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INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
THIS INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT is made as of this
1st day of June, 2000, between FIRST FUNDS, a business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust"), on behalf of its
CAPITAL APPRECIATION PORTFOLIO (the "Portfolio") and Delaware Management
Company, a series of Delaware Management Business Trust, a Delaware business
trust organized under the laws of the State of Delaware ("DMC").
WHEREAS, the Trust has been organized to operate as an investment
company registered under the Investment Company Act of 1940, as amended, (the
"1940 Act") with multiple series of shares (hereinafter referred to as Classes)
having varying preferences, limitations and relative rights, and to invest and
reinvest the assets of the Portfolio in securities pursuant to investment
objectives and policies for the Portfolio;
WHEREAS, the Trust, under separate agreement has engaged the services
of First Tennessee Bank National Association ("Bank") as a co-investment adviser
to provide or perform various investment advisory, monitoring, statistical,
research, portfolio investment adviser selection, and other services with
respect to the Portfolio as set forth more fully in the Bank's Investment
Advisory and Management Agreement, a form of which is attached hereto as Exhibit
A, (Bank hereinafter being referred to as "Co-Adviser" and DMC hereinafter being
referred to as "Investment Adviser"); and
WHEREAS, the Trust desires to obtain the day-to-day portfolio investment
management services, information, advice, assistance and facilities of the
Investment Adviser with respect to the Portfolio as set forth more fully herein;
NOW, THEREFORE, Trust, on behalf of the Portfolio, and Investment
Adviser agree as follows:
1. Employment of the Investment Adviser. The Trust hereby employs the
Investment Adviser to provide investment advice and to manage the investment and
reinvestment of the Portfolio's assets in the manner set forth in Section 2A of
this Agreement, subject to the direction of the Trustees, for the period, in the
manner, and on the terms hereinafter set forth. The Investment Adviser hereby
accepts such employment and agrees during such period to render the services and
to assume the obligations herein set forth. The Investment Adviser shall for all
purposes herein be deemed to be an independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. Obligation of, and Services to be Provided by, the Investment
Adviser. The Investment Adviser undertakes to provide the services hereinafter
set forth and to assume the following obligations:
A. Investment Advisory Services.
(a) The Investment Adviser shall have overall responsibility for the
day-to-day management and investment of the Portfolio's assets
and securities portfolio subject to and in accordance with the
investment objectives and policies of the Portfolio, and any
directions which the Trustees and officers of the Trust may
issue to the Investment Adviser from time to time, and shall
perform the following services: (i)
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provide or cause to be provided investment research and credit
analysis concerning the Portfolio's investments, (ii) conduct or
cause to be conducted a continual program of investment of the
Portfolio's assets, (iii) place or cause to be placed orders for
all purchases and sales of the investments made for the
Portfolio, and (iv) maintain or cause to be maintained the books
and records required in connection with its duties hereunder.
(b) The Investment Adviser shall advise the Trustees of the Trust
regarding overall investment programs and strategies for the
Portfolio, revision of such programs as necessary, and shall
monitor and report periodically to the Trustees concerning the
implementation of such programs and strategies.
(c) The Investment Adviser, with the prior approval of the Trustees
(and the shareholders to the extent required by applicable law)
as to particular appointments, shall be permitted to (i) engage
one or more persons or companies ("Sub-Advisers"), which may
have full investment discretion to make all determinations with
respect to the investment and reinvestment of all or any portion
of the Portfolio's assets and the purchase and sale of all or
any portion of the Portfolio securities, subject to the terms
and conditions of this Agreement and the written agreement to be
executed with any Sub-Adviser; and (ii) take such steps as may
be necessary to implement such appointment.
(d) The Investment Adviser will coordinate its activities with those
of the Co-Adviser and will provide to the Co-Adviser such
information regarding the Investment Adviser's investment
management activities to the Portfolio as the Co-Adviser may
reasonably request in order to enable the Co-Adviser to perform
its services on behalf of the Portfolio under the Co-Adviser
Agreement.
B. Provision of Information Necessary for Preparation of Securities
Registration Statements, Amendments and Other Materials.
The Investment Adviser will make available and provide such
financial, accounting, statistical and other information related to
its duties and responsibilities hereunder as required by the
Trustees and necessary for the preparation of registration
statements, reports and other documents required by federal and
state securities laws and such other information as the Trustees may
reasonably request for use by the Trust and its distributor for the
underwriting and distribution of the Portfolio's shares.
