EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the day of , 1997, by and between OCC ACCUMU-
LATION TRUST (formerly called Quest for Value Accumulation Trust and before
that, Quest for Value Asset Builder Trust), a Massachusetts business trust
(the "Fund") and OPCAP ADVISORS, (formerly called Quest for Value Advisors), a
Delaware general partnership (the "Manager").
WHEREAS, the Fund is an open-end, diversified, management investment company,
organized in "series" form and comprised of seven separate investment portfo-
lios (the "Portfolios" or the "Series") and is registered with the Securities
and Exchange Commission (the "Commission") pursuant to the Investment Company
Act of 1940 (the "1940 Act");
NOW, THEREFORE, in consideration of the mutual promises and covenants herein-
after set forth, the Fund and the Manager agree as follows:
1. General Provisions
The Fund hereby employs the Manager and the Manager hereby undertakes to act
as the investment adviser of the Fund in connection with and for the benefit
of each Portfolio, including any Portfolio hereafter created, and to perform
for the Fund and for each of the Portfolios such other duties and functions in
connection with each Portfolio for the period and on such terms as set forth
in this Agreement. The Manager shall, in all matters, give to the Fund and its
Board of Trustees (the "Trustees") the benefit of its best judgment, effort,
advice and recommendations and shall at all times conform to, and use its best
efforts to enable the Fund to conform to:
(a) the provisions of the 1940 Act and any rules or regulations thereun-
der;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Declaration of Trust and By-Laws of the Fund as
amended from time to time;
(d) the policies and determinations of the Trustees;
(e) the investment objectives and policies and investment restrictions of
each Portfolio as reflected in the registration statement of the Fund
under the 1940 Act or as such objectives, policies and restrictions
may from time to time be amended; and
(f) the prospectus, if any, of the Fund in effect from time to time.
The appropriate officers and employees of the Manager shall be available upon
reasonable notice for consultation with any of the Trustees or officers with
respect to any matters dealing with the Fund's business affairs, including the
valuation of
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any securities held by the Fund for the benefit of any Portfolio that are ei-
ther not registered for public sale or not being traded on any securities mar-
ket.
2. Investment Management
(a) The Manager shall, subject to the direction and control by the Trustees,
separately with respect to each Portfolio: (i) regularly provide investment
advice and recommendations to the Fund with respect to it's investments, in-
vestment policies, and the purchase and sale of securities and commodities;
(ii) supervise continuously and determine the securities and commodities to be
purchased or sold by the Fund and the portion, if any, of the Fund's assets to
be held uninvested; and (iii) arrange, subject to the provisions of Section 6
hereof, for the purchase and sale of securities, commodities and other invest-
ments by the Fund.
(b) The Manager may obtain investment information, research or assistance from
any other person, firm or corporation to supplement, update or otherwise im-
prove its investment management services, including entering into sub-advisory
agreements with other affiliated or unaffiliated registered investment advis-
ers in order to obtain specialized services; provided, however, that the Fund
shall not be required to pay any compensation other than as provided by the
terms of this Agreement and subject to the provisions of Section 5 hereof.
(c) So long as the Manager shall have acted with due care and in good faith,
the Manager shall not be liable to the Fund or its shareholders for any error
in judgment, mistake of law, or any other act or omission in the course of or
connected with, rendering services hereunder, including without limitation,
any losses which may be sustained by the Fund or its shareholders as a result
of the purchase, holding, redemption, or sale of any security by the Fund ir-
respective of whether the determinations of the Manager relative thereto shall
have been based, in whole or in part, upon the investigation, research or rec-
ommendation of any other individual, firm or corporation believed by the Man-
ager to be reliable. Nothing herein contained shall, however, be construed to
protect the Manager against any liability to the Fund or its shareholders
arising out of the Manager's willful misfeasance, bad faith, or gross negli-
gence in the performance of its duties or reckless disregard of its obliga-
tions and duties under this Agreement.
(d) Nothing in this Agreement shall prevent the Manager, any parent, subsidi-
ary or affiliate, or any director or officer thereof, from acting as invest-
ment adviser for any other person, firm, or corporation, and shall not in any
way limit or restrict the Manager or any of its directors, officers, stock-
holders or employees from buying, selling or trading any securities or commod-
ities for its or their own account or for the account of others for whom it or
they may be acting, if such activities will not adversely affect or otherwise
impair the performance by the Manager of its duties and obligations under this
Agreement.
