EXHIBIT (I)(1)
BRYCE CAPITAL FUNDS
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") made as of the 28th
day of June, 2004, by and between Bryce Capital Funds, a Delaware statutory
trust (the "Trust"), on behalf of the Bryce Capital Growth Fund and the Bryce
Capital Value Fund (hereinafter each are referred to as a "Fund" or the "Funds")
and Bryce Capital Management, LLC (the "Adviser"), a registered investment
adviser with the Securities and Exchange Commission.
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Adviser is an investment adviser, registered as such under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is
engaged in the business of supplying investment advice, investment management
and administrative services, as an independent contractor; and
NOW, THEREFORE, in consideration of the covenants and the mutual premises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. Appointment of Adviser. The Trust hereby appoints the Adviser and
the Adviser hereby accepts such appointment, to render investment advice and
management services with respect to the assets of each Fund for the period and
on the terms set forth in this Agreement, subject to the supervision and
direction of the Trust's Board of Trustees (the "Board").
2. Duties of Adviser.
(a) General Duties. The Adviser shall perform the management and
administrative services necessary for the operation of the Funds that are not
otherwise provided by third party service providers. The Adviser shall, subject
to the supervision of the Board, perform various services for the Funds,
including but not limited to: (1) providing the Funds with office space,
equipment and facilities (which may be its own) for maintaining their
organization; and (2) on behalf of the Funds, supervising relations with, and
monitoring the performance of, custodians, depositories, fund administrators,
transfer, dividend disbursing, accounting and pricing agents, independent
auditors, attorneys, brokers and dealers, insurers and other persons in any
capacity deemed to be necessary or desirable.
(b) Investment Advisory Services. The Adviser shall act as
investment adviser to the Funds and shall manage the investments of the Funds on
behalf of the Funds in accordance with the investment objectives, programs and
restrictions of the Funds as provided in the Trust's governing documents,
including, without limitation, the Trust 's Declaration of Trust and By-Laws, or
otherwise and such other limitations as the Trustees may impose from time to
time in writing to the Adviser. In this regard, the Adviser shall regularly make
decisions as to what securities and other investments to purchase and sell on
behalf of each Fund, and shall effect the purchase and sale of such investments.
The Adviser shall also have discretion to vote
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any proxy solicited by a Fund's portfolio company, again subject to the ultimate
supervision of the Board. The investment policies and all other actions of the
Funds are and shall at all times be subject to the control and direction of the
Board.
(c) Brokerage. The Adviser shall place orders for the purchase and
sale of securities either directly with the issuer or with a broker or dealer
selected by the Adviser. In placing the Funds' securities trades, it is
recognized that the Adviser will give primary consideration to securing the most
favorable price and efficient execution, so that the Funds' total cost or
proceeds in each transaction will be the most favorable under all the
circumstances. Within the framework of this policy, the Adviser may consider the
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 Adviser may be a
party.
It is also understood that it is desirable for the Funds that the Adviser
have access to investment and market research and securities and economic
analyses provided by brokers and others. It is also understood that brokers
providing such services may execute brokerage transactions at a higher cost to
the Funds than might result from the allocation of brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the purchase and sale of securities for the Funds may be made with
brokers who provide such research and analysis, subject to review by the Board
from time to time with respect to the extent and continuation of this practice
to determine whether the Funds benefit, directly or indirectly, from such
practice. It is understood by both parties that the Adviser may select
broker-dealers for the execution of the Funds' portfolio transactions who
provide research and analysis as the Adviser may lawfully and appropriately use
in its investment management and advisory capacities, whether or not such
research and analysis may also be useful to the Adviser in connection with its
services to other clients.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Funds as well as of other clients, the Adviser,
to the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Funds and to such other clients.
The Adviser is authorized to direct portfolio transactions to a
broker-dealer which is an affiliated person of the Adviser or the Trust in
accordance with such standards and procedures as may be approved by the Board in
accordance with 1940 Act Rule 17e-1, or other rules promulgated by the SEC. Any
transaction placed with an affiliated broker-dealer must (i) be placed at the
best available execution, and (ii) may not be a principal transaction.
