INVESTMENT ADVISORY AGREEMENT
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n/i Growth Fund
AGREEMENT made as of November 12, 2004 between THE RBB FUND,
INC., a Maryland corporation (herein called the "Fund"), and Numeric Investors
LLC (formerly Numeric Investors L.P.) (herein called the "Investment Adviser").
WHEREAS, the Fund is registered as an open-end, management
investment company under the Investment Company Act of 1940 (the "1940 Act") and
currently offers or proposes to offer shares representing interests in separate
investment portfolios; and
WHEREAS, the Fund desires to retain the Investment Adviser to
render certain investment advisory services to the Fund with respect to the
Fund's n/i Growth Fund (the "Portfolio"), and the Investment Adviser is willing
to so render such services.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, and intending to be legally bound hereby, it is
agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints the Investment
Adviser to act as investment adviser for the Portfolio for the period and on the
terms set forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Fund has furnished the
Investment Adviser with copies properly certified or authenticated of each of
the following:
(a) Resolutions of the Board of Directors of the Fund
authorizing the appointment of the Investment Adviser and the execution and
delivery of this Agreement;
(b) Each prospectus and statement of additional information
relating to any class of Shares representing interests in the Portfolio of the
Fund in effect under the 1933 Act (such prospectus and statement of additional
information, as presently in effect and as they shall from time to time be
amended and supplemented, are herein collectively called the "Prospectus" and
"Statement of Additional Information," respectively).
The Fund will promptly furnish the Investment Adviser from
time to time with copies, properly certified or authenticated, of all amendments
of or supplements to the foregoing, if any.
In addition to the foregoing, the Fund will also provide the
Investment Adviser with copies of the Fund's Charter and By-laws, and any
registration statement or service contracts related to the Portfolio, and will
promptly furnish the Investment Adviser with any amendments of or supplements to
such documents.
3. MANAGEMENT OF THE PORTFOLIO. Subject to the supervision of
the Board of Directors of the Fund, the Investment Adviser will provide for the
overall management of the Portfolio including (i) the provision of a continuous
investment program for the Portfolio, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Portfolio, (ii) the determination from time to time of what
securities and other investments will be purchased, retained, or sold by the
Fund for the Portfolio, and (iii) the placement from time to time of orders for
all purchases and sales made for the Portfolio. The Investment Adviser will
provide the services rendered by it hereunder in accordance with the Portfolio's
investment objectives, restrictions and policies as stated in the applicable
Prospectus and the Statement of Additional Information, provided that the
Investment Adviser has actual or constructive notice or knowledge of any changes
by the Board of Directors to such investment objectives, restrictions or
policies. The Investment Adviser further agrees that it will render to the
Fund's Board of Directors such periodic and special reports regarding the
performance of its duties under this Agreement as the Board may reasonably
request. The Investment Adviser agrees to provide to the Fund (or its agents and
service providers) prompt and accurate data with respect to the Portfolio's
transactions and, where not otherwise available, the daily valuation of
securities in the Portfolio.
4. BROKERAGE. Subject to the Investment Adviser's obligation
to obtain best price and execution, the Investment Adviser shall have full
discretion to select brokers or dealers to effect the purchase and sale of
securities. When the Investment Adviser places orders for the purchase or sale
of securities for the Portfolio, in selecting brokers or dealers to execute such
orders, the Investment Adviser is expressly authorized to consider the fact that
a broker or dealer has furnished statistical, research or other information or
services for the benefit of the Portfolio directly or indirectly. Without
limiting the generality of the foregoing, the Investment Adviser is authorized
to cause the Portfolio to pay brokerage commissions which may be in excess of
the lowest rates available to brokers who execute transactions for the Portfolio
or who otherwise provide brokerage and research services utilized by the
Investment Adviser, provided that the Investment Adviser determines in good
faith that the amount of each such commission paid to a broker is reasonable in
relation to the value of the brokerage and research services provided by such
broker viewed in terms of either the particular transaction to which the
commission relates or the Investment Adviser's overall responsibilities with
respect to accounts as to which the Investment Adviser exercises investment
discretion. The Investment Adviser may aggregate securities orders so long as
the Investment Adviser adheres to a policy of allocating investment
opportunities to the Portfolio over a period of time on a fair and equitable
basis relative to other clients. In no instance will the Portfolio's securities
be purchased from or sold to the Fund's principal underwriter, the Investment
Adviser, or any affiliated person thereof, except to the extent permitted by SEC
exemptive order or by applicable law.
The Investment Adviser shall report to the Board of Directors
of the Fund at least quarterly with respect to brokerage transactions that were
entered into by the Investment Adviser, pursuant to the foregoing paragraph, and
shall certify to the Board that the commissions paid were reasonable in terms
either of that transaction or the overall responsibilities of the Adviser to the
Fund and the Investment Adviser's other clients, that the total commissions paid
by the Fund were reasonable in relation to the benefits to the Fund over the
long term, and that
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such commissions were paid in compliance with Section 28(e) of the Securities
Exchange Act of 1934.
5. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment
Adviser further agrees that it will comply with all applicable rules and
regulations of all federal regulatory agencies having jurisdiction over the
Investment Adviser in the performance of its duties hereunder. The Investment
Adviser will treat confidentially and as proprietary information of the Fund all
records and other information relating to the Fund and prior, present or
potential shareholders (except clients of the Investment Adviser and its
affiliates), 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 Fund, which approval shall
not be unreasonably withheld and may not be withheld 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, or when so requested by the Fund.
6. SERVICES NOT EXCLUSIVE. The Investment Adviser and its
officers may act and continue to act as investment managers for others, and
nothing in this Agreement shall in any way be deemed to restrict the right of
the Investment Adviser to perform investment management or other services for
any other person or entity, and the performance of such services for others
shall not be deemed to violate or give rise to any duty or obligation to the
Portfolio or the Fund.
Nothing in this Agreement shall limit or restrict the
Investment Adviser or any of its partners, officers, affiliates or employees
from buying, selling or trading in any securities for its or their own account.
The Fund acknowledges that the Investment Adviser and its partners, officers,
affiliates, employees and other clients may, at any time, have, acquire,
increase, decrease, or dispose of positions in investments which are at the same
time being acquired or disposed of for the Portfolio. The Investment Adviser
shall have no obligation to acquire for the Portfolio a position in any
investment which the Investment Adviser, its partners, officers, affiliates or
employees may acquire for its or their own accounts or for the account of
another client, so long as it continues to be the policy and practice of the
Investment Adviser not to favor or disfavor consistently or consciously any
client or class of clients in the allocation of investment opportunities so
that, to the extent practical, such opportunities will be allocated among
clients over a period of time on a fair and equitable basis.
The Investment Adviser agrees that this Paragraph 6 does not
constitute a waiver by the Fund of the obligations imposed upon the Investment
Adviser to comply with Sections 17(d) and 17(j) of the 1940 Act, and the rules
thereunder, nor constitute a waiver by the Fund of the obligations imposed upon
the Investment Adviser under Section 206 of the Investment Advisers Act of 1940
and the rules thereunder. Further, the Investment Adviser agrees that this
Paragraph 6 does not constitute a waiver by the Fund of the fiduciary obligation
of the Investment Adviser arising under federal or state law, including Section
36 of the 1940 Act. The Investment Adviser agrees that this Paragraph 6 shall be
interpreted consistent with the provisions of Section 17(i) of the 1940 Act.
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7. BOOKS AND RECORDS. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all
records which it maintains for the Portfolio are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Investment Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
8. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement. The Portfolio shall bear all of its own expenses not
specifically assumed by the Investment Adviser. General expenses of the Fund not
readily identifiable as belonging to a portfolio of the Fund shall be allocated
among all investment portfolios by or under the direction of the Fund's Board of
Directors in such manner as the Board determines to be fair and equitable.
Expenses borne by the Portfolio shall include, but are not limited to, the
following (or the portfolio's share of the following): (a) the cost (including
brokerage commissions) of securities purchased or sold by the Portfolio and any
losses incurred in connection therewith; (b) fees payable to and expenses
incurred on behalf of the Portfolio by the Investment Adviser; (c) filing fees
and expenses relating to the registration and qualification of the Fund and the
Portfolio's shares under Federal and/or state securities laws and maintaining
such registrations and qualifications; (d) fees and salaries payable to the
Fund's directors and officers; (e) taxes (including any income or franchise
taxes) and governmental fees; (f) costs of any liability and other insurance or
fidelity bonds; (g) any costs, expenses or losses arising out of a liability or
claim for damages or other relief asserted against the Fund or the Portfolio for
violation of any law; (h) legal, accounting and auditing expenses, including
legal fees of special counsel for the independent directors; (i) charges of
custodians and other agents; (j) expenses of setting in type and printing
prospectuses, statements of additional information and supplements thereto for
existing shareholders, reports, statements, and confirmations to shareholders
and proxy material that are not attributable to a class; (k) costs of mailing
prospectuses, statements of additional information and supplements thereto to
existing shareholders, as well as reports to shareholders and proxy material
that are not attributable to a class; (l) any extraordinary expenses; (m) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment company organizations; (n) costs of mailing and tabulating proxies
and costs of shareholders' and directors' meetings; (o) costs of independent
pricing services to value a portfolio's securities; and (p) the costs of
investment company literature and other publications provided by the Fund to its
directors and officers. Distribution expenses, transfer agency expenses,
expenses of preparation, printing and mailing, prospectuses, statements of
additional information, proxy statements and reports to shareholders, and
organizational expenses and registration fees, identified as belonging to a
particular class of the Fund are allocated to such class.
