EXHIBIT (D)(4)
INVESTMENT ADVISORY AGREEMENT FOR SELECT VALUE PORTFOLIO
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PRINCIPAL PRESERVATION PORTFOLIOS, INC.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of the 15th day of December, 2000, by and between
PRINCIPAL PRESERVATION PORTFOLIOS, INC., a Maryland corporation ("PPP"), on
behalf of its Select Value Portfolio (the "Fund"), and NORTHPOINTE CAPITAL, LLC
(the "Advisor").
W I T N E S S E T H:
A. On September 29, 2000, PPP, on behalf of the Fund, and the Advisor
entered into an Interim Investment Advisory Agreement (the "Interim Agreement")
in compliance with Rule 15a-4 under the Investment Company Act of 1940, as
amended (the "Act");
B. Under Rule 15a-4, the Interim Agreement may continue for a period of
up to 150 days from its effective date (until February 26, 2001);
C. PPP has proposed a tax-free reorganization (the "Reorganization") with
respect to the Fund which involves the transfer of substantially all of its
assets to the Nationwide Value Opportunities Fund (the "Nationwide Fund") in
exchange solely for shares of the Nationwide Fund followed by the distribution
of shares to the Fund's shareholders in liquidation of the Fund;
D. The Reorganization is subject to approval by the shareholders of the
Fund at a special meeting to be held on February 16, 2001, and if so approved,
the Reorganization is expected to be completed on or about February 19, 2001;
and
E. This Agreement, if approved by the shareholders of the Fund, will
become effective on February 26, 2001, but only if the Reorganization is not
completed by such date.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and between
the parties hereto as follows:
1. IN GENERAL
PPP hereby appoints the Advisor to act as investment advisor for the
Fund, subject to the terms and conditions set forth in this Agreement. The
Advisor agrees to provide professional investment management with respect to the
investment of the assets of the Fund and to supervise and arrange the purchase
and sale of securities held in the portfolio of the Fund.
2. DUTIES AND OBLIGATIONS OF THE ADVISOR WITH RESPECT TO MANAGEMENT OF
THE FUND
(a) Subject to the succeeding provisions of this section and subject
to the direction and control of the Board of Directors of PPP,
the Advisor shall:
(i) Decide what securities shall be purchased or sold by the
Fund and when; and
(ii) Arrange for the purchase and the sale of securities held in
the portfolio of the Fund by placing purchase and sale
orders for the Fund.
(b) Any purchases or sales of portfolio securities on behalf of the
Fund shall at all times conform to, and be in accordance with,
any requirements imposed by: (1) the provisions of the Act and of
any rules or regulations in force thereunder; (2) any other
applicable provisions of law; (3) the provisions of the Articles
of Incorporation and By-Laws of PPP as amended from time to time;
(4) any policies and determinations of the Board of Directors of
PPP; and (5) the fundamental policies of the Fund, as reflected
in its prospectus and statement of additional information (the
"Registration Statement") under the Act, or as amended by the
shareholders of the Fund.
(c) The Advisor shall also administer the affairs of the Fund and, in
connection therewith, shall be responsible for (i) maintaining
the Fund's books and records, (other than financial or accounting
books and records maintained by any accounting services agent and
such records maintained by the Fund's custodian or transfer
agent); (ii) preparing for the Fund (or assisting counsel and/or
auditors in the preparation of) all required tax returns, proxy
statements and reports to the Fund's shareholders and Directors
and reports to and other filings with the Securities and Exchange
Commission ("SEC") and other governmental agency (the Fund
agreeing to supply or cause to be supplied to the Advisor all
necessary financial and other information in connection with the
foregoing); (iii) preparing such applications and reports as may
be necessary to register or maintain the Fund's registration
and/or the registration of the shares of the Fund under the
securities or "blue sky" laws of the various states selected by
the Fund's distributor (the Fund agreeing to pay all filing fees
or other similar fees in connection therewith); (iv) responding
to all inquiries or other communications of shareholders, if any,
which are directed to the Advisor, or if any such inquiry or
communication is more properly to be responded to by the Fund's
custodian, transfer agent or accounting services agent,
overseeing their response thereto; (v) overseeing all
relationships between the Fund and its custodian(s), transfer
agent(s) and accounting services agent(s), including the
negotiation of agreements and the supervision of the performance
of such agreements; and (vi) authorizing and directing any of the
Advisor's directors, officers and employees who may be elected as
Directors or officers of PPP to serve in the capacities in which
they are elected. All services to be furnished by the Advisor
under this Agreement may be furnished through the medium of any
such Directors, officers or employees of the Advisor. The
Advisor may also, at its own cost and expense, engage or contract
with others for the provision of the services described in this
Section 2(c), subject to the approval of the PPP Board of
Directors which shall not be unreasonably withheld.
