FORM OF
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the __th day of September, 2002, by and
between THE NOTTINGHAM INVESTMENT TRUST II (the "Trust"), a Massachusetts
business trust, and XXXXX CAPITAL MANAGEMENT, INC., a Maryland corporation (the
"Advisor"), registered as an investment advisor under the Investment Advisors
Act of 1940, as amended (the "Advisors Act").
WHEREAS, the Trust is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment advisory
and administrative services to THE XXXXX CAPITAL MANAGEMENT MID-CAP FUND series
of the Trust, and the Advisor is willing to so furnish such services;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained and other good and valuable consideration, it is agreed between the
parties hereto as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as Investment
Advisor to THE XXXXX CAPITAL MANAGEMENT MID-CAP FUND (the "Fund") series of
the Trust for the period and on the terms set forth in this Agreement. The
Advisor accepts such appointment and agrees to furnish the services herein
set forth, for the compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Advisor with copies
properly certified or authenticated of each of the following:
(a) The Trust's Amended and Restated Declaration of Trust (such
Instrument, as presently in effect and as it shall from time to time
be amended, is herein called the "Instrument");
(b) The Trust's Amended and Restated By-Laws (such By-Laws, as presently
in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the resolution
approved by a majority of the outstanding shares of the Fund
authorizing the appointment of the Advisor and approving this
Agreement;
(d) The Trust's Registration Statement on Form N-1A under the 1940 Act and
under the Securities Act of 1933 as amended, (the "1933 Act"),
relating to shares of beneficial interest of the Fund (herein called
the "Shares") as filed with the Securities and Exchange Commission
("SEC") and all amendments thereto;
(e) The Fund's Prospectuses and Statement of Additional Information (such
Prospectuses and Statement of Additional Information, as presently in
effect and all amendments and supplements thereto are herein
collectively called the "Prospectus").
The Trust will also furnish the Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to
the foregoing at the same time as such documents are required to be filed
with the SEC.
3. Investment Advisory Services. Subject to the supervision of the Trust's
Board of Trustees, the Advisor will provide a continuous investment program
for the Fund, including investment research and management with respect to
all securities, investments, cash and cash equivalents in the Fund. The
Advisor will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund. The Advisor
will provide the services under this Agreement in accordance with the
Fund's investment objectives, policies and restrictions as stated in (i)
its Prospectus; (ii) the Trust's Instrument, By-Laws and other governing
instruments, as in affect from time to time; and (iii) such other policies,
procedures and/or limitations as may be adopted by the Trust with respect
to such Fund from time to time and provided to the Advisor in writing. The
Advisor further agrees that it:
(a) Will conform its activities to all applicable Rules and Regulations of
the Securities and Exchange Commission and will, in addition, conduct
its activities under this Agreement in accordance with regulations of
any other Federal and State agencies which may now or in the future
have jurisdiction over its activities under this Agreement;
(b) Will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers or dealers, the Advisor will attempt to
obtain the best net price and the most favorable execution of its
orders as further described in the Prospectus. Consistent with this
obligation, when the Advisor believes two or more brokers or dealers
are comparable in price and execution, the Advisor may prefer: (i)
brokers and dealers who provide the Fund with research advice and
other services, or who recommend or sell Trust shares, and (ii)
brokers who are affiliated with the Fund or its Advisor; provided,
however, that in no instance will portfolio securities be purchased
from or sold to the Advisor or any affiliated person of the Advisor in
principal transactions;
(c) Will provide certain executive personnel for the Fund as may be
mutually agreed upon from time to time with the Board of Trustees, the
salaries and expenses of such personnel to be borne by the Advisor
unless otherwise mutually agreed upon; and
(d) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities on
behalf of the Fund.
2
4. Services Not Exclusive. The advisory 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; provided, however, that without the
written consent of the Board of Trustees, the Advisor will not serve as
investment advisor to any other investment company having a similar
investment objective to that of the Fund.
5. 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 benefit of the Fund are the property of the Fund and further agrees
to surrender promptly to the Fund any of such records upon the Fund'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
it pursuant to Rule 31a-1 under the 1940 Act that are not maintained by
others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory services
pertaining to the Fund. In the event that there is no distribution plan
under Rule 12b-1 of the 1940 Act in effect for the Fund, the Advisor will
pay, out of the Advisor's resources generated from sources other than fees
received from the Fund, the entire cost of the promotion and sale of Fund
shares. The Advisor will provide other information and services, other than
services of outside counsel or independent accountants for any Fund,
required in connection with the preparation of all registration statements
and prospectuses, prospectus supplements, statements of additional
information, all annual, semiannual, and periodic reports to shareholders
of the Trust, regulatory authorities, or others, and all notices and proxy
solicitation materials, furnished to shareholders of the Trust or
regulatory authorities, and all tax returns.
