EXHIBIT 2(g)(1)
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made the 18th day of November,
2002 between NEW COLONY INVESTMENT TRUST (the "Trust"), a Delaware business
trust and SENTRY SELECT CAPITAL CORP. (the "Adviser"), a registered investment
adviser duly incorporated under the laws of Ontario, Canada, as investment
adviser to the Trust;
WHEREAS the Trust is registered under the Investment Company Act of
1940, as amended (the "Act"), as a closed-end management investment company, may
issue shares in series and, as of the date hereof, has issued one series of
shares designated as the New Colony Equity Income Fund (together with any
successor series thereto, the "Fund");
WHEREAS the Adviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act"); and
WHEREAS the Trust wishes to appoint the Adviser as investment adviser
to the Fund and the Adviser wishes to accept such appointment as investment
adviser;
NOW THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
agree as follows:
1. APPOINTMENT OF ADVISER
The Trust hereby appoints the Adviser to act as investment adviser to the Trust
and the Fund, and any other series of shares of the Trust as agreed upon by the
Adviser and Trust for the period and on the terms set forth in this Agreement.
The Adviser accepts such appointment and agrees to render the services herein
described, for the compensation herein provided.
2. DUTIES OF ADVISER
Pursuant to this Agreement and subject to the oversight and review of the Board
of Trustees, the Adviser will manage the investment and reinvestment of the
assets of the Fund. The Adviser will determine, in its discretion and subject to
the oversight and review of the Board of Trustees, the securities and options to
be purchased or sold by the Fund, and shall provide the Board of Trustees of the
Trust and the Fund once each quarter, or on such periodic basis as the Board of
Trustees may request, with information relating to transactions concerning the
Fund's assets. The Adviser shall also provide the Board of Trustees of the Trust
with such records and information concerning its activities with respect to or
affecting the Fund as the Board of Trustees of the Trust may reasonably request.
The Adviser shall discharge its responsibilities under this agreement, subject
to the control of the officers and the Board of Trustees of the Trust and in
compliance with (i) the Trust's current prospectus and statement of additional
information, in particular, the objectives, policies, and limitations for the
Fund set forth therein, (ii) the Agreement and Declaration of Trust and By-Laws
of the Trust, (iii) applicable laws and regulations, and (iv) such compliance or
similar policies or procedures as the Board of Trustees of the Trust may from
time to time adopt as to which the Adviser has prior written notice, in each
case as may be amended from time to time. The Adviser shall cooperate
with the Board of Trustees of the Trust as may be reasonably requested in
connection with the Adviser's responsibilities to the Fund and the Trust. The
Adviser shall also promptly review, and with respect to matters relating or
information known to it, provide comments on, any Fund offering or disclosure
materials provided to it for review.
The Adviser represents and warrants to the Trust that the Adviser's operations
and investment management activities on behalf of the Fund will at all times be
in compliance with all applicable federal and state laws governing the Fund's
operations and investments. Without limiting the foregoing, the Adviser
represents and warrants that it will (i) invest and reinvest the Fund's assets
in a manner that will enable the Fund to qualify and elect to be treated as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"); and (ii) comply with (1) the provisions of the
Act and rules adopted thereunder; and (2) other applicable federal and state
laws and regulations. The Adviser further represents and warrants that to
the extent that any statements or omissions made in the Trust's Registration
Statement under the Act and the 1933 Act, on Form N-2, as filed with the
Securities and Exchange Commission relating to the Fund and the Trust's Shares
and any amendments or supplements thereto (the "Registration Statement"), are
made in reliance upon and in conformity with information furnished by the
Adviser for use therein, such Registration Statement will conform in all
material respects to the requirements of the Securities Act of 1933 and the
rules and regulations of the Securities and Exchange Commission thereunder (the
"1933 Act") and the Act and will not, as to information relating to the Adviser
and its activities on behalf of the Fund, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading at the time such
information is furnished. In addition, the Adviser shall promptly advise the
Trust of any modifications or supplements to such information furnished by it to
the extent such modifications or supplements become necessary to ensure that
such information continues to not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
Without limiting the foregoing, the Adviser shall have the following rights and
shall perform the following duties, subject to the directions of the Board of
