XXXXXXXXXXX.XXX TRUST
INVESTMENT ADVISORY AGREEMENT
-----------------------------
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the __th day
of __________, 1999, by and between XXXXXXXXXXX.XXX TRUST, a Massachusetts
business trust (the "Trust"), on behalf of its series, XxxxxXxxxxx.xxx Community
Intelligence Fund (the "Fund") and XXXXXXXXXXX.XXX INVESTMENT ADVISORS, INC., a
Delaware corporation (the "Adviser").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Trust hereby employs the Adviser and the
Adviser hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Board of Trustees.
1. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as investment adviser to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objective, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
limitation, the Trust's Amended and Restated Agreement and Declaration of Trust
and By-Laws; the Fund's prospectus, statement of additional information and
undertaking from time to time; and such other limitations, policies and
procedures as the Trustees may impose from time to time in writing to the
Adviser. In providing such services, the Adviser shall at all times adhere to
the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, the Uniform
Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Adviser shall: (i)
furnish the Fund with advice and recommendations with respect to the investment
of the Fund's assets and the purchase and sale of portfolio securities for the
Fund, including the taking of such steps as may be necessary to implement such
advice and recommendations (e.g., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Board of Trustees; (iii) vote proxies for the Fund, file ownership
reports under Section 13 of the Securities Exchange Act of 1934 for the Fund,
and take other similar actions on behalf of the Fund; (iv) maintain the books
and records required to be maintained by the Fund except to the extent
arrangements have been made for such books and records to be maintained by the
administrator or another agent of the Fund; (v) furnish reports, statements and
other data on securities, economic conditions and other matters related to the
investment of the Fund's assets which the Fund's administrator or distributor or
the officers of the Trust may reasonably request; and (vi) render to the Board
of Trustees such periodic and special reports with respect to the Fund's
investment activities as the Board may reasonably request, including at least
one in-person appearance annually before the Board of Trustees. Notwithstanding
the provisions of this Section 2(a), the Adviser may delegate some or all of
these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Trustees. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may determine, the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement
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or otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research services to
the Adviser an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission was 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 Adviser's overall
responsibilities with respect to the Trust. The Adviser is further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other services, to
the Trust, the Adviser, or any affiliate of either. Such allocation shall be in
such amounts and proportions as the Adviser shall determine, and the Adviser
shall report on such allocations regularly to the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The Adviser is also authorized to consider sales of shares as a factor in the
selection of brokers or dealers to execute portfolio transactions, subject to
the requirements of best price and execution.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as of other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the provisions of
Sections 2(a) and 2(b), respectively, the Adviser may delegate the performance
of investment advisory services for the Fund to one or more sub-advisers
approved by the Board of Trustees, but such delegation will not relieve the
Adviser of the duty to supervise the performance of advisory services hereunder.
If the advisory functions are delegated to one or more sub-advisers, then the
obligations of each such sub-adviser shall be governed by a sub-advisory
agreement to be entered into between the Adviser and each such sub-adviser.
2. REPRESENTATIONS OF THE ADVISER.
(c) The Adviser shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(d) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(e) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company
Act, and any other applicable state and/or self-regulatory organization laws and
regulations.
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(f) The Adviser shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Trustees in connection
with their approval of this Agreement.
(g) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to enter into this Agreement and to perform services hereunder, the
execution and delivery of this Agreement by the Adviser has been duly authorized
by all necessary corporate action, and this Agreement is a valid binding
obligation of the Adviser, enforceable against the Adviser in accordance with
its terms.
3. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Fund under the provisions of this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
4. ADVISER'S PERSONNEL. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
5. EXPENSES. With respect to the operation of the Fund, the Adviser shall
be responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's operating expenses, including but not limited to: investment
sub-advisory and administrative fees payable to any sub-adviser or administrator
under the appropriate agreements entered into with the Adviser or the Trust, as
the case may be; fees and expenses incurred in connection with the issuance,
registration and transfer of Trust shares; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest
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charges on any borrowings; costs and expenses of pricing and calculating the
Fund's daily net asset value and of maintaining the Fund's books of account
required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of the Fund's shareholders and the Trust's Board of
Trustees that are not paid by other third parties; salaries and expenses of
officers and fees and expenses of members of the Board of Trustees or members of
any advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the administrator; insurance premiums on
property or personnel of the Fund which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder record-keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of the Fund's operation. Notwithstanding any other provision
of this Agreement to the contrary, however, the Adviser will not be responsible
for any brokerage commissions or extraordinary and non-recurring expenses,
except as specifically agreed to herein or as otherwise prescribed.
6. INVESTMENT ADVISORY FEE.
(h) The Fund shall pay to the Adviser, and the Adviser agrees to
accept, as full compensation for all investment and advisory services furnished
or provided to the Fund pursuant to this Agreement, an annual investment
advisory fee at the rate equal to 1.00% of the Fund's average daily net assets.
(i) The investment advisory fee shall be accrued daily by the Fund and
paid to the Adviser on the first business day of the succeeding month.
(j) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Adviser shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(k) The fee payable to the Adviser under this Agreement will be
reduced to the extent of any receivable owed by the Adviser to the Fund and as
required under any expense limitation applicable to the Fund.
(l) The Adviser voluntarily may reduce any portion of the compensation
or reimbursement of expenses due to it pursuant to this Agreement and may agree
to make payments to limit the expenses which are the responsibility of the Fund
under this
-5-
Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Adviser hereunder or to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis.