If the expenses borne by the Portfolio in any fiscal year
exceed the most restrictive applicable expense limitations imposed by the
securities regulations of any state in which the Shares of the Portfolio are
registered or qualified for sale to the public, the Investment Adviser shall
reimburse the Portfolio for any excess up to the amount of the fees payable by
the Portfolio to it during such fiscal year pursuant to Paragraph 9 hereof in
the same proportion that its fees bear to the total fees paid by the Fund for
investment advisory services in respect of the Portfolio; provided, however,
that notwithstanding the foregoing, the Investment Adviser shall
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reimburse the Portfolio for such excess expenses regardless of the amount of
such fees payable to it during such fiscal year to the extent that the
securities regulations of any state in which the Shares are registered or
qualified for sale so require.
9. VOTING. The Investment Adviser shall have the authority to
vote as agent for the Fund, either in person or by proxy, tender and take all
actions incident to the ownership of all securities in which the Portfolio's
assets may be invested from time to time, subject to such policies and
procedures as the Board of Directors of the Fund may adopt from time to time.
10. RESERVATION OF NAME. The Investment Adviser shall at all
times have all rights in and to the Portfolio's name and all investment models
used by or on behalf of the Portfolio. The Investment Adviser may use the
Portfolio's name or any portion thereof in connection with any other mutual fund
or business activity without the consent of any shareholder and the Fund shall
execute and deliver any and all documents required to indicate the consent of
the Fund to such use.
No public reference to, or description of, the Investment
Adviser or its methodology or work shall be made by the Fund, whether in the
Prospectus, Statement of Additional Information or otherwise, without the prior
written consent of the Investment Adviser, which consent shall not be
unreasonably withheld. In each case, the Fund shall provide the Investment
Adviser a reasonable opportunity to review any such reference or description
before being asked for such consent.
11. DISCONTINUATION OF PUBLIC OFFERING. Subject to the prior
approval of the Fund's Board of Directors, the Investment Adviser may instruct
the Fund's distributor to cease sales of shares of the Portfolio to new
investors due to concerns that an increase in the size of the Portfolio may
adversely affect the implementation of the Portfolio's investment strategy.
Subject to prior Board approval, the Investment Adviser may subsequently
instruct the Fund's distributor to recommence the sale of shares of the
Portfolio.
12. COMPENSATION.
(a) The Portfolio will pay the Investment Adviser from the
assets of the Portfolio and the Investment Adviser will accept as full
compensation therefor fees calculated as follows:
(i) There shall be a fee, computed daily and payable
monthly, at the annual rate of 0.85% of the Portfolio's average daily net assets
(the "Base Fee"), provided, however, that if subparagraph (ii) below is
applicable, the fee shall be calculated pursuant to subparagraph (iii) below.
(ii) After each calendar month, it shall be determined
whether the investment performance of the Portfolio (calculated in accordance
with subparagraph (v) below) has exceeded or lagged the Target (as hereinafter
defined) within the parameters of one of subparagraphs (A) through (E) during
the immediately preceding twelve months:
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(A) the investment performance of the Portfolio
lagged the Target;
(B) the investment performance of the Portfolio
exceeded the Target by at least 0 but less than 100 basis points;
(C) the investment performance of the Portfolio
exceeded the Target by at least 100 but less than 200 basis points;
(D) the investment performance of the Portfolio
exceeded the Target by at least 200 but less than 300 basis points;
(E) the investment performance of the Portfolio
exceeded the Target by at least 300 but less than 400 basis points;
(F) the investment performance of the Portfolio
exceeded the Target by at least 400 but less than 500 basis points;
(G) the investment performance of the Portfolio
exceeded the Target by at least 500 but less than 600 basis points;
(H) the investment performance of the Portfolio
exceeded the Target by at least 600 but less than 700 basis points;
(I) the investment performance of the Portfolio
exceeded the Target by at least 700 but less than 800 basis points;
(J) the investment performance of the Portfolio
exceeded the Target by at least 800 but less than 900 basis points; or
(K) the investment performance of the Portfolio
exceeded the Target by 900 basis points or more;
(iii) If subparagraph (ii) applies, the rate of the
Base Fee for such calendar month should be adjusted as follows:
(A) If subparagraph (ii)(A) applies, the annual
rate of the Base Fee shall be 0.35%;
(B) If subparagraph (ii)(B) applies, the annual
rate of the Base Fee shall be 0.45%;
(C) If subparagraph (ii)(C) applies, the annual
rate of the Base Fee shall be 0.55%;
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(D) If subparagraph (ii)(D) applies, the annual
rate of the Base Fee shall be 0.65%;
(E) If subparagraph (ii)(E) applies, the annual
rate of the Base Fee shall be 0.75%;
(F) If subparagraph (ii)(F) applies, the annual
rate of the Base Fee shall be 0.85%;
(G) If subparagraph (ii)(G) applies, the annual
rate of the Base Fee shall be 0.95%;
(H) If subparagraph (ii)(H) applies, the annual
rate of the Base Fee shall be 1.05%;
(I) If subparagraph (ii)(I) applies, the annual
rate of the Base Fee shall be 1.15%;
(J) If subparagraph (ii)(J) applies, the annual
rate of the Base Fee shall be 1.25%; or
(K) If subparagraph (ii)(K) applies, the annual
rate of the Base Fee shall be 1.35%.