Trustees of the Trust:
(a) to comply with the investment objectives and policies applicable to the
Fund, including any restrictions on investments as set forth in the
Registration Statement, and to implement or arrange for the
implementation of such objectives and policies;
(b) to make all investment decisions with respect to the Fund, including
decisions regarding the purchase and sale of Fund's portfolio
securities, the writing of covered call options, cash covered put
options and other derivative securities permitted by the Registration
Statement and the closing out of covered call options and other
derivative securities written by the Trust [and to execute transactions
in securities and options on behalf of the Trust];
(c) to select broker-dealers and negotiate brokerage commission rates,
subject to ss.4 hereof;
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(d) to instruct the Fund concerning the exercise of any conversion
privileges, subscription rights, warrants or other rights or options
available in connection with any securities at any time held by the
Fund;
(e) to instruct the Fund concerning the voting of any portfolio securities
that may be held at any time and with respect to the exercise of any
right appurtenant to any securities or other property held at any time;
(f) to instruct the Fund with respect to the renewal or extension or
participation in the renewal or extension of any securities in the
Portfolio on such terms as the Adviser may deem advisable; and
(g) to provide such other investment advisory, portfolio management and
related services to the Fund as the Board of Trustees of the Trust may
request from time to time.
(h) to render the services set forth herein and to provide the office
space, furnishings, equipment and personnel required by it to perform
such services on the terms and for the compensation provided in this
Agreement.
(i) to maintain a level of errors and omissions or professional liability
insurance coverage that is from time to time reasonably satisfactory to
the Trust.
(j) to select and engage a party to provide subadvisory services to the
Trust, subject to the supervision of the Adviser and the Board of
Trustees, and to make and enter into a Sub-Advisory Agreement with such
party that sets forth all material terms of such engagement.
3. PORTFOLIO TRANSACTIONS
In selecting broker-dealers and negotiating brokerage commission rates pursuant
to ss.3(c) hereof, the Adviser shall give primary consideration to securing
favorable prices and efficient executions and may, in that connection consider,
among other things, the financial responsibility, research and investment
information and other services provided by brokers or dealers who may effect or
be a party to any such transaction or other transactions to which other clients
of the Adviser may be a party. It is understood that neither the Trust nor the
Adviser has adopted a formula for allocation of the Fund's investment business.
It is also understood that it is desirable for the Fund that the Adviser have
access to supplemental investment and market research and security and economic
analysis provided by brokers who may execute brokerage transactions at a higher
cost to the Trust and the Fund than may result when allocating brokerage to
other brokers on the basis of seeking the most favorable prices and efficient
executions. Therefore, the Adviser is authorized to place orders for the
purchase and sale of securities for the Fund with such brokers, subject to
review by the Board of Trustees of the Trust, from time to time, with respect to
the extent and continuation of this practice, and in accordance with any
applicable policies or procedures as may be adopted by the Board of Trustees of
the Trust from time to time as to which the Adviser has prior written notice.
The Adviser 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 or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the
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Adviser determined 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 clients of the Adviser as
to which the Adviser exercises investment discretion. The Trust recognizes that
all research services and research that the Adviser receives are available for
all clients of the Adviser, and that the Fund and other clients of the Adviser
may benefit thereby.
The Adviser will promptly communicate to the officers and Board of Trustees of
the Trust such information relating to the Fund transactions as they may
reasonably request.
To the extent consistent with applicable law and with any applicable policies or
procedures adopted by the Board of Trustees of the Trust from time to time as to
which the Adviser has prior written notice, the Adviser may aggregate purchase
or sell orders for the Fund with contemporaneous purchase or sell orders of
other clients of the Adviser or its affiliated persons. 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 the
Adviser determines to be equitable and consistent with its and its affiliates'
fiduciary obligations to the Fund and to such other clients. The Trust hereby
acknowledges that such aggregation of orders may not result in more favorable
pricing or lower brokerage commissions in all instances.
