Pinnacle Advisors LLC
0000 X. Xxxxxxx Xxxxxx
XxXxxx, XX 00000
Re: Advisory Agreement
Ladies and Gentlemen:
The New York State Opportunity Funds (the "Trust") is an open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust currently offers one series of shares to
investors, the New York Equity Fund (the "Fund"). Each share of the Fund
represents an undivided interest in the assets, subject to the liabilities, of
the Fund.
1. APPOINTMENT AS ADVISOR. The Trust being duly authorized hereby
appoints and employs Pinnacle Advisors LLC ("Advisor") as discretionary
portfolio manager, on the terms and conditions set forth herein, of the Fund.
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE. Advisor accepts
the appointment as discretionary portfolio manager and agrees to use its best
professional judgment to make timely investment decisions for the Fund in
accordance with the provisions of this Agreement.
3. PORTFOLIO MANAGEMENT SERVICES OF ADVISOR. Advisor is hereby employed
and authorized to select portfolio securities for investment by the Trust on
behalf of the Fund, to purchase and sell securities of the Fund, and upon making
any purchase or sale decision, to place orders for the execution of such
portfolio transactions in accordance with paragraphs 5 and 6 hereof. In
providing portfolio management services to the Fund, Advisor shall be subject to
such investment restrictions as are set forth in the Act and the rules
thereunder, the Internal Revenue Code of 1986, as amended, applicable state
securities laws, the supervision and control of the Trustees of the Trust, such
specific instructions as the Trustees may adopt and communicate to Advisor and
the investment objective, policies and restrictions of the Fund furnished
pursuant to paragraph 4. Advisor is not authorized by the Trust to take any
action, including the purchase or sale of securities for the Fund, in
contravention of any restriction, limitation, objective, policy or instruction
described in the previous sentence. Advisor shall maintain on behalf of the
Trust the records listed in Schedule A hereto (as amended from time to time). At
the Trust's reasonable request, Advisor will consult with the Trust with respect
to any decision made by it with respect to the investments of the Fund.
4. INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS. The Trust will
provide Advisor with the statement of investment objective, policies and
restrictions applicable to the Fund as contained in the Trust's registration
statements under the Act and the Securities Act of 1933, and any instructions
adopted by
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the Trustees supplemental thereto. The Trust will provide Advisor with such
further information concerning the investment objective, policies and
restrictions applicable thereto as Advisor may from time to time reasonably
request. The Trust retains the right, on written notice to Advisor from the
Trust, to modify any such objective, policies or restrictions in any manner at
any time.
5. TRANSACTION PROCEDURES. All transactions will be consummated by
payment to or delivery by The Bank of New York, or any successor custodian (the
"Custodian"), or such depositories or agents as may be designated by the
Custodian in writing, as custodian for the Fund, of all cash and/or securities
due to or from the Fund, and Advisor shall not have possession or custody
thereof. Advisor shall advise Custodian and confirm in writing to the Trust and
to Countrywide Fund Services, Inc., or any other designated agent of the Trust,
all investment orders for the Fund placed by it with brokers and dealers.
Advisor shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Advisor.
6. ALLOCATION OF BROKERAGE. Advisor shall have authority and discretion
to select brokers and dealers to execute portfolio transactions initiated by
Advisor and to select the markets on or in which the transactions will be
executed.
In doing so, the Advisor will give primary consideration to securing
the most favorable price and efficient execution. Consistent with this policy,
the Advisor may consider the
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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 Advisor may be a
party. It is understood that neither the Trust 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 analyses
provided by certain brokers who may execute brokerage transactions at a higher
commission to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the lowest commission. Therefore, the Advisor is
authorized to place orders for the purchase and sale of securities for the Fund
with such certain brokers, subject to review by the Trust's Trustees 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 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 expenses incurred in
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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.
For each fiscal quarter of the Trust, Advisor shall prepare and render
reports to the Trust's Trustees of the total brokerage business placed and the
manner in which the allocation has been accomplished. Such reports shall set
forth at a minimum the information required to be maintained by Rule 31a-1(b)(9)
under the Act.
7. PROXIES. The Trust will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Fund may be invested
from time to time. At the request of the Trust, Advisor shall provide the Trust
with its recommendations as to the voting of such proxies.
8. REPORTS TO ADVISOR. The Trust will provide Advisor with such
periodic reports concerning the status of the Fund as Advisor may reasonably
request.
9. FEES FOR SERVICES. For all of the services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Advisor a
fee, computed and accrued daily and paid monthly, at the annual rate of 1.00% of
the Fund's average daily net assets up to $100 million; .95% of such assets from
$100 million to $200 million; and .85% of such assets in excess of $200 million.
