EXHIBIT (d)(2)
YIELDQUEST FUNDS TRUST
INVESTMENT ADVISORY AGREEMENT
This Investment Advisory Agreement ("Agreement") is entered into as of the
12th day of August, 2005, between YieldQuest Funds Trust (the "Trust") and
YieldQuest Advisors, LLC, a Georgia limited liability company (the "Advisor").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company. The
Trust is authorized to create separate series, each with its own separate
investment portfolio, and beneficial interest in each such series will be
represented by a separate series of shares (the "Shares"); and
WHEREAS, the Advisor is an investment adviser registered under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust desires to retain the Advisor to furnish investment
advisory and portfolio management services to the Trust with respect to its
initial series listed on Schedule A, as amended from time to time by the
parties, and such other series as the Trust and the Advisor shall agree upon
(each a "Fund" and, collectively, the "Funds"), and the Advisor is willing to
furnish such services and to perform the functions assigned to it under this
Agreement for the consideration provided herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints the Advisor as investment adviser
of each Fund for the period and on the terms set forth in this Agreement. The
Advisor accepts such appointment and agrees to render the services described
herein. In the performance of its duties, the Advisor will act in the best
interests of each Fund and will comply with (a) applicable laws and regulations,
including, but not limited to, the 1940 Act, (b) the terms of this Agreement,
(c) the Certificate of Trust, Agreement and Declaration of Trust ("Trust
Agreement"), By-laws and currently effective registration statement under the
Securities Act of 1933, as amended, and the 1940 Act, and any amendments
thereto, (d) the stated investment objective, policies and restrictions of each
Fund, and (e) such other guidelines as the Board of Trustees of the Trust (the
"Board") reasonably may establish.
2. DUTIES AS INVESTMENT ADVISER.
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(a) Subject to the supervision of the Board, the Advisor will provide a
continuous investment program for each Fund, including investment research and
management with respect to all securities, other investments and cash
equivalents held by such Fund. The Advisor will determine from time to time what
securities and other investments will be purchased, retained or sold by each
Fund, and the portion of the Fund's assets to be held uninvested, subject always
to the Fund's investment objectives, policies and restriction, each as the same
shall form time to time be in effect, and subject further to such policies and
instructions as the Board may from
time to time establish. The Advisor will exercise full discretion and act for
each Fund in the same manner and with the same force and effect as the Fund
itself might or could do with respect to purchases, sales, or other
transactions, as well as with respect to all other things necessary or
incidental to the furtherance or conduct of such purchases, sales or other
transactions.
(b) The Advisor will place orders pursuant to its investment determinations
for the Funds either directly with the issuer or through other brokers
including, without limitation, affiliated brokers. In the selection of brokers
and the placement of orders for the purchase and sale of portfolio investments
for the Funds, the Advisor shall use its best efforts to obtain for the Funds
the best qualitative execution, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), the execution
capability, financial responsibility and responsiveness of the broker or dealer
and the brokerage and research services provided by the broker or dealer. In
using its best efforts to obtain the most favorable price and execution
available, the Advisor, bearing in mind each Fund's best interests at all times,
shall consider all factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for the security,
the amount of the commission, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial stability of
the broker involved, the quality of service rendered by the broker in other
transactions. Subject to such policies as the Board may determine, the Advisor
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having caused the
Fund to pay a broker that provides brokerage and research services to the
Advisor an amount of commission for effecting a portfolio investment transaction
in excess of the amount of commission another broker would have charged for
effecting that transaction if the Advisor 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, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities with respect to
the Funds and to other clients of the Advisor or its affiliates as to which the
Advisor or its affiliates exercise investment discretion. In no instance will
portfolio securities of the Funds be purchased from or sold to the Advisor or
any affiliated person of the Advisor. The Trust agrees that any entity or person
associated with the Advisor which is a member of a national securities exchange
is authorized to effect any transaction on such exchange for the account of each
Fund which is permitted by Section 11(a) of the Securities Exchange Act of 1934,
as amended, and that the Trust consents to the retention of compensation for
such transactions.