C. Other Obligations and Services.
The Investment Adviser agrees to make available its officers and
employees to the Trustees and officers of the Trust and to the
Co-Adviser for consultation and discussions regarding the investment
advisory activities of the Investment Adviser for the Portfolio. The
Investment Adviser will also coordinate its activities, to the
extent necessary, with the activities of the custodian, transfer
agent, distributor, administrator and pricing agent insofar as their
respective activities relate to the duties of the Investment Adviser
hereunder, and will provide to such service providers of the
Portfolio such information as they may reasonably request in order
to perform their services on behalf of the Portfolio.
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3. Covenants by Investment Adviser. The Investment Adviser covenants
with the Trust that with respect to the services provided to the Portfolio it:
(a) will comply with all applicable provisions of the 1940 Act and
applicable rules and regulations of the Securities and Exchange
Commission ("SEC") and will in addition conduct its activities
under this Agreement in accordance with the investment
objective, policies and limitations contained the current
registration statement of the Portfolio;
(b) will not make loans to any person for the purpose of purchasing
or carrying Portfolio shares, or make loans to the Portfolio or
the Trust;
(c) will not purchase shares of the Portfolio or the Trust for its
own investment account;
(d) will maintain all books and records with respect to the
securities transactions of the Portfolio and furnish the
Trustees such periodic and special reports as the Trustees may
request with respect to the Portfolio;
(e) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust
and the Portfolio and prior, present or potential shareholders
(other than any information which Investment Adviser may have
obtained about shareholders from other business relationships
with such shareholders), and will not use such records and
information for any purpose other than performance of its
responsibilities and duties hereunder (except after prior
notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be
withheld and will be deemed granted where the Investment Adviser
may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by
duly constituted authorities, when so requested by the Trust or
when otherwise required or permitted by law);
(f) will immediately notify the Trust and the Co-Adviser of the
occurrence of any event which would disqualify Investment
Adviser or any Sub-Adviser from serving as investment adviser of
an investment company; and
(g) will determine that all information furnished to the Trust or
the Co-Adviser by it pursuant to this Agreement is accurate in
all material respects.
4. Transaction Procedures. All investment transactions on behalf of the
Portfolio will be compensated by payment to or delivery by the custodian for the
Portfolio duly appointed by the Trustees of the Trust (the "Custodian"), or such
approved depositories or agents duly appointed by the Trustees and as may be
designated by the Custodian in writing, as custodian for the Portfolio, of all
cash and/or securities due to or from the Portfolio, and the Investment Adviser
shall not have possession or custody thereof or any responsibility or liability
with respect thereto. The Investment Adviser effecting transactions on behalf of
the Portfolio shall advise the Custodian and the Co-Adviser of all investment
orders for the Portfolio placed by it with brokers, dealers, banks and other
parties ("Brokers"). The Trustees shall issue, or cause to be issued, to the
Custodian such instructions as may be appropriate in connection with the
settlement of any transaction initiated by the Investment Adviser. The Portfolio
shall be responsible for all custodial arrangements and the payment of all
custodial charges and fees, and, upon
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the giving of proper instructions to the Custodian, the Investment Adviser shall
have no responsibility or liability with respect to custodian arrangements or
the acts, omissions or other conduct of the Custodian, except that it shall be
the responsibility of the Investment Adviser to take appropriate action if the
Custodian fails properly to confirm execution of the instructions to the
Investment Adviser and the Co-Adviser in a written form duly agreed upon by the
Custodian, the Investment Adviser and the Co-Adviser.
5. Execution and Allocation of Portfolio Brokerage. The Investment
Adviser shall place, subject to the limitations contained in this paragraph 5,
on behalf of the Portfolio, orders for the execution of the Portfolio's
securities transactions. The Investment Adviser is authorized by the Trust to
take any action, including the purchase or sale of securities for the account of
the Portfolio, (a) that is not in contravention of (i) any investment
restrictions set forth in the 1940 Act and the rules thereunder; (ii) specific
instructions adopted by the Trustees and communicated to the Investment Adviser;
(iii) the investment objectives, policies and restrictions of the Portfolio as
set forth in the Trust's current registration statement, as amended from time to
time; or (iv) instructions from the Trustees to the Investment Adviser, and (b)
which would not have the effect of causing the Trust to fail to qualify or to
cease to qualify as a regulated investment company under the Internal Revenue
Code of 1986, as amended, or any succeeding statute.
