Exhibit 9
QUANTITATIVE ADVISORS, INC.
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ADVISORY CONTRACT
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Advisory Contract ("Contract") dated as of January 31, 1999, between
QUANTITATIVE ADVISORS, INC., a Massachusetts corporation (the "Manager") and
COLUMBIA PARTNERS, L.L.C., INVESTMENT MANAGEMENT a Delaware limited liability
company (the "Advisor").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY ADVISOR TO TRUST.
(a) Subject always to the control of the trustees (the "Trustees") of
Quantitative Group of Funds, a Massachusetts business trust (the "Trust"), and
the Manager, the Advisor, at its expense, will furnish continuously an
investment program for the Quantitative Small Cap Fund (the "Fund") of the
Trust. The Advisor will determine what securities shall be purchased, held,
sold or exchanged by the Fund and what portion, if any, of the assets of the
Fund shall be held uninvested and shall, on behalf of the Fund, make changes in
the Fund's investments. In the performance of its duties, the Advisor will
comply with the provisions of the Agreement and Declaration of Trust and By-Laws
of the Trust, as amended, and the stated investment objectives, policies and
restrictions of the Fund as set forth in the then current Prospectus and/or
Statement of Additional Information of the Trust and with other written policies
which the Trustees or the Manager may from time-to-time determine and of which
the Advisor has received notice. In furnishing an investment program to the
Fund and in determining what securities shall be purchased, held, sold or
exchanged by the Fund, the Advisor shall (1) comply in all material respects
with all provisions of applicable law governing its duties and responsibilities
hereunder, including, without limitation, the Investment Company Act of 1940
(the "1940 Act"), and the Rules and Regulations thereunder; the Investment
Advisors Act of 1940, and the Rules and Regulations thereunder; the Internal
Revenue Code of 1986, as amended (the "Code"), relating to regulated investment
companies and all Rules and Regulations thereunder; the Xxxxxxx Xxxxxxx and
Securities Fraud Enforcement Act of 1988; and such other laws as may be
applicable to its activities as Advisor to the Fund and (2) use its best efforts
to manage the Fund so that the Fund will qualify, and continue to qualify, as a
regulated investment company under Subchapter M of the Code and regulations
issued thereunder. The Advisor shall make its officers and employees available
to the Manager or Trustees from time-to-time at reasonable times to review
investment policies of the Fund and to consult with the Manager or Trustees
regarding the investment affairs of the Fund.
(b) The Advisor, at its expense, will (1) furnish all necessary investment
and management facilities, including salaries of personnel, required for it to
execute its duties hereunder, (2) keep records relating to the purchase, sale or
current status of portfolio securities, (3) provide clerical personnel and
equipment necessary for the efficient rendering of investment advice to the
Fund, (4) furnish to the Manager such reports and records regarding the Fund and
the Advisor as the Manager or Trustees shall from time-to-time request, and, (5)
upon reasonable notice, review written references to the Advisor, or its
methodology, whether in a Prospectus, Statement of Additional Information, sales
material or otherwise. The Advisor shall have no obligation with respect to the
determination of the Fund's net asset value, except to provide the Trust's
custodian with information as to the securities held in the Fund's portfolio.
The Advisor shall not be obligated to provide shareholder accounting services.
(c) The Advisor shall place all orders for the purchase and sale of
portfolio investments for the Fund's account with brokers or dealers selected by
the Advisor. In the selection of such brokers or dealers and the placing of
such orders, the Advisor shall use its best efforts to obtain for the Fund the
most favorable price and execution available, except to the extent that it may
be permitted to pay higher brokerage commissions for brokerage and research
services as described below. In using its best efforts to obtain for the Fund
the most favorable price and execution available, the Advisor, bearing in mind
the Fund's best interests at all times, shall consider all factors it deems
relevant, including by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission, if any,
the timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or dealer involved
and the quality of service rendered by the broker or dealer in other
transactions. Subject to such written policies as the Trustees or the Manager
may determine, and of which the Advisor has received notice and which the
Advisor has accepted in writing, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Contract or otherwise
solely by reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Advisor and/or the Manager an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Advisor determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the Advisor's and/or Manager's overall
responsibilities with respect to the Trust and to other clients as to which the
Advisor and/or Manager or persons controlled by or under common control with the
Advisor and/or Manager exercise investment discretion. The Advisor agrees that
in connection with purchase or sales of portfolio instruments for the Fund's
account, neither the Advisor nor any officer, director, employee or agent of the
Advisor shall act as principal or receive any commission other than as provided
in Section 3.
(d) The assets of the Fund shall be held by the Trust's custodian in an
account which the Trust has directed the Custodian to open. The Advisor shall
at no time have custody or physical control of any of the assets of the Fund.