(c) The Advisor will assist the officers of the Trust in taking such steps
as a necessary or appropriate to carry out the decisions of the Board and the
appropriate committees of the Board regarding the conduct of the business of the
Funds. The Advisor will provide to the Board on a regular basis any economic and
investment analyses or reports concerning the Funds as are reasonably requested
by the Board.
(d) The Advisor will vote all proxies with respect to each Fund's portfolio
securities and provide to the Trust's administrator a complete proxy voting
record with the information required to be included in Form N-PX.
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(e) Any of the foregoing functions with respect to a Fund may be delegated
by the Advisor, at the Advisor's expense, to another appropriate party
(including an affiliated party), subject to such approval by the Board and
shareholders of the applicable Fund as may be required by the 1940 Act. The
Advisor shall oversee the performance of delegated functions by any such party
and shall furnish to the Board quarterly evaluations and analyses concerning the
performance of delegated responsibilities by those parties.
3. SERVICES NOT EXCLUSIVE. The services furnished by the Advisor hereunder
are not to be deemed exclusive and the Advisor shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Advisor hereby agrees that all records which it
maintains for the Funds are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Advisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
5. EXPENSES.
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(a) During the term of this Agreement, each Fund will bear all expenses not
specifically assumed by the Advisor incurred in its operations and the offering
of its shares. Expenses borne by a Fund will include, but not be limited to,
the following: (i) brokerage commissions relating to securities purchased or
sold by the Fund or any losses incurred in connection therewith; (ii) fees
payable to, and expenses incurred on behalf of the Fund, by the Advisor; (iii)
expenses of organizing the Fund; (iv) filing fees and expenses relating to the
registration, and notice filings of the Fund's shares under federal or state
securities laws and maintaining such registrations, qualifications and notice
filings; (v) distribution fees and other expenses that it may be authorized to
pay pursuant to Rule 12b-1 under the 1940 Act; (vi) fees and salaries payable to
the members of the Board and officers who are not officers or employees of the
Advisor or interested persons (as defined in the 0000 Xxx) of any investment
subadviser or distributor of the Funds; (vii) taxes (including any income or
franchise taxes) and governmental fees; (viii) costs of any liability,
uncollectible items of deposit and other insurance or fidelity bonds; (ix) any
costs, expenses or losses arising out of any liability of or claim for damage or
other relief asserted against the Fund for violation of any law; (x) legal,
accounting and auditing expenses, including legal fees of special counsel or
salaries of compliance staff for the independent trustees; (xi) charges of
custodians, transfer agents and other agents; (xii) costs of preparing share
certificates; (xii) expenses of setting in type and printing prospectuses and
supplements thereto for existing shareholders, reports and statements to
shareholders and proxy material; (xiv) any extraordinary expenses (including
fees and disbursements of counsel) incurred by the Fund; and (xv) fees and other
expenses incurred in connection with membership in investment company
organizations.
(b) The Advisor will pay the compensation and expenses of any persons
rendering any services to the Funds who are officers, directors, equity owners
or employees of the Advisor, and will make available, without expense to any
Fund, the services of such of the Advisor's
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employees who may also be duly elected officers or trustees of the Trust,
subject to their individual consent to serve and to any limitation imposed by
law. The Advisor will also pay any expenses incurred in connection with voting
proxies with respect to securities held in a Fund's portfolio.
(c) A Fund may pay directly any expense incurred by it in its normal
operations and, if any such payment is consented to by the Advisor and
acknowledged as otherwise payable by the Advisor pursuant to this Agreement, the
Fund may reduce the fee payable to the Advisor pursuant to paragraph 6 hereof by
such amount. To the extent that such deductions exceed the fee payable to the
Advisor on any monthly payment date, such excess shall be carried forward and
deducted in the same manner from the fee payable on succeeding monthly payment
dates. The Advisor may receive reimbursement from a Fund, at such time or times
as the Advisor determines, in its sole discretion, for any of the expenses
advanced by the Advisor which the Fund is obligated to pay pursuant to
Subsection (a) above, and such reimbursement shall not be considered part of the
Advisor's compensation pursuant to this Agreement.
6. COMPENSATION. For the services to be rendered and payments to be made as
provided in this Agreement, as of the last business day of each month, each Fund
will pay the Advisor fee based on its average daily net assets at the annual
rate set forth in Schedule B attached hereto.