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3. Other Duties of the Manager
The Manager shall, at its own expense, provide and supervise the activities of
all administrative and clerical personnel and shall be required to provide ef-
fective corporate administration for the Fund, including (1) coordination of
the functions of accountants, counsel and other parties performing services
for the Fund, (2) the preparation and filing of such reports related to the
Fund or to any Portfolio as shall be required by federal securities laws and
various state "blue sky" laws, (3) composition of periodic reports with re-
spect to its operations for shareholders of the Fund and (4) composition of
proxy materials for meetings of the Fund's shareholders.
4. Allocation of Expenses
The Manager will bear all costs and expenses of its employees and overhead in-
curred by it in connection with its duties hereunder except as noted in Sec-
tion 5 below. All other expenses (other than those to be paid by the Fund's
distributor under a distribution agreement), shall be paid by the Fund, in-
cluding, but not limited to:
(a) interest expense, taxes and governmental fees;
(b) brokerage commissions and other expenses incurred in acquiring or dis-
posing of the Fund's securities and commodities holdings;
(c) insurance premiums for fidelity and other coverage requisite to the
Fund's operations;
(d) fees of the Trustees other than those who are interested persons of
the Fund and out-of-pocket travel expenses for all Trustees and other
expenses incurred by the Fund in connection with Trustees' meetings;
(e) outside legal, accounting and audit expenses;
(f) custodian, dividend disbursing, and transfer agent fees and expenses;
(g) expenses in connection with the issuance, offering, sale or underwrit-
ing of securities issued by the Fund, including preparation of stock
certificates;
(h) fees and expenses, other than as hereinabove provided, incident to the
registration or qualification of the Fund's shares for sale with the
Commission and in various states and foreign jurisdictions;
(i) expenses of printing and mailing reports and notices and proxy mate-
rial to the Fund's shareholders;
(j) all other expenses incidental to holding meetings of the Fund's share-
holders;
(k) expenses of organizing the Fund; and
(l) such extraordinary non-recurring expenses as may arise, including lit-
igation affecting the Fund and the legal obligation the Fund may have
to indemnify its officers and Trustees with respect thereto.
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Notwithstanding the foregoing, the Manager shall pay all salaries and fees of
each of the Fund's officers and Trustees who are interested persons of the
Manager.
5. Compensation of the Manager
(a) The Fund agrees to pay the Manager, and the Manager agrees to accept as
full compensation for the performance of all its functions and duties to be
performed hereunder, a fee based on the total net assets of each Portfolio at
the end of each business day. Determination of net asset value of each Portfo-
lio will be made in accordance with the policies disclosed in the Fund's reg-
istration statement under the 1940 Act. The fee is payable at the close of
business on the last day of each calendar month and shall be made on the first
business day following such last calendar day. The payment due on such day
shall be computed by (1) adding together the results of multiplying (i) the
total net assets of each Portfolio on each day of the month by (ii) the appli-
cable daily fraction of the annual advisory fee percentage rate for such Port-
folio as set forth on Schedule A hereto and then (2) adding together the total
monthly amounts computed for each Portfolio.
(b) In the event the operating expenses of the Fund, including any amounts
payable to the Manager pursuant to subsection (a) hereof, but excluding the
amount of any interest, taxes, brokerage commissions, distribution fees, and
extraordinary expenses (including but not limited to legal claims and liabili-
ties and litigation costs and any indemnification related thereto) paid or
payable by the Fund for any fiscal year ending on a date during which this
Agreement is in effect, exceed the most restrictive state law provisions in
effect in states where the Fund is qualified to be sold, the Manager will pay
or refund to the Fund any such excess amount. In addition, the Manager shall
waive any amounts payable to the Manager pursuant to subsection (a) hereof,
and reimburse the Fund such that total operating expenses of each of the Port-
folios of the Fund do not exceed 1.25% of their respective average daily net
assets. Whenever the expenses of a Portfolio exceed a pro rata portion of the
expense limitations stated above, the monthly amount payable to the Manager
will be reduced or postponed in the amount of such excess.