The Manager shall cause such custodian to provide the Advisor with such
information and reports concerning the Fund or its assets as the Advisor may
from time to time reasonably request and to accept instructions from the Advisor
with respect to such assets and transactions by the Fund in the performance of
the Advisor's duties hereunder. The Advisor shall have no liability or
obligation to pay the cost of such custodian or any of its services.
(e) Advice rendered to the Fund shall be confidential and may not be used
by any shareholder, Trustee, officer, director, employee or agent of the Trust
or of the Manager or by the advisor of any other fund of the Trust. Non-public
information provided to the Manager on a confidential basis regarding the
methodology of the Advisor shall not be made publicly available by the Manager,
except that such information may be disclosed to the Trustees and may be
disclosed to the extent necessary to comply with the federal and state
securities laws and, after notice to the Advisor, upon order of any court or
administrative agency or self regulatory organization of which the Manager or
its affiliates are members.
(f) The Advisor shall not be obligated to pay any expenses of or for the
Fund not expressly assumed by the Advisor pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder, partner, director, officer or
employee of, or be otherwise interested in, the Advisor, and in any person
controlled by or under common control with the Advisor, and that the Advisor and
any person controlled by or under common control with the Advisor may have an
interest in the Trust. It is also understood that the Advisor and persons
controlled by or under common control with the Advisor have and may have
advisory, management, service or other contracts with other organizations
(including other investment companies and other managed accounts) and persons,
and may have other interests and businesses.
Nothing in this Contract shall prohibit the Advisor or any of its
affiliates from providing any services for any other person or entity or limit
the services which the Advisor or any such affiliate can provide to any person
or entity, provided, however, that without the written consent of the Manager,
the Advisor may not provide investment advisory or investment management
services to another investment company which invests the primary portion of its
assets in companies comprising the Xxxxxxx 2000 Index, or any other widely
recognized index of small cap stocks. The Manager understands and agrees that
the Advisor and its affiliates perform investment advisory and investment
management services for various clients other than the Manager and the Trust.
The Manager agrees that the Advisor and its affiliates may give advice and take
action in the performance of duties with respect to any other client which may
differ from advice
given, or the timing or nature of action taken, with respect to the Fund.
Nothing in this Contract shall be deemed to impose upon the Advisor any
obligation to purchase or sell or to recommend for purchase or sale for the Fund
any security or other property which the Advisor or any of its affiliates may
purchase or sell for its own account or for the account of any other client, so
long as it continues to be the policy and practice of the Advisor 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.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE ADVISOR
The Manager will pay to the Advisor, as compensation for the Advisor's
services rendered and for the expenses borne by the Advisor pursuant to Section
1, a fee, computed and paid monthly at the annual rate of 0.50% of the aggregate
average daily net asset value of the Fund. Such fee shall be paid by the
Manager and not by the Fund out of the management fee paid by the Trust to the
Manager pursuant to the Management Contract between the Manager and the Trust or
out of any other funds available to the Manager. Such average daily net asset
value of the Fund shall be determined by taking an average of all the
determinations of such net asset value during such month at the close of
business on each business day, and for non-business days, the net asset value
determined on the previous business day, during such month while this Contract
is in effect. Such fee shall be payable for each month within 30 days after the
end of each month.
If the Advisor shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS TO
THIS CONTRACT
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract between the Trust and the Manager is terminated generally, or with
respect to the Fund; and this Contract shall not be amended unless (i) such
amendment is approved at a meeting by an affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
Trustees of the Trust who are not interested persons of the Trust or of the
Manager or of the Advisor. Notwithstanding the foregoing, shareholder approval
will not be required for amendments to this Contract if the Fund obtains an
exemptive order from the Securities and Exchange Commission permitting
amendments to this Contract without shareholder approval.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective on January 31, 1999 or such other time
as shall be agreed upon by the Manager and the Advisor, and shall remain in full
force and effect as to the Fund continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) The Trust or the Manager may at any time terminate this Contract as
to the Fund by not more than sixty days' or less than thirty days' written
notice delivered or mailed by registered mail, postage prepaid, to the Advisor,
or
(b) The Advisor may at any time terminate this Contract as to the Fund
by not less than one hundred fifty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager, or
(c) If (i) the Trustees of the Trust, or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager or of the Advisor, by vote cast in person at a meeting
called for the purpose of voting on such approval, do not specifically approve
at least annually the continuance of this Contract, then this Contract shall
automatically terminate as to the Fund at the close of business on the second
anniversary of the effective date hereof or the expiration of one year from the
effective date of the last such continuance, whichever is later; provided,
however, that if the continuance of this Contract is submitted to the
shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of this Contract as provided herein, the Advisor may
continue to serve hereunder in a manner consistent with the 1940 Act and the
Rules and Regulations thereunder.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Contract pursuant to this Section 5 shall be without
the payment of any penalty.