The Investment Adviser may place orders pursuant to its investment
determinations for the Portfolio either directly with the issuer or with any
Brokers. In placing orders with any Broker, the Investment Adviser will consider
the experience and skill of a Broker's securities traders as well as the
Broker's financial responsibility and administrative efficiency. The Investment
Adviser will attempt to obtain the best price and the most favorable execution
of its orders with any Brokers; however, in so doing, the Investment Adviser may
consider, subject to applicable law, the research, statistical, and related
brokerage services provided or to be provided by such Broker to the Portfolio or
the other accounts for which the Investment Adviser exercises investment
discretion. A commission paid to such Brokers may be higher than that which
another Broker would have charged for effecting the same transaction, provided
that the Investment Adviser determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided by such Broker when viewed in terms of either the particular
transaction or the overall responsibilities of the Investment Adviser with
respect to the accounts as to which it exercises investment discretion. It is
understood that the Investment Adviser has not adopted a formula for selection
of Brokers for the execution of the Portfolio's investment transactions. On
occasions when the Investment Adviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other clients, the
Investment Adviser, 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 the transaction, will be
made by the Investment Adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Portfolio and to
such other clients.
The Investment Adviser will not execute any Portfolio transactions for
the account of the Portfolio with a Broker which is an "affiliated person" (as
defined in the 0000 Xxx) of the Trust, the Trust's distributor, the Investment
Adviser or the Co-Adviser except in accordance with applicable laws, rules,
regulations or interpretations thereof and effective exemption orders issued by
the SEC pursuant to the 1940 Act without the prior written approval of the
Trustees. The Trust agrees to provide the Investment Adviser with a list of
brokers and dealers that are "affiliated persons" of the Trust. The Investment
Adviser likewise agrees to furnish to the Trust and the Co-Adviser a list of
Brokers which are "affiliated
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persons" of the Investment Adviser. In no instance will Portfolio securities be
purchased from or sold to the Trust's principal distributor, Investment Adviser,
Co-Adviser or any affiliate thereof, except to the extent permitted by an
exemption order issued by the SEC or by applicable law.
The Investment Adviser shall render regular reports to the Trustees and
the Co-Adviser of the total brokerage business placed by it with respect to the
Trust and the manner in which the allocation of such brokerage has been
accomplished.
6. Expenses of the Portfolio. The Portfolio or Trust will pay, or will
enter into arrangements that require third parties to pay, all expenses other
than those expressly assumed by the Investment Adviser herein, which expenses
payable by the Portfolio or Trust shall include:
(a) Expenses of all audits by independent public accountants;
(b) Expenses of the Co-Adviser, transfer agent, registrar, dividend
disbursing agent and shareholder recordkeeping services;
(c) Expenses of custodial services including recordkeeping services
provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of
the Portfolio's net assets;
(e) Salaries and other compensation of any of its executive officers
or employees, if any, who are not officers, directors,
stockholders or employees of the Investment Adviser, the
administrator or the distributor;
(f) Taxes levied against the Portfolio;
(g) Brokerage fees and commissions in connection with the purchase
and sale of portfolio securities for the Portfolio;
(h) Costs, including the interest expense, of borrowing money;
(i) Costs and/or fees incident to Trustees and shareholder meetings
of the Trust and the Portfolio, the preparation and mailings of
prospectuses and reports of the Portfolio to its existing
shareholders, the filing of reports with regulatory bodies, the
maintenance of the Portfolio's legal existence, and the
registration of shares with federal and state securities
authorities;
(j) Legal fees in connection with the representation of the Trust
and/or Portfolio, including the legal fees related to the
registration and continued qualification of the Portfolio's
shares for sale;
(k) Costs of printing any share certificates representing shares of
the Portfolio;
(l) Fees and expenses of Trustees who are not affiliated persons, as
defined in the 1940 Act, of the Investment Adviser, the
Co-Adviser, the distributor or any of their affiliates; and
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(m) Its pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or of other insurance premiums.
