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Exhibit 99(d)
KELMOORE STRATEGIC TRUST
[FORM OF] INVESTMENT ADVISORY AGREEMENT
This Investment Advisory Agreement is made as of this ____ day of ____________,
1999, by and between Kelmoore Strategic Trust, a Delaware business trust (the
"Trust"), on behalf of each series of the Trust listed in Schedule I attached
hereto, as such may be amended from time to time (individually, a "Fund" and
collectively, the "Funds") and Kelmoore Investment Company, Inc., a California
corporation (the "Adviser").
WHEREAS, the Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended;
WHEREAS, the Trust desires to retain the Adviser to render investment advisory
and other services to the Funds pursuant to the terms and provisions of this
Agreement, and the Adviser is interested in furnishing said services;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained in this Agreement, the parties hereto agree as follows:
SECTION 1. APPOINTMENT.
The Trust hereby appoints the Adviser to act as investment adviser to the
Funds for the period and on the terms and subject to the conditions set
forth in this Agreement. The Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
Additional series of the Trust may from time to time be added to those
covered by this Agreement by the parties executing a new Schedule I that
shall become effective upon its execution and shall supersede any Schedule I
having an earlier date.
SECTION 2. INVESTMENT ADVISORY AND OTHER SERVICES.
Subject to the supervision of the Trust's Trustees (the "Trustees"), the
Adviser shall provide a continuous investment program for each of the Funds,
including investment, research and management with respect to all securities
and investments and cash equivalents in the Funds. The Adviser shall
determine from time to time what securities and other investments will be
purchased, retained or sold by the Trust with respect to the Funds. The
Adviser shall provide the services under this Agreement in accordance with
each of the Fund's investment objectives, policies, and restrictions as
stated in such Fund's most current Prospectus and Statement of Additional
Information, including all amendments or supplements thereto, and in such
resolutions of the Trustees as may be adopted from time to time. The Adviser
further agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to any fiduciary accounts for which it has
investment responsibilities;
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(b) will conform with all applicable rules and regulations of the U.S.
Securities and Exchange Commission (the "Commission") and, in addition,
will conduct its activities under this Agreement in accordance with any
applicable regulations of any governmental authority pertaining to the
investment advisory activities of the Adviser;
(c) will place orders pursuant to its investment determinations for the
Funds either directly with the issuer or with any broker or dealer,
including the Adviser. In placing orders with brokers and dealers, the
Adviser will attempt to obtain and is hereby directed to obtain prompt
execution of orders in an effective manner at the most favorable price.
Consistent with this obligation, the Adviser may, in its discretion,
purchase and sell portfolio securities to and from brokers and dealers
who provide the Adviser with brokerage and research services (within the
meaning of Section 28(e) of the Securities Exchange Act of 1934).
Subject to the review of the Trustees from time to time with respect to
the extent and continuation of this policy, the Adviser is authorized to
pay a broker or dealer who provides such brokerage and research services
a commission for effecting a securities transaction for any of the Funds
which is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but only if, the
Adviser determines in good faith that such 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 overall responsibilities of the Adviser with respect
to the accounts as to which it exercises investment discretion. On
occasions when the Adviser deems the purchase or sale of a security to
be in the best interest of one or more of the Funds 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 Funds and to such other clients. In placing orders with the Adviser
for the Trust, the Adviser will comply with the procedures adopted by
the Trust pursuant to Rule 17e-1 under the 1940 Act.
(d) will maintain all books and records with respect to the securities
transactions of the Funds and will furnish the Trust's Board of Trustees
such periodic and special reports with respect to each Fund's investment
activities as the Trustees may reasonably request; and
(e) will advise and assist the officers of the Trust in taking such
actions as may be necessary or appropriate to carry out the decisions of
the Trustees and of the appropriate committees of the Trustees regarding
the conduct of the business of the Funds.
SECTION 3. EXPENSES.
During the term of this Agreement, the Adviser will pay all expenses
incurred by it in connection with its activities, duties and obligations
under this Agreement, other than the costs of securities (including
brokerage fees, if any) purchased for the Funds. The Adviser will also
furnish the Funds with office space and equipment necessary for the conduct
of the Funds' business.
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SECTION 4. COMPENSATION.
For the services provided and the expenses assumed pursuant to this
Agreement, each of the Funds will pay the Adviser and the Adviser will
accept as full compensation therefor the annual fee set forth on Schedule I
hereto. The obligations of the Funds to pay the above described fee to the
Adviser will begin as of the respective dates of the initial public sale of
shares in the Funds, including any shares sold or exchanged in connection
with a merger, consolidation or reorganization involving one or more of the
Funds. Such fee shall be paid monthly based upon each respective Fund's
average daily net assets calculated in the manner provided in the Prospectus
and Statement of Additional Information then in effect.