Notwithstanding the foregoing, the Trust shall pay the expenses and costs
of the following (as they pertain to the Fund):
(a) Taxes, interest charges and extraordinary expenses;
(b) Brokerage fees and commissions with regard to portfolio transactions
of the Fund;
(c) Fees and expenses of the custodian of the Fund's portfolio securities;
(d) Fees and expenses of the Fund's administrator, transfer and dividend
disbursing agent and the Fund's fund accounting agent or, if the Fund
performs any such services without an agent, the costs of the same;
(e) Auditing and legal expenses;
(f) Cost of maintenance of the Fund's existence as a legal entity;
(g) Compensation of trustees who are not interested persons of the Advisor
as that term is defined by Section 2(a)(19) of the 1940 Act;
(h) Costs of Trust meetings;
(i) Federal and State registration or qualification fees and expenses;
(j) Costs of setting in type, printing and mailing Prospectuses, reports
and notices to existing shareholders;
(k) The investment advisory fee payable to the Advisor, as provided in
paragraph 7 herein; and
3
(l) Plan of Distribution Pursuant to Rule 12b-1 expenses, but only in
accordance with the Plan of Distribution Pursuant to Rule 12b-1 as
approved by the shareholders of the Fund.
It is understood that the Trust may desire to register the Fund's shares
for sale in certain states which impose expense limitations on mutual
funds. The Trust agrees that it will register the Fund's shares in such
states only with the prior written consent of the Advisor.
7. Compensation. The Trust will pay the Advisor and the Advisor will accept as
full compensation an investment advisory fee, based upon the daily average
net assets of each Fund determined in the manner described in the
Prospectus, computed at the end of each month and payable within five (5)
business days thereafter, based upon the schedule attached hereto as
Exhibit A.
8. Limitation of Liability; Indemnification; Failure to Perform; Force
Majeure.
---------------------------------------------------------------------------
(a) Neither the Advisor nor any of its directors, officers, shareholders,
agents, or employees shall be liable or responsible to the Trust, the
Funds or to any shareholder of the Funds for any error of judgment,
mistake of law or for any other loss whatsoever suffered by any Fund
in connection with error of judgment or mistake of law or for any act
or omission in the course of, or connected with, rendering services
hereunder or for any loss suffered by the Trust, a Fund or any
shareholder of a Fund in connection with the performance of this
Agreement, except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith or gross negligence on
the part of the Advisor in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Agreement.
(b) Subject to the limitations set forth in this Subsection 8(b), the
Trust shall indemnify, defend and hold harmless (from the assets of
the Fund or Funds to which the conduct in question relates) the
Advisor against all loss, damage and liability, including but not
limited to amounts paid in satisfaction of judgments, in compromise or
as fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by the Advisor in connection
with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or legislative body, related to or resulting from this
Agreement or the performance of services hereunder, except with
respect to any matter as to which it has been determined that the
loss, damage or liability is a direct result of (i) a breach of
fiduciary duty with respect to the receipt of compensation for
services or (ii) willful misfeasance, bad faith or gross negligence on
the part of the Advisor in the performance of its duties or from
reckless disregard by it of its duties under this Agreement (either
and both of the conduct described in clauses (i) and (ii) above being
referred to hereinafter as "Disabling Conduct"). A determination that
the Advisor is entitled to indemnification may be made by (i) a final
decision on the merits by a court or other body before whom the
4
proceeding was brought that the Advisor was not liable by reason of
Disabling Conduct, (ii) dismissal of a court action or an
administrative proceeding against the Advisor for insufficiency of
evidence of Disabling Conduct, or (iii) a reasonable determination,
based upon a review of the facts, that the Advisor was not liable by
reason of Disabling Conduct by, (a) vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Fund as the
quoted phrase is defined in Section 2(a)(19) of the 1940 Act nor
parties to the action, suit or other proceeding on the same or similar
grounds that is then or has been pending or threatened (such quorum of
such Trustees being referred to hereinafter as the "Independent
Trustees") or (b) an independent legal counsel approved by the
Trustees, including a majority of Independent Trustees, (hereinafter
referred to as an "independent legal counsel") in a written opinion.