7. Activities and Affiliates of the Investment Adviser. The Trustees
acknowledge that Investment Adviser, 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
Investment Adviser, its affiliates or any of its or their directors, officers,
agents or employees may buy, sell or trade in any securities for its or their
respective accounts (such individuals, entities and accounts hereinafter
referred to as Affiliated Accounts). Subject to the provisions of paragraph 2
hereof, the Trustees agree that the Investment Adviser 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 Portfolio, provided
that Investment Adviser acts in good faith and in accordance with applicable law
or as permitted by an exemption order issued by the SEC, and provided further,
that it is Investment Adviser's policy to allocate within its reasonable
discretion, investment opportunities to the Portfolio 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 Portfolio 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 Portfolio may have an interest from time to time, whether in transactions
which involve the Portfolio or otherwise. The Investment Adviser shall not have
any obligation to acquire for the Portfolio a position in any investment which
any Affiliated Account may acquire, and the Portfolio shall have no first
refusal, coinvestment or other rights in respect of any investment, either for
the Portfolio or otherwise.
8. Compensation of the Investment Adviser. (a) For all services
provided to the Portfolio pursuant to this Agreement, the Trust shall pay the
Investment Adviser, and the Investment Adviser agrees to accept as full
compensation therefor, an investment advisory fee, payable as soon as
practicable after the last day of each month, calculated using an annual rate of
0.70% of the average daily net assets of the Portfolio for the first $50 million
of such assets, and 0.65% on average daily net assets of the Portfolio in excess
of $50 million (the "Annual Rate"). The monthly investment advisory fee to be
paid by the Trust to the Investment Adviser shall be determined as of the close
of business on the last business day of each month by multiplying one-twelfth of
the Annual Rate by the Average Portfolio Net Assets (hereinafter defined),
calculated monthly as of such day.
(b) For purposes of this paragraph 8, the "Average Portfolio Net
Assets" shall be calculated monthly as of the last business day of each month
and shall mean the sum of the net assets of the Portfolio calculated each
business day during the month divided by the number of business days in the
month (such net assets to be determined as of the close of business each
business day and computed in the manner set forth in the Declaration of Trust of
the Trust).
9. Proxies. The Trustees will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Portfolio may be
invested from time to time, unless the Trustees delegate such right to the
Investment Adviser, at which time the Trustees shall provide DMC with a
certified resolution authorizing DMC to vote such proxies.
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10. Liabilities of the Investment Adviser.
(a) The Investment Adviser will not be liable for any loss suffered
by the Portfolio or the Trust as the result of any error of
judgment or mistake of law in connection with its performance of
this Agreement; provided, however, that the Investment Adviser
shall be liable to the Portfolio and the Trust for any loss
resulting from (i) a breach of fiduciary duty with respect to
the receipt of compensation for services; (ii) willful
misfeasance, bad faith or gross negligence in, or reckless
disregard by the Investment Adviser of, the performance of its
obligations or duties under this Agreement; or (iii) any
material breach of any of its covenants contained in this
Agreement.
(b) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or the Investment Adviser, from
liability in violation of Sections 17(h) and (i) of the 1940
Act.
11. Renewal, Amendment and Termination.
(a) This Agreement shall become effective on the date first written
above and shall remain in force for a period of two (2) years
from such date and from year to year thereafter but only so long
as such continuance is specifically approved at least annually
(i) by the vote of a majority of the Trustees who are not
interested persons of the Portfolio, the Co-Adviser or the
Investment Adviser, 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 (ii) by the vote of a majority of the outstanding
voting securities of the Portfolio. The aforesaid provision that
this Agreement may be continued "annually" shall be construed in
a manner consistent with the 1940 Act and the rules and
regulations thereunder.
(b) This Agreement may be amended at any time, but only by written
agreement between the Trust and the Investment Adviser, which
amendment is subject to the approval of the Trustees and, if
applicable, the shareholders of the Trust in the manner required
by the 1940 Act, subject to any applicable exemption order of
the SEC modifying the provisions of the 1940 Act with respect to
approval of amendments to this Agreement.
(c) This Agreement:
(i) may at any time be terminated without the payment of any
penalty either by vote of the Trustees or by vote of a
majority of the outstanding voting securities of the
Portfolio, on sixty (60) days' written notice to the
Investment Adviser;
(ii) shall immediately terminate in the event of its
assignment; and
(iii) may be terminated by the Investment Adviser on sixty (60)
days' written notice to the Trust.