(m) Any fee withheld or voluntarily reduced and any Fund expense
absorbed by the Adviser voluntarily pursuant to Section 7(e) shall be reimbursed
by the Fund to the Adviser, if so requested by the Adviser, no later than the
fifth fiscal year succeeding the fiscal year of the withholding, reduction or
absorption if the aggregate amount actually paid by the Fund toward the
operating expenses for such fiscal year (taking into account the reimbursement)
do not exceed the applicable limitation on Fund expenses. Such reimbursement may
be paid prior to the Fund's payment of current expenses if so requested by the
Adviser even if such practice may require the Adviser to waive, reduce or absorb
current Fund expenses.
(n) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
7. NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Fund. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Adviser or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Adviser
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's assets in connection with any borrowing not
directly for the Fund's benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days shall
constitute a borrowing.
8. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Amended and Restated Agreement and Declaration of
Trust, By-Laws, or any applicable statute or regulation, or to relieve or
deprive the Board of Trustees of the Trust of its responsibility for and control
of the conduct of the affairs of the Trust and the Fund. In this connection, the
Adviser acknowledges that the Trustees retain ultimate plenary authority over
the Fund and may take any and all actions necessary and reasonable to protect
the interests of shareholders.
-6-
9. REPORTS AND ACCESS. The Adviser agrees to supply such information to the
Fund's administrator and to permit such compliance inspections by the
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
10. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(o) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Trust or another third party for inclusion therein.
(p) The Adviser shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Adviser.
(q) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the Trust
or 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 for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(r) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, trustees, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any duties under this Agreement;
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(s) No provision of this Agreement shall be construed to protect any
Director or officer of the Trust, or officer of the Adviser, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
11. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The Trust's
employment of the Adviser is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise,
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the Adviser may act as investment adviser for any other person, and shall not in
any way be limited or restricted from having, 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 Adviser expressly represents that it will
undertake no activities which will adversely affect the performance of its
obligations to the Fund under this Agreement; and provided further that the
Adviser shall adhere to a code of ethics governing employee trading and trading
for proprietary accounts that conforms to the requirements of the Investment
Company Act and the Investment Advisers Act of 1940 and has been approved by the
Trust's Board of Trustees.
12. TERM. This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (1) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of the Fund and (ii) the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
2. OWNERSHIP OF THE NAME OF THE FUND. The parties to this Agreement hereby
acknowledge that the prefix to the name of the Trust and the Fund,
XxxxxXxxxxx.xxx, is the exclusive property of the parent of the Adviser,
XxxxxXxxxxx.xxx, Inc. and is not the property of the Trust or the Fund. In the
event that the Adviser ceases to provide investment advisory services to the
Fund pursuant to this Agreement, the Fund shall change its name within thirty
(30) days of the termination of this Agreement.
15. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
(b) The Adviser shall treat as confidential and proprietary
information of the Trust all records and other information relative to the Trust
and shareholders of the Trust, or persons who respond to inquiries concerning
investment in the Trust, and shall not use such records and information for any
purpose other than performance of its responsibilities and duties
-8-
hereunder or under any other agreement with the Trust, except as otherwise
provided in writing by the Trust (which approval shall not be unreasonably
withheld if the Adviser may be exposed to civil or criminal proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust). However, nothing
herein shall be deemed to prohibit the Adviser or its affiliates from using in
any manner information provided by the Adviser or its affiliates to the Trust,
or from advertising to or soliciting the public generally with respect to other
products and services, regardless of whether such advertisements or solicitation
may coincidentally include prior or present shareholders or persons who have
responded to inquiries regarding the Trust.
16. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty, by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, upon sixty
(60) days' written notice to the Adviser, and by the Adviser upon sixty (60)
days' written notice to a Fund. In the event of a termination, the Adviser shall
cooperate in the orderly transfer of the Fund's affairs and, at the request of
the Board of Trustees, transfer any and all books and records of the Fund
maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
agreement and understanding between the parties hereto. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement thereof
is sought. To the extent required by the Investment Company Act, no amendment of
this Agreement shall be effective until approved by a majority of the
outstanding voting securities of the Funds (as defined in such Act).
18. DECLARATION OF TRUST. The Amended and Restated Agreement and
Declaration of Trust of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. In accordance therewith, the Adviser acknowledges
and agrees that this Agreement was signed on behalf of the Trust by the
undersigned as officers of the Trust and not individually, and that the
obligations of the Trust under this Agreement are not binding upon any officers,
trustees or shareholders of the Trust individually but are binding only upon the
assets of the Trust.
19. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
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20. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act of
1940 and any rules and regulations promulgated thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
XXXXXXXXXXX.XXX TRUST XXXXXXXXXXX.XXX INVESTMENT
on behalf of its series, the ADVISORS, INC.
XxxxxXxxxxx.xxx Community
Intelligence Fund
By:______________________________ By:______________________________
Name: Name:
Title: Title:
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XXXXXXXXXXX.XXX TRUST
INVESTMENT ADVISORY AGREEMENT
-----------------------------
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the __th day
of __________, 1999, by and between XXXXXXXXXXX.XXX TRUST, a Massachusetts
business trust (the "Trust"), on behalf of its series, XxxxxXxxxxx.xxx Market
Leaders Growth Fund (the "Fund") and XXXXXXXXXXX.XXX INVESTMENT ADVISORS, INC.,
a Delaware corporation (the "Adviser").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Trust hereby employs the Adviser and the
Adviser hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Board of Trustees.
1. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as investment adviser to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objective, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
limitation, the Trust's Amended and Restated Agreement and Declaration of Trust
and By-Laws; the Fund's prospectus, statement of additional information and
undertaking from time to time; and such other limitations, policies and
procedures as the Trustees may impose from time to time in writing to the
Adviser. In providing such services, the Adviser shall at all times adhere to
the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, the Uniform
Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Adviser shall: (i)
furnish the Fund with advice and recommendations with respect to the investment
of the Fund's assets and the purchase and sale of portfolio securities for the
Fund, including the taking of such steps as may be necessary to implement such
advice and recommendations (e.g., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Board of Trustees; (iii) vote proxies for the Fund, file ownership
reports under Section 13 of the Securities Exchange Act of 1934 for the Fund,
and take other similar actions on behalf of the Fund; (iv) maintain the books
and records required to be maintained by the Fund except to the extent
arrangements have been made for such books and records to be maintained by the
administrator or another agent of the Fund; (v) furnish reports, statements and
other data on securities, economic conditions and other matters related to the
investment of the Fund's assets which the Fund's administrator or distributor or
the officers of the Trust may reasonably request; and (vi) render to the Board
of Trustees such periodic and special reports with respect to the Fund's
investment activities as the Board may reasonably request, including at least
one in-person appearance annually before the Board of Trustees. Notwithstanding
the provisions of this Section 2(a), the Adviser may delegate some or all of
these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Trustees. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may determine, the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement
-2-
or otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research services to
the Adviser an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission was 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 Adviser's overall
responsibilities with respect to the Trust. The Adviser is further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other services, to
the Trust, the Adviser, or any affiliate of either. Such allocation shall be in
such amounts and proportions as the Adviser shall determine, and the Adviser
shall report on such allocations regularly to the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The Adviser is also authorized to consider sales of shares as a factor in the
selection of brokers or dealers to execute portfolio transactions, subject to
the requirements of best price and execution.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as of other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the provisions of
Sections 2(a) and 2(b), respectively, the Adviser may delegate the performance
of investment advisory services for the Fund to one or more sub-advisers
approved by the Board of Trustees, but such delegation will not relieve the
Adviser of the duty to supervise the performance of advisory services hereunder.
If the advisory functions are delegated to one or more sub-advisers, then the
obligations of each such sub-adviser shall be governed by a sub-advisory
agreement to be entered into between the Adviser and each such sub-adviser.
2. REPRESENTATIONS OF THE ADVISER.
(c) The Adviser shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(d) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(e) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company
Act, and any other applicable state and/or self-regulatory organization laws and
regulations.
-3-
(f) The Adviser shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Trustees in connection
with their approval of this Agreement.
(g) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to enter into this Agreement and to perform services hereunder, the
execution and delivery of this Agreement by the Adviser has been duly authorized
by all necessary corporate action, and this Agreement is a valid binding
obligation of the Adviser, enforceable against the Adviser in accordance with
its terms.
3. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Fund under the provisions of this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
4. ADVISER'S PERSONNEL. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
5. EXPENSES. With respect to the operation of the Fund, the Adviser shall
be responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's operating expenses, including but not limited to: investment
sub-advisory and administrative fees payable to any sub-adviser or administrator
under the appropriate agreements entered into with the Adviser or the Trust, as
the case may be; fees and expenses incurred in connection with the issuance,
registration and transfer of Trust shares; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest
-4-
charges on any borrowings; costs and expenses of pricing and calculating the
Fund's daily net asset value and of maintaining the Fund's books of account
required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of the Fund's shareholders and the Trust's Board of
Trustees that are not paid by other third parties; salaries and expenses of
officers and fees and expenses of members of the Board of Trustees or members of
any advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the administrator; insurance premiums on
property or personnel of the Fund which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder record-keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of the Fund's operation. Notwithstanding any other provision
of this Agreement to the contrary, however, the Adviser will not be responsible
for any brokerage commissions or extraordinary and non-recurring expenses,
except as specifically agreed to herein or as otherwise prescribed.
6. INVESTMENT ADVISORY FEE.
(h) The Fund shall pay to the Adviser, and the Adviser agrees to
accept, as full compensation for all investment and advisory services furnished
or provided to the Fund pursuant to this Agreement, an annual investment
advisory fee at the rate equal to 1.00% of the Fund's average daily net assets.
(i) The investment advisory fee shall be accrued daily by the Fund and
paid to the Adviser on the first business day of the succeeding month.
(j) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Adviser shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(k) The fee payable to the Adviser under this Agreement will be
reduced to the extent of any receivable owed by the Adviser to the Fund and as
required under any expense limitation applicable to the Fund.
(l) The Adviser voluntarily may reduce any portion of the compensation
or reimbursement of expenses due to it pursuant to this Agreement and may agree
to make payments to limit the expenses which are the responsibility of the Fund
under this
-5-
Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Adviser hereunder or to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis.
(m) Any fee withheld or voluntarily reduced and any Fund expense
absorbed by the Adviser voluntarily pursuant to Section 7(e) shall be reimbursed
by the Fund to the Adviser, if so requested by the Adviser, no later than the
fifth fiscal year succeeding the fiscal year of the withholding, reduction or
absorption if the aggregate amount actually paid by the Fund toward the
operating expenses for such fiscal year (taking into account the reimbursement)
do not exceed the applicable limitation on Fund expenses. Such reimbursement may
be paid prior to the Fund's payment of current expenses if so requested by the
Adviser even if such practice may require the Adviser to waive, reduce or absorb
current Fund expenses.
