INVESTMENT ADVISORY AGREEMENT
Between CONSECO FUND GROUP
and
CONSECO CAPITAL MANAGEMENT, INC.
THIS INVESTMENT ADVISORY AGREEMENT is entered into as of this
day of January, 1997, by and between Conseco Fund Group (the Trust ), a
Massachusetts business trust, on behalf of its series Asset Allocation Fund
(the Fund ), and Conseco Capital Management, Inc. (the Adviser ).
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company,
registered as such pursuant to the provisions of the Investment Company Act
of 0000 (xxx 0000 Xxx );
WHEREAS, the Fund is a diversified series of the Trust operating as
an open-end management investment company under the 1940 Act, and is
currently divided into Class A and Class Y shares to be offered to
individual and institutional investors, respectively;
WHEREAS, the Adviser is an investment adviser, registered as such
pursuant to the provisions of the Investment Advisers Act of 1940, and is
engaged in the business of rendering investment advice and investment
management services as an independent contractor;
WHEREAS, the Fund desires and has agreed to retain the Adviser to
render advice and services to the Fund in connection with management and
operation of the Fund pursuant to terms and conditions set forth herein;
and
WHEREAS, the Adviser desires and has agreed to render such advice and
furnish such services pursuant to the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants, conditions and agreements contained herein, and for
such other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties, each intending to be legally
bound hereby, mutually agree as follows:
1. Employment. The Fund hereby employs the Adviser and the
Adviser hereby accepts such employment, to render investment advice and
investment management services with respect to the Fund, subject to the
supervision and direction of the Board of Trustees of the Trust (the
Trustees ). The Adviser shall, except as otherwise provided herein,
render or make available all services needed for the management and
operation of the Fund, and shall, as part of its duties hereunder, (i)
furnish the Fund with advice and recommendations with respect to the
investment of the assets of the Fund and the purchase and sale of the
portfolio securities of the Fund, including the taking of such other steps
as may be necessary to implement such advice and recommendations, (ii)
furnish the Fund with reports, statements and other data on securities,
economic conditions and other pertinent subjects which the Trustees may
request, (iii) furnish such office space and personnel as is needed by the
Fund, and (iv) in general, superintend and manage the investments of the
Fund, subject to the ultimate supervision and direction of the Trustees.
2. Best Efforts. The Adviser hereby agrees to use its best
judgment and efforts in rendering the advice and services with respect to
the Fund as contemplated by this Agreement. The Adviser further agrees to
use its best efforts in the furnishing of such advice and recommendations
with respect to the Fund, in the preparation of reports and information,
and in the management of the respective assets of the Fund pursuant to this
Agreement. For this purpose 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, 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 may desire and request.
3. Independent Contractor Status. The Adviser shall, for all
purposes herein, be deemed to be an independent contractor, and shall,
unless otherwise expressly provided and authorized, have no authority to
act for or represent the Trust or the Fund in any way, or in any way be
deemed an agent of the Trust or the Fund. It is expressly understood and
agreed that the services to be rendered by the Adviser to the Fund pursuant
to the provisions of this Agreement are not to be deemed exclusive with
respect to the Adviser s rendering of services, and the Adviser shall
therefore be free to render similar or different services to others,
provided that, its ability to render the services described herein shall
not be impaired thereby.
4. Furnishing of Information. The Fund shall from time to time
furnish to the Adviser detailed statements of the investments and assets of
the Fund and information pertaining to the investment objectives and needs
of the Fund, and shall make available to the Adviser such financial
reports, proxy statements, legal and other information in the possession of
or available to the Fund relating to its investments, as the same may be
relevant to the performance by the Adviser of its obligations hereunder.
The Fund shall furnish such other information as the Adviser may reasonably
request.
5. Fund Records. The Adviser agrees that all records which it
maintains for the Fund shall be the property of the Fund and that it will
surrender promptly to the designated officers of the Fund any of such
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records upon request. The Adviser further agrees to preserve for the
period prescribed by the rules and regulations of the Securities and
Exchange Commission all such records as are required to be maintained
pursuant to said rules. The Adviser agrees that it will maintain all
records and accounts regarding the investment activities of the Fund in a
confidential manner. All such accounts or records shall be made available
within five (5) business days of request to the accountants or auditors of
the Fund during regular business hours at the Adviser s offices upon
reasonable prior written notice. In addition, the Adviser will provide any
materials reasonably related to the investment advisory services provided
hereunder as may be reasonably requested in writing by the designated
officers of the Fund or as may be required by any governmental agency
having jurisdiction.