6. CERTAIN DEFINITIONS
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Trust or the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Trust or the Fund, as the case may be, entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Trust or the Fund, as the case
may be, entitled to vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the 1940 Act and the Rules and Regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission ("SEC") under said Act; the term "specifically approve at
least annually" shall be construed in a manner consistent with the 1940 Act and
the Rules and Regulations thereunder; and the term "brokerage and research
services" shall have the meaning given by the Securities Exchange Act of 1934
and the Rules and Regulations thereunder.
7. NONLIABILITY OF ADVISOR.
Notwithstanding any other agreement to the contrary, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the Advisor,
its partners, officers, directors, employees or agents or reckless disregard of
the Advisor's obligations and duties hereunder, neither the Advisor nor its
officers, directors, employees or agents shall be subject to any liability to
the Trust or to the Manager, or to any shareholder of the Trust, for any act or
omission in the course of, or connected with, rendering services hereunder,
unless the Advisor is claiming indemnity from any of them in connection
herewith, but then only to the extent of the indemnity obtained.
8. VOTING OF SECURITIES.
The Advisor shall have the power to vote, either in person or by proxy, all
securities in which assets of the Fund may be invested from time to time and
shall not be required to seek or take instructions from the Manager or the
Trustees of the Trust, or to take any action, with respect thereto.
9. REPRESENTATIONS AND COVENANTS OF THE MANAGER.
(a) The Manager represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law or otherwise, and that it has the power, capacity and authority
to enter into this Contract and to perform in accordance herewith. In addition,
the Manager represents, warrants and covenants to the Advisor that it has the
power, capacity and authority to commit the Trust to this Contract; that a true
and complete copy of the Agreement and Declaration of Trust and By-Laws of the
Trust and the stated objectives, policies and restrictions of the Fund have been
delivered to the Advisor; and that true and complete copies of every amendment
thereto will be delivered to the Advisor as promptly as practicable after the
adoption thereof. The Manager agrees that notwithstanding any other provision of
this Contract to the contrary, the Advisor will not be bound by any such
amendment until the Advisor has received a copy thereof and has had a reasonable
opportunity to review it.
(b) The Manager shall indemnify and hold harmless the Advisor, its
partners, officers, employees and agents and each person, if any, who controls
the Advisor within the meaning of any applicable law (each individually an
"Indemnified Party") from and against all losses, claims, damages, liabilities
and expenses (including, without limitation, reasonable fees and other expenses
of an Indemnified Party's counsel, other than attorneys' fees and costs in
relation to the preparation of this Contract; each party bearing responsibility
for its own such costs and fees), joint or several, (other than liabilities,
losses, expenses, attorneys' fees and costs or damages arising from the failure
of the Advisor to perform its responsibilities hereunder or claims arising from
its acts or failure to act in performing this Contract) to which the Advisor or
any other Indemnified Party may become subject under any federal or state law as
a result of any failure of the Manager or, if caused by any failure of the
Manager, of the Trust or the Fund, to disclose a material fact, or any omission
by the Manager, or, if caused by any failure of the Manager, of the Trust or the
Fund, to disclose a material fact, in any document relating to the Trust or the
Fund, except any failure or omission caused solely by (i) the incorporation in
any such document of information relating to the Advisor which is furnished to
the Manager in writing by or with the consent of the Advisor expressly for
inclusion in such document or (ii) a breach, of which the Manager was not aware,
by the Advisor of its duties hereunder. With respect to any claim for which an
Indemnified Party is entitled to indemnity hereunder, the Manager shall assume
the reasonable expenses and costs (including any reasonable attorneys' fees and
costs) of the Indemnified Party or investigating and/or defending any claim
asserted or threatened by any party, subject always to the Manager first
receiving a written undertaking from the Indemnified Party to repay any amounts
paid on its behalf in the event and to the extent of any subsequent
determination that the Indemnified Party was not entitled to indemnification
hereunder with respect of such claim.
(c) No public reference to, or description of, the Advisor or its
methodology or work shall be made by the Manager or the Trust, whether in a
prospectus, Statement of Additional Information or otherwise, unless the Manager
provides the Advisor with a reasonable opportunity to review any such reference
or description prior to the first use of such reference or description.
10. REPRESENTATIONS AND COVENANTS OF THE ADVISOR.
(a) The Advisor represents that the terms of this Contract do not
violate any obligation by which it is bound, whether arising by contract,
operation of law, or otherwise, and that it has the power, capacity and
authority to enter into this Contract and to perform in accordance herewith.
(b) The Advisor shall immediately notify the Manager in the event that
the Advisor or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Advisor from serving as investment
advisor pursuant to this Contract; or (2) becomes aware that it the subject of
an administrative proceeding or enforcement action by the SEC or any other
regulatory authority. The Advisor further agrees to notify the Manager
immediately of any material fact known to the Advisor respecting or relating to
the Advisor that is not contained in the Trust's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but that is required
to be disclosed therein, and of any statement contained therein that becomes
untrue in any material respect.
