders; calling and holding of shareholders' meetings;
miscellaneous office expenses; brokerage commissions; custodian fees; legal and
accounting fees; taxes, and state and federal registration fees.
(b) In the conduct of the respective businesses of the parties and in the
performance of this Agreement, the Trust and the Advisor may share facilities
common to each, with appropriate proration of expenses between them.
(c) To the extent the Advisor incurs any costs by assuming expenses that
are an obligation of the Trust as set forth herein, the Trust shall promptly
reimburse the Advisor for such reasonable costs and expenses, except to the
extent the Advisor has otherwise agreed to bear such expenses. To the extent the
services for which the Trust is obligated to pay are performed by the Advisor,
the Advisor shall be entitled to recover from the Trust to the extent of the
Advisor's actual costs for providing such services.
2. DUTIES OF THE ADVISOR.
(a) The Trust employs the Advisor generally to manage the investment and
reinvestment of the assets of the Funds. In so doing, the Advisor may hire one
or more sub-advisors for each Fund to carry out the investment program of the
Fund(s) (subject to the approval of the Trust's Board of Trustees and, except as
otherwise permitted under the terms of any exemptive relief obtained by the
Advisor from the U.S. Securities and Exchange Commission, or by rule or
regulation, a majority of the outstanding voting securities of any affected
Fund(s). To the extent that the Advisor does hire any sub-advisor, it will
thereafter continuously review, supervise and (where appropriate) administer the
investment program of the Fund(s).
(b) The Advisor will provide, or direct any sub-advisor to provide, to the
Administrator and the Trust records concerning the Advisor's (or
sub-advisor(s)') activities which the Trust is required to maintain, and to
render regular reports to the Administrator and to the Trust's officers and
Trustees concerning the Advisor's performance of the foregoing responsibilities.
The retention of a sub-advisor by the Advisor shall not relieve the Advisor of
its responsibilities under this Agreement.
(c) The Advisor shall discharge the foregoing responsibilities 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 each such Fund set forth in the
Trust's prospectus and statement of additional information, as amended from time
to time (referred to collectively as the "Prospectus"), and applicable laws and
regulations. The Trust will furnish the Advisor from time to time with copies of
all amendments or supplements to the Prospectus, if any.
(d) The Advisor accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and equipment
and the personnel (including the costs of retaining any sub-advisors) required
by it to perform the services on the terms and for the compensation provided
herein. The Advisor will not, however, pay for the cost of securities,
commodities, and other investments (including brokerage commissions and other
transaction charges, if any) purchased or sold for the Trust.
3. DELIVERY OF DOCUMENTS.
(a) The Trust has furnished Advisor with copies properly certified or
authenticated of each of the following and will furnish any amendments and
restatements as they are effected:
(i) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of Delaware (such Agreement and Declaration of
Trust, as presently in effect and as it shall from time to time be
amended, is herein called the "Declaration of Trust");
(ii) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(iii) Prospectus(es) of the Fund(s).
(b) The Advisor has furnished to the Trust, a copy of its Form ADV as filed
with the U.S. Securities and Exchange Commission, and will furnish any amendment
thereto as it may be effected.
4. OTHER COVENANTS. The Advisor agrees that it:
(a) will comply with all applicable Rules and Regulations of the U.S.
Securities and Exchange Commission and will in addition conduct its activities
under this Agreement in accordance with other applicable law;
(b) will place (or will direct the sub-advisors to place) orders pursuant
to its/their investment determinations for the Fund(s) either directly with the
issuer or with any broker or dealer. In executing portfolio transactions and
selecting brokers or dealers, the Advisor will (or will direct the sub-advisors
to) use its/their best efforts to seek on behalf of a Fund the best overall
terms available. In assessing the best overall terms available for any
transaction, the Advisor (or any sub-advisor) shall consider all factors that it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In evaluating the best overall
terms available, and in selecting the broker-dealer to execute a particular
transaction the Advisor (or any sub-advisor) may also consider the brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided to a Fund and/or other accounts over which the
Advisor or an affiliate of the Advisor may exercise investment discretion. The
Advisor (or any sub-advisor) is authorized, subject to the prior approval of the
Trust's Board of Trustees, to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for any of the Funds that is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if,
but only if, the Advisor (or any sub-advisor) determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer - - viewed in terms of that
particular transaction or terms of the overall responsibilities of the Advisor
to a Fund. In addition, the Advisor (or any sub-advisor) is authorized to
allocate purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Advisor or the
Trust's principal underwriter) to take into account the sale of shares of the
Trust if the Advisor believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified firms. In
no instance, however, will any Fund's securities be purchased from or sold to
the Advisor, any sub-advisor engaged with respect to a Fund, the Trust's
principal underwriter, or any affiliated person of either the Trust, the Advisor
(or sub-advisor) or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the U.S. Securities and Exchange
Commission and the 1940 Act. The Advisor (and any sub-advisor) is also
authorized to enter into brokerage/service arrangements with broker-dealers
whereby certain broker-dealers agree to pay all or a portion of a Fund's
custodian, administrative, transfer agency, and/or other fees in exchange for
such Fund directing certain minimum brokerage amounts to such broker-dealer, if,
and only if, the Advisor (or any sub-advisor) determines in good faith that such
arrangement was reasonable - viewed in terms of that particular transaction or
terms of the overall responsibilities of the Advisor (or sub-advisor) to a Fund.
5. COMPENSATION OF THE ADVISOR.
(a) For the 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(s) specified in Schedule A, as may be amended from time to time,
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 to the assets of each of the Funds, based on the annual percentage rates as
specified in the attached Schedule A. The fee shall be based on the average
daily net assets for the month involved.
(b) Any advisory fees which may be charged by sub-advisors hired by the
Advisor are the sole obligation of the Advisor, and not of the Trust nor any
Fund.
(c) If this Agreement is terminated prior to the end of any calendar month,
the management fee shall be prorated for the portion of any month in which this
Agreement is in effect according to the proportion which the number of calendar
days, during which the Agreement is in effect, bears to the number of calendar
days in the month, and shall be payable within 10 days after the date of
termination.
(d) The Advisor may voluntarily or contractually agree to reduce any
portion of the compensation or reimbursement of expenses due to it pursuant to
this Agreement and may similarly agree to make payments to limit expenses which
are the responsibility of the Trust 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 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 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 the
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 or to pay
current Fund expenses.
6. EXCESS EXPENSES.
If the expenses for any 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
are qualified for offer and sale, the Advisor shall bear such excess cost.
However, the Advisor will not bear expenses of the Trust or any Fund which
would result in the Trust's inability to qualify as a regulated investment
company under provisions of the Internal Revenue Code. Payment of expenses by
the Advisor pursuant to this Section 6 shall be settled on a monthly basis
(subject to fiscal year end reconciliation) by a waiver of the Advisor's fees
provided for hereunder, and such waiver shall be treated as a reduction in the
purchase price of the Advisor's services.
7. REPORTS.
The Trust and the Advisor agree to furnish to each other, if applicable,
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request. The Advisor further agrees to
furnish to the Trust, if applicable, the same such documents and information
pertaining to any sub-advisor as the Trust may reasonably request.
8. STATUS OF THE ADVISOR.
The services of the Advisor to the Trust are not to be deemed exclusive,
and the Advisor shall be free to render similar services to others so long as
its services to the Trust are not impaired thereby. The Advisor 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 Trust in any way or
otherwise be deemed an agent of the Trust. To the extent that the purchase or
sale of securities or other investments of any issuer may be deemed by the
Advisor to be suitable for two or more accounts managed by the Advisor, the
available securities or investments may be allocated in a manner believed by the
Advisor to be equitable to each account. It is recognized that in some cases
this may adversely affect the price paid or received by the Trust or the size or
position obtainable for or disposed by the Trust or any Fund.
9. 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 (or any sub-advisor) on behalf of the
Trust are the property of the Trust and will be surrendered promptly to the
Trust on request. The Advisor further agrees to preserve for the periods
prescribed in Rule 31a-2 under the 1940 Act the records required to be
maintained under Rule 31a-1 under the 1940 Act.
10. LIMITATION OF LIABILITY 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 malfeasance, bad faith or 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
which cannot be waived or modified hereby. (As used in this Section 11, the term
"Advisor" shall include directors, officers, employees and other corporate
agents of the Advisor as well as that corporation itself).
11. 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,
officers, shareholders or otherwise; and the Advisor (or any successor) is or
may be interested in the Trust as a shareholder or otherwise subject to the
provisions of applicable law. All such interests shall be fully disclosed
between the parties on an ongoing basis in the Trust's Prospectus as required by
law. In addition, brokerage transactions for the Trust may be effected through
affiliates of the Advisor (or any sub-advisor) if approved by the Board of
Trustees, subject to the rules and regulations of the U.S. Securities and
Exchange Commission.
12. DURATION AND TERMINATION.
This Agreement, unless sooner terminated as provided herein, shall for each
Fund listed on Schedule A attached hereto remain in effect from the date of
execution or, if later, the date the initial capital to a series of the Trust is
first provided (the "Effective Date."), until two years from the Effective Date,
and thereafter, for a period of one year so long as (a) such continuance
thereafter is specifically approved at least annually by either (i) the
affirmative vote of a majority of the Trustees cast in person at a meeting
called for the purpose of voting on such approval, or (ii) the affirmative vote
of a majority of each Fund's outstanding voting securities; and (b) the
affirmative vote of a majority of the Trustees who are not parties to the
agreement or interested persons of any such party, cast in person at a meeting
called for that purpose; provided, however, that if the shareholders of any 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
thereunder.
This Agreement may be terminated as to any Fund at any time, without the
payment of any penalty by vote of a majority of the Trustees of the Trust or by
vote of a majority of the outstanding voting securities of the Fund 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
thereunder, subject to such exemptions as may be granted by the U.S. Securities
and Exchange Commission.
13. GOVERNING LAW.
This Agreement shall be governed by the internal laws of the State of
Delaware, without regard to conflict of law principles; provided, however that
nothing herein shall be construed as being inconsistent with the 1940 Act.
14. NOTICE.
Any notice, advice or report to be given pursuant to this Agreement shall
be deemed sufficient if delivered or mailed by registered, certified or
overnight mail, postage prepaid addressed by the party giving notice to the
other party at the last address furnished by the other party:
To the Advisor at: To the Trust at:
XXXXXXX.xxx, Inc. 1-800-MUTUALS Advisor Series
000 X. Xxxxx Xxxxxx, Xxxxx 0000 000 Xxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Attn: Xxxx X. XxXxxxxx Attn: Xxxxxx X. Xxxxxxxx
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. ENTIRE AGREEMENT.
This Agreement embodies the entire agreement and understanding between the
parties hereto, and supersedes all prior agreements and understandings relating
to this Agreement's subject matter. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of State of Delaware, 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.
No series of the Trust shall be liable for the obligations of any other
series of the Trust. Without limiting the generality of the foregoing, the
Advisor shall look only to the assets of a particular Fund for payment of fees
for services rendered to that Fund.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
U.S. Securities and Exchange Commission, whether of special or general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
XXXXXXX.XXX, INC. 1-800-MUTUALS ADVISOR SERIES
By: /s/ Xxxx X. XxXxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------- ------------------------
Attest: /s/ Xxx Xxxx Attest: /s/ Xxxxxx Xxxxxxxx
Title: President Title: President
Schedule A
to the
Investment Advisory Agreement
between
1-800-MUTUALS Advisor Series
and
XXXXXXX.xxx, Inc.
Pursuant to Article 5, the Trust shall pay the Advisor compensation at an annual
rate as follows:
FUND: Compensation (as a Date Added:
percentage of daily
net assets):
Generation Wave Aggressive Growth Fund 0.95%
Generation Wave Growth Fund 0.95%
Generation Wave Alternative Growth Fund 0.95%
Generation Wave Balanced Growth Fund 0.95%
Generation Wave Conservative Growth Fund 0.95%