6. Tender Offers. The Adviser hereby agrees that whenever the
Adviser has determined that the Fund should tender securities pursuant to a
tender offer solicitation, the Adviser shall designate an affiliate as
the tendering dealer, so long as such affiliate is legally permitted to
act in such capacity under the federal securities laws, the rules
promulgated thereunder and the rules of any securities exchange or
association of which such affiliate may be a member. Such affiliated
dealer shall not be obligated to make any additional commitments of
capital, expense or personnel beyond that committed as of the date of this
Agreement (other than normal periodic fees or payments necessary to
maintain its corporate existence and its membership in the National
Association of Securities Dealers, Inc.). This Agreement shall not
obligate the Adviser or such affiliate to (i) act pursuant to the foregoing
requirement under any circumstance in which either might reasonably believe
that liability might be imposed upon it as a result of so acting, or
(ii) institute legal or other proceedings to collect fees which may be
considered to be due to it from others as a result of such a tender, unless
the Fund shall enter into an agreement with the Adviser or such affiliate
to reimburse it for all expenses connected with attempting to collect such
f e es (including legal fees and expenses and that portion of the
compensation due to their respective employees, which amount is directly
attributable to the time involved in attempting to collect such fees).
7. Allocation of Costs and Expenses. The Adviser shall bear and
pay the costs of rendering its services pursuant to the terms of this
Agreement, including the fees paid to any sub-adviser which the Adviser may
retain and any value added taxes due in connection therewith. The Fund
shall bear and pay for all other expenses of its operation, including but
not limited to, organizational and offering expenses of the Fund and
expenses incurred in connection with the issuance and registration of
shares of the Fund; fees of the Fund s custodian, transfer and shareholder
servicing agent; costs and expenses of pricing and calculating the daily
net asset value of the shares of the Fund and of maintaining the books of
account required by the 1940 Act; expenditures in connection with meetings
of shareholders and Trustees, other than those called solely to accommodate
the Adviser; salaries of officers and fees and expenses of Trustees or
members of any advisory board or committee who are not affiliated with or
interested persons of the Fund or the Adviser; salaries of personnel
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involved in placing orders for the execution of the portfolio transactions
of the Fund or in maintaining registration of shares of the Fund under
state securities laws; insurance premiums on property or personnel of the
Fund which inure to its benefit; the cost of preparing and printing
r e ports, proxy statements and prospectuses of the Trust or other
communications for distribution to its shareholders; legal, auditing, and
accounting fees; trade association dues; fees and expenses or registering
and maintaining registration of shares of the Fund for sale under
applicable federal and state securities laws; and all other charges and
costs associated with the Fund s operations, plus any extraordinary and
non-recurring expenses, except as otherwise prescribed herein. To the
extent the Adviser incurs any costs or performs any services which are an
obligation of the Fund as set forth herein and to the extent such costs or
services have been reasonably rendered, (a) the Fund shall promptly
reimburse the Adviser for such costs and expenses, and (b) the Adviser
shall be entitled to recover from the Fund the actual costs incurred by the
Adviser in rendering such services.
8. Management Fees. (a) In exchange for the rendering of
advice and services pursuant hereto, the Fund shall pay to the Adviser, and
the Adviser shall accept as full compensation for all investment management
services furnished or provided to the Fund and as full reimbursement for
all expenses assumed by the Adviser, a management fee computed at the
annual rate of .70% of the average daily net assets of the Fund.
(b) The management fee shall be accrued daily by the Fund and
paid to the Adviser at the end of each calendar month.
(c) In the case of termination of this Agreement during any
month, the management fee for that month shall be calculated on the basis
of the number of business days during which it is in effect for that month.
(d) To the extent that the gross operating costs and expenses
of the Fund (excluding any interest, taxes, brokerage commissions,
distribution expenses and, to the extent permitted, any extraordinary
expenses, such as litigation and non-recurring expenses) exceed the
allowable expense limitations of the state in which shares of the Fund are
registered for sale having the most stringent expenses reimbursement
provisions, the Adviser shall reimburse the Fund for the amount of such
excess.
(e) The management fee payable by the Fund hereunder shall be
reduced to the extent that an affiliate of the Adviser has actually
received cash payments of tender offer solicitation fees (less certain
costs and expenses incurred in connection therewith) as referred to in
Paragraph 6 hereof.
9. Prohibition on Purchase of Shares. The Adviser agrees that
neither it nor any of its officers or employees shall take any short
position in the shares of beneficial interest of the Fund. This
prohibition shall not prevent the purchase of such shares by any of the
officers and directors or bona fide employees of the Adviser or any trust,
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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
1940 Act.
10. Compliance with Applicable Law. Nothing contained herein
shall be deemed to require the Fund to take any action contrary to (a) the
Agreement and Declaration of Trust of the Trust, (b) the By-laws of the
Trust, or (c) any applicable statute or regulation. Nothing contained
herein shall be deemed to relieve or deprive the Trustees of their
responsibility for and control of the conduct of the affairs of the Fund.