The average daily value of the net assets of each Fund shall be determined
pursuant to the applicable provisions of the Trust Agreement and/or By-laws, or
a resolution of the Board, if required. If, pursuant to such provisions, the
determination of net asset value of a Fund are suspended for any particular
business day, then, for purposes of this paragraph, the value of the net assets
of the Fund as last determined shall be deemed to be the value of the net assets
as of the close of the business day, or as of such other time as the value of
the Fund's net assets may be lawfully determined on that day. If the
determination of the net asset value of a Fund has been suspended for a period
including such month, the compensation payable at the end of such month shall be
computed on the basis of the value of the net assets of the Fund as last
determined (whether during or prior to such month).
7. LIMITATION OF LIABILITY OF THE ADVISOR. The Advisor shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which this Agreement relate, including
any act or omission connected with or arising out of any services rendered, or
payments made pursuant to this Agreement, except by reason of a loss resulting
from the willful misfeasance, bad faith or negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Any person, even though also an officer,
partner, employee, or agent of the Advisor, who may be or become an trustee,
officer, employee or agent of the Trust shall be deemed, when rendering services
to the Trust or acting in any business of the Trust, to be rendering such
services to or acting solely for the Trust and not as an officer, partner,
employee, member, shareholder or agent or one under the control or direction of
the Advisor even though paid by it.
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8. DURATION AND TERMINATION.
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(a) This Agreement shall become effective upon the date that the Trust's
registration statement is declared effective by the Securities and Exchange
Commission and shall remain in effect for an initial period of two years;
provided, that with respect to each Fund, this Agreement shall not take effect
unless it first has been approved by (i) a vote of the majority of those
Trustees who are not parties to this Agreement or interested persons of such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) each Fund's initial shareholder.
(b) If the initial shareholder of a Fund fail to approve the Agreement in
the manner set forth above, upon request of the Board, the Advisor will continue
to serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with the Advisor or a
different adviser or other definitive action; provided that the compensation to
be paid by the Fund to the Advisor for its services to and payments on behalf of
the Fund will be equal to the lesser of the actual costs incurred by the Advisor
in furnishing such services and payments or the amount the Advisor would have
received under this Agreement for furnishing such services and payments.
(c) This Agreement shall remain in full force and effect continuously
thereafter until terminated without the payment of any penalty as follows:
(i) By vote of a majority of its Trustees, or by the affirmative vote
of a majority of the outstanding shares of a Fund, the Trust may at any time
terminate this Agreement with respect to a Fund by providing not more than 60
days' written notice delivered or mailed by registered mail, postage prepaid, to
the Advisor at its principal offices; or
(ii) With respect to each Fund, if (A) the Trustees or the shareholders
of such Fund by the affirmative vote of a majority of the outstanding shares of
the Fund, and (B) a majority of the Trustees who are not interested persons of
the Trust or of the Advisor, by vote cast in person at a meeting called for
the purpose of voting on such approval, do not specifically approve at least
annually the continuance of this Agreement, then this Agreement shall
automatically terminate at the close of business on the second anniversary of
its execution, or upon the expiration of one year from the effective date of
the last such continuance, whichever is later; provided, however, that if the
continuance of this Agreement is submitted to the shareholders of a Fund for
their approval and such shareholders fail to approve such continuance of this
Agreement as provided herein, the Advisor may continue to serve hereunder in a
manner consistent with the 1940 Act and the rules and regulations thereunder
with respect to the Fund; or
(d) The Advisor may at any time terminate this Agreement by not less than
60 days' written notice delivered or mailed by registered mail, postage prepaid
to the Trust.
(e) This Agreement automatically and immediately will terminate in the
event of its assignment.
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9. AMENDMENT OF THIS AGREEMENT. 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 of the change, waiver,
discharge or termination is sought, and no material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of each
Fund's outstanding voting securities.