6. Portfolio Transactions and Brokerage
(a) The Manager is authorized, in arranging the purchase and sale of the
Fund's portfolio securities, to employ or deal with such members of securities
exchanges and brokers or dealers, including Xxxxxxxxxxx & Co., Inc. ("Opco")
("broker/dealer"), as may, in the Manager's best judgment based on all rele-
vant factors, implement the policy of the Fund to obtain, at reasonable ex-
pense, the "best execution" (prompt and reliable execution of the Fund's secu-
rities transactions at the most favorable security prices obtainable of the
Fund's securities transactions) as well as to obtain, consistent with the pro-
visions of subparagraph (c) of this Section 6, the benefit of such investment
information or research as will be of significant assistance to the Manager in
the performance of its functions and duties under this Agreement.
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(b) The Manager shall select broker/dealers to effect the Fund's securities
transactions on the basis of its estimate of the ability of such
broker/dealers to obtain best execution of particular and related securities
transactions. The ability of a broker/dealer to obtain best execution of par-
ticular securities transaction(s) will be judged by the Manager on the basis
of all relevant factors and considerations, including, insofar as feasible,
the execution capabilities required by the transactions; the ability and will-
ingness of the broker/dealer to facilitate the Fund's securities transactions
by participating therein for its own account; the importance to the Fund of
speed, efficiency or confidentiality; the broker/dealer's apparent familiarity
with sources from or to whom particular securities might be purchased or sold;
and any other matters relevant to the selection of a broker/dealer for partic-
ular and related transactions of the Fund.
(c) The Manager shall have discretion, in the interests of the Fund, to allo-
cate brokerage on the Fund's securities transactions to broker/dealers quali-
fied to provide best execution of such transactions who provide brokerage
and/or research services (as such services are defined in Section 28(e)(3) of
the Securities Exchange Act of 1934 (the "1934 Act")) for the Fund and/or
other accounts for which the Manager exercises investment discretion (as that
term is defined in Section 3(a)(35) of the 0000 Xxx) and to cause the Fund to
pay such broker/dealers (other than Opco) a commission for effecting a securi-
ties transaction for the Fund that is in excess of the amount of commission
another broker/dealer adequately qualified to effect such transaction would
have charged for effecting that transaction, if the Manager determines, in
good faith, that such commission is reasonable in relation to the value of the
brokerage and/or research services provided by such broker/dealer, viewed in
terms of either that particular transaction or the Manager's overall responsi-
bilities with respect to the accounts as to which it exercises investment dis-
cretion. In reaching such determination, the Manager will not be required to
place or attempt to place a specific dollar value on the brokerage and/or re-
search services provided by such broker/dealer. In demonstrating that such de-
terminations were made in good faith, the Manager shall be prepared to show
that all commissions were allocated to such broker/dealers for purposes con-
templated by this Agreement and that the total commissions paid by the Fund
over a representative period selected by the Trustees were reasonable in rela-
tion to the benefits received by the Fund. Such research information may be in
written form or through direct contact with individuals, and may include in-
formation on particular companies and industries as well as market, economic
or institutional activity areas.
(d) The Manager shall have no duty or obligation to seek advance competitive
bidding for the most favorable commission rate applicable to any particular
securities transactions or to select any broker/dealer on the basis of its
purported or "posted" commission rate, although it will, to the best of its
ability, endeavor to be aware of the current level of the charges of eligible
broker/dealers and to minimize the expense incurred by the Fund for effecting
its securities transactions to the extent
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consistent with the interests and policies of the Fund as established by the
determinations of the Trustees and the provisions of this Section 6.
(e) The Fund recognizes and intends that, subject to the foregoing provisions
of this Section 6, Opco will act as its regular broker so long as it is lawful
for it so to act and that Opco may be a major recipient of brokerage commis-
sions paid by the Fund. Opco may effect securities transactions for the Fund
only if (1) the commissions, fees or other remuneration received or to be re-
ceived by it are reasonable and fair compared to the commissions, fees or
other remuneration received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a securi-
ties exchange during a comparable period of time and (2) the Trustees, includ-
ing a majority of those Trustees who are not interested persons, have adopted
procedures pursuant to Rule 17e-1 under the 1940 Act for determining the per-
missible level of such commissions.
(f) Sales of shares of the Fund and/or shares of the other investment compa-
xxxx managed by the Manager or distributed by the Fund's distributor may, sub-
ject to applicable rules covering the distributor's activities in this area,
also be considered as a factor in the direction of securities transactions to
dealers, but only in conformity with the price, execution and other considera-
tions and practices discussed above. Those other investment companies may also
give similar consideration relating to the sale of the Fund's shares. The Fund
will not purchase any securities from or sell any securities to Opco acting as
principal for its own account.