(n) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
7. NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Fund. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Adviser or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Adviser
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's assets in connection with any borrowing not
directly for the Fund's benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days shall
constitute a borrowing.
8. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Amended and Restated Agreement and Declaration of
Trust, By-Laws, or any applicable statute or regulation, or to relieve or
deprive the Board of Trustees of the Trust of its responsibility for and control
of the conduct of the affairs of the Trust and the Fund. In this connection, the
Adviser acknowledges that the Trustees retain ultimate plenary authority over
the Fund and may take any and all actions necessary and reasonable to protect
the interests of shareholders.
-6-
9. REPORTS AND ACCESS. The Adviser agrees to supply such information to the
Fund's administrator and to permit such compliance inspections by the
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
10. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(o) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Trust or another third party for inclusion therein.
(p) The Adviser shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Adviser.
(q) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the Trust
or 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 for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(r) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, trustees, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any duties under this Agreement;
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(s) No provision of this Agreement shall be construed to protect any
Director or officer of the Trust, or officer of the Adviser, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
11. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The Trust's
employment of the Adviser is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise,
-7-
the Adviser may act as investment adviser for any other person, and shall not in
any way be limited or restricted from having, 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 Adviser expressly represents that it will
undertake no activities which will adversely affect the performance of its
obligations to the Fund under this Agreement; and provided further that the
Adviser shall adhere to a code of ethics governing employee trading and trading
for proprietary accounts that conforms to the requirements of the Investment
Company Act and the Investment Advisers Act of 1940 and has been approved by the
Trust's Board of Trustees.
12. TERM. This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (1) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of the Fund and (ii) the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
2. OWNERSHIP OF THE NAME OF THE FUND. The parties to this Agreement hereby
acknowledge that the prefix to the name of the Trust and the Fund,
XxxxxXxxxxx.xxx, is the exclusive property of the parent of the Adviser,
XxxxxXxxxxx.xxx, Inc. and is not the property of the Trust or the Fund. In the
event that the Adviser ceases to provide investment advisory services to the
Fund pursuant to this Agreement, the Fund shall change its name within thirty
(30) days of the termination of this Agreement.
15. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
(b) The Adviser shall treat as confidential and proprietary
information of the Trust all records and other information relative to the Trust
and shareholders of the Trust, or persons who respond to inquiries concerning
investment in the Trust, and shall not use such
-8-
records and information for any purpose other than performance of its
responsibilities and duties hereunder or under any other agreement with the
Trust, except as otherwise provided in writing by the Trust (which approval
shall not be unreasonably withheld if the Adviser may be exposed to civil or
criminal proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Trust).
However, nothing herein shall be deemed to prohibit the Adviser or its
affiliates from using in any manner information provided by the Adviser or its
affiliates to the Trust, or from advertising to or soliciting the public
generally with respect to other products and services, regardless of whether
such advertisements or solicitation may coincidentally include prior or present
shareholders or persons who have responded to inquiries regarding the Trust.
16. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty, by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, upon sixty
(60) days' written notice to the Adviser, and by the Adviser upon sixty (60)
days' written notice to a Fund. In the event of a termination, the Adviser shall
cooperate in the orderly transfer of the Fund's affairs and, at the request of
the Board of Trustees, transfer any and all books and records of the Fund
maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
agreement and understanding between the parties hereto. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement thereof
is sought. To the extent required by the Investment Company Act, no amendment of
this Agreement shall be effective until approved by a majority of the
outstanding voting securities of the Funds (as defined in such Act).
18. DECLARATION OF TRUST. The Amended and Restated Agreement and
Declaration of Trust of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. In accordance therewith, the Adviser acknowledges
and agrees that this Agreement was signed on behalf of the Trust by the
undersigned as officers of the Trust and not individually, and that the
obligations of the Trust under this Agreement are not binding upon any officers,
trustees or shareholders of the Trust individually but are binding only upon the
assets of the Trust.
19. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
-9-
20. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act of
1940 and any rules and regulations promulgated thereunder.
-10-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
XXXXXXXXXXX.XXX TRUST XXXXXXXXXXX.XXX INVESTMENT
on behalf of its series, the ADVISORS, INC.
XxxxxXxxxxx.xxx Market Leaders
Growth Fund
By:______________________________ By:______________________________
Name: Name:
Title: Title:
-11-
XXXXXXXXXXX.XXX TRUST
INVESTMENT ADVISORY AGREEMENT
-----------------------------
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the __th day
of __________, 1999, by and between XXXXXXXXXXX.XXX TRUST, a Massachusetts
business trust (the "Trust"), on behalf of its series, XxxxxXxxxxx.xxx Pure Play
Internet Fund (the "Fund") and XXXXXXXXXXX.XXX INVESTMENT ADVISORS, INC., a
Delaware corporation (the "Adviser").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Trust hereby employs the Adviser and the
Adviser hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Board of Trustees.
1. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as investment adviser to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objective, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
limitation, the Trust's Amended and Restated Agreement and Declaration of Trust
and By-Laws; the Fund's prospectus, statement of additional information and
undertaking from time to time; and such other limitations, policies and
procedures as the Trustees may impose from time to time in writing to the
Adviser. In providing such services, the Adviser shall at all times adhere to
the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, the Uniform
Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Adviser shall: (i)
furnish the Fund with advice and recommendations with respect to the investment
of the Fund's assets and the purchase and sale of portfolio securities for the
Fund, including the taking of such steps as may be necessary to implement such
advice and recommendations (e.g., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Board of Trustees; (iii) vote proxies for the Fund, file ownership
reports under Section 13 of the Securities Exchange Act of 1934 for the Fund,
and take other similar actions on behalf of the Fund; (iv) maintain the books
and records required to be maintained by the Fund except to the extent
arrangements have been made for such books and records to be maintained by the
administrator or another agent of the Fund; (v) furnish reports, statements and
other data on securities, economic conditions and other matters related to the
investment of the Fund's assets which the Fund's administrator or distributor or
the officers of the Trust may reasonably request; and (vi) render to the Board
of Trustees such periodic and special reports with respect to the Fund's
investment activities as the Board may reasonably request, including at least
one in-person appearance annually before the Board of Trustees. Notwithstanding
the provisions of this Section 2(a), the Adviser may delegate some or all of
these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Trustees. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may determine, the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement
-2-
or otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research services to
the Adviser an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission was 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 Adviser's overall
responsibilities with respect to the Trust. The Adviser is further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other services, to
the Trust, the Adviser, or any affiliate of either. Such allocation shall be in
such amounts and proportions as the Adviser shall determine, and the Adviser
shall report on such allocations regularly to the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The Adviser is also authorized to consider sales of shares as a factor in the
selection of brokers or dealers to execute portfolio transactions, subject to
the requirements of best price and execution.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as of other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the provisions of
Sections 2(a) and 2(b), respectively, the Adviser may delegate the performance
of investment advisory services for the Fund to one or more sub-advisers
approved by the Board of Trustees, but such delegation will not relieve the
Adviser of the duty to supervise the performance of advisory services hereunder.
If the advisory functions are delegated to one or more sub-advisers, then the
obligations of each such sub-adviser shall be governed by a sub-advisory
agreement to be entered into between the Adviser and each such sub-adviser.
2. REPRESENTATIONS OF THE ADVISER.
(c) The Adviser shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(d) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(e) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company
Act, and any other applicable state and/or self-regulatory organization laws and
regulations.
-3-
(f) The Adviser shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Trustees in connection
with their approval of this Agreement.
(g) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to enter into this Agreement and to perform services hereunder, the
execution and delivery of this Agreement by the Adviser has been duly authorized
by all necessary corporate action, and this Agreement is a valid binding
obligation of the Adviser, enforceable against the Adviser in accordance with
its terms.
3. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Fund under the provisions of this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
4. ADVISER'S PERSONNEL. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
5. EXPENSES. With respect to the operation of the Fund, the Adviser shall
be responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's operating expenses, including but not limited to: investment
sub-advisory and administrative fees payable to any sub-adviser or administrator
under the appropriate agreements entered into with the Adviser or the Trust, as
the case may be; fees and expenses incurred in connection with the issuance,
registration and transfer of Trust shares; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest
-4-
charges on any borrowings; costs and expenses of pricing and calculating the
Fund's daily net asset value and of maintaining the Fund's books of account
required under the Investment Company Act; taxes, if any; expenditures in
connection with meetings of the Fund's shareholders and the Trust's Board of
Trustees that are not paid by other third parties; salaries and expenses of
officers and fees and expenses of members of the Board of Trustees or members of
any advisory board or committee who are not members of, affiliated with or
interested persons of the Adviser or the administrator; insurance premiums on
property or personnel of the Fund which inure to its benefit, including
liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information
of the Fund or other communications for distribution to existing shareholders;
legal, auditing and accounting fees; trade association dues; fees and expenses
(including legal fees) of registering and maintaining registration of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder record-keeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of the Fund's operation. Notwithstanding any other provision
of this Agreement to the contrary, however, the Adviser will not be responsible
for any brokerage commissions or extraordinary and non-recurring expenses,
except as specifically agreed to herein or as otherwise prescribed.
6. INVESTMENT ADVISORY FEE.
(h) The Fund shall pay to the Adviser, and the Adviser agrees to
accept, as full compensation for all investment and advisory services furnished
or provided to the Fund pursuant to this Agreement, an annual investment
advisory fee at the rate equal to 1.00% of the Fund's average daily net assets.
(i) The investment advisory fee shall be accrued daily by the Fund and
paid to the Adviser on the first business day of the succeeding month.
(j) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Adviser shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(k) The fee payable to the Adviser under this Agreement will be
reduced to the extent of any receivable owed by the Adviser to the Fund and as
required under any expense limitation applicable to the Fund.
(l) The Adviser voluntarily may reduce any portion of the compensation
or reimbursement of expenses due to it pursuant to this Agreement and may agree
to make payments to limit the expenses which are the responsibility of the Fund
under this
-5-
Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Adviser hereunder or to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis.
(m) Any fee withheld or voluntarily reduced and any Fund expense
absorbed by the Adviser voluntarily pursuant to Section 7(e) shall be reimbursed
by the Fund to the Adviser, if so requested by the Adviser, no later than the
fifth fiscal year succeeding the fiscal year of the withholding, reduction or
absorption if the aggregate amount actually paid by the Fund toward the
operating expenses for such fiscal year (taking into account the reimbursement)
do not exceed the applicable limitation on Fund expenses. Such reimbursement may
be paid prior to the Fund's payment of current expenses if so requested by the
Adviser even if such practice may require the Adviser to waive, reduce or absorb
current Fund expenses.