4. DELIVERY OF DOCUMENTS
The Trust has delivered to the Adviser copies of each of the following documents
and will deliver to it all future amendments and supplements, if any:
(a) The Agreement and Declaration of Trust of the Trust filed with the
State of Delaware;
(b) The By-Laws of the Trust;
(c) Certified resolutions of the Board of Trustees of the Trust (i)
authorizing the appointment of the Adviser and approving the form of
this Agreement;
(d) The Trust's Registration Statement;
(e) The Trust's Notification of Registration under the Act on Form N-8A as
filed with the Securities Exchange Commission and all amendments
thereto;
(f) The Prospectus and Statement of Additional Information of the Trust as
currently in effect;
(g) The Code of Ethics of the Trust as currently in effect; and
The Trust will also deliver copies of any compliance or similar policies or
procedures of the Trust relevant to the performance of the Adviser's duties
under this Agreement.
The Trust will furnish the Adviser from time to time with copies, properly
certified or otherwise authenticated, of all amendments of or supplements to the
foregoing, if any. Such amendments or supplements generally will be provided
within 30 days of the time such materials became
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available to the Trust and, until so provided, the Adviser may continue to rely
on those documents previously provided.
During the term of this Agreement, the Trust also will furnish to the Adviser
prior to use thereof copies of all the Fund documents, proxy statements, reports
to shareholders, sales literature, or other material prepared for distribution
to shareholders or the public that refer in any way to the Adviser, and will not
use such material if the Adviser reasonably objects in writing within five
business days (or such other time period as may be mutually agreed) after
receipt thereof. However, the Trust and the Adviser may agree amongst themselves
that certain of the above-mentioned documents do not need to be furnished to the
Adviser prior to the document's use.
5. FEES AND EXPENSES
In consideration of the duties performed by the Adviser pursuant to the terms of
this Agreement, the Trust shall pay the Adviser fees as set forth in Schedule A
attached hereto.
The Adviser shall pay all of its expenses arising from the performance of its
obligations under ss.2 hereof and shall pay any salaries, fees and expenses of
the Trustees or Officers of the Trust who are employees of the Adviser. The
Adviser shall not be required to pay any other expenses of the Trust, including,
but not limited to, direct charges relating to the purchase and sale of
portfolio securities, interest charges, fees and expenses of independent
auditors, taxes and governmental fees, cost of share certificates and any other
expenses (including clerical expenses) of issue, sale, repurchase or redemption
of shares, expenses of registering and qualifying shares for sale, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of data processing and related services, shareholder recordkeeping and
shareholder account service, expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of printing and
distributing prospectuses, expenses of annual and special shareholders meetings,
fees and disbursements of transfer agents and custodians, expenses of disbursing
dividends and distributions, fees and expenses of Trustees who are not employees
of the Adviser or its affiliates, insurance premiums and extraordinary expenses
such as litigation expenses.
6. ADVISER'S STANDARD OF CARE; LIMITATIONS OF LIABILITY
(a) The Adviser will give the Trust the benefit of the Adviser's best
judgment and efforts in rendering its services to the Fund.
