Exhibit B
INTERIM INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ____ day of December, 1995, by and between
The FFB Lexicon Fund, a Massachusetts business trust (the "Trust"),
and First Union National Bank of North Carolina (the "Adviser").
WHEREAS, the Trust is an open-end, diversified management
investment company registered under the Investment Company Act of
1940, as amended, consisting of several series of shares, each having
its own investment policies; and
WHEREAS, the Trust has retained SEI Financial Management
Corporation (the "Administrator") to provide administration of the
Trust's operations, subject to the control of the Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render
investment management services with respect to the portfolio listed on
Schedule A hereto and such other portfolios as the Trust and the
Adviser may agree upon (the "Funds"), and the Adviser is willing to
render such services:
NOW, THEREFORE, in consideration of mutual covenants herein
contained, the parties hereto agree as follows:
1. Duties of Adviser. The Trust employs the Adviser to
manage the investment and reinvestment of the assets,
and to continuously review, supervise, and administer
the investment program of the Funds, to determine in its
discretion the securities to be purchased or sold, to
provide the Administrator and the Trust with records
concerning the Adviser'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 Adviser's discharge of the
foregoing responsibilities.
The Adviser 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, and
applicable laws and regulations.
The Adviser 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 required
by it to perform the services on the terms and for the
compensation provided herein.
2. Fund Transactions. The Adviser is authorized to select
the brokers or dealers that will execute the purchases
and sales of portfolio securities for the Funds and is
directed to use its best efforts to obtain the best net
results as described in the Trust's prospectus and
statement of additional information from time to time.
The Adviser will promptly communicate to the
Administrator and to the officers and the Trustees of
the Trust such information relating to portfolio
transactions as they may reasonably request.
It is understood that the Adviser will not be deemed to
have acted unlawfully, or to have breached a fiduciary
duty to the Trust or be in breach of any obligation
owing to the Trust under this Agreement, or otherwise,
solely by reason of its having directed a securities
transaction on behalf of the Trust to a broker-dealer in
compliance with the provisions of Section 28(e) of the
Securities Exchange Act of 1934.
3. Compensation of the Adviser. For the services to be
rendered by the Adviser as provided in Sections 1 and 2
of this Agreement as well as Custody Services, the Trust
shall pay to the Adviser compensation at the rate
specified in the Schedule(s) which are attached hereto
and made a part of this Agreement. Such compensation
shall be paid to the Adviser at the end of each month,
and calculated by applying a daily rate, based on the
annual percentage rates as specified in the attached
Schedule(s), to the assets. The fee shall be based on
the average daily net assets for the month involved
(less any assets of such Funds held in non-interest
bearing special deposits with a Federal Reserve Bank).
All rights of compensation under this Agreement for
services performed as of the termination date shall
survive the termination of this Agreement.
4. Excess Expenses. If the expenses for any Fund for any
fiscal year (including fees and other amounts payable to
the Adviser, 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 Adviser shall bear such excess cost.
However, the Adviser 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 Adviser pursuant to this Section 4 shall
be settled on a monthly basis (subject to fiscal year
end reconciliation) by a reduction in the fee payable to
the Adviser for such month pursuant to Section 3 and, if
such reduction shall be insufficient to offset such
expenses, by reimbursing the Trust.
5. Reports. The Trust and the Adviser 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.
6. Status of Adviser. The services of the Adviser to the
Trust are not to be deemed exclusive, and the Adviser
shall be free to render similar services to others so
long as its services to the Trust are not impaired
thereby. The Adviser 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.
7. 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 Investment Company
Act of 1940 (the "1940 Act") which are prepared or
maintained by the Adviser on behalf of the Trust are the
property of the Trust and will be surrendered promptly
to the Trust on request.
8. Limitation of Liability Adviser. The duties of the
Adviser shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be
asserted against the Adviser hereunder. The Adviser
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
misfeasance, bad faith or gross 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 or Federal securities law which
cannot be waived or modified hereby. (As used in this
Paragraph 8, the term "Adviser" shall include directors,
officers, employees and other corporate agents of the
Adviser as well as that corporation itself).