10. USE OF NAME. The Trust and Advisor acknowledge that all rights to the
name "YieldQuest" belong to the Advisor, and that the Trust is being granted a
limited license to use such words in the Trust's, any Fund's or in any class'
name. In the event the Advisor ceases to be the adviser to the Funds, the
Trust's right to the use of the name "YieldQuest" shall automatically cease on
the 90th day following the termination of this Agreement. The right to the name
may also be withdrawn by the Advisor during the term of this Agreement upon 90
days' written notice to the Trust. Nothing contained herein shall impair or
diminish in any respect, the Advisor's right to use the name "YieldQuest" in the
name of, or in connection with, any other business enterprises with which the
Advisor are or may become associated. There is no charge to the Trust for the
right to use this name.
11. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Georgia, without giving effect to the conflicts of laws
principles thereof, and the 1940 Act. To the extent the laws of the State of
Georgia conflict with the applicable provisions of the 1940 Act, the latter
shall control.
12. DEFINITIONS. As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person," and "assignment" shall have
the same meanings as such terms have in the 1940 Act.
13. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors.
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
YIELDQUEST ADVISORS, LLC
By: /s/ Xxx X. Xxxxxxx, President
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YIELDQUEST FUNDS TRUST
By: /s/ Xxx X. Xxxxxxx, President and Chairman
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AMENDMENT NO. 2 TO SCHEDULE A
OF THE
INVESTMENT ADVISORY AGREEMENT
YieldQuest Advisors, LLC (the "Advisor") and YieldQuest Funds Trust (the
"Trust") entered into an Investment Advisory Agreement dated August 12, 2005
(the "Agreement"), and they desire to amend the Agreement as provided below.
1. Amendment. Trust hereby appoints Advisor as investment adviser to each
series of the Trust listed on Schedules A, pursuant to the terms of the
Agreement, and Adviser agrees to furnish investment advisory and portfolio
management services to the Trust with respect to each series listed in Schedule
A. Schedule A is hereby replaced in its entirety with the following:
LIST OF SERIES
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YieldQuest Core Equity Fund
YieldQuest Total Return Bond Fund
YieldQuest Tax-Exempt Bond Fund
YieldQuest Flexible Income Fund
YieldQuest Low Duration Bond Fund
YieldQuest Low Duration Tax-Exempt Bond Fund
YieldQuest Core Bond Fund
YieldQuest Core Tax-Exempt Bond Fund
2. Ratification and Confirmation of Agreement. Except as specifically set
forth herein, the Agreement is hereby ratified and confirmed in all respects and
shall remain in full force and effect.
* * *
NOW THEREFORE, the parties hereby agree to enter into this amendment to
Schedule A to the Investment Advisory Agreement effective as of December __,
2008.
YIELDQUEST ADVISORS, LLC
By:______________________________
Xxx X. Xxxxxxx, President
YIELDQUEST FUNDS TRUST
By:______________________________
Xxx X. Xxxxxxx, President
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AMENDED SCHEDULE B
OF THE
INVESTMENT ADVISORY AGREEMENT
YieldQuest Advisors, LLC (the "Advisor") and YieldQuest Funds Trust (the
"Trust") entered into an Investment Advisory Agreement dated August 12, 2005
(the "Agreement"), and they desire to amend the Agreement as provided below.
1. Amendment. For the services to be rendered by Advisor as provided in
the Agreement, as of the last business day of each month, each series of the
Trust listed on Schedules B will pay to the Advisor a fee based on its average
daily net assets at the annual rate set forth below:
NAME OF SERIES MANAGEMENT FEE
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YieldQuest Core Equity Fund 0.99%
YieldQuest Total Return Bond Fund 0.59%
YieldQuest Tax-Exempt Bond Fund 0.59%
YieldQuest Flexible Income Fund 0.75%
YieldQuest Low Duration Bond Fund 0.45%
YieldQuest Low Duration Tax-Exempt Bond Fund 0.45%
YieldQuest Core Bond Fund 0.34%
YieldQuest Core Tax-Exempt Bond Fund 0.40%
* * *
NOW THEREFORE, the parties hereby agree to enter into this amendment to
Schedule A to the Investment Advisory Agreement effective as of December __,
2008.
YIELDQUEST ADVISORS, LLC
By:_________________________________
Xxx X. Xxxxxxx, President
YIELDQUEST FUNDS TRUST
By:_________________________________
Xxx X. Xxxxxxx, President
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