AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 28th day of October, 1997 and amended as of
February 18, 1998 and amended and restated as of October 15, 1999,
January 24, 2000, May 5, 2000, August 24, 2000, December 8, 2000,
January 26, 2001, May 1, 2001, September 1, 2001, May 1, 2002,
September 24, 2002, December 17, 2003, June 17, 2004, December 15,
2004 and March 10, 2005, between ProFunds, a Delaware statutory
trust (the "Trust"), and ProFund Advisors LLC, a Maryland limited
liability company (the "Advisor").
WHEREAS, the Advisor is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and is engaged
principally in the business of rendering investment management
services; and
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial
interest ("shares") in separate series with each such series
representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Trust currently offers multiple series of shares,
and may offer additional portfolios in the future; and
WHEREAS, the Trust desires to retain the services of the Advisor to
provide a continuous program of investment management for the Trust
listed on Schedule A attached hereto, as may be amended from time to
time (each referred to hereinafter as a "Portfolio" and collectively
as the "Portfolios"); and
WHEREAS, the Advisor is willing, in accordance with the terms and
conditions hereof to provide such services to the Trust on behalf of
such Portfolios.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and intending to be legally bound hereby, it is agreed between
the parties as follows:
1. APPOINTMENT OF ADVISOR
The Trust hereby appoints Advisor to provide the advisory
services set forth herein to the Portfolios and Advisor agrees to
accept such appointment and agrees to render the services set forth
herein for the compensation herein provided. In carrying out its
responsibilities under this Agreement, Advisor shall at all times act
in accordance with the investment objectives, policies and
restrictions applicable to the Portfolios as set forth in the then-
current Registration Statement of the Trust, applicable provisions of
the 1940 Act and the rules and regulations promulgated thereunder and
other applicable federal securities laws and regulations.
2. DUTIES OF ADVISOR
Advisor shall provide a continuous program of investment management
for each Portfolio. Subject to the general supervision of the Trusts'
Board of Trustees, Advisor shall have sole investment discretion
with respect to the Portfolios, including investment research,
selection of the securities to be purchased and sold and the portion
of the assets of each Portfolio, if any, that shall be held uninvested,
and the selection of broker-dealers through which securities
transactions in the Portfolios will be executed. Advisor shall manage
the Portfolios in accordance with the objectives, policies and
limitations set forth in the Trust's current Prospectus and
Statement of Additional Information. Specifically, and
without limiting the generality of the foregoing, Advisor agrees that
it will:
(a) promptly advise each Portfolio's designated custodian bank and
administrator or accounting agent of each purchase and sale, as the
case may be, made on behalf of the Portfolio, specifying the name and
quantity of the security purchased or sold, the unit and aggregate
purchase or sale price, commission paid, the market on which the
transaction was effected, the trade date, the settlement date, the
identity of the effecting broker or dealer and/or such other
information, and in such manner, as may from time to time be
reasonably requested by the Trust;
(b) maintain all applicable books and records with respect to the
securities transactions of the Portfolio. Specifically, but without
limitation, Advisor agrees to maintain with respect to each Portfolio
those records required to be maintained under Rule 3la-l(b)(l), (b)(5)
and (b)(6) under the 1940 Act with respect to transactions in each
Portfolio including, without limitation, records which reflect
securities purchased or sold in the Portfolio, showing for each such
transaction, the market on which the transaction was effected, the
trade date, the settlement date, and the identity of the executing
broker or dealer. Advisor will preserve such records in the manner
and for the periods prescribed by Rule 31a-2 under the 1940 Act.
Advisor acknowledges and agrees that all such records it maintains
for the Trust are the property of the Trust and Advisor will surrender
promptly to the Trust any such records upon the Trust's request;
(c) provide, in a timely manner, such information as may be reasonably
requested by the Trust or its designated agents in connection with,
among other things, the daily computation of each Portfolio's net
asset value and net income, preparation of proxy statements or
amendments to the Trust's registration statement and monitoring
investments made in the Portfolio to ensure compliance with the
various limitations on investments applicable to the Portfolio, to
ensure that the Portfolio will continue to qualify for the tax
treatment accorded to regulated investment companies under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), and
to ensure that the Portfolios that serve as the investment medium for
variable insurance contracts are managed in conformity with the
requirements of Section 817 of the Code and Treasury Regulatory
subsection 1.817-5 thereunder (or any successor or amended provision);
(d) render regular reports to the Trust concerning the performance by
Advisor of its responsibilities under this Agreement. In particular,
Advisor
agrees that it will, at the reasonable request of the Board of
Trustees, attend meetings of the Board or its validly constituted
committees and will, in addition, make its officers and employees
available to meet with the officers and employees of the Trust at
least quarterly and at other times upon reasonable notice, to review
the investments and investment programs of the Portfolio;
(e) maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the
Portfolios, the Advisor's personnel will not inquire or take into
consideration whether the issuers of securities proposed for purchase
or sale for the Trust's account are customers of the Advisor or of its
affiliates. In dealing with such customers, the Advisor and its
affiliates will not inquire or take into consideration whether
securities of those customers are held by the Trust; and
(f) review periodically and take responsibility for the material
accuracy and completeness of the information supplied by or at the
request of the Advisor for inclusion in Trust's registration statement
under the 1940 Act and the Securities Act of 1933.