So long as the Adviser acts in good faith and with due
diligence and without gross negligence, the Trust
assumes full responsibility and shall indemnify the
Adviser and hold it harmless from and against any and
all actions, suits and claims, whether groundless or
otherwise, and from and against any and all losses,
damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities
(including reasonable investigation expenses) arising
directly or indirectly out of any Advisory Service
rendered to the Trust hereunder except to the extent
such indemnification would be prohibited by Federal
securities laws. The indemnity and defense provisions
set forth herein shall indefinitely survive the
termination of this Agreement.
The rights hereunder shall include the right to
reasonable advances of defense expenses in the event of
any pending or threatened litigation with respect to
which indemnification hereunder may ultimately be
merited. In order that the indemnification provision
contained herein shall apply, however, it is understood
that if in any case the Trust may be asked to indemnify
or hold the Adviser harmless, the Trust shall be fully
and prompted advised of all pertinent facts concerning
the situation in question, and it is further understood
that the Adviser will use all reasonable care to
identify and notify the Trust promptly concerning any
situation which presents or appears likely to present
the probability of such a claim for indemnification
against the Trust, but failure to do so in good faith
shall not effect the rights hereunder.
The Adviser may apply to the Trust at any time for
instructions and may consult counsel for the Trust or
its own counsel and with accountants and other experts
with respect to any matter arising in connection with
the Adviser's duties, and the Adviser shall not be
liable or accountable for any action taken or omitted by
it in good faith in accordance with such instruction or
with the opinion of such counsel, accountants or other
experts.
Also, the Adviser shall be protected in acting upon any
document which it reasonably believes to be genuine and
to have been signed or presented by the proper person or
persons. Nor shall the Adviser be held to have notice of
any change of authority of any officers, employee or
agent of the Trust until receipt of written notice
thereof from the Trust.
9. Permissible Interests. Trustees, agents, and
shareholders of the Trust are or may be interested in
the Adviser (or any successor thereof) as directors,
partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and shareholders
of the Adviser are or may be interested in the Trust as
Trustees, shareholders or otherwise; and the Adviser (or
any successor) is or may be interested in the Trust as a
shareholder or otherwise. In addition, brokerage
transactions for the Trust may be effected through
affiliates of the Adviser if approved by the Board of
Trustees, subject to the rules and regulations of the
Securities and Exchange Commission ("SEC").
10. Duration and Termination. This Agreement, unless sooner
terminated as provided herein, shall remain in effect
until the earlier of the Closing Date defined in the
Agreements and Plans of Reorganization dated September
__, 1995 approved by shareholders of the Funds, or two
years from date of execution, and thereafter, for
periods of one year so long as such continuance
thereafter is specifically approved at least annually
(a) by the vote of a majority of those Trustees of the
Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at
a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust or by
vote of a majority of the outstanding voting securities
of each Fund; provided, however, that if the
shareholders of any Fund fail to approve the Agreement
as provided herein, the Adviser 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 60 days written notice to the Adviser, or by the
Adviser 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. Any notice under this
Agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the other party at any
office of such party.
As used in this Section 10, 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 SEC under said Act.
11. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if
sent by registered or certified mail, postage prepaid,
addressed by the party giving notice to the other party
at the last address furnished by the other party to the
party giving notice: if to the Trust, the Trust
Administrator c/o the Trust Administrator, SEI Financial
Management Corporation, at 000 Xxxx Xxxxxxxxxx Xxxx,
Xxxxx, XX and if to the Adviser at Xxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, to the
attention of Xxxxxxx X. Xxxxxxx, III, President.
12. 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.
13. Governing Law. This Agreement shall be construed in
accordance with the laws of the Commonwealth of
Massachusetts and the applicable provisions of the 1940
Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts, or any of the provisions
herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of
the Trust as Trustees, and are 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.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed as of the day and year first written above.
THE FFB LEXICON FUND
By: _________________________
Attest: _____________________
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: _________________________
Attest: _____________________
SCHEDULE A
to the
Interim Investment Advisory Agreement
between
The FFB Lexicon Fund
and
First Union National Bank of North Carolina
Select Value Fund
SCHEDULE B
to the
Interim Investment Advisory Agreement
between
The FFB Lexicon Fund
and
First Union National Bank of North Carolina
Pursuant to Article 3, the Trust shall pay the Adviser compensation at
an annual rate as follows:
Fund Fee (in basis points)
=================================================================
Select Value Fund 75