(d) As used in this Section 11, the terms "assignment", "interested
person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act
and the rules and regulations thereunder, subject to any
applicable orders of exemption or other interpretations issued
by the SEC.
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12. Books and Records. (a) The Trustees shall provide to the Investment
Adviser copies of the Trust's most recent prospectus, statement of additional
information, supplement, and post-effective amendment which relate to any class
of shares representing interests in the Portfolio.
(b) In compliance with the requirements of Rule 31a-3 of the rules
promulgated under the 1940 Act ("Rules"), the Investment Adviser hereby agrees
that all records which it maintains for the Trust are the property of the Trust
and further agrees to surrender promptly to the Trust any such records upon the
Trust's request. The Investment Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2, the records required to be maintained by the
Investment Adviser hereunder pursuant to Rule 31a-1 of the Rules.
13. Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed given, if delivered
personally, on the day delivered or if mailed, by certified or registered mail,
postage prepaid, return receipt requested, three (3) days after placement in the
United States mail, or national courier service (e.g. UPS, Fed Ex, Airborne
Express), upon actual receipt as documented by such courier, to the addresses
below:
If to Trust: First Funds
c/o Xxxxxxx X. Xxxx, Esq., General Counsel
ALPS Mutual Fund Services, Inc.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxxxx Xxxxxxxx, Esq.
Baker, Donelson, Bearman, Caldwell, P.C.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
If to Investment Adviser: Delaware Management Company
Attn: Xxxxxxx X. Xxxxxxxx, Esq., General Counsel
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
14. 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.
15. Limitation on Liability. Investment Adviser is hereby expressly put
on notice of the limitation of shareholder liability as set forth in the
Declaration of Trust and agrees that obligations assumed by the Portfolio
pursuant to this Agreement shall be limited in all cases to the Portfolio and
its assets. Investment Adviser agrees that it shall not seek satisfaction of any
such obligation from the shareholders or any individual shareholder of the
Portfolio, nor from the Trustees or any individual Trustee of the Portfolio.
16. Governing Law. To the extent that state law has not been 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
Tennessee without giving effect to the choice of laws provisions thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
FIRST FUNDS
By:
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Secretary
DELAWARE MANAGEMENT COMPANY
By:
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By:
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EXHIBIT A
AMENDED AND RESTATED
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
THIS INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT is made as of this
1st day of June, 2000, between FIRST FUNDS, a business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust"), on behalf of its
CAPITAL APPRECIATION PORTFOLIO (the "Portfolio") and First Tennessee Bank
National Association ("Bank").
WHEREAS, the Trust has been organized to operate as an investment
company registered under the Investment Company Act of 1940, as amended, (the
"1940 Act") with multiple series of shares (hereinafter referred to as Classes)
having varying preferences, limitations and relative rights, and to invest and
reinvest the assets of the Portfolio in securities pursuant to investment
objectives and policies for the Portfolio; and
WHEREAS, the Trust, under separate agreement (the "Investment Advisory
and Management Agreement"), has engaged the services of Delaware Management
Company as co-investment adviser to the Portfolio to provide day-to-day
investment management of the Portfolio's assets and securities, to conduct a
continuous program of investment of the Portfolio's assets, and to provide other
advisory services as outlined in the Investment Advisory and Management
Agreement (DMC hereinafter being referred to as "Investment Adviser" and Bank
hereinafter being referred to as "Co-Adviser"); and
WHEREAS, the Trust desires to obtain the services, information, advice,
assistance and facilities of an investment adviser and to have an investment
adviser provide or perform for it various investment advisory, monitoring,
statistical, research, investment adviser selection and counseling and other
services with respect to the Portfolio as set forth more fully herein, but
exclusive of day-to-day investment management services;
NOW, THEREFORE, the Trust, on behalf of the Portfolio, and Co-Adviser
agree as follows:
1. Employment of the Co-Adviser. The Trust hereby employs the
Co-Adviser to provide investment advisory services in the manner set forth in
Section 2A of this Agreement, subject to the direction of the Trustees, for the
period, in the manner, and on the terms hereinafter set forth. The Co-Adviser
hereby accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth. The Co-Adviser shall
for all purposes herein be deemed to be an independent contractor and shall,
except as expressly provided or authorized (whether herein or otherwise), have
no authority to act or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. Obligations of, and Services to be Provided by, the Co-Adviser. The
Co-Adviser undertakes to provide the services hereinafter set forth and to
assume the following obligations:
A. Investment Advisory Services.
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(a) The Co-Adviser will provide the Trust with research, analyses
and recommendations with respect to the investment objective,
guidelines for and risk characteristics of the Portfolio.
