INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 16th day of September, 1994, and amended this
1st day of May, 1996, by and between OCC ACCUMULATION 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
portfolios (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
hereinafter 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 thereunder;
(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 any securities held by the Fund for the benefit of any Portfolio
that are either not registered for public sale or not being traded on any
securities market.
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, investment 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 investments 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 improve its investment management services, including entering
into sub-advisory agreements with other affiliated or unaffiliated
registered investment advisers 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 irrespective of whether the determinations of the
Manager relative thereto shall have been based, in whole or in part, upon
the investigation, research or recommendation of any other individual, firm
or corporation believed by the Manager 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 negligence in the performance of
its duties or reckless disregard of its obligations and duties under this
Agreement.
(d) Nothing in this Agreement shall prevent the Manager, any parent,
subsidiary or affiliate, or any director or officer thereof, from acting as
investment 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, stockholders or employees from buying, selling or trading any
securities or commodities 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.
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
effective 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 respect 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
incurred by it in connection with its duties hereunder except as noted in
Section 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,
including, but not limited to:
(a) interest expense, taxes and governmental fees;
(b) brokerage commissions and other expenses incurred in acquiring or
disposing 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
underwriting 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 material
to the Fund's shareholders;
(j) all other expenses incidental to holding meetings of the Fund's
shareholders;
(k) expenses of organizing the Fund; and
(l) such extraordinary non-recurring expenses as may arise, including
litigation affecting the Fund and the legal obligation the Fund may have to
indemnify its officers and Trustees with respect thereto.
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
Portfolio will be made in accordance with the policies disclosed in the
Fund's registration 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 applicable daily fraction of the annual advisory fee
percentage rate for such Portfolio 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
liabilities 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 Portfolios 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 limitation
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 relevant factors, implement the policy of the Fund to obtain,
at reasonable expense, the "best execution" (prompt and reliable execution
of the Fund's securities transactions at the most favorable security prices
obtainable of the Fund's securities transactions) as well as to obtain,
consistent with the provisions 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.
(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 particular 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 willingness 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 particular and
related transactions of the Fund.
(c) The Manager shall have discretion, in the interests of the Fund, to
allocate brokerage on the Fund's securities transactions to broker/dealers
qualified 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 securities 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 responsibilities with
respect to the accounts as to which it exercises investment discretion. 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 research
services provided by such broker/dealer. In demonstrating that such
determinations were made in good faith, the Manager shall be prepared to
show that all commissions were allocated to such broker/dealers for
purposes contemplated by this Agreement and that the total commissions paid
by the Fund
over a representative period selected by the Trustees were reasonable in
relation to the benefits received by the Fund. Such research information
may be in written form or through direct contact with individuals, and may
include information 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
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 commissions 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 received 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 securities exchange during a
comparable period of time and (2) the Trustees, including 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 permissible
level of such commissions.
(f) Sales of shares of the Fund and/or shares of the other investment
companies managed by the Manager or distributed by the Fund's distributor
may, subject 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 considerations 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 received, 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
(unless sooner terminated in accordance with this agreement) for successive
periods of twelve months so long as each continuance shall be specifically
approved 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 at a meeting called for the purpose of
voting on such approval, and (2) a majority 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
payment 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
termination 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
termination has been given to the Manager.
9. Amendment or Assignment
This Agreement may be amended with respect to a Portfolio only if such
amendment is specifically approved by (i) the vote of the outstanding voting
securities of such Portfolio and (ii) a majority of the Trustees, including a
majority 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
shareholders 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
majority of the outstanding securities" shall have the respective meanings set
forth in Sections 2(a)(19) and 2(a)(42) of the 1940 Act.
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 obligation
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
regarding 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:
s\ Xxxxxxx Xxxxxxxx
----------------------------
By: s\ Xxxxx X. Xxxxxx
--------------------------------
Title: Assistant Secretary
OPCAP ADVISORS
Attest:
----------------------------
By: s\ Xxxxxxx Xxxxx
--------------------------------
Title: President
Schedule A
to
Investment Advisory Agreement
between
OCC Accumulation Trust and OpCap Advisors
Annual Fee as a
Percentage of Daily
Name of Series 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%