Expenses, including accountants' and counsel fees so incurred by the
Advisor (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by
the Fund or Trust to which the conduct in question related in advance
of the final disposition of any such action, suit or proceeding;
provided, that the Advisor shall have undertaken to repay the amounts
so paid if it is ultimately determined that indemnification of such
expenses is not authorized under this Subsection 8(b) and if (i) the
Advisor shall have provided security for such undertaking, (ii) the
Fund shall be insured against losses arising by reason of any lawful
advances, or (iii) a majority of the Independent Trustees, or an
independent legal counsel in a written opinion, shall have determined,
based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Advisor
ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Advisor
referred to in this Subsection 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for said payment or for any
other expenses shall be provided with respect to a Fund unless such
indemnification shall be approved (i) by a majority of the Independent
Trustees or (ii) by an independent legal counsel in a written opinion.
Approval by the Independent Trustees pursuant to clause (i) shall not
prevent the recovery from the Advisor of any amount paid to the
Advisor in accordance with either of such clauses as indemnification
of the Advisor is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief
that the Advisor's action was in or not opposed to the best interest
of the Fund or to have been liable to the Fund or its shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall
not be exclusive of or affect any of the rights to which the Advisor
may be entitled. Nothing contained in this Subsection 8(b) shall
affect any rights to indemnification to which Trustees, officers or
other personnel of any Fund, and other persons may be entitled by
contract or otherwise under law, nor the power of any Fund to purchase
and maintain liability insurance on behalf of any such person.
The Board shall take all such action as may be necessary and
appropriate to authorize a Fund hereunder to pay the indemnification
required by this Subsection 8(b) including, without limitation, to the
extent needed, to determine whether the Advisor is entitled to
5
indemnification hereunder and the reasonable amount of any indemnity
due it hereunder, or employ independent legal counsel for that
purpose.
(c) The Advisor acknowledges that the terms "Funds" and "Trustees" as used
herein, refer, respectively, to the trust created by the Instrument
and the Trustees thereof, as trustees but not individually or
personally, acting from time to time under the Instrument, to which
reference is hereby made and the Instrument which is on file at the
office of the Secretary of State of the Commonwealth of Massachusetts,
such reference being inclusive of any and all amendments thereto so
filed or hereafter filed. The obligations of the "Funds" entered into
in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such
capacities and are not binding upon any of the Trustees, shareholders
or representatives of the Trust personally, but bind only the assets
of the Trust, and all persons dealing with the Trust or a Fund must
look solely to the assets of the Trust or Fund for the enforcement of
any claims against the Trust or Fund.
(d) The Advisor agrees to indemnify and hold harmless the Trust and
Trust's Trustees and officers from all loss, damage and liability,
including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees, incurred by the
Trust in connection with the defense or disposition of any body,
related to or resulting from (i) any breach or violation of this
Agreement by the Advisor; (ii) any breach of fiduciary duty with
respect to the receipt of compensation for services; and (iii) any
willful misfeasance, bad faith or gross negligence on the part of the
Advisor in the performance of its duties or from reckless disregard by
it of its duties under this Agreement.
(e) No failure or omission by either party hereto in the performance of
any obligation of this Agreement (other than payment obligations)
shall be deemed a breach of this Agreement or create any liability if
the same shall arise from any cause or causes beyond the control of
the party, including but not limited to, the following: acts of God,
acts or omissions of any governmental agency; any rules, regulations,
or orders issued by any governmental authority or by any officer,
department, agency or instrumentality thereof; fire; storm; flood;
earthquake, war; rebellion; insurrection; riot; and invasion and
provided that such failure or omission resulting from one of the above
causes is cured as soon as is practicable after the occurrence of one
or more of the above-mentioned causes.
(f) The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and
protect the Advisor and the Trust and their respective directors,
officers, employees and agents and shall inure to the benefit of
its/their respective successors, assigns and personal representatives.
9. Duration and Termination. This Agreement shall become effective upon the
registration statement of the Trust containing the Fund's Prospectus being
declared effective by the Securities and Exchange Commission and
6
commencement of operations of the Fund and, unless sooner terminated as
provided herein, shall continue in effect for two years. Thereafter, this
Agreement shall be renewable for successive periods of one year each,
provided such continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of Trustees
who are not parties to this Agreement or interested persons of any
such party (as that term is defined in the 1940 Act), cast in person
at a meeting called for the purpose of voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as that term is
defined in the 0000 Xxx) of the outstanding voting securities of the
Fund.
Notwithstanding the foregoing, this Agreement may be terminated with
respect to the Fund by the Trust or by the Advisor at any time on sixty
(60) days' written notice, without the payment of any penalty, provided
that termination by the Trust must be authorized either by vote of the
Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund. This Agreement will automatically terminate in the
event of its assignment (as that term is defined in the 1940 Act).
10. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by a written instrument
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of
the Fund's outstanding voting securities (as defined in the 1940 Act). The
modification of any of the non-material terms of this Agreement may be
approved by a vote of a majority of those Trustees of the Trust who are not
interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
11. Miscellaneous. 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. If any provision
of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be
affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
12. Applicable Law. This Agreement shall be construed in accordance with, and
governed by, the laws of the Commonwealth of Massachusetts.
