Exhibit (d)(4)
KELMOORE STRATEGIC TRUST
INVESTMENT ADVISORY AGREEMENT
MAY 17, 2006
This Investment Advisory Agreement is dated as of the l7th of May, 2006, by and
between Kelmoore Strategic Trust, a Delaware statutory trust (the "Trust"), on
behalf of each series of the Trust listed in Schedule I attached hereto, as such
Schedule may be amended from time to time (individually, a "Fund" and
collectively, the "Funds") and Kelmoore Investment Company, Inc., a California
corporation (the "Adviser" or, at times, "Kelmoore").
WHEREAS, the Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Kelmoore is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and as a broker-dealer under the Securities
Exchange Act of 1934, as amended; and
WHEREAS, the Trust desires to retain the Adviser to render investment advisory
and other services to the Funds pursuant to the terms and provisions of this
Agreement, and the Adviser is interested in furnishing said services.
NOW THEREFORE, in consideration of the mutual agreements and covenants contained
in this Agreement, the parties hereto agree as follows:
SECTION 1. APPOINTMENT.
The Trust hereby appoints the Adviser to act as investment adviser to the Funds
listed on Schedule I hereto for the period and on the terms and subject to the
conditions set forth in this Agreement. The Adviser accepts such appointment
and agrees to furnish the services herein set forth for the compensation herein
provided, Additional series of the Trust may from time to time be added to
those covered by this Agreement by the parties' execution of a new Schedule I
that shall become effective as of the date stated on the Schedule and shall
supersede any Schedule I having an earlier date.
SECTION 2. INVESTMENT ADVISORY AND OTHER SERVICES.
Subject to the supervision of the Trust's Board of Trustees (the "Board"), the
Adviser shall provide a continuous investment program for each of the Funds,
including investment, research and management with respect to all securities and
investments and cash equivalents in the Funds. The Adviser shall determine from
time to time what securities and other investments will be purchased, retained
or sold by the Trust
with respect to the Funds. The Adviser shall provide the services to each Fund
under this Agreement in accordance with its respective investment objective,
policies, and restrictions as stated in such Fund's most current Prospectus and
Statement of Additional Information, including all amendments or supplements
thereto, and in such resolutions of the Board as may be adopted from time to
time. The Adviser further agrees that it:
(a) will use the same skill and care in providing such services as it uses in
providing services to any fiduciary accounts for which it has investment
responsibilities;
(b) will conform with all applicable rules and regulations of the U.S.
Securities and Exchange Commission (the "Commission") and, in addition, will
conduct its activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment advisory
activities of the Adviser;
(c) may place orders pursuant to its investment determinations for the Funds
either directly with an issuer or with any broker-dealer, including Kelmoore, as
broker. In placing orders with broker-dealers, the Adviser will seek to obtain
best execution and is hereby directed to seek prompt execution of orders in an
effective manner at the most favorable price or overall proceeds. Consistent
with this obligation, the Adviser may, in its discretion, purchase and sell
portfolio securities to and from broker-dealers who provide the Adviser with
brokerage and research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934) and any interpretations thereto. Subject to the
Board's review from time to time with respect to the extent and continuation of
this policy, the Adviser is authorized to pay a broker-dealer who provides such
brokerage and research services in connection with effecting a securities
transaction for any of the Funds a commission that may be in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Adviser with
respect to the accounts as to which it exercises investment discretion. On
occasions when the Adviser deems the purchase or sale of a security to be in the
best interest of one or more of the Funds as well as of other clients, the
Adviser, to the extent permitted by applicable laws and regulations, and
consistent with its duty to seek best execution, 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 In
placing orders with Kelmoore as broker for the Trust, Kelmoore will comply with
the procedures adopted by the Trust's Board pursuant to Rule 17e-1 under the
1940 Act.
(d) will maintain all books and records with respect to the securities
transactions of the Funds and will furnish the Trust's Board such periodic and
special reports with respect to each Fund's investment activities as the Board
may reasonably request; and
(e) will advise and assist the officers of the Trust in taking such actions as
may be necessary or appropriate to carry out the decisions of the Board and of
the appropriate committees of the Board regarding the conduct of the business of
the Funds.
SECTION 3. EXPENSES.
During the term of this Agreement, the Adviser will pay all expenses incurred by
it in connection with its activities, duties and obligations under this
Agreement, other than the costs of securities (including brokerage fees, if
any) purchased for the Funds. The Adviser will also furnish the Funds with
office space and equipment necessary for the conduct of the Funds' business.
SECTION 4. COMPENSATION.
For the services provided and the expenses assumed pursuant to this Agreement,
each of the Funds will pay the Adviser and the Adviser will accept as full
compensation therefor the annual fee set forth on Schedule I hereto. The
obligations of the Funds to pay the above described fee to the Adviser will
begin as of the respective dates of the initial public sale of shares in the
Funds, including any shares sold or exchanged in connection with a merger,
consolidation or reorganization involving one or more of the Funds. Such fee
shall be paid monthly based upon each respective Fund's average daily net assets
calculated in the manner provided in the Prospectus and Statement of Additional
Information then in effect.