(n) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
7. NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Fund. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Adviser or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Adviser
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's assets in connection with any borrowing not
directly for the Fund's benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days shall
constitute a borrowing.
8. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Amended and Restated Agreement and Declaration of
Trust, By-Laws, or any applicable statute or regulation, or to relieve or
deprive the Board of Trustees of the Trust of its responsibility for and control
of the conduct of the affairs of the Trust and the Fund. In this connection, the
Adviser acknowledges that the Trustees retain ultimate plenary authority over
the Fund and may take any and all actions necessary and reasonable to protect
the interests of shareholders.
-6-
9. REPORTS AND ACCESS. The Adviser agrees to supply such information to the
Fund's administrator and to permit such compliance inspections by the
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
10. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(o) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Trust or another third party for inclusion therein.
(p) The Adviser shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Adviser.
(q) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the Trust
or 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 for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(r) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, trustees, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any duties under this Agreement;
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(s) No provision of this Agreement shall be construed to protect any
Director or officer of the Trust, or officer of the Adviser, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
11. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The Trust's
employment of the Adviser is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise,
-7-
the Adviser may act as investment adviser for any other person, and shall not in
any way be limited or restricted from having, 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 Adviser expressly represents that it will
undertake no activities which will adversely affect the performance of its
obligations to the Fund under this Agreement; and provided further that the
Adviser shall adhere to a code of ethics governing employee trading and trading
for proprietary accounts that conforms to the requirements of the Investment
Company Act and the Investment Advisers Act of 1940 and has been approved by the
Trust's Board of Trustees.
12. TERM. This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (1) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of the Fund and (ii) the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
2. OWNERSHIP OF THE NAME OF THE FUND. The parties to this Agreement hereby
acknowledge that the prefix to the name of the Trust and the Fund,
XxxxxXxxxxx.xxx, is the exclusive property of the parent of the Adviser,
XxxxxXxxxxx.xxx, Inc. and is not the property of the Trust or the Fund. In the
event that the Adviser ceases to provide investment advisory services to the
Fund pursuant to this Agreement, the Fund shall change its name within thirty
(30) days of the termination of this Agreement.
15. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
(b) The Adviser shall treat as confidential and proprietary
information of the Trust all records and other information relative to the Trust
and shareholders of the Trust, or persons who respond to inquiries concerning
investment in the Trust, and shall not use such records and information for any
purpose other than performance of its responsibilities and duties
-8-
hereunder or under any other agreement with the Trust, except as otherwise
provided in writing by the Trust (which approval shall not be unreasonably
withheld if the Adviser may be exposed to civil or criminal proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust). However, nothing
herein shall be deemed to prohibit the Adviser or its affiliates from using in
any manner information provided by the Adviser or its affiliates to the Trust,
or from advertising to or soliciting the public generally with respect to other
products and services, regardless of whether such advertisements or solicitation
may coincidentally include prior or present shareholders or persons who have
responded to inquiries regarding the Trust.
16. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty, by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, upon sixty
(60) days' written notice to the Adviser, and by the Adviser upon sixty (60)
days' written notice to a Fund. In the event of a termination, the Adviser shall
cooperate in the orderly transfer of the Fund's affairs and, at the request of
the Board of Trustees, transfer any and all books and records of the Fund
maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
agreement and understanding between the parties hereto. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement thereof
is sought. To the extent required by the Investment Company Act, no amendment of
this Agreement shall be effective until approved by a majority of the
outstanding voting securities of the Funds (as defined in such Act).
18. DECLARATION OF TRUST. The Amended and Restated Agreement and
Declaration of Trust of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. In accordance therewith, the Adviser acknowledges
and agrees that this Agreement was signed on behalf of the Trust by the
undersigned as officers of the Trust and not individually, and that the
obligations of the Trust under this Agreement are not binding upon any officers,
trustees or shareholders of the Trust individually but are binding only upon the
assets of the Trust.
19. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
-9-
20. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act of
1940 and any rules and regulations promulgated thereunder.
-10-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
XXXXXXXXXXX.XXX TRUST XXXXXXXXXXX.XXX INVESTMENT
on behalf of its series, the ADVISORS, INC.
XxxxxXxxxxx.xxx Pure Play
Internet Fund
By:______________________________ By:______________________________
Name: Name:
Title: Title:
-11-
XXXXXXXXXXX.XXX TRUST
INVESTMENT ADVISORY AGREEMENT
-----------------------------
THIS INVESTMENT ADVISORY AGREEMENT ("Agreement") is made as of the __th day
of __________, 1999, by and between XXXXXXXXXXX.XXX TRUST, a Massachusetts
business trust (the "Trust"), on behalf of its series, XxxxxXxxxxx.xxx No Fee
S&P 500 Index Fund (the "Fund") and XXXXXXXXXXX.XXX INVESTMENT ADVISORS, INC., a
Delaware corporation (the "Adviser").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 and is engaged in the business of providing
investment advice to individual clients and investment companies; and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Trust hereby employs the Adviser and the
Adviser hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Board of Trustees.