10. ALLOCATION OF CHARGES AND EXPENSES. Advisor shall employ or provide
and compensate the executive, administrative, secretarial and clerical personnel
necessary to provide the
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services set forth herein, and shall bear the expense thereof. Advisor shall
compensate all trustees, officers and employees of the Trust who are also
partners or employees of Advisor. Advisor will pay all expenses incurred in
connection with the sale or distribution of the Fund's shares to the extent such
expenses are not assumed by the Fund under the Trust's Distribution Plan.
The Fund will be responsible for the payment of all operating expenses
of the Fund, including fees and expenses incurred by the Trust in connection
with membership in investment company organizations, brokerage fees and
commissions, legal, auditing and accounting expenses, expenses of registering
shares under federal and state securities laws, insurance expenses, taxes or
governmental fees, fees and expenses of the custodian, the transfer, shareholder
service and dividend disbursing agent and the accounting and pricing agent of
the Fund, expenses including clerical expenses of issue, sale, redemption or
repurchase of shares of the Fund, the fees and expenses of Trustees of the Trust
who are not interested persons of the Trust, the cost of preparing, printing and
distributing prospectuses, statements, reports and other documents to
shareholders, expenses of shareholders' meetings and proxy solicitations, and
such extraordinary or non-recurring expenses as may arise, including litigation
to which the Fund may be a party and indemnification of the Trust's officers and
Trustees with respect thereto, or any other expense not specifically described
above incurred in the performance of the Trust's
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obligations. All other expenses not expressly assumed by Advisor herein incurred
in connection with the organization, registration of shares and operations of
the Fund will be borne by the Fund.
11. OTHER INVESTMENT ACTIVITIES OF ADVISOR. The Trust acknowledges that
Advisor or one or more of its affiliates may have investment responsibilities or
render investment advice to or perform other investment advisory services for
other individuals or entities and that Advisor, its affiliates or any of its or
their Trustees, officers, agents or employees may buy, sell or trade in any
securities for its or their respective accounts ("Affiliated Accounts"). Subject
to the provisions of paragraph 2 hereof, the Trust agrees that Advisor or its
affiliates may give advice or exercise investment responsibility and take such
other action with respect to other Affiliated Accounts which may differ from the
advice given or the timing or nature of action taken with respect to the Fund,
provided that Advisor acts in good faith, and provided further, that it is
Advisor's policy to allocate, within its reasonable discretion, investment
opportunities to the Fund over a period of time on a fair and equitable basis
relative to the Affiliated Accounts, taking into account the investment
objectives and policies of the Fund and any specific investment restrictions
applicable thereto. The Trust acknowledges that one or more of the Affiliated
Accounts may at any time hold, acquire, increase, decrease, dispose of or
otherwise deal with positions in investments in which the Fund may have an
interest from time to time, whether in
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transactions which involve the Fund or otherwise. Advisor shall have no
obligation to acquire for the Fund a position in any investment which any
Affiliated Account may acquire, and the Trust shall have no first refusal,
co-investment or other rights in respect of any such investment, either for the
Fund or otherwise.
12. CERTIFICATE OF AUTHORITY. The Trust and the Advisor shall furnish
to each other from time to time certified copies of the resolutions of their
Board of Trustees or executive committees, as the case may be, evidencing the
authority of officers and employees who are authorized to act on behalf of the
Trust, the Fund and/or the Advisor.
13. LIMITATION OF LIABILITY. Advisor shall not be liable for any action
taken, omitted or suffered to be taken by it in its reasonable judgment, in good
faith and believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement, or in accordance with (or in the
absence of) specific directions or instructions from the Trust, provided,
however, that such acts or omissions shall not have resulted from Advisor's
willful misfeasance, bad faith or gross negligence, a violation of the standard
of care established by and applicable to Advisor in its actions under this
Agreement or breach of its duty or of its obligations hereunder. Nothing in this
paragraph 13 shall be construed in a manner inconsistent with Sections 17(h) and
(i) of the Act.
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14. CONFIDENTIALITY. Subject to the duty of Advisor and the Trust to
comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of Advisor and the Trust
in respect thereof.
15. ASSIGNMENT. No assignment of this Agreement shall be made by
Advisor, and this Agreement shall terminate automatically in the event of such
assignment. Advisor shall notify the Trust in writing sufficiently in advance of
any proposed change of control, as defined in Section 2(a)(9) of the Act, as
will enable the Trust to consider whether an assignment will occur, and to take
the steps necessary to enter into a new contract with Advisor.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRUST. The Trust
represents, warrants and agrees that:
A. Advisor has been duly appointed by the Trustees of the
Trust to provide investment services to the Fund as contemplated hereby.
B. The Trust will deliver to Advisor true and complete copies
of the Fund's then current prospectus and statement of additional information as
effective from time to time and such other documents or instruments governing
the investments of the Fund and such other information as is necessary for
Advisor to carry out its obligations under this Agreement.
