EXHIBIT 5(d)
INVESTMENT ADVISORY AGREEMENT
(Equity Fund, Equity Income Fund, Short-Term Fixed Income
Fund, U.S. Government Securities Fund, Florida
Tax-Exempt Fund, Tax-Exempt Target Fund (Maturity 1995),
Tax-Exempt Target Fund (Maturity 2000) and Tax-Exempt
Target Fund (Maturity 2005))
AGREEMENT made as of June 28, 1991 between EMERALD FUNDS, a
Massachusetts business trust (herein called the "Trust"), and XXXXXXX XXXXX
TRUST COMPANY, N.A., a national banking association (herein called the
"Investment Adviser"), a wholly-owned subsidiary of Xxxxxxx Xxxxx, Inc.
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory and other services to the Trust for its Equity Fund, Equity
Income Fund, Short-Term Fixed Income Fund, U.S. Government Securities Fund,
Florida Tax-Exempt Fund, Tax-Exempt Target Fund (Maturity 1995), Tax-Exempt
Target Fund (Maturity 2000) and Tax-Exempt Target Fund (Maturity 2005) (the
"Funds"), and the Investment Adviser is willing to so furnish such services;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) The Trust hereby appoints the Investment Adviser to act as
investment adviser to the Trust's Equity Fund, Equity Income Fund, Short-Term
Fixed Income Fund, U.S. Government Securities Fund, Florida Tax-Exempt Fund,
Tax-Exempt Target Fund (Maturity 1995), Tax-Exempt Target Fund (Maturity 2000)
and Tax-Exempt Target Fund (Maturity 2005) for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
(b) In the event that the Trust establishes one or more
portfolios other than the Funds with respect to which it desires to retain the
Investment Adviser to act as investment adviser hereunder, it shall notify the
Investment Adviser in writing. If the Investment Adviser is willing to render
such services under this Agreement it shall notify the Trust in writing
whereupon such portfolio shall become a Fund hereunder and shall be subject to
the provisions of this Agreement to the
same extent as the Funds named above in subparagraph (a) except to the extent
that said provisions (including those relating to the compensation payable by
the Fund to the Investment Adviser) are modified with respect to such Fund in
writing by the Trust and the Investment Adviser at the time.
2. DELIVERY OF DOCUMENTS.
The Trust has furnished the Investment Adviser with copies properly
certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed
with the State Secretary of the Commonwealth of Massachusetts on March
16, 1988, and any amendments thereto (such Agreement and Declaration
of Trust, as presently in effect and as it shall from time to time be
amended, is herein called the "Declaration of Trust");
(b) The Trust's Code of Regulations and any amendments thereto;
(c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) The Trust's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange Commission on
March 21, 1988 and any amendments thereto;
(e) The Trust's Registration on Form N-1A under the Securities
Act of 1933 as amended ("1933 Act") (File No. 33-20658) and under the
1940 Act as filed with the Securities and Exchange Commission on
March 21, 1988 and any amendments thereto; and
(f) The most recent prospectuses of the Funds (