1. DUTIES OF ADVISER.
(a) GENERAL DUTIES. The Adviser shall act as investment adviser to the
Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objective, policies and restrictions of the Fund
as set forth in the Fund's and Trust's governing documents, including, without
limitation, the Trust's Amended and Restated Agreement and Declaration of Trust
and By-Laws; the Fund's prospectus, statement of additional information and
undertaking from time to time; and such other limitations, policies and
procedures as the Trustees may impose from time to time in writing to the
Adviser. In providing such services, the Adviser shall at all times adhere to
the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, the Uniform
Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Adviser shall: (i)
furnish the Fund with advice and recommendations with respect to the investment
of the Fund's assets and the purchase and sale of portfolio securities for the
Fund, including the taking of such steps as may be necessary to implement such
advice and recommendations (e.g., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Board of Trustees; (iii) vote proxies for the Fund, file ownership
reports under Section 13 of the Securities Exchange Act of 1934 for the Fund,
and take other similar actions on behalf of the Fund; (iv) maintain the books
and records required to be maintained by the Fund except to the extent
arrangements have been made for such books and records to be maintained by the
administrator or another agent of the Fund; (v) furnish reports, statements and
other data on securities, economic conditions and other matters related to the
investment of the Fund's assets which the Fund's administrator or distributor or
the officers of the Trust may reasonably request; and (vi) render to the Board
of Trustees such periodic and special reports with respect to the Fund's
investment activities as the Board may reasonably request, including at least
one in-person appearance annually before the Board of Trustees. Notwithstanding
the provisions of this Section 2(a), the Adviser may delegate some or all of
these duties under Section 2(c) below.
(b) BROKERAGE. The Adviser shall be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates, provided that the Adviser shall not
direct orders to an affiliated person of the Adviser without general prior
authorization to use such affiliated broker or dealer from the Board of
Trustees. The Adviser's primary consideration in effecting a securities
transaction will be to obtain on behalf of the Fund the best available price and
execution. In selecting a broker-dealer to execute each particular transaction,
the Adviser may take into consideration all factors it deems relevant, including
without limitation: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may determine, the
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement
-2-
or otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research services to
the Adviser an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission was 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 Adviser's overall
responsibilities with respect to the Trust. The Adviser is further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other services, to
the Trust, the Adviser, or any affiliate of either. Such allocation shall be in
such amounts and proportions as the Adviser shall determine, and the Adviser
shall report on such allocations regularly to the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
The Adviser is also authorized to consider sales of shares as a factor in the
selection of brokers or dealers to execute portfolio transactions, subject to
the requirements of best price and execution.
On occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of the Fund as well as of other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) DELEGATION OF RESPONSIBILITIES. Notwithstanding the provisions of
Sections 2(a) and 2(b), respectively, the Adviser may delegate the performance
of investment advisory services for the Fund to one or more sub-advisers
approved by the Board of Trustees, but such delegation will not relieve the
Adviser of the duty to supervise the performance of advisory services hereunder.
If the advisory functions are delegated to one or more sub-advisers, then the
obligations of each such sub-adviser shall be governed by a sub-advisory
agreement to be entered into between the Adviser and each such sub-adviser.
2. REPRESENTATIONS OF THE ADVISER.
(c) The Adviser shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(d) The Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(e) The Adviser shall conduct its operations at all times in
conformance with the Investment Advisers Act of 1940, the Investment Company Act
of 1940, and any other applicable state and/or self-regulatory organization laws
and regulations.
-3-
(f) The Adviser shall maintain errors and omissions insurance in an
amount at least equal to that disclosed to the Board of Trustees in connection
with their approval of this Agreement.
(g) The Adviser is a corporation duly organized and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to enter into this Agreement and to perform services hereunder, the
execution and delivery of this Agreement by the Adviser has been duly authorized
by all necessary corporate action, and this Agreement is a valid binding
obligation of the Adviser, enforceable against the Adviser in accordance with
its terms.
3. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Adviser to the Fund under the provisions of this Agreement are
not to be deemed exclusive, and the Adviser shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
4. ADVISER'S PERSONNEL. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Adviser or the Board of Trustees may desire and reasonably request.
5. EXPENSES.
(h) With respect to the operation of the Fund, the Adviser shall be
responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, (ii) the
expenses of printing and distributing extra copies of the Fund's prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) the costs of any special
Board of Trustees meetings or shareholder meetings convened for the primary
benefit of the Adviser. The Adviser shall also be responsible for payment of all
of the Fund's expenses, including but not limited to: investment sub-advisory
and administrative fees payable to any sub-adviser or administrator under the
appropriate agreements entered into with the Adviser or the Trust, as the case
may be; fees and expenses incurred in connection with the issuance, registration
and transfer of Trust shares; all expenses of transfer, receipt, safekeeping,
servicing and accounting for the cash,
-4-
securities and other property of the Trust for the benefit of the Fund including
all fees and expenses of its custodian, shareholder services agent and
accounting services agent; interest charges on any borrowings; costs and
expenses of pricing and calculating the Fund's daily net asset value and of
maintaining the Fund's books of account required under the Investment Company
Act; taxes, if any; expenditures in connection with meetings of the Fund's
shareholders and the Trust's Board of Trustees that are not paid by other third
parties; salaries and expenses of officers and fees and expenses of members of
the Board of Trustees or members of any advisory board or committee who are not
members of, affiliated with or interested persons of the Adviser or the
administrator; insurance premiums on property or personnel of the Fund which
inure to its benefit, including liability and fidelity bond insurance; the cost
of preparing and printing reports, proxy statements, prospectuses and statements
of additional information of the Fund or other communications for distribution
to existing shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of registering and maintaining
registration of its shares for sale under federal and applicable state and
foreign securities laws; all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer, shareholder record-keeping,
dividend disbursing, redemption, and other agents for the benefit of the Fund,
if any; and all other charges and costs of the Fund's operation. Notwithstanding
any other provision of this Agreement to the contrary, however, the Adviser will
not be responsible for any brokerage commissions or extraordinary and
non-recurring expenses, except as specifically agreed to herein or as otherwise
prescribed.