(d) The Advisor shall give the Fund the benefit of its best judgment
and effort in rendering services hereunder. In the absence of
willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties ("disabling conduct")
hereunder on the part of the Advisor (and its officers,
directors, agents, employees, controlling persons, shareholders
and any other person or entity affiliated with the Advisor) the
Advisor shall not be subject to liability to PPP, the Fund or to
any shareholder of the Fund for any act or omission in the course
of, or connected with rendering services hereunder or under this
Agreement, including without limitation, any error of judgment or
mistake of law or for any loss suffered by any of them in
connection with the matters to which this Agreement related,
except to the extent specified in Section 36(b) of the Act
concerning loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services.
Furthermore, the Advisor shall not be subject to liability to
PPP, the Fund or to any shareholder of the Fund for any act or
omission of X.X. Xxxxxxx and Company ("Xxxxxxx") or any other
advisors or sub-advisors in the course of, or connected with,
rendering services under the terms of any prior investment
advisory agreements ("Prior Agreements"). Except for such
disabling conduct, PPP shall indemnify the Advisor (and its
officers, directors, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the
Advisor) from any liability arising from the Advisor's conduct
under this Agreement or the Interim Agreement or Xxxxxxx'x or any
other advisor's or sub-advisor's conduct under the terms of the
Prior Agreements to the extent permitted by PPP's Articles of
Incorporation, By-Laws and applicable law.
(e) Nothing in this Agreement shall prevent the Advisor or any
affiliated person (as defined in the Act) of the Advisor from
acting as investment advisor or manager and/or principal
underwriter for any other person, firm or corporation and shall
not in any way limit or restrict the advisor or any such
affiliated person from buying, selling or trading any securities
for its or their own accounts or the accounts of others for whom
it or they may be acting, provided, however, that the Advisor
expressly represents that it will undertake no activities which,
in its judgment, will adversely affect the performance of its
obligations to the Fund under this Agreement.
(f) It is agreed that the Advisor shall have no responsibility or
liability for the accuracy or completeness of PPP's Registration
Statement under the Act or the Securities Act of 1933 except for
information supplied by the Advisor for inclusion therein.
3. BROKER-DEALER RELATIONSHIPS
In connection with its duties set forth in Section 2(a)(ii) of this
Agreement to arrange for the purchase and the sale of securities held by the
Fund by placing purchase and sale orders for the Fund, the Advisor shall select
such broker-dealers ("brokers") as shall, in the Advisor's judgment, implement
the policy of PPP to achieve "best execution," i.e., prompt and efficient
execution at the most favorable securities price. In making such selection, the
Advisor is also authorized to consider whether the broker provides brokerage
and/or research services to the Fund and/or other accounts of the Advisor. The
commissions paid to such brokers may be higher than another broker would have
charged if a good faith determination is made by the Advisor that the commission
is reasonable in relation to the services provided, viewed in terms of either
that particular transaction or the Advisor's overall responsibilities as to the
accounts as to which it exercises investment discretion. The Advisor shall use
its judgment in determining that the amount of commissions paid are reasonable
in relation to the value of brokerage and research services provided and need
not place or attempt to place a specific dollar value on such services or on the
portion of commission rates reflecting such services. To demonstrate that such
determinations were in good faith, and to show the overall reasonableness of
commissions paid, the Advisor shall be prepared to show that commissions paid
(i) were for purposes contemplated by this Agreement; (ii) provide lawful and
appropriate assistance to the Advisor in the performance of its decision-making
responsibilities; and (iii) were within a reasonable range as compared to the
rates charged by qualified brokers to other institutional investors as such
rates may become known from available information. PPP recognizes that, on any
particular transaction, a higher than usual commission may be paid due to the
difficulty of the transaction in question. The Advisor is also authorized to
consider sales of Fund shares as a factor in the selection of brokers to execute
brokerage and principal transactions, subject to the requirements of "best
execution," as defined above.