(c) The Advisor agrees to maintain such books and records with respect
to its services to the Fund as are required under the 1940 Act, and rules
adopted thereunder, and by other applicable legal provisions, and to preserve
such records for the periods and in the manner required by that Section, and
those rules and legal provisions. The Advisor also agrees that records it
maintains and preserves pursuant to Rule 31a-1 and Rule 31a-2 under the 1940 Act
and otherwise in connection with its services hereunder are the property of the
Trust and will be surrendered promptly to the Trust upon its request. The
Advisor further agrees that it will furnish to regulatory authorities having the
requisite authority any information or reports in connection with its services
hereunder which may be requested in order to determine whether the operations of
the Fund are being conducted in accordance with applicable laws and regulations.
(d) The Advisor shall provide the Manager with quarterly
representations regarding the compliance of its' employees with the Advisor's
code of ethics governing personal securities transactions. The Advisor shall
provide the Manager with copies of any revisions to its code of ethics.
(e) The Advisor shall indemnify and hold harmless the Manager, the
Fund, their partners, officers, employees and agents and each person, if any,
who controls the Manager or Fund within the meaning of any applicable law (each
individually an "Indemnified Party") from and against all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
fees and other expenses of an Indemnified Party's counsel, other than attorneys'
fees and costs in relation to the preparation of this Contract; each party
bearing responsibility for its own such costs and fees), joint or several,
(other than liabilities, losses, expenses, attorneys' fees and costs or damages
arising from the failure of the Manager to perform its responsibilities
hereunder or claims arising from its acts or failure to act in performing this
Contract) arising from Advisor's (or its respective agents and employees)
failure to perform its duties and assume its obligations hereunder, including
any action or claim against the Manager based on any alleged untrue statement or
misstatement of a material fact made or provided in writing by or with the
consent of Advisor contained in any registration statement, prospectus,
shareholder report or other information or materials relating to the Fund and
shares issued by the Fund, or the failure or alleged failure to state a material
fact therein required to be stated in order that the statements therein are not
misleading,
which fact should have been made known or provided by the Advisor to the
Manager. With respect to any claim for which an Indemnified Party is entitled to
indemnity hereunder, the Advisor shall assume the reasonable expenses and costs
(including any reasonable attorneys' fees and costs) of the Indemnified Party of
investigating and/or defending any claim asserted or threatened by any party,
subject always to the Advisor first receiving a written undertaking from the
Indemnified Party to repay any amounts paid on its behalf in the event and to
the extent of any subsequent determination that the Indemnified Party was not
entitled to indemnification hereunder with respect of such claim.
11. USE OF NAME.
It is understood that the name of the Fund (as it may be changed from time
to time while the Advisor provides services pursuant to this Contract) or any
derivative thereof or logo associated with that name is the valuable property of
the Trust and/or its affiliates, and that the Advisor has the right to use such
name (or derivative or logo) only with the approval of the Manager and only so
long as the Advisor is Advisor to the Trust and/or the Fund. Upon termination
of this Contract the Advisor shall forthwith cease to use such name (or
derivative or logo).
12. GOVERNING LAW.
This Contract shall be governed by, and construed and enforced in
accordance with, the substantive laws of The Commonwealth of Massachusetts
without regard to its principles of conflicts of laws, except to the extent such
laws shall be preempted by the Investment Company Act of 1940 or by other
applicable laws.
13. INDEPENDENT CONTRACTOR.
Advisor shall for all purposes of this Contract be deemed to be an
independent contractor and, except as otherwise expressly provided herein, shall
have no authority to act for, bind or represent the Fund in any way or otherwise
be deemed to be an agent of the Fund. Likewise, the Fund, the Manager and their
affiliates, agents and employees shall not be deemed agents of the Advisor and
shall have no authority to bind the Advisor.
14. MISCELLANEOUS.
(a) The captions of this Contract are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(b) In the event that the Advisor or Manager is or becomes a party to
any action or proceedings in respect of which indemnification may be sought
hereunder, the party seeking indemnification shall promptly notify the other
party thereof. The party from whom indemnification is sought shall not be
liable hereunder for any settlement of any action or claim effected without its
written consent, which consent shall not be reasonably withheld.
(c) This Contract may be executed in one or more counterparts, all of
which taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, QUANTITATIVE ADVISORS, INC. and COLUMBIA PARTNERS,
L.L.C., INVESTMENT MANAGEMENT have each caused this instrument to be signed in
duplicate in its behalf, all as of the day and year first above written.
QUANTITATIVE ADVISORS, INC.
By_________________________
Xxxxxxx X. Xxxxxxx
President
COLUMBIA PARTNERS, L.L.C.,
INVESTMENT MANAGEMENT
By_________________________
Name:
Title:
