INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the 23rd day of May, 1995, by and between THE
TUSCARORA INVESTMENT TRUST, a Massachusetts business trust, on behalf of its XXX
XXXXX FUND series (the "Fund"), and XXX XXXXX CAPITAL MANAGEMENT, INC. (the
"Advisor"), a North Carolina corporation registered as an investment advisor
under the Investment Advisers Act of 1940, as amended.
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment advisory
and administrative services to the Fund, and the Advisor is willing to so
furnish such services;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints the Advisor to act
as investment advisor to the Fund for the period and on the
terms set forth in this Agreement. The Advisor accepts such
appointment and agrees to furnish the services herein set
forth, for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Trust has furnished the Advisor
with copies properly certified or authenticated of each of
the following:
(a) The Trust's Declaration of Trust, as filed with The
Commonwealth of Massachusetts (such Declaration, as presently
in effect and as it shall from time to time be amended, is
herein called the "Declaration");
(b) The Trust's Bylaws (such Bylaws, as presently in effect
and as they shall from time to time be amended, are
herein called the "Bylaws");
(c) Resolutions of the Trust's Board of Trustees
authorizing the appointment of the Advisor and
approving this Agreement;
(d) The Trust's Registration Statement on Form N-1A under the 1940
Act and under the Securities Act of 1933, as amended, relating
to shares of beneficial interest of the Fund (herein called
the "Shares") as filed with the Securities and Exchange
Commission ("SEC") and all amendments thereto; and
(e) The Fund's Prospectus and Statement of Additional Information
(such Prospectus and Statement of Additional Information, as
presently in effect and all amendments and supplements thereto
are herein called the "Prospectus").
The Trust will furnish the Advisor from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the foregoing
at the same time as such documents are required to be filed with the SEC.
3. MANAGEMENT. Subject to the supervision of the Trust's Board
of Trustees, the Advisor will provide a continuous
investment program for the Fund, including investment
research and management with respect to all securities,
investments, cash and cash equivalents of the Fund. The
Advisor will determine from time to time what securities and
other investments will be purchased, retained or sold by the
Fund. The Advisor will provide the services under this
Agreement in accordance with the Fund's investment
objectives, policies and restrictions as stated in its
Prospectus. The Advisor further agrees that it:
(a) Will conform its activities to all applicable rules and
regulations of the SEC and will, in addition, conduct its
activities under this Agreement in accordance with regulations
of any other federal and state agencies which may now or in
the future have jurisdiction over its activities under this
Agreement;
(b) Will place orders pursuant to its investment
determinations for the Fund either directly with the
issuer or with any broker or dealer. In placing orders
with brokers or dealers, the Advisor will attempt to
obtain the best net price and the most favorable
execution of its orders. Consistent with this
obligation, the Advisor may consider the financial
responsibility, research and investment information and
other services provided by brokers. It is understood
that research and investment information provided by
such brokers may be useful to the Advisor in connection
with its services to other clients;
(c) Will provide certain executive personnel for the Trust as may
be mutually agreed upon from time to time with the Board of
Trustees, the salaries and expenses of such personnel to be
borne by the Advisor unless otherwise mutually agreed upon;
and
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(d) Will provide, at its own cost, all office space, facilities
and equipment necessary for the conduct of its advisory
activities on behalf of the Fund.
4. SERVICES NOT EXCLUSIVE. The advisory services furnished by
the Advisor hereunder are not to be deemed exclusive, and
the Advisor shall be free to furnish similar services to
others so long as its services under this Agreement are not
impaired thereby provided, however, that without the written
consent of the Trustees, the Advisor will not serve as
investment advisor to any other investment company having a
similar investment objective to that of the Fund.
5. BOOKS AND RECORDS. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Advisor hereby agrees
that all records which it maintains for the benefit of the
Fund are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the
Trust's request. The Advisor further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by it pursuant to Rule
31a-1 under the 1940 Act that are not maintained by others
on behalf of the Fund.
6. EXPENSES. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory
services pertaining to the Fund. In the event that there is no
distribution plan under Rule 12b-1 of the 1940 Act in effect for the
Fund, the Advisor will pay the entire cost of the promotion and sale of
Fund shares.
Notwithstanding the foregoing, the Fund shall pay the expenses and
costs of the following:
(a) Taxes, interest charges and extraordinary expenses;
(b) Brokerage fees and commissions with regard to portfolio
transactions of the Fund;
(c) Fees and expenses of the custodian of the Fund's
portfolio securities;
(d) Fees and expenses of the Fund's administrator, transfer and
dividend disbursing agent and the Fund's fund accounting agent
or, if the Trust performs any such services without an agent,
the costs of the same;
(e) Auditing and legal expenses;
(f) Cost of maintenance of the Trust's existence as a legal
entity;
(g) Compensation of Trustees who are not interested persons
of the Advisor as that term is defined by law;
(h) Costs of Trustees' and shareholders' meetings;
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(i) Federal and state registration or qualification fees
and expenses;
(j) Costs of setting in type, printing and mailing
Prospectuses, reports and notices to existing
shareholders;
(k) The investment advisory fee payable to the Advisor, as
provided in paragraph 7 herein; and
(l) Distribution expenses, but only in accordance with a Plan of
Distribution as approved by the shareholders of the Fund in
accordance with Rule 12b-1 under the 1940 Act.
It is understood that the Trust may desire to register the Fund's
shares for sale in certain states which impose expense limitations on
mutual funds. The Trust agrees that it will register the Fund's shares
in such states only with the prior written consent of the Advisor.
7. COMPENSATION. The Trust will pay the Advisor and the Advisor will
accept as full compensation an investment advisory fee, based upon the
average daily net assets of the Fund, computed at the end of each month
and payable within five (5) business days thereafter, at the annual
rate of nine tenths of one percent (0.9%) of such assets.