(d) Administrative Services. The Adviser shall oversee the
administration of the Funds' business and affairs although the provision of
administrative services, to the extent not covered by subparagraphs (a) or (b)
above, is not the obligation of the Adviser under this Agreement.
Notwithstanding any other provisions of this Agreement, the Adviser shall be
entitled to reimbursement from the Funds for all or a portion of the reasonable
costs and expenses, including salary, associated with the provision by the
Adviser of personnel to render administrative services to the Funds.
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3. Best Efforts and Judgment. The Adviser shall use its best efforts
and judgment in rendering the advice and services to the Funds as contemplated
by this Agreement.
4. Independent Contractor. The Adviser shall, for all purposes herein,
be deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Funds in any way, or in any way be deemed an agent for the Trust or
for the Funds. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Funds under the provisions of this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. Adviser's Personnel. The Adviser or its affiliates shall, at its own
expense, maintain such staff and employ or retain such personnel and consult
with such other persons as it shall from time to time determine to be necessary
to the performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board may desire and reasonably request.
6. Reports by Fund to Adviser. The Funds will from time to time furnish
to the Adviser detailed statements of its investments and assets, and
information as to its investment objective and needs, and will make available to
the Adviser such financial reports, proxy statements, legal and other
information relating to the Funds' investments as may be in its possession or
available to it, together with such other information as the Adviser may
reasonably request.
7. Expenses.
(a) With respect to the operation of the Funds, the Adviser is
responsible for (i) the compensation of any of the Trust's Trustees, officers,
and employees who are affiliates of the Adviser (but not the compensation of
employees performing services in connection with expenses which are the Funds'
responsibility under Subparagraph 7(b) below), and (ii) providing personnel,
office space and equipment reasonably necessary to fulfill the Adviser's duties
under this Agreement.
(b) The Funds are responsible for and has assumed the obligation
for payment of all of its expenses, other than as stated in Subparagraph 7(a)
above, including but not limited to: fees and expenses incurred in connection
with the issuance, registration and transfer of its shares; brokerage and
commission expenses; all expenses of transfer, receipt, safekeeping, servicing
and accounting for the cash, securities and other property of the Trust for the
benefit of the Funds including all fees and expenses of its custodian, fund
administrator, shareholder services agent and accounting services agent;
interest charges on any borrowings; costs and expenses of pricing and
calculating its daily net asset value and of maintaining its books of account
required under the 1940 Act; taxes, if any; expenditures in connection with
meetings of the Funds' shareholders and Board that are properly payable by the
Funds; salaries and expenses of officers and fees and expenses of members of the
Board or members of any advisory board or committee who are not members of,
affiliated with or interested persons of the Adviser;
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insurance premiums on property or personnel of each Funds which inure to its
benefit, including liability and fidelity bond insurance; the cost of preparing
and printing reports, proxy statements, prospectuses and statements of
additional information of the Funds or other communications for distribution to
existing shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of obtaining and maintaining any
required registration or notification for its shares for sale under federal and
applicable state and foreign securities laws; all expenses of maintaining and
servicing shareholder accounts, including all charges for transfer, shareholder
recordkeeping, dividend disbursing, redemption, and other agents for the benefit
of the Funds, if any; and all other charges and costs of its operation plus any
extraordinary and non-recurring expenses, except as herein otherwise prescribed.
(c) To the extent the Adviser incurs any costs by assuming
expenses which are an obligation of the Funds as set forth herein, the
respective Fund shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such
expenses. To the extent the services for which the Funds are obligated to pay
are performed by the Adviser, the Adviser shall be entitled to recover from the
respective Fund to the extent of the Adviser's actual costs for providing such
services.
8. Advisory Fee.
(a) Each Fund shall pay to the Adviser, and the Adviser agrees to
accept, as full compensation for all administrative and investment management
and advisory services furnished or provided to the respective Fund pursuant to
this Agreement, an advisory fee as set forth in the Fee Schedule attached hereto
as Appendix A, as may be amended in writing from time to time by the Trust and
the Adviser.