(b) The Co-Adviser will monitor the investment and management
activities of the Investment Adviser relative to the Portfolio,
including, but not limited to, purchase and sale transactions
following settlement thereof, and report to the Trustees on
compliance by the Investment Adviser with the investment objective
and policies of the Portfolio, any directions which the Trustees and
officers of the Trust may issue to the Investment Adviser from time
to time and the requirements of the 1940 Act and all applicable
rules and regulations of the Securities and Exchange Commission
("SEC") with respect to the Portfolio. In performing its monitoring
services under this sub-section, the Co-Adviser may rely, among
other things, upon reports, data and information furnished to it by
the Investment Adviser, custodian or other service providers to the
Portfolio.
(c) The Co-Adviser will make recommendations with respect to the
engagement and termination of investment advisers and sub-advisers
for the Portfolio and provide research, analyses and recommendations
on qualified candidates to perform the investment advisory and, if
applicable, sub-advisory duties and responsibilities for the
day-to-day management of a continuous investment program for the
Portfolio and the related functions to sustain that role.
(d) The Co-Adviser will perform or obtain research and analysis on
the investment performance of the Investment Adviser, or other
investment advisers or sub-advisers (collectively, the "Advisers")
with respect to the Portfolio and comparisons of its absolute and
relative performance to relevant indices and investment universes.
(e) The Co-Adviser will determine and recommend allocation of assets
between multiple active Advisers at such time that the assets of the
Portfolio reach such size that multiple active Advisers are
warranted.
(f) The Co-Adviser may make presentations or reports on behalf of
the Investment Adviser, or other Advisers, at the request of the
Investment Adviser or such other Advisers in meetings and other
settings where the presence of a representative of any such
investment adviser is needed or requested but is unable to attend.
Such meetings and settings may include, but are not limited to, (i)
Board of Trustee meetings, (ii) meetings with broker-dealers, and
(iii) meetings with other channels of distribution. Such meetings
shall not include regulatory meetings.
(g) The Co-Adviser will coordinate its activities with the
Investment Adviser and the activities of the Investment Adviser or
other Advisers, with the Portfolio's transfer agent, administrator,
custodian and independent accountants.
B. Provision of Information Necessary for Preparation of Securities
Registration Statements, Amendments and Other Materials.
The Co-Adviser will make available and provide such financial,
accounting, statistical and other information related to its duties
and responsibilities hereunder as required by
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the Trustees and necessary for the preparation of registration
statements, reports and other documents required by federal and
state securities laws and such other information as the Trustees may
reasonably request for use by the Trust and its distributor for the
underwriting and distribution of the Portfolio's shares.
C. Other Obligations and Services.
The Co-Adviser agrees to make available its officers and employees
to the Trustees and officers of the Trust for consultation and
discussions regarding the activities of the Investment Adviser and
the Co-Adviser's duties hereunder and their activities with respect
to the Portfolio.
3. Covenants by Co-Adviser. The Co-Adviser covenants with the Trust
that, with respect to the services provided to the Portfolio, it:
(a) will comply with all applicable provisions of the 1940 Act and
applicable rules and regulations of the Securities and Exchange
Commission ("SEC") and will in addition conduct its activities
under this Agreement in accordance with the Portfolio's current
registration statement and applicable regulations of the Office
of the Comptroller of the Currency pertaining to the investment
advisory activities of national banks which are applicable to
the Co-Adviser;
(b) will not make loans to any person for the purpose of purchasing
or carrying Trust or Portfolio shares, or make loans to the
Trust or the Portfolio;
(c) will not purchase shares of the Trust or the Portfolio for its
own investment account;
(d) will maintain all books and records with respect to its duties
set forth herein, and furnish the Trustees such periodic and
special reports as the Trustees may request with respect to the
Portfolio;
(e) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust
and the Portfolio and prior, present or potential shareholders
(other than any information which Co-Adviser may have obtained
about shareholders from other business relationships with such
shareholders), and will not use such records and information for
any purpose other than performance of its responsibilities and
duties hereunder (except after prior notification to and
approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld and will be deemed
granted where the Co-Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, when
so requested by the Trust or when otherwise required or
permitted by law);
(f) will, to the best of its knowledge and ability, immediately
notify the Trust of the occurrence of any event which would
disqualify Co-Adviser or the Investment Adviser from serving as
investment adviser of an investment company; and
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(g) will determine that all information furnished to the Trust by
the Co-Adviser pursuant to this Agreement is accurate in all
material respects.