13. Representations and Warranties.
------------------------------
(a) The Advisor hereby represents and warrants to the Trust as follows:
(i) The Advisor is a corporation duly organized and in good standing
under the laws of the State of Maryland and is fully authorized to
enter into this Agreement and carry out its duties and obligations
hereunder. (ii) The Advisor is registered as an investment Advisor
with the SEC under the Advisors Act and is registered or licensed as
7
an investment Advisor under the laws of all applicable jurisdictions.
The Advisor shall maintain such registrations or licenses in effect at
all times during the term of this Agreement. (iii) The Advisor at all
times shall provide its best judgment and effort to the Trust in
carrying out the Advisor's obligations hereunder.
(b) The Trust hereby represents and warrants to the Advisor as follows:
(i) The Trust has been duly organized as a business trust under the
laws of the Commonwealth of Massachusetts and is authorized to enter
into this Agreement and carry out its terms. (ii) The Trust is (or
will be) registered as an investment company with the Commission under
the 1940 Act and shares of the Fund are registered for offer and sale
to the public under the 1933 Act and all applicable state securities
laws where currently sold. Such registrations will be kept in effect
during the term of this Agreement.
14. Interested Persons. It is understood that, to the extent consistent with
applicable laws, the Trustees, officers and shareholders of the Trust are
or may be or become interested in the Advisor as directors, officers or
otherwise and that directors, officers and shareholders of the Advisor are
or may be or become similarly interested in the Trust.
15. Independent Contractor. The Advisor shall for all purposes herein be deemed
to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board from time to time, have no
authority to act for or represent a Fund in any way or otherwise be deemed
an agent of a Fund.
16. Structure of Agreement. The Trust is entering into this Agreement on behalf
of the respective fund severally and not jointly. The responsibilities and
benefits set forth in this Agreement shall refer to each fund severally and
not jointly. No fund shall have any responsibility for any obligation of
any other fund arising out of this Agreement. Without otherwise limiting
the generality of the foregoing: (a) any breach of any term of this
Agreement regarding the Trust with respect to any one fund shall not create
a right or obligation with respect to any other fund; (b) under no
circumstances shall the Advisor have the right to set off claims relating
to a fund by applying property of any other fund; and (c) the business and
contractual relationships created by this Agreement, consideration for
entering into this Agreement, and the consequences of such relationship and
consideration relate solely to the Trust and the particular fund to which
such relationship and consideration applies. This Agreement is intended to
govern only the relationships between the Advisor, on the one hand, and the
Trust and the funds, on the other hand, and (except as specifically
provided above in this Paragraph 16) is not intended to and shall not
govern (i) the relationship between the Trust and any fund or (ii) the
relationships among the respective funds.
17. 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 and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
8
18. Notices. Notices of any kind to be given to the Trust hereunder by the
Advisor shall be in writing and shall be duly given if mailed or delivered
to The Nottingham Investment Trust II, 000 Xxxxx Xxxxxxxx Xxxxxx, Post
Xxxxxx Xxx 00, Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000-0000, Attention: C. Xxxxx
Xxxxxx, III or to such other address or to such individual as shall be so
specified by the Trust to the Advisor. Notices of any kind to be given to
the Advisor hereunder by the Trust shall be in writing and shall be duly
given if mailed or delivered to the Advisor at 0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxx, or at such other
address or to such individual as shall be so specified by the Advisor to
the Trust. Notices shall be effective upon delivery.
9
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.
ATTEST: THE NOTTINGHAM INVESTMENT TRUST II
By: ________________________________ By: ________________________________
Title: _____________________________ Title: _____________________________
ATTEST: XXXXX CAPITAL MANAGEMENT, INC.
By: ________________________________ By: ________________________________
Title: _____________________________ Title: _____________________________
10
EXHIBIT A
INVESTMENT ADVISOR'S COMPENSATION SCHEDULE
For the services delineated in the INVESTMENT ADVISORY AGREEMENT and rendered to
THE XXXXX CAPITAL MANAGEMENT MID-CAP FUND, the Advisor shall be compensated
monthly, as of the last day of each month, within five (5) business days of the
month end, a fee based upon the daily average net assets of the Fund according
to the following schedule:
The Xxxxx Capital Management Mid-Cap Fund
Date added to this Agreement - September __, 2002
Net Assets Annual Fee
---------- ----------
On All Assets 0.75%
THE XXXXX CAPITAL MANAGEMENT MID-CAP FUND's registration statement was effective
and it commenced operations on September __, 2002.
11