(b) The initial fees under this Agreement shall be payable on the
first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated before the end of any month, the fee to the Adviser shall be prorated
for the portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(c) Fee Reduction. The Adviser may, but is not required to,
voluntarily or contractually reduce all or a portion of its fees and/or make
payments for other expenses in order to decrease the operating expenses of a
respective Fund. Any such reduction or payment (a "subsidy" or collectively
"subsidies") shall be applicable only to such specific subsidy and shall not
constitute an agreement to continue such subsidy in the future. Any such subsidy
will be agreed to prior to accrual of the related expense or fee and will be
estimated daily and reconciled and paid on a monthly basis. The Adviser may seek
reimbursement of any subsidies made by the Adviser either voluntarily or
pursuant to contract. The reimbursement of any subsidy must be approved by the
Board and must be sought no later than the end of the third fiscal year
following the year to which the subsidy relates if the aggregate expenses for
that period do not exceed any more restrictive limitation to which the Adviser
has agreed (subsidies available for reimbursement to the Adviser are
collectively referred to as the "Recoupment Balance") and the Board approves the
reimbursement. For example, subsidized operating expenses relating to the period
July 1, 2004 through June 30, 2005 would no longer be eligible for reimbursement
after July 1, 2008. The Adviser agrees not to request or seek reimbursement of
subsidized operating expenses that are no longer eligible for reimbursement. The
Adviser may not request or receive
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reimbursement of the Recoupment Balance before payment of a Fund's operating
expenses for the current year and cannot cause that Fund to exceed any agreed
upon expense limitation for that year in making such reimbursement.
(d) The Adviser may agree not to require payment of any portion of
the compensation or reimbursement of expenses otherwise due to it pursuant to
this Agreement prior to the time such compensation or reimbursement has accrued
as a liability of the respective Fund. Any such agreement shall be applicable
only with respect to the specific items covered thereby and shall not constitute
an agreement not to require payment of any future compensation or reimbursement
due to the Adviser hereunder.
9. Conflicts with Trust's Governing Documents and Applicable Laws.
Nothing herein contained shall be deemed to require the Trust or the Funds to
take any action contrary to the Trust's Declaration of Trust, By-Laws, or any
applicable statute or regulation, or to relieve or deprive the Board of the
Trust of its responsibility for and control of the conduct of the affairs of the
Trust and Funds.
10. Adviser's Liabilities.
(a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the Trust
or the Funds or to any shareholder of the Funds for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Funds.
(b) The Funds shall indemnify and hold harmless the Adviser, its
managing member and the shareholders, trustees, officers and employees of each
of them (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or non-performance of any duties under this Agreement;
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement; and provided, further,
that this provision shall not be construed as a waiver or limitation of any
rights which the Trust or the Funds may have under applicable federal securities
laws.
(c) No provision of this Agreement shall be construed to protect
any trustee or officer of the Trust, or managing member, trustee or officer of
the Adviser, from liability in violation of Sections 17(h) and (i) of the 1940
Act.
11. Non-Exclusivity. The Trust's employment of the Adviser is not an
exclusive arrangement, and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein.
12. Term. This Agreement shall become effective as to the Trust on the
date that is the latest of (1) the execution of this Agreement, (2) the approval
of this Agreement for the Funds by the Board of the Trust (as required under
Section 15 of the 0000 Xxx) or (3) the approval of this Agreement by the
shareholders of the affected Funds. This Agreement shall remain in effect as to
each Fund for an initial period of two (2) years or such shorter initial period
as may be approved by the Board and shareholders of that Fund in the manner
required
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under Section 15 of the 1940 Act (including SEC interpretations thereof), unless
sooner terminated as hereinafter provided. This Agreement shall continue in
effect thereafter for additional periods not exceeding one (1) year so long as
such continuation is approved for each Fund at least annually by (i) the Board
or by the vote of a majority of the outstanding voting securities of the
respective Fund and (ii) the vote of a majority of the Trustees of the Trust who
are not parties to this Agreement nor interested persons thereof, cast in person
at a meeting called for the purpose of voting on such approval.
13. Termination. This Agreement may be terminated by the Trust on behalf
of the each Fund at any time without payment of any penalty, by the Board or by
the vote of a majority of the outstanding voting securities of the respective
Fund, upon thirty (30) days' written notice to the Adviser, and by the Adviser
upon sixty (60) days' written notice to the Trust.