4. Expenses of the Portfolio. The Portfolio or Trust will pay, or will
enter into arrangements that require third parties to pay, all expenses other
than those expressly assumed by the Co-Adviser herein, which expenses payable by
the Portfolio or Trust shall include:
(a) Expenses of all audits by independent public accountants;
(b) Expenses of Investment Adviser, transfer agent, registrar,
dividend disbursing agent and shareholder recordkeeping
services;
(c) Expenses of custodial services including recordkeeping services
provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of
the Portfolio's net assets;
(e) Salaries and other compensation of any of its executive officers
or employees, if any, who are not officers, directors,
stockholders or employees of the Investment Adviser, the
Co-Adviser, the Administrator or the Distributor;
(f) Taxes levied against the Portfolio;
(g) Brokerage fees and commissions in connection with the purchase
and sale of portfolio securities for the Portfolio;
(h) Costs, including the interest expense, of borrowing money;
(i) Costs and/or fees incident to Trustees and shareholder meetings
of the Trust and the Portfolio, the preparation and mailings of
prospectuses and reports of the Portfolio to its existing
shareholders, the filing of reports with regulatory bodies, the
maintenance of the Portfolio's legal existence, and the
registration of shares with federal and state securities
authorities;
(j) Legal fees, including the legal fees related to the registration
and continued qualification of the Portfolio's shares for sale;
(k) Costs of printing any share certificates representing shares of
the Portfolio;
(l) Fees and expenses of Trustees who are not affiliated persons, as
defined in the 1940 Act, of the Co-Adviser, the Investment
Adviser, the Distributor or any of their affiliates; and
(m) Its pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or of other insurance premiums.
5. Activities and Affiliates of the Co-Adviser. The Trustees
acknowledge that the Co-Adviser, or one or more of its affiliates, may have
investment responsibilities or render investment
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advice to or perform other investment advisory services for other individuals or
entities and that the Co-Adviser, its affiliates or any of its or their
directors, officers, agents or employees may buy, sell or trade in any
securities for its or their respective accounts (such individuals, entities and
accounts hereinafter referred to as "Affiliated Accounts"). Subject to the
provisions of paragraph 2 hereof, the Trustees agree that the Co-Adviser 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
Portfolio, provided that the Co-Adviser acts in good faith and in accordance
with applicable law or as permitted by an exemption order issued by the SEC, and
provided further, that, as applicable to the Portfolio, it is the Co-Adviser's
policy to allocate within its reasonable discretion, investment opportunities to
the Portfolio 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 Portfolio 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 Portfolio may have an interest from time
to time, whether in transactions which involve the Portfolio or otherwise. The
Co-Adviser shall not have any obligation to acquire for the Portfolio a position
in any investment which any Affiliated Account may acquire, and the Portfolio
shall have no first refusal, coinvestment or other rights in respect of any
investment, either for the Portfolio or otherwise.
6. Compensation of the Co-Adviser.
(a) For all services provided to the Portfolio pursuant to this
Agreement, the Trust shall pay the Co-Adviser, and the
Co-Adviser agrees to accept as full compensation therefor, an
investment advisory fee, payable as soon as practicable after
the last day of each month, calculated using an annual rate of
0.15% of the average daily net assets of the Portfolio (the
"Annual Rate"). The monthly investment advisory fee to be paid
by the Trust to the Co-Adviser shall be determined as of the
close of business on the last business day of each month by
multiplying one-twelfth of the Annual Rate by the Average
Portfolio Net Assets (hereinafter defined), calculated monthly
as of such day.
(b) For purposes of this paragraph 6, the "Average Portfolio Net
Assets" shall be calculated monthly as of the last business day
of each month and shall mean the sum of the net assets of the
Portfolio calculated each business day during the month divided
by the number of business days in the month (such net assets to
be determined as of the close of business each business day and
computed in the manner set forth in the Declaration of Trust of
the Trust).