11. Liability. (a) In the absence of willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Fund or to any shareholder of the Fund for any act or
omission in the course of or in connection with rendering services
hereunder or for any losses that may be sustained in the purchase, holding
or sale of any security by the Fund.
(b) Notwithstanding the foregoing, the Adviser agrees to
reimburse the Fund for any and all costs, expenses, and counsel and
Trustees fees reasonably incurred by the Fund in connection with
( i ) p reparation, printing and distribution of proxy statements,
(ii) amendments to its Registration Statement, (iii) the holding of
meetings of shareholders or Trustees, (iv) the conduct of factual
investigations, (v) any legal or administrative proceedings (including any
applications for exemptions or determinations by the Securities and
Exchange Commission) which the Fund incurs as a result of action or
inaction on the part of the Adviser or any of its shareholders where the
action or inaction necessitating such expenditures is (A) directly or
indirectly related to any transactions or proposed transaction in the
shares or control of the Adviser or its affiliates (or litigation related
to any transactions or proposed transaction involving such shares or
control) which shall have been undertaken without the prior express
approval of the Trustees, or (B) within the sole control of the Adviser or
any of its affiliates or any of their respective officers, directors,
employees or shareholders. The Adviser shall not be obligated pursuant to
the provisions of this Subparagraph 10(b) to reimburse the Fund for any
expenditures related to the institution of an administrative proceeding or
related to civil litigation by the Fund or by a shareholder of the Trust
seeking to recover all or a portion of the proceeds derived by any
shareholder of the Adviser or any of its affiliates from the sale of shares
of the Adviser or similar matters. So long as this Agreement remains in
effect, the Adviser shall pay to the Fund the amount due for expenses
subject to this Subparagraph 10(b) within thirty (30) days after a xxxx or
statement has been received by the Fund therefor. This provision shall not
be deemed to be a waiver of any claim which the Fund may have or may assert
against the Adviser or others for costs, expenses, or damages heretofore
incurred by the Trust or for costs, expenses, or damages the fund may
hereafter incur which are not reimbursable to it hereunder.
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(c) No provision of this Agreement shall be construed to
protect any Trustee of the Trust or officer of the Fund, or any director or
officer of the Adviser, from liability in violation of Sections 17(h) and
(i) of the 1940 Act.
(d) The Adviser understands that the obligations of this
Agreement are not personally binding upon any shareholder of the Fund, but
bind only the Trust s property. The Adviser represents that it has notice
of the provisions of the Declaration of Trust of the Trust disclaiming
shareholder liability for acts or obligations of the Trust.
12. Term of Agreement. This Agreement shall become effective on
the date hereof and shall continue in effect for two years from such date
unless sooner terminated as hereinafter provided, and shall continue in
effect from year to year thereafter so long as such continuation is
approved at least annually by (i) the 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 or interested persons of any such party, with such vote
being cast in person at a meeting called for the purpose of voting on such
approval.
13. Termination. This Agreement may be terminated at any time
without payment of any penalty (a) by the Trustees of the Trust or by vote
of a majority of the outstanding voting securities of the Fund, upon
delivery of sixty (60) days written notice to the Adviser, or (b) by the
Adviser upon sixty (60) days written notice to the Fund. This Agreement
shall terminate automatically in the event of any transfer or assignment
hereof, as defined in the 1940 Act.
14. No Waiver. The waiver by any party of any breach of or
default under any provision or portion of this Agreement shall not operate
as or be construed to be a waiver of any subsequent breach or default.
15. Severability. The provisions of this Agreement shall be
considered severable and if for any reason any provision of this Agreement
which is not essential to the effectuation of the basic purpose of this
Agreement is deemed to be invalid or contrary to any existing or future
law, such invalidity shall not impair the operation of or affect any other
provision of this Agreement which is valid.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
17. Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior understandings or agreements
between the parties pertaining to the subject matter hereof, whether oral
or written. This Agreement may only be modified or amended by mutual
written agreement of the parties hereto and, as required, upon approval of
a majority of the outstanding voting securities of the Fund.
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18. Definitions. For purposes of application and operation of
the provisions of this Agreement, the term majority of the outstanding
voting securities shall have the meaning as set forth in the 1940 Act.
19. Use of Name. In consideration of the execution of this
Agreement, the Adviser hereby grants to the Trust the right to use the name
Conseco as part of its name and the names of series thereof. The Trust
agrees that in the event this Agreement is terminated, it shall immediately
take such steps as are necessary to amend its name to remove the reference
to Conseco.
20. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested by their duly authorized officers on the day
and year first above written.
CONSECO FUND GROUP,
on behalf of Equity Fund
ATTEST:
By:
[title]
CONSECO CAPITAL MANAGEMENT, INC.
ATTEST: By:
[title]
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