8. (a) LIMITATION OF LIABILITY. The Advisor shall not be
liable for any error of judgment, mistake of law or for
any other loss whatsoever suffered by the Fund 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
Advisor in the performance of its duties or from
reckless disregard by it of its obligations and duties
under this Agreement.
(b) INDEMNIFICATION OF ADVISOR. Subject to the limitations
set forth in this Subsection 8(b), the Trust shall
indemnify, defend and hold harmless (from the assets of
the Fund) the Advisor against all loss, damage and
liability, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines
and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by the Advisor
in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or
criminal, before any court or administrative or
legislative body, related to or resulting from this
Agreement or the performance of services hereunder,
except with respect to any matter as to which it has
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been determined that the loss, damage or liability is a direct
result of (i) a breach of fiduciary duty with respect to the
receipt of compensation for services; or (ii) willful
misfeasance, bad faith or gross negligence on the part of the
Advisor in the performance of its duties or from reckless
disregard by it of its duties under this Agreement (either and
both of the conduct described in clauses (i) and (ii) above
being referred to hereinafter as "Disabling Conduct"). A
determination that the Advisor is entitled to indemnification
may be made by (i) a final decision on the merits by a court
or other body before whom the proceeding was brought that the
Advisor was not liable by reason of Disabling Conduct, (ii)
dismissal of a court action or an administrative proceeding
against the Advisor for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination, based upon a
review of the facts, that the Advisor was not liable by reason
of Disabling Conduct by (a) vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Trust as
the quoted phrase is defined in Section 2(a)(19) of the 1940
Act nor parties to the action, suit or other proceeding on the
same or similar grounds that is then or has been pending or
threatened (such quorum of such Trustees being referred to
hereinafter as the "Independent Trustees"), or (b) an
independent legal counsel in a written opinion. Expenses,
including accountants' and counsel fees so incurred by the
Advisor (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), may be
paid from time to time by the Fund in advance of the final
disposition of any such action, suit or proceeding; provided,
that the Advisor shall have undertaken to repay the amounts so
paid if it is ultimately determined that indemnification of
such expenses is not authorized under this Subsection 8(b) and
if (i) the Advisor shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses
arising by reason of any lawful advances, or (iii) a majority
of the Independent Trustees, or an independent legal counsel
in a written opinion, shall have determined, based on a review
of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the Advisor
ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the
Advisor referred to in this Subsection 8(b), pursuant to a
consent decree or otherwise, no such indemnification either
for said payment or for any
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other expenses shall be provided unless such indemnification
shall be approved (i) by a majority of the Independent
Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Independent Trustees pursuant to
clause (i) shall not prevent the recovery from the Advisor of
any amount paid to the Advisor in accordance with either of
such clauses as indemnification if the Advisor is subsequently
adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that the
Advisor's action was in or not opposed to the best interests
of the Fund or to have been liable to the Fund or its
Shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved
in its conduct under this Agreement.
The right of indemnification provided by this Subsection 8(b)
shall not be exclusive of or affect any of the rights to which
the Advisor may be entitled. Nothing contained in this
Subsection 8(b) shall affect any rights to indemnification to
which Trustees, officers or other personnel of the Trust, and
other persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
The Board of Trustees of the Trust shall take all such action
as may be necessary and appropriate to authorize the Fund
hereunder to pay the indemnification required by this
Subsection 8(b) including, without limitation, to the extent
needed, to determine whether the Advisor is entitled to
indemnification hereunder and the reasonable amount of any
indemnity due it hereunder, or employ independent legal
counsel for that purpose.
8. (c) The provisions contained in Section 8 shall survive the
expiration or other termination of this Agreement, shall be
deemed to include and protect the Advisor and its directors,
officers, employees and agents and shall inure to the benefit
of its/their respective successors, assigns and personal
representatives.
9. DURATION AND TERMINATION. This Agreement shall become effective on the
date hereof and, unless sooner terminated as provided herein, shall
continue in effect for two years. Thereafter, this Agreement shall be
renewable for successive periods of one year each, provided such
continuance is specifically approved annually:
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(a) By the vote of a majority of those members of the
Board of Trustees who are not parties to this
Agreement or interested persons of any such party (as
that term is defined in the 1940 Act), cast in person
at a meeting called for the purpose of voting on such
approval; and
(b) By vote of either the Board of Trustees or a majority
(as that term is defined in the 0000 Xxx) of the
outstanding voting securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the
Trust or by the Advisor at any time on sixty (60) days' written notice,
without the payment of any penalty, provided that termination of the
Trust must be authorized either by vote of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund.
This Agreement will automatically terminate in the event of its
assignment (as that term is defined in the 1940 Act).
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but
only by a written instrument signed by the party against
which enforcement of the change, waiver, discharge or
termination is sought. No material amendment of this
Agreement shall be effective until approved by vote of the
holders of a majority of the Fund's outstanding voting
securities (as defined in the 1940 Act).
11. MISCELLANEOUS. 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. If any provision of this Agreement
shall be held or made invalid by a court decision, statute,
rule or otherwise, the remainder of the Agreement shall not
be affected thereby. This Agreement shall be binding and
shall insure to the benefit of the parties hereto and their
respective successors.
12. APPLICABLE LAW. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of
North Carolina.
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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.
ATTEST: THE TUSCARORA INVESTMENT TRUST
By: /s/ Xxxxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
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Title: Assistant Secretary Title: Chairman & CEO
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ATTEST: XXX XXXXX CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxxxx Xxxxxx By: Xxxxxx X. Xxxxxxx
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Title: Vice President Title: Chairman & CEO
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