(b) In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties ("disabling conduct")
hereunder on the part of the Adviser (and/or its officers,
directors/trustees, agents, employees, controlling persons,
shareholders, members and any other person or entity affiliated with
the Adviser), the Adviser shall not be subject to liability to the
Trust or to any shareholder of the Trust or any series thereof for any
act or omission in the course of, or connected with, rendering services
hereunder, including without limitation, any error of judgment or
mistake of law or for any loss suffered by any of them in connection
with the matters to which this Agreement relates, except to the extent
specified in section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation
for services. Except for such disabling conduct on the part of the
Adviser (and/or its officers, directors/trustees, partners, agents,
employees, controlling persons, shareholders, members and any other
person or entity affiliated with the Adviser), the Trust shall
indemnify the Adviser (and its officers, directors/trustees, partners,
agents, employees, controlling persons, shareholders, members and any
other person or entity affiliated with the Adviser) (each, an
"Indemnified Party") from any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other
expenses), to which such an Indemnified Party may become subject under
the Act or the 1933 Act, under other statutes, at common law or
otherwise, arising from (i) the Adviser's provision of services under
this Agreement, (ii) the offer or sale of shares of the Trust or any
series thereof, or (iii) any statements or omissions made in any
Registration Statement for shares of the
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Trust, or any amendments or supplements thereto, other than those made
in reliance upon and in conformity with information furnished by the
Adviser for use therein. In no case, however, shall such an indemnity
be owed by the Trust or any series thereof to an Indemnified Party with
respect to liabilities not arising from conduct of the Trust or any
series thereof.
(c) The Adviser agrees to indemnify and hold harmless the Board of Trustees
of the Trust and its affiliates and each of its directors and officers
and each person, if any, who controls the Board of Trustees of the
Trust within the meaning of section 15 of the 1933 Act against any and
all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses), to which the Board of Trustees of
the Trust or its affiliates or such directors, officers or controlling
person may become subject under the Act or the 1933 Act, under other
statutes, at common law or otherwise, which may be based upon (i) any
wrongful act under or breach of this Agreement by the Adviser, or (ii)
any failure by the Adviser to comply with the representations and
warranties set forth in ss.1 of this Agreement; provided, however, that
in no case is the Adviser's indemnity in favor of any person deemed to
protect such other persons against any liability to which such person
would otherwise be subject by reasons of willful misfeasance, bad
faith, or gross negligence in the performance of his, her or its duties
or by reason of his, her or its reckless disregard of obligation and
duties under this Agreement. The Adviser shall not be liable to the
Trust or any series thereof for any acts of the Trust or any series
thereof with respect to any portion of the assets of the Trust not
managed by the Adviser.
(d) The rights and obligations under ss.ss.6(b) and 6(c) hereof shall
survive the termination or expiration of this Agreement.
7. CODE OF ETHICS
The Adviser agrees to observe and comply with Rule 17j-1 under the Act, as the
same may be amended from time to time. In this regard, the Adviser shall, among
other things, adopt internal procedures, including a Code of Ethics as required
by such Rule, shall periodically report any issues arising under such procedures
to the Board of Trustees of the Trust and shall furnish to the Trust a copy of
such Code of Ethics as is currently in effect as requested by the Trust.
8. ADVISER NOT LIABLE FOR TAXES
The Adviser shall not be liable for any taxes, assessments or other governmental
charges levied with respect to the Trust or the shares of the Fund or upon the
Fund or upon the any property of the Trust or any part thereof or upon the
income thereof or any interest of the Trust or of any shareholder therein or
thereunder.
9. ALLOCATION OF INVESTMENT OPPORTUNITIES AND OTHER CLIENTS
Subject to the Adviser's policies concerning the allocation of investment
opportunities as described in its Form ADV (a copy of which has been provided to
the Trust) and compliance with applicable law and the Adviser's Code of Ethics,
nothing in this Agreement shall impose upon the Adviser any obligation to
purchase or sell, or recommend for purchase or sale, for the Fund any security
which it or its officers, directors, affiliates or employees may purchase or
sell for the Adviser or such officer's, director's, affiliate's or employee's
own accounts or for the
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account of any of the Adviser's clients, advisory or otherwise. Subject to the
same proviso, the Adviser may give advice and take action with respect to other
funds or clients, or for its own account that may differ from the advice or the
timing or nature of action taken with respect to the Fund. Other than as
provided in ss.10 hereof, nothing in this Agreement shall be implied to prevent
the Adviser from providing investment advice and other services to other funds
or clients.
10. BOOKS AND RECORDS
(a) The Adviser hereby undertakes and agrees to maintain, in the form and
for the period required by Rule 31a-1 and Rule 31a-2 under the Act and
Rule 204-2 under the Advisers Act, all books and records relating to
the Fund or its investors that are required to be maintained by the
Adviser pursuant to the requirements of such Rule. The Adviser agrees
that all books and other records maintained and preserved by it as
required hereby shall be subject at any time, and from time to time,
to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Trust's auditors, the Trust or
any representative of the Trust, the Adviser, or any governmental
agency or other instrumentality having regulatory authority over the
Trust.
(b) The Adviser agrees that all records which it maintains for the Trust
are the property of the Trust and it will surrender promptly to the
Trust any such records upon the Trust's request, provided, however,
that the Sub-Adviser may retain a copy of such records.
11. NOTICE
Any notice or other communication required to be given pursuant to this
Agreement shall be in writing and given by personal delivery or by facsimile
transmission and shall be effective upon receipt. Notices and communications
shall be given:
(i) to the Trust:
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
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copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
(ii) to the Adviser:
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
12. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective upon approval by vote of a
majority of the outstanding voting securities (as defined in the Act)
of the Fund.
(b) This Agreement shall remain in force for a period of two years from the
day that it becomes effective under ss.16(a) hereof, and from year to
year thereafter so long as such continuance is specifically approved at
least annually (i) by either the vote of the Board of Trustees of the
Trust, or by the affirmative vote of a majority of the outstanding
voting securities (as defined in the Act) of the Fund, and (ii) by the
vote of a majority of the Trust's trustees who are not parties to this
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
(c) This Agreement may be terminated at any time, without payment of a
penalty by the Fund or the Trust, by vote of the Board of Trustees, or
by vote of a majority of the outstanding voting securities (as defined
in the Act) of the Fund, or by the Adviser, on not less than 30 nor
more than 60 days' written notice; provided, however, that this
Agreement may not be terminated by the Adviser unless another
subadvisory agreement has been approved by the Trust in accordance with
the Act, or after 120 days' written notice, whichever is earlier, and
provided further that the Board of Trustees of the Trust may at its
election shorten such 120 day period to any period of not less than 30
days. This Agreement shall automatically terminate in the event of its
assignment (as defined by the Act). The Board of Trustees of the Trust
shall promptly notify the Adviser of any transaction or other event
that results in an "assignment" of this Agreement within the meaning of
the Act.
(d) Upon the expiration of this Agreement (including any renewal or
extension hereof) or its termination pursuant to any provision of this
ss.16, the Adviser shall not be entitled to any further compensation
hereunder, except that the Trust shall pay the Adviser any
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compensation accrued under ss.6 hereof through the date of such
expiration or termination. Any such payments shall be made promptly in
accordance with prior practice.
13. COUNTERPARTS
This Agreement may be executed in any number of counterparts by the Parties
hereto, all of which shall be deemed to be an original and such counterparts
taken together shall constitute one agreement.
14. FACSIMILES
This Agreement may be executed and delivered by the parties hereto by facsimile
transmission and such facsimile copy, when received, shall constitute an
original hereof.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement on the day
and year first above written.
NEW COLONY INVESTMENT TRUST SENTRY SELECT CAPITAL CORP.
/s/ Xxxxx Xxxxx /s/ Xxxx Xxxxxxxx
--------------------------------- ----------------------------------
By: Xxxxx Xxxxx By: Xxxx Xxxxxxxx
Title: Trustee Title: President and Chief Executive
Officer
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SCHEDULE A
In consideration of the advisory and other services provided by the Adviser to
the Trust, the Fund will pay the Adviser an annual investment management fee of
1.10% of the Fund's month-end net asset value before giving effect to any
repurchases by the Fund of the shares of the Trust. The investment management
fee will accrue monthly and will be payable monthly after the month of accrual.
The Fund will pay the investment management fee to the Adviser out of the assets
of the Trust.