The fee shall be accrued daily by each Fund and paid to the Adviser within five
(5) business days after the end of each calendar month, 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 and shall be
payable within ten (10) days after the date of termination,
The Adviser may voluntarily waive fees or reimburse expenses to a Fund at any
time. Any amounts waived or reimbursed by the Adviser are subject to
reimbursement by the Fund within the following three years, to the extent such
reimbursement by the Fund would not cause the Fund to exceed any current expense
limitation.
SECTION 5. LIMITATION OF LIABILITY.
The Adviser shall not be liable for any error of judgment or mistake of fact or
law or for any loss suffered by the Funds in connection with the performance of
this Agreement, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Adviser in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
SECTION 6. DURATION AND TERMINATION.
This Agreement shall become effective at the time the Trust's initial
Registration Statement under the Securities Act of 1933 with respect to the
shares of a Fund listed on Schedule I shall remain in effect for a period of two
(2) years, 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 vote of the Board or the vote of a majority of the outstanding voting
securities of such 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.
Notwithstanding the foregoing, this Agreement may be terminated as to a
particular Fund at any time on sixty days' written notice, without the payment
of any penalty, by the Trust (by vote of the Board or by vote of a majority of
the outstanding voting securities of such Fund) or by the Adviser, This
Agreement will automatically terminate in the event of its assignment. Any
notice under this Agreement shall be given in writing, addressed and delivered
or mailed to the other party at the principal office of such party.
As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meanings
as ascribed to such terms in the 1940 Act.
SECTION 7. NAME.
The word "Kelmoore" in the name of the Trust or the Funds is understood to be
used by the Trust with the Adviser's consent, and the Trust is hereby granted a
non-exclusive license to use the name "Kelmoore Strategic Trust" and to use the
word "Kelmoore" in any Fund's name provided that the Trust and the Funds may use
such name only so long as (i) the Adviser shall continue to be retained by the
Trust and the Funds as their adviser pursuant to an investment advisory
agreement between the Trust and the Adviser, as from time to time amended or
supplemented, or (ii) the Adviser shall specifically consent in writing to such
continued use. Any such use by the Trust and the Funds shall in no way prevent
the Adviser or any of its successors or
assigns from using or permitting the use of the name "Kelmoore" alone or with
any other word or business whether or not the same directly or indirectly
competes or conflicts with the Trust or its business in any manner. To the
extent permitted by the 1940 Act and the rules and regulations thereunder, and
Investment Company Act Release No. 5510, in the event that the Adviser shall
cease to be the adviser of the Trust and the Funds, the Trust, upon the
Adviser's written request, shall take such further action as may be necessary to
delete from its name and the name of the Funds the terms "Kelmoore" and
"Kelmoore Strategy(R)" and thereafter (i) cease to use the name "Kelmoore
Strategic Trust" and omit the terms "Kelmoore" and "Kelmoore Strategy(R) from
the Funds' names or any name deceptively similar thereto or to "Kelmoore
Investment Company" in any way whatsoever, and (ii) for such period and in such
manner as may reasonably be required by you, on all letterheads and other
material designed to be read or used by salesmen, underwriters or investors,
state in a prominent position and prominent type that Kelmoore Investment
Company, Inc. ceased to be the adviser of the Trust and the Funds.
SECTION 8. ADVISER'S REPRESENTATIONS.
The Adviser hereby represents and warrants that it is willing, and possesses all
requisite legal authority, to provide the services contemplated by this
Agreement without violation of applicable laws and regulations.
SECTION 9. AMENDMENT OF THIS AGREEMENT.
No provision of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought.
SECTION 10. MISCELLANEOUS.
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. 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. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by the laws of the State of California.
All persons contracting with or having any claim against the Trust or a
particular Fund shall look only to the assets of all Funds or such particular
Fund for payment under such contract or claim; and neither the Board nor, when
acting in such capacity, any of the Trust's shareholders, officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
KELMOORE STRATEGIC TRUST KELMOORE INVESTMENT COMPANY, INC.
By: /s/ Xxxxxxx Kelmon By: /s/ Xxxxx X. Kelmon
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Name: Xxxxxxx Kelmon Name: Xxxxx X. Kelmon
Title: President Title: CEO
SCHEDULE I
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MAY 17, 2006
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NAME OF FUND DATE ANNUAL FEE
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Kelmoore Strategy(R) Capitol Fund May 17, 2006 1.00%
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KELMOORE STRATEGIC TRUST KELMOORE INVESTMENT COMPANY, INC.
By: /s/ Xxxxxxx Kelmon By: /s/ Xxxxx X. Kelmon
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Name: Xxxxxxx Kelmon Name: Xxxxx X. Kelmon
Title: President Title: CEO