(iv) The "Target" means the investment record of the
Xxxxxxx 2500 Growth Index.
(v) The investment record of the Xxxxxxx 2500 Growth
Index shall be calculated in accordance with Rule 205-1(b) under the Investment
Advisers Act of 1940, as amended (the "Advisers Act") as such Rule shall be
amended from time to time or any successor regulation. The investment
performance of the Fund shall be calculated in accordance with Rule 205-1(a)
under the Advisers Act as such Rule shall be amended from time to time or any
successor regulation.
(b) The fee attributable to the Fund shall be satisfied
only against assets of the Portfolio and not against the assets of any other
investment portfolio of the Fund.
13. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER. The
Investment Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, 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
Investment Adviser in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement ("disabling conduct").
The Portfolio will indemnify the Investment Adviser against and hold it harmless
from any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand,
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action or suit not resulting from disabling conduct by the Investment Adviser.
Indemnification shall be made only following: (i) a final decision on the merits
by a court or other body before whom the proceeding was brought that the
Investment Adviser was not liable by reason of disabling conduct or (ii) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the Investment Adviser was not liable by reason of disabling
conduct by (a) the vote of a majority of a quorum of directors of the Portfolio
who are neither "interested persons" of the Portfolio nor parties to the
proceeding ("disinterested non-party directors") or (b) an independent legal
counsel in a written opinion. The Investment Adviser shall be entitled to
advances from the Portfolio for payment of the reasonable expenses incurred by
it in connection with the matter as to which it is seeking indemnification in
the manner and to the fullest extent permissible under the Maryland General
Corporation Law. The Investment Adviser shall provide to the Portfolio a written
affirmation of its good faith belief that the standard of conduct necessary for
indemnification by the Portfolio has been met and a written undertaking to repay
any such advance if it should ultimately be determined that the standard of
conduct has not been met. In addition, at least one of the following additional
conditions shall be met: (a) the Investment Adviser shall provide a security in
form and amount acceptable to the Portfolio for its undertaking; (b) the
Portfolio is insured against losses arising by reason of the advance; or (c) a
majority of a quorum of disinterested non-party directors, or independent legal
counsel, in a written opinion, shall have determined, based upon a review of
facts readily available to the Portfolio at the time the advance is proposed to
be made, that there is reason to believe that the Investment Adviser will
ultimately be found to be entitled to indemnification. Any amounts payable by
the Portfolio under this Section shall be satisfied only against the assets of
the Portfolio and not against the assets of any other investment portfolio of
the Fund.
14. DURATION AND TERMINATION. This Agreement shall become
effective with respect to the Portfolio upon approval of this Agreement by vote
of a majority of the outstanding voting securities of the Portfolio and unless
sooner terminated as provided herein, shall continue with respect to the
Portfolio until August 16, 2005. Thereafter, if not terminated, this Agreement
shall continue with respect to the Portfolio for successive annual periods
ending on August 16, PROVIDED such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Board of
Directors of the Fund who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Board of Directors of the Fund or by
vote of a majority of the outstanding voting securities of the Portfolio;
PROVIDED, HOWEVER, that this Agreement may be terminated with respect to the
Portfolio by the Fund at any time, without the payment of any penalty, by the
Board of Directors of the Fund or by vote of a majority of the outstanding
voting securities of the Portfolio, on 60 days' prior written notice to the
Investment Adviser, or by the Investment Adviser at any time, without payment of
any penalty, on 60 days' prior written notice to the Fund. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act).
15. AMENDMENT OF THIS AGREEMENT. No provision of this
Agreement may be changed, discharged or terminated orally, except by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought, and no amendment of this Agreement
affecting the Portfolio shall be effective until approved by vote of the holders
of a majority of the outstanding voting securities of the Portfolio.
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16. 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 Delaware law.
17. CHANGE IN MEMBERSHIP. The Investment Adviser shall notify
the Fund of any change in its membership within a reasonable time after such
change.
18. COUNTERPARTS. This agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the state of Delaware
without giving effect to the conflicts of laws principles thereof.
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.
THE RBB FUND, INC.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
President
NUMERIC INVESTORS LLC
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer
Numeric Investors LLC
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