The fee shall be accrued daily by each Fund and paid to the Adviser within
five (5) business days after the end of each calendar month. If this
Agreement is terminated before 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 and shall be payable within ten (10) days after the date of
termination.
The Adviser may voluntarily waive or reimburse expenses at any time. Any
amounts waived or reimbursed by the Adviser are subject to reimbursement by
the Fund within the following three years, to the extent such reimbursement
by the Fund would not cause total operating expenses to exceed any current
expense limitation.
SECTION 5. LIMITATION OF LIABILITY.
The Adviser shall not be liable for any error of judgment or mistake of fact
or law or for any loss suffered by the Funds 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 Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
SECTION 6. DURATION AND TERMINATION.
This Agreement shall become effective at the time the Trust's initial
Registration Statement under the Securities Act of 1933 with respect to the
shares of the Trust is declared effective by the Commission 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 each Fund at least annually by (i) the vote of the Trustees
or the vote of a majority of the outstanding voting securities of such 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.
Notwithstanding the foregoing, this Agreement may be terminated as to a
particular Fund at any time on sixty days' written notice, without the
payment of any penalty, by the Trust (by vote of the Trustees or by vote of
a majority of the outstanding voting securities of such Fund) or by the
Adviser. This Agreement will automatically terminate in the event of its
assignment.
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Any notice under this Agreement shall be given in writing, addressed and
delivered or mailed to the other party at the principal office of such
party.
As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same
meanings as ascribed to such terms in the 1940 Act.
SECTION 7. NAME.
The word "Kelmoore" in the name of the Trust or the Funds is understood to
be used by the Trust with your consent, and the Trust is hereby granted a
non-exclusive license to use the name "Kelmoore Strategic Trust" and to use
the word "Kelmoore" in any Fund's name provided that the Trust and the Funds
may use such name only so long as (i) Kelmoore Investment Company, Inc. (the
"Adviser"), which currently acts as adviser to the Trust and the Funds,
shall continue to be retained by the Trust and the Funds as its adviser
pursuant to an investment advisory Agreement between the Trust and the
Adviser, as from time to time amended or supplemented, or (ii) you shall
specifically consent in writing to such continued use. Any such use by the
Trust and the Funds shall in no way prevent you or any of your successors or
assigns from using or permitting the use of the name "Kelmoore" alone or
with any other word or business whether or not the same directly or
indirectly competes or conflicts with the Trust or its business in any
manner. To the extent permitted by the 1940 Act and the rules and
regulations thereunder, and Investment Company Act Release No. 5510, in the
event that the Adviser shall cease to be the adviser of the Trust and the
Funds, the Trust, upon your written request, shall take such further action
as may be necessary to delete from its name and the name of the Funds the
word "Kelmoore" and thereafter (i) cease to use the name "Kelmoore Strategic
Trust" and omit the word "Kelmoore" from the Funds' names or any name
deceptively similar thereto or to "Kelmoore Investment Company" in any way
whatsoever, and (ii) for such period and in such manner as may reasonably be
required by you, on all letterheads and other material designed to be read
or used by salesmen, underwriters or investors, state in a prominent
position and prominent type that Kelmoore Investment Company, Inc. ceased to
be the adviser of the Trust and the Funds.
SECTION 8. ADVISER'S REPRESENTATIONS.
The Adviser hereby represents and warrants that it is willing, and possesses
all requisite legal authority, to provide the services contemplated by this
Agreement without violation of applicable laws and regulations.
SECTION 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.
SECTION 10. 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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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
and shall be governed by the laws of the State of California.
All persons contracting with or having any claim against the Trust or a
particular Fund shall look only to the assets of all Funds or such
particular Fund for payment under such contract or claim; and neither the
Trustees nor, when acting in such capacity, any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally
liable therefor.
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.
KELMOORE STRATEGIC TRUST KELMOORE INVESTMENT COMPANY, INC.
By: ________________________ By: __________________________
Name: ________________________ Name: __________________________
Title: ________________________ Title: __________________________
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SCHEDULE I
Name of Fund Annual Fee
KELMOORE STRATEGY COVERED OPTION FUND 1.00%
Dated:____________________, 1999
KELMOORE INVESTMENT COMPANY, INC KELMOORE STRATEGIC TRUST
By:_____________________________ By:______________________________
Name:___________________________ Name:____________________________
Title:__________________________ Title:___________________________
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