It is recognized that the services provided by such brokers may be
useful to the Advisor in connection with the Advisor's services to other
clients. On occasions when the Advisor deems the purchase or sale of a security
to be in the best interests of the Fund as well as other clients of the Advisor,
the Advisor, to the extent permitted by applicable laws and regulations, may,
but shall be under no obligation to, aggregate the securities to be sold or
purchased in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of securities so
sold or purchased, as well as the expenses incurred in the transaction, will be
made by the Advisor in the manner the Advisor considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and to such other
clients.
4. ALLOCATION OF EXPENSES
The Advisor agrees that it will furnish the Fund, at the Advisor's
expense, with all office space and facilities, and equipment and clerical
personnel necessary for carrying out its duties under this Interim Agreement.
The Advisor will also pay all compensation of all directors, officers and
employees of PPP who are affiliated persons of the Advisor. All costs and
expenses not expressly assumed by the Advisor under this Agreement shall be paid
by PPP, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its
directors other than those affiliated with the Advisor; (v) legal and audit
expenses; (vi) fees and expenses of the Fund's custodian, shareholder servicing
or transfer agent and accounting services agent; (vii) expenses incident to the
issuance of its shares, including stock certificates and issuance of shares on
the payment of, or reinvestment of, dividends; (viii) fees and expenses incident
to the registration under Federal or state securities laws of the Fund or its
shares; (ix) expenses of preparing, printing and mailing reports and notices
proxy material and prospectuses to shareholders of the Fund; (x) all other
expenses incidental to holding meetings of the Fund's shareholders; (xi) dues or
assessments of or contributions to the Investment Company Institute or any
successor or other industry association; (xii) such non-recurring expenses as
may arise, including litigation affecting PPP and the legal obligations which
PPP may have to indemnify its officers and Directors with respect thereto; and
(xiii) all expenses which PPP or the Fund agrees to bear in any distribution
agreement or in any plan adopted by PPP and/or the Fund pursuant to Rule 12b-1
under the Act.
5. COMPENSATION OF THE ADVISOR
(a) PPP agrees to pay the Advisor and the Advisor agrees to accept as
full compensation for all services rendered by the Advisor as
such, an annual management fee, payable monthly and computed on
the value of the average daily net asset value of the Fund as
shown on Schedule A attached hereto. The method of determining
net assets of the Fund for purposes hereof shall be the same as
the method of determining net assets for purposes of establishing
the offering and redemption price of the Fund's shares. If this
Agreement shall be effective for only a portion of a month, the
fee shall be prorated for the portion of such month during which
this Agreement is in effect.
(b) In the event the expenses of the Fund (including the fees of the
Advisor and amortization of organization expenses but excluding
interest, taxes, brokerage commissions, extraordinary expenses
and sales charges and distribution fees) for any fiscal year
exceed the limits set by applicable regulations of state
securities commissions, the Advisor will reduce its fee by the
amount of such excess. Any such reductions are subject to
readjustment during the year. The payment of the management fee
at the end of any month will be reduced or postponed or, if
necessary, a refund will be made to the Fund so that at any time
will there be any accrued but unpaid liability under this expense
limitation.
