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INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 23rd day of July, 1999, by and between
X.X. Xxxxxx Investment Management Inc., a Delaware corporation
(the "Adviser"), and Endeavor Management Co., a California
corporation (the "Manager").
WHEREAS, the Manager has been organized to serve as investment manager
and administrator of Endeavor Series Trust (the "Trust"), a Massachusetts
business trust which has filed a registration statement under the Investment
Company Act of 1940, as amended (the "1940 Act") and the Securities Act of 1933
(the "Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Endeavor Enhanced Index Portfolio (the
"Portfolio"); and
WHEREAS, the Manager desires to avail itself of the services of an
investment adviser to assist the Manager in performing services for the
Portfolio; and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended, and is engaged in the business of rendering investment
advisory services to investment companies and desires to provide such services
to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Portfolio, subject
to the control and direction of the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
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 for or represent the Manager, the Portfolio
or the Trust in any way.
2. Obligations of and Services to be Provided by the
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Adviser. The Adviser undertakes to provide the following
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services and to assume the following obligations:
a. The Adviser shall manage the investment and reinvestment of
the portfolio assets of the Portfolio, all without prior consultation with the
Manager, subject to and in accordance with the respective investment objectives
and policies of the Portfolio set forth in the Trust's Registration Statement,
as such Registration Statement may be amended from time to time, and any written
instructions which the Manager or the Trust's Board of Trustees may issue from
time-to-time in
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accordance therewith. The Manager has delivered copies of the Trust's
Declaration of Trust, as amended to date (the "Charter Document") to the
Adviser. The Manager agrees, on an ongoing basis, to provide the Adviser as
promptly as practicable copies of all amendments to the Registration Statement
and Charter Document and supplements to the Prospectus. In pursuance of the
foregoing, the Adviser shall make all determinations with respect to the
purchase and sale of portfolio securities and shall take such action necessary
to implement the same. The Adviser shall render regular reports to the Trust's
Board of Trustees and the Manager concerning the investment activities of the
Portfolio. The Manager agrees to cause to be delivered to a person designated in
writing for such purpose by the Adviser within three days after the end of each
month a written report dated the date of its delivery (the "Report") with
respect to the Portfolio's compliance for its current fiscal year with the
short-three test set forth in Section 851(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code")(the "short-three test"). The Report shall include
in chart form the Portfolio's gross income (within the meaning of Section 851 of
the Code) from the beginning of the current fiscal year to the date of the
Report and its cumulative income and gains described in Section 851(b(3) of the
Code for such period. If the Report is not timely delivered, the Adviser shall
be permitted to rely on the most recent Report delivered to it. The Manager
agrees that its Adviser may rely on the Report without independent verification
of its accuracy.
b. To the extent provided in the Trust's Registration
Statement, as such Registration Statement may be amended from time to time, the
Adviser shall, in the name of the Portfolio, place orders for the execution of
portfolio transactions with or through such brokers, dealers or banks as it may
select including affiliates of the Adviser and, complying with Section 28(e) of
the Securities Exchange Act of 1934, may pay a commission on transactions in
excess of the amount of commission another broker-dealer would have charged.
c. In connection with the placement of orders for the
execution of the portfolio transactions of the Portfolio, the Adviser shall
create and maintain all necessary records pertaining to the purchase and sale of
securities by the Adviser on behalf of the Portfolio in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the Securities and
Exchange Commission ("SEC"), the Trust, the Manager or any person retained by
the Trust. Where applicable, such records shall be maintained by the Adviser for
the periods and in the places required by Rule 31a-2 under the 1940 Act.
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d. The Adviser shall bear its expenses of providing services
pursuant to this Agreement. The Adviser will not bear any other expenses in the
operation of the Portfolio.
3. Compensation of the Adviser. In consideration of services rendered
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Portfolio's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Trust's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in other activities, so long as the services
rendered hereunder are not impaired.
5. Use of Names. The Manager shall not use the name of the Adviser or
its parent, X.X. Xxxxxx & Co., Incorporated, in any prospectus, sales literature
or other material relating to the Trust in any manner not approved prior thereto
by the Adviser; provided, however, that the Adviser shall approve all uses of
its name which merely refer in accurate terms to its appointment hereunder with
no more prominence than other relationships described in the materials and all
uses of its name and that of its parent which are required by the SEC or a state
securities commission. The Adviser shall not use the name of the Trust or the
Manager in any material relating to the Adviser in any manner not approved prior
thereto by the Manager; provided, however, that the Manager shall approve all
uses of its or the Trust's name which merely refer in accurate terms to the
appointment of the Adviser hereunder or which are required by the SEC or a state
securities commission; and, provided further, that in no event shall such
approval be unreasonably withheld.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "X.X. Xxxxxx" as part of their name, and that the Adviser or
its affiliates may enter into investment advisory, administration or other
agreements with such other entities.
6. Liability of the Adviser; Indemnification of the Adviser.
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Absent willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the part
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of the Adviser (each such act or omission shall be referred to as "Disqualifying
Conduct"), the Adviser shall not be liable 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. Nothing herein
shall constitute a waiver of any rights or remedies which the Trust may have
under any federal or state securities laws.
The Manager agrees to indemnify and hold harmless the Adviser from
and against any and all claims, losses, liabilities or damages (including
reasonable attorneys' fees and other related expenses), howsoever arising, from
or in connection with this Agreement or the performance by the Adviser of its
duties hereunder; provided, however, that nothing contained herein shall require
that the Adviser be indemnified for Disqualifying Conduct.
7. Limitation of Trust's Liability. The Adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Adviser agrees that any
of the Trust's obligations shall be limited to the assets of the Portfolio and
that the Adviser shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Portfolio is specifically approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Portfolio or by vote of a majority of the Trust's Board of Trustees; and further
provided that such continuance is also approved annually by the vote of a
majority of the Trustees 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. This Agreement may be terminated as to the Portfolio at
any time, without payment of any penalty, by the Trust's Board of Trustees, by
the Manager, or by a vote of the majority of the outstanding voting securities
of the Portfolio upon 60 days' prior written notice to the Adviser, or by the
Adviser upon 90 days' prior written notice to the Manager, or upon such shorter
notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Management Agreement dated
July 22, 1999 between the Manager and the Trust, provided that the Adviser
receives prior written notice of the termination of the Management Agreement.
This Agreement shall terminate automatically and immediately in the event of its
assignment. The terms "assignment" and "vote of a majority of
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the outstanding voting securities" shall have the meaning set forth for such
terms in the 1940 Act. This Agreement may be amended at any time by the Adviser
and the Manager, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of a majority of the
Portfolio's outstanding voting securities.
9. Confidential Relationship. Any information and advice
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furnished by either party to this Agreement to the other shall be
treated as confidential and shall not be disclosed to third
parties except as required by law.
10. Severability. If any provision of this Agreement shall
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be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected
thereby.
11. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ENDEAVOR MANAGEMENT CO.
BY:
/s/ Xxxxxxx X. XxXxxxxxxx
Authorized Officer
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
BY:
/s/ Xxxxxx Bertuii
Authorized Officer
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SCHEDULE A
Endeavor Enhanced Index
Portfolio .35% of average daily net
assets