6. INVESTMENT ADVISORY FEE. The Adviser has agreed to serve as the Adviser
to the Fund without compensation or reimbursement for expenses incurred by or on
behalf of the Fund.
7. NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Fund. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Adviser or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Adviser
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's assets in connection with any borrowing not
directly for the Fund's benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days shall
constitute a borrowing.
8. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Amended and Restated Agreement and Declaration of
Trust, By-Laws, or any applicable statute or regulation, or to relieve or
deprive the Board of Trustees of the Trust of its responsibility for and control
of the conduct of the affairs of the Trust and the Fund. In this connection, the
Adviser acknowledges that the Trustees retain ultimate plenary authority over
the Fund and may take any and all actions necessary and reasonable to protect
the interests of shareholders.
-5-
9. REPORTS AND ACCESS. The Adviser agrees to supply such information to the
Fund's administrator and to permit such compliance inspections by the
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
10. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(i) The Adviser shall have responsibility for the accuracy and
completeness of the statements in the Fund's offering materials (including the
prospectus, the statement of additional information, advertising and sales
materials), except for information supplied by any sub-adviser, the
administrator or the Trust or another third party for inclusion therein.
(j) The Adviser shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Adviser.
(k) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Adviser, the Adviser shall not be subject to liability to the Trust
or 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 for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(l) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, trustees, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any duties under this Agreement
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(m) No provision of this Agreement shall be construed to protect any
Director or officer of the Trust, or officer of the Adviser, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
11. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The Trust's
employment of the Adviser is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Adviser may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from having, selling or trading any securities for its or their own accounts or
-6-
the accounts of others for whom it or they may be acting, provided, however,
that the Adviser expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that the Adviser shall adhere to a code of
ethics governing employee trading and trading for proprietary accounts that
conforms to the requirements of the Investment Company Act and the Investment
Advisers Act of 1940 and has been approved by the Trust's Board of Trustees.
12. TERM. This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (1) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of the Fund and (ii) the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting called for
the purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
2. OWNERSHIP OF THE NAME OF THE FUND. The parties to this Agreement hereby
acknowledge that the prefix to the name of the Trust and the Fund,
XxxxxXxxxxx.xxx, is the exclusive property of the parent of the Adviser,
XxxxxXxxxxx.xxx, Inc. and is not the property of the Fund. In the event that the
Adviser ceases to provide investment advisory services to the Fund or the Trust
pursuant to this Agreement, the Fund shall change its name within thirty (30)
days of the termination of this Agreement.
15. BOOKS AND RECORDS; CONFIDENTIALITY.
(a) In compliance with the requirements of Rule 31a-3 under the
Investment Company Act, the Adviser agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Investment Company Act the records required to be maintained by Rule 31a-1 under
such Act.
(b) The Adviser shall treat as confidential and proprietary
information of the Trust all records and other information relative to the Trust
and shareholders of the Trust, or persons who respond to inquiries concerning
investment in the Trust, and shall not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder or
under any other agreement with the Trust, except as otherwise provided in
writing by the Trust (which approval shall not be unreasonably withheld if the
Adviser may be exposed to civil or criminal proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust). However,
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nothing herein shall be deemed to prohibit the Adviser or its affiliates from
using in any manner information provided by the Adviser or its affiliates to the
Trust, or from advertising to or soliciting the public generally with respect to
other products and services, regardless of whether such advertisements or
solicitation may coincidentally include prior or present shareholders or persons
who have responded to inquiries regarding the Trust.
16. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Trust on behalf of the
Fund at any time without payment of any penalty, by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund, upon sixty
(60) days' written notice to the Adviser, and by the Adviser upon sixty (60)
days' written notice to a Fund. In the event of a termination, the Adviser shall
cooperate in the orderly transfer of the Fund's affairs and, at the request of
the Board of Trustees, transfer any and all books and records of the Fund
maintained by the Adviser on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
17. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
agreement and understanding between the parties hereto. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement thereof
is sought. To the extent required by the Investment Company Act, no amendment of
this Agreement shall be effective until approved by a majority of the
outstanding voting securities of the Funds (as defined in such Act).
18. DECLARATION OF TRUST. The Amended and Restated Agreement and
Declaration of Trust of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts. In accordance therewith, the Adviser acknowledges
and agrees that this Agreement was signed on behalf of the Trust by the
undersigned as officers of the Trust and not individually, and that the
obligations of the Trust under this Agreement are not binding upon any officers,
trustees or shareholders of the Trust individually but are binding only upon the
assets of the Trust.
19. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
20. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be
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inconsistent with, any federal law, regulation or rule, including the Investment
Company Act and the Investment Advisers Act of 1940 and any rules and
regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
XXXXXXXXXXX.XXX TRUST XXXXXXXXXXX.XXX INVESTMENT
on behalf of its series, the ADVISORS, INC.
XxxxxXxxxxx.xxx No Fee S&P 500
Index Fund
By:______________________________ By:______________________________
Name: Name:
Title: Title:
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