7. Proxies. The Trustees will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Portfolio may be
invested from time to time, unless the Trustees delegate such right to the
Investment Adviser.
8. Liabilities of the Co-Adviser.
(a) The Co-Adviser will not be liable for any loss suffered by the
Portfolio or the Trust as the result of any error of judgment or
mistake of law in connection with its performance of this
Agreement; provided, however, that the Co-Adviser shall be
liable to the Portfolio and the Trust for any loss resulting
from (i) a breach of fiduciary duty with respect to the receipt
of compensation for services; (ii) willful misfeasance, bad
faith or gross negligence in, or reckless disregard by the Co-
15
Adviser of, the performance of its duties and obligations under
this Agreement; or (iii) any material breach of any of its
covenants contained in this Agreement.
(b) No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or the Co-Adviser, from
liability in violation of Sections 17(h) and (i) of the 1940
Act.
9. Renewal, Amendment and Termination.
(a) This Agreement shall become effective on the date first
written above and shall remain in force for a period of two
(2) years from such date and from year to year thereafter
but only so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of
the Trustees who are not interested persons of the
Portfolio, the Investment Adviser or the Co-Adviser, 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 (ii) by
the vote of a majority of the outstanding voting securities
of the Portfolio. The aforesaid provision that this
Agreement may be continued "annually" shall be construed in
a manner consistent with the 1940 Act and the rules and
regulations thereunder.
(b) This Agreement may be amended at any time, but only by
written agreement between the Trust and the Co-Adviser,
which amendment is subject to the approval of the Trustees
and the shareholders of the Trust in the manner required by
the 1940 Act, subject to any applicable exemption order of
the SEC modifying the provisions of the 1940 Act with
respect to approval of amendments to this Agreement.
(c) This Agreement:
(i) may at any time be terminated without the payment of
any penalty either by vote of the Trustees or by vote
of a majority of the outstanding voting securities of
the Portfolio, on sixty (60) days' written notice to
the Co-Adviser;
(ii) shall immediately terminate in the event of its
assignment; and
(iii) may be terminated by the Co-Adviser on sixty (60)
days' written notice to the Trust.
(d) As used in this Section 9, the terms "assignment",
"interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set
forth in the 1940 Act and the rules and regulations
thereunder, subject to any applicable orders of exemption
issued by the SEC.
10. Books and Records.
(a) The Trustees shall provide to the Co-Adviser copies of the
Trust's most recent prospectus and statement of additional
information (as each may be amended or supplemented from
time to time) which relate to any class of shares
representing interests in the Portfolio.
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(b) In compliance with the requirements of Rule 31a-3 of the
rules promulgated under the 1940 Act ("Rules"), the
Co-Adviser hereby agrees that all records which it maintains
for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any such records
upon the Trust's request. The Co-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2, the
records required to be maintained by the Co-Adviser
hereunder pursuant to Rule 31a-1 of the Rules.
11. Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed given, if delivered
personally, on the day delivered or if mailed, by certified or registered mail,
postage prepaid, return receipt requested, three (3) days after placement in the
United States mail, to the addresses below:
If to Trust: First Funds
c/o Xxxxxxx X. Xxxx, Esq., General Counsel
ALPS Mutual Fund Services, Inc.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
With a copy to: Xxxxxxx Xxxxxxxx, Esq.
Baker, Donelson, Bearman, Caldwell, P.C.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
If to Co-Adviser: C. Xxxxxxx Xxxxx, III
c/o: First Tennessee Bank National Association
0000 Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, XX 00000
With a copy to: Xxxxxx Xxxxx, Esq.
First Tennessee Bank National Corporation
000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, XX 00000
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. Limitation on Liability. Co-Adviser is hereby expressly put on notice
of the limitation of shareholder liability as set forth in the Declaration of
Trust and agrees that obligations assumed by the Portfolio pursuant to this
Agreement shall be limited in all cases to the Portfolio and its assets.
Co-Adviser agrees that it shall not seek satisfaction of any such obligation
from the shareholders or any individual shareholder of the Portfolio, nor from
the Trustees or any individual Trustee of the Portfolio.
14. Governing Law. To the extent that state law has not been 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
Tennessee without giving effect to the choice of laws provisions thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
FIRST FUNDS
By:
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Secretary
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By:
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