6. DURATION AND TERMINATION
(a) This Agreement shall go into effect on the date set forth on
Schedule A attached hereto (provided it has then been approved by
the holders of a majority of the outstanding voting securities of
the Fund (as defined in the Act)) and shall, unless terminated as
hereinafter provided, continue in effect until October 31, 2001
or the date on which the Reorganization is completed, whichever
is earlier to occur.
(b) This Agreement may be terminated by the Advisor at any time
without penalty upon giving PPP sixty (60) days' written notice
(which notice may be waived by PPP) and may be terminated by PPP
at any time without penalty upon giving the Advisor sixty (60)
days' written notice (which written notice may be waived by the
Advisor), provided that such termination by PPP shall be directed
or approved by the Board of Directors of PPP or a majority of the
outstanding voting securities of the Fund (as defined in the
Act). This Agreement shall automatically terminate in the event
of its assignment (as defined in the Act).
7. SERVICES NOT EXCLUSIVE
The 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. It is
understood that the action taken by the Advisor under this Agreement may differ
from the advice given or the timing or nature of action taken with respect to
other clients of the Advisor, and that a transaction in a specific security may
not be accomplished for all clients of the Advisor at the same time or at the
same price.
8. AMENDMENT
This Agreement may be amended by mutual consent of the parties,
provided that the terms of each such amendment shall be approved by the Board of
Directors of PPP or by a vote of a majority of the outstanding voting securities
of the Fund (as defined in the Act).
9. CONFIDENTIALITY
Subject to the duties of the Advisor and PPP to comply with applicable
law, including any demand of any regulatory or taxing authority having
jurisdiction, the parties hereto shall treat as confidential all information
pertaining to the Fund and PPP and the actions of the Advisor and the Fund in
respect thereof.
10. NOTICES
Any notice that is required to be given by the parties to each other
under the terms of this Agreement shall be in writing, delivered, or mailed
postpaid to the other party, or transmitted by facsimile with acknowledgment of
receipt, to the parties at the following addresses or facsimile numbers, which
may from time to time be changed by the parties by notice to the other party:
(a) If to the Advisor:
NorthPointe Capital, LLC
000 Xxxx Xxx Xxxxxx Xxxx
Xxxxx 0000
Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Facsimile: 000-000-0000
With a copy to:
Villanova Capital, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Legal Department
Facsimile: 000-000-0000
(b) If to PPP or the Fund:
Principal Preservation Portfolios, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
11. JURISDICTION
This Agreement shall be governed by and construed to be in accordance
with the substantive laws of the State of Wisconsin without reference to choice
of law principles thereof and in accordance with the Act. In the case of any
conflict, the Act shall control.
12. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, all of which shall together constitute one
and the same instrument.
13. CERTAIN DEFINITIONS
For the purposes of this Agreement, "interested person," "majority of
the outstanding voting securities," "affiliated person," "assignment" shall have
their respective meanings as set forth in the Act, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission.
14. CAPTIONS
The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
15. SEVERABILITY
If any provision of this Agreement shall be held or made invalid by a
court decision or applicable law, the remainder of this Agreement shall not be
affected adversely and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by duly authorized persons and their seals to be hereunto
affixed, all as of the day and year first above written.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
(ON BEHALF OF THE SELECT VALUE PORTFOLIO)
By: ----------------------------------------------
Title: -------------------------------------------
NORTHPOINTE CAPITAL, LLC
By: ----------------------------------------------
Title: -------------------------------------------
SCHEDULE A
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PRINCIPAL PRESERVATION PORTFOLIOS, INC.
INVESTMENT ADVISORY AGREEMENT
ON BEHALF OF
SELECT VALUE PORTFOLIO
COMPENSATION
a. Effective Date: February 26, 2001 (as of the close of trading), but
only if the Reorganization has not been completed by such date.
b. Management Fee: The management fee for this Portfolio, calculated in
accordance with paragraph 5, shall be at an annual rate of 0.75 of 1%
of the first $250 million of the average daily net assets of the
Portfolio, and 0.65 of 1% on average daily net assets in excess of
$250 million.