3. PORTFOLIO TRANSACTIONS
Advisor shall be responsible for selecting members of securities
exchanges, brokers and dealers (herein after referred to as "brokers")
for the execution of purchase and sale transactions for the
Portfolios.
In executing portfolio transactions and selecting brokers or dealers,
if any, the Advisor will use its best efforts to seek on behalf of a
Portfolio the best overall terms available. In assessing the best
overall terms available for any transaction, the Advisor shall
consider all factors it deems relevant, including brokerage and
research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) provided to any Portfolio of
the Trust and/or other accounts over which the Advisor or an
affiliate of the Advisor exercises investment discretion. The
Advisor may pay to a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio
transaction which 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 determines in good faith that such
commission was reasonable in relation to the value of the brokerage
and research services provided. The Advisor will report to the
Trustees from time to time regarding its portfolio execution and
brokerage practices.
4. EXPENSES AND COMPENSATION
a) Allocation of Expenses
The Advisor shall, at its expense, employ or associate with itself
such persons as it believes appropriate to assist in performing its
obligations under this Agreement and provide all advisory services,
equipment, facilities and personnel necessary to perform its
obligations under this Agreement.
The Trust shall be responsible for all its expenses and
liabilities, including, without limitation, compensation of its
Trustees who are not affiliated with the Portfolios' Administrator
or the Advisor or any of their affiliates; taxes and governmental
fees; interest charges; fees and expenses of the Trust's independent
accountants and legal counsel; trade association membership dues;
fees and expenses of any custodian (including for keeping books and
accounts and calculating the net asset value of shares of each
Portfolio, transfer agent, registrar and dividend disbursing agent
of the Trust; expenses of issuing, selling, redeeming, registering
and qualifying for sale the Trust's shares of beneficial interest;
expenses of preparing and printing share certificates (if any),
prospectuses, shareholders' reports, notices, proxy statements and
reports to regulatory agencies; the cost of office supplies; travel
expenses of all officers, trustees and employees; insurance premiums;
brokerage and other expenses of executing portfolio transactions;
expenses of shareholders' meetings; organizational expenses; and
extraordinary expenses.
b) Compensation
Subject to Section 5, for its services under this Agreement, Advisor
shall be entitled to receive a fee calculated at the applicable
annual rate set forth on Schedule A hereto with respect to the
average daily net asset value of each Portfolio, which will be paid
monthly. For the purpose of accruing compensation, the net asset
value of the Portfolios will be determined in the manner provided
in the then-current Prospectus of the Trust.
c) Expense Limitations
Advisor may waive all or a portion of its fees provided for hereunder
and such waiver will be treated as a reduction in the purchase price
of its services. Advisor shall be contractually bound hereunder by
the terms of any publicity announced waiver of its fee, or any
limitation of the Portfolio's expenses, as if such waiver were fully
set forth herein.
5. MONEY MARKET PROFUND
The Money Market ProFund currently invests all of its investable
assets in another mutual fund with a substantially similar
investment objective (the "Portfolio"). For so long as the Money
Market ProFund invests all of its investable assets in the Portfolio,
or any successor mutual fund, the Advisor shall not be entitled to
any fee pursuant to Section 4(b) with respect to the Money Market
ProFund. Should the Trust's Board of Trustees determine that it is
in the best interests of the Money Market ProFund and its
shareholders to withdraw the Money Market ProFund's investment in
the Portfolio (or successor), the Advisor will directly manage, or
supervise the direct management of, the assets of the Money Market
ProFund in accordance with the terms of this Agreement. The Advisor
may employ one or more investment sub-advisers from time to time to
perform some of the duties and services of the Advisor, including
the selection of brokers for the execution of portfolio transactions,
for the Money Market Portfolio, upon such terms and conditions as may
be agreed upon between the Advisor and such investment sub-adviser(s)
and approved by the Trust's Board of Trustees.
6. LIABILI1Y OF ADVISOR
Neither the Advisor nor its officers, directors, employees, agents or
controlling person ("Associated Person") of the Advisor shall be
liable for any error of judgement or mistake of law or for any loss
suffered by the Trust in connection with the matters to which this
Agreement relates including, without limitation, losses that may be
sustained in connection with the purchase, holding, redemption or
sale of any security or other investment by the Trust except a loss
resulting from willful misfeasance, bad faith or gross negligence on
the part of Advisor or such Associated Persons in the performance of
their duties or from reckless disregard by them of their duties under
this Agreement.
7. LIABILITY OF 1HE TRUST AND PORTFOLIOS
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 shall bind
only the trust property of the Trust as provided in the Declaration
of Trust. The execution and delivery of this Agreement have been
authorized by the Trustees, and it has been 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 as provided in its Declaration of Trust.
With respect to any obligation of the Trust on behalf of any
Portfolio arising hereunder, the Advisor shall look for payment or
satisfaction of such obligations solely to the assets and property
of the Portfolio to which such obligation relates as though the
Trust had separately contracted with the Advisor by separate
written instrument with respect to each Portfolio.
8. DURATION AND TERMINATION OF THIS AGREEMENT
(a) Duration. This Agreement shall become effective on the date
hereof. Unless terminated as herein provided, this Agreement shall
remain in full force and effect for two years from the date hereof.
Subsequent to such initial period of effectiveness, this Agreement
shall continue in full force and effect for successive periods of
one year thereafter with respect to each Portfolio so long as such
continuance with respect to such Portfolio is approved at least
annually (a) by either the Trustees of the Trust or by vote of a
majority of the outstanding voting securities (as defined in the
0000 Xxx) of such Portfolio, and (b), in either event, by the vote
of a majority of the Trustees of the Trust who are not parties to
this Agreement or "interested persons" (as defined in the 0000 Xxx)
of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(b) Amendment. Any amendment to this Agreement shall become
effective with respect to a Portfolio upon approval by the Advisor
and the Trustees, and to the extent required by applicable law, a
majority of the outstanding voting securities (as defined in the
0000 Xxx) of that Portfolio.
(c) Termination. This Agreement may be terminated with respect to
any Portfolio at any time, without payment of any penalty, by vote
of the Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of that Portfolio, or by
the Advisor, in each case upon sixty
(60) days' prior written notice to the other party. Any termination
of this Agreement will be without prejudice to the completion of
transactions already initiated by the Advisor on behalf of the
Trust at the time of such termination. The Advisor shall take all
steps reasonably necessary after such termination to complete any
such transactions and is hereby authorization to take such steps.
In addition, this Agreement may be terminated with respect to one
or more Portfolios without affecting the rights, duties or
obligations of any of the other Portfolios.
(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined
in the 1940 Act).
(e) Approval, Amendment or Termination by Individual Portfolio. Any
approval, amendment or termination of this Agreement by the holders
of a majority of the outstanding voting securities (as defined in
the 0000 Xxx) of any Portfolio shall be effective to continue,
amend or terminate this Agreement with respect to any such
Portfolio notwithstanding (i) that such action has not been
approved by the holders of a majority of the outstanding voting
securities of any other Portfolio affected thereby, and (ii) that
such action has not been approved by the vote of a majority of the
outstanding voting securities of the Trust, unless such action shall
be required by any applicable law or otherwise.
(t) Use of Name. The parties acknowledge and agree that the names
"ProFunds", "VP ProFunds" (collectively, the "ProFund Names") and
any derivatives thereof, as well as any logos that are now or shall
hereafter be associated with the ProFund Names are the valuable
property of the Advisor. In the event that this Agreement is
terminated and the Advisor no longer acts as Investment Advisor to
the Trust, the Advisor reserves the right to withdraw from the
Trust and the Portfolios the uses of the ProFund Names and logos
or any name or logo misleadingly implying a continuing relationship
between the Trust of the Portfolios and the Advisor or any of its
affiliates.
9. SERVICES NOT EXCLUSIVE
The services of the Advisor to the Trust hereunder are not to be
deemed exclusive, and the Advisor shall be free to render similar
services to others so long as its services hereunder are not
impaired thereby.
10. MISCELLANEOUS
(a) Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate in writing
for the receipt of such notices.
(b) Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statue, rule or otherwise, the
remainder shall not be thereby affected.
(c) Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date written below.
ATTEST: /s/ Xxxxxxxxx X. Xxxxx
ProFund Advisors LLC,
a Maryland limited liability company
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Sir
Chairman and Chief Executive Officer
Date: March 10, 2005
ATTEST: /s/ Xxxxxxxxx X. Xxxxx
ProFunds,
a Delaware statutory trust
By: /s/Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
President
Date: March 10, 2005