(g) When orders to purchase or sell the same security on identical terms are
placed by more than one of the funds and/or other advisory accounts managed by
the Manager or its affiliates, the transactions are generally executed as re-
ceived, although a fund or advisory account that does not direct trades to a
specific broker ("free trades") usually will have its order executed first.
Purchases are combined where possible for the purpose of negotiating brokerage
commissions, which in some cases might have a detrimental effect on the price
or volume of the security in a particular transaction as far as the Fund is
concerned. Orders placed by accounts that direct trades to a specific broker
will generally be executed after the free trades. All orders placed on behalf
of the Fund are considered free trades. However, having an order placed first
in the market does not necessarily guarantee the most favorable price.
7. Duration
This Agreement will become effective as of the date hereof. This Agreement
will continue in effect for two years from the date hereof and thereafter (un-
less sooner terminated in accordance with this agreement) for successive peri-
ods of twelve months so long as each continuance shall be specifically ap-
proved at least annually with respect to each Portfolio by (1) the vote of a
majority of those Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person
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at a meeting called for the purpose of voting on such approval, and (2) a ma-
jority of the Trustees or of a majority of the outstanding voting securities
of the respective Portfolios of the Fund.
8. Termination
This Agreement may be terminated (i) by the Manager at any time, without pay-
ment of any penalty upon giving the Fund ninety (90) days' written notice
(which notice may be waived by the Fund); or (ii) by the Fund at any time,
without payment of any penalty upon sixty (60) days' written notice to the
Manager (which notice may be waived by the Manager), provided that such termi-
nation by the Fund shall be directed or approved by the vote of the majority
of all of the Trustees or by the vote of a majority of the outstanding voting
securities of the Portfolios of the Fund with respect to which notice of ter-
mination has been given to the Manager.
9. Amendment or Assignment
This Agreement may be amended with respect to a Portfolio only if such amend-
ment is specifically approved by (i) the vote of the outstanding voting secu-
rities of such Portfolio and (ii) a majority of the Trustees, including a ma-
jority of those Trustees who are not parties to this Agreement or interested
persons of such party, cast in person at a meeting called for the purpose of
voting on such approval, provided that this Agreement may be amended to add a
new Portfolio or delete an existing Portfolio without a vote of the of share-
holders of any other Portfolio covered by this Agreement. This Agreement shall
automatically and immediately terminate in the event of its assignment, as
that term is defined in the 1940 Act and the rules thereunder.
10. Governing Law
This Agreement shall be interpreted in accordance with the laws of the State
of New York and the applicable provisions of the 1940 Act, other securities
laws and rules thereunder. To the extent that the applicable laws of the State
of New York, other securities laws or any of the provisions herein, conflict
with the applicable provisions of the 1940 Act, the latter shall control.
11. Severability
If any provisions of this Agreement shall be held or made unenforceable by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
12. Definitions
As used in this Agreement, the terms "interested person" and "vote of a major-
ity of the outstanding securities" shall have the respective meanings set
forth in Sections 2(a)(19) and 2(a)(42) of the 1940 Act.
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13. No Liability of Shareholders
This Agreement is executed by the Trustees of the Fund, not individually, but
rather in their capacity as Trustees under the Declaration of Trust made May
12, 1994. None of the Shareholders, Trustees, officers, employees, or agents
of the Fund shall be personally bound or liable under this Agreement, nor
shall resort be had to their private property for the satisfaction of any ob-
ligation or claim hereunder but only to the property of the Fund and, if the
obligation or claim relates to the property held by the Fund for the benefit
of one or more but fewer than all Portfolios, then only to the property held
for the benefit of the affected Portfolio.
14. Notice of Change in Partnership of Manager
The Manager agrees to notify the Fund within a reasonable period of time re-
xxxxxxx a material change in the membership of the Manager.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
OCC Accumulation Trust
Attest:
By:_______________________________________
Title:____________________________________
OpCap Advisors
Attest:
By:_______________________________________
Title:____________________________________
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SCHEDULE A
to
Investment Advisory Agreement
between
OCC Accumulation Trust and OpCap Advisors
ANNUAL FEE AS A PERCENTAGE
NAME OF SERIES OF DAILY NET ASSETS
-------------- ---------------------------
Equity Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Small Cap Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Managed Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Global Equity Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
U.S. Government Income Portfolio .60%
Bond Portfolio .50%
Money Market Portfolio .40%
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