14. Amendment. This Agreement may be modified by mutual consent subject
to the provisions of Section 15 of the 1940 Act, as modified by or interpreted
by any applicable order or orders of the SEC or any rules or regulations adopted
by, or interpretative releases of, the SEC. In addition to the requirements of
paragraph 12 and this paragraph 14, the terms of any continuance or modification
of this Agreement must have been approved by the vote of a majority of those
Trustees of the Trust who are not parties to the Agreement or interested persons
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.
15. Termination by Assignment. This Agreement shall terminate
automatically in the event of any assignment thereof, as defined in the 1940
Act.
16. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
17. Definitions. The terms "majority of the outstanding voting
securities, " "assignment," and "interested persons," when used herein, shall
have the respective meanings specified in the 1940 Act, as now in effect or as
hereafter amended, and subject to such orders as may be granted by the SEC.
18. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
19. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of New York without giving effect to the conflict of
laws principles thereof; provided that nothing herein shall be construed to
preempt, or to be inconsistent with, any federal law, regulation or rule,
including the 1940 Act and the Advisers Act and any rules and regulations
promulgated thereunder.
20. Nonpublic Personal Information. Notwithstanding any provision herein
to the contrary, the Adviser agrees on behalf of itself and its trustees,
officers, and employees (1) to treat confidentially and as proprietary
information of the Trust (a) all records and other information relative to each
Series of the Trust and their prior, present, or potential shareholders (and
clients of said shareholders) and (b) any Nonpublic Personal Information, as
defined under Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated
under the Xxxxx-Xxxxx-Xxxxxx Act (the "Privacy Act"), and (2) not to use such
records and information for any purpose other than the performance of its
responsibilities and duties hereunder, or as otherwise permitted by the privacy
policies adopted by the Trust, Regulation S-P or the Privacy Act, except after
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prior notification to and approval in writing by the Trust. Such written
approval shall not be unreasonably withheld by the Trust and may not be withheld
where the Adviser may be exposed to civil or criminal contempt proceedings for
failure to comply after being requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
22. Anti-Money Laundering Compliance. The Adviser acknowledges that, in
compliance with the Bank Secrecy Act, as amended, and implementing regulations
("BSA"), each Fund has adopted an Anti-Money Laundering Policy. The Adviser
agrees to comply with each Fund's Anti-Money Laundering Policy and the BSA, as
the same may apply to the Adviser, now and in the future. The Adviser further
agrees to provide to the Funds and/or the Trust such reports, certifications and
contractual assurances as may be requested by a Fund or the Trust. The Trust and
the Funds may disclose information respecting the Adviser to governmental and/or
regulatory or self-regulatory authorities to the extent required by applicable
law or regulation and may file reports with such authorities as may be required
by applicable law or regulation.
22. Certifications; Disclosure Controls and Procedures. The Adviser
acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act of 2002, and the
implementing regulations promulgated thereunder, each Fund is required to make
certain certifications and have adopted disclosure controls and procedures. To
the extent reasonably requested by the Trust or the Funds, the Adviser agrees to
use its best efforts to assist the Trust and the Funds in complying with the
Xxxxxxxx-Xxxxx Act and implementing each Fund's disclosure controls and
procedures. The Adviser agrees to inform the Trust and each Fund of any material
development related to the Trust or the Funds that the Adviser reasonably
believes is relevant to the certification obligations of a Fund under the
Xxxxxxxx-Xxxxx Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day and
year first above written.
BRYCE CAPITAL MANAGEMENT, LLC BRYCE CAPITAL FUNDS
By: ____________________________ By: _________________________________
Name: Xxxxxx X. Xxxxxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: President Title: Principal
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APPENDIX A
FUNDS AND FEE SCHEDULE
Bryce Capital Growth Fund 1.00% of the net assets
Bryce Capital Value Fund 1.00% of the net assets
BRYCE CAPITAL FUNDS BRYCE CAPITAL MANAGEMENT, LLC
By: ____________________________ By: _________________________________
Name: Xxxxxx X. Xxxxxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: President Title: Principal
Date: Date:
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