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C. The Trust is currently in compliance and shall at all times
comply with the requirements imposed upon the Trust by applicable law and
regulations.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ADVISOR. Advisor
represents, warrants and agrees that:
A. Advisor is registered as an investment advisor under the
Investment Advisers Act of 1940.
B. Advisor will maintain, keep current and preserve on behalf
of the Fund, in the manner and for the time periods required or permitted by the
Act, the records identified in Schedule A. Advisor agrees that such records
(unless otherwise indicated on Schedule A) are the property of the Trust, and
will be surrendered to the Trust promptly upon request.
C. Advisor will complete such reports concerning purchases or
sales of securities on behalf of the Fund as the Trust may from time to time
require to ensure compliance with the Act, the Internal Revenue Code of 1986 and
applicable state securities laws.
D. Advisor has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the Act and will provide the Trust with a
copy of the code of ethics and evidence of its adoption. Within forty-five (45)
days of the end of the last calendar quarter of each year while this Agreement
is in effect, a partner of Advisor shall certify to the Trust that Advisor has
complied with the requirements of Rule 17j-1 during the previous year and that
there has been no violation of the
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Advisor's code of ethics or, if such a violation has occurred, that appropriate
action was taken in response to such violation. Upon the written request of the
Trust, Advisor shall permit the Trust, its employees or its agents to examine
the reports required to be made to Advisor by Rule 17j-1(c)(1).
E. Advisor will, promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV, furnish a copy of such
amendment to the Trust.
F. Upon request of the Trust, Advisor will provide assistance
to the Custodian in the collection of income due or payable to the Fund.
G. Advisor will immediately notify the Trust of the occurrence
of any event which would disqualify Advisor from serving as an investment
advisor of an investment company pursuant to Section 9(a) of the Act or
otherwise.
18. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between Advisor and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Trustees and may be
subject to the approval of the shareholders of the Fund in the manner required
by the Act and the rules thereunder, subject to any applicable exemptive order
of the Securities and Exchange Commission modifying the provisions of the Act
with respect to approval of amendments to this Agreement.
19. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date of its execution and shall remain in force for a period of two (2) years
from such date, and from year to
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year thereafter but only so long as such continuance is specifically approved at
least annually by the vote of a majority of the Trustees who are not interested
persons of the Trust or the Advisor, cast in person at a meeting called for the
purpose of voting on such approval, and by a vote of the Board of Trustees or of
a majority of the outstanding voting securities of the Fund. The aforesaid
requirement that this Agreement may be continued "annually" shall be construed
in a manner consistent with the Act and the rules and regulations thereunder.
20. TERMINATION. This Agreement may be terminated by either party
hereto, without the payment of any penalty, immediately upon written notice to
the other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other, but
any such termination shall not affect the status, obligations or liabilities of
any party hereto to the other.
21. LIMITATION OF LIABILITY. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust and
signed by an officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust.
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22. DEFINITIONS. As used in paragraphs 15 and 19 of this Agreement, the
terms "assignment," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
23. APPLICABLE LAW. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of New
York.
THE NEW YORK STATE OPPORTUNITY FUNDS
By: /s/ Xxxxx X. Xxxx
Title: President
Date: April 4, 1997
ACCEPTANCE
The foregoing Agreement is hereby accepted.
PINNACLE ADVISORS LLC
By: /s/ Xxxxx X. Xxxx
Title: /s/ Managing Member
Date: April 4, 1997
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SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISOR
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases or sales, given by the Advisor on behalf of
the Fund for, or in connection with, the purchase or sale of
securities, whether executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any
modification or cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the
Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within
ten (10) days after the end of the quarter, showing specifically the
basis or bases upon which the allocation of orders for the purchase and
sale of portfolio securities to named brokers or dealers was effected,
and the division of brokerage commissions or other compensation on such
purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or
dealers.
(ii) The supplying of services or benefits by brokers
or dealers to:
(a) The Trust;
(b) The Advisor;
(c) The Trust's principal underwriter; and
(d) Any person affiliated with the foregoing
persons.
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(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate
memorandum identifying the person or persons, committees or
groups authorizing the purchase or sale of portfolio
securities. Where an authorization is made by a committee
or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be
retained as part of this record any memorandum,
recommendation or instruction supporting or authorizing the
purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are
required to be maintained by registered investment advisors by rule
adopted under Section 204 of the Investment Advisers Act of 1940, to
the extent such records are necessary or appropriate to record the
Advisor's transactions with respect to the Fund.
-----------------------
* Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from
brokerage firms (including their recommendation; i.e., buy, sell, hold)
or any internal reports or portfolio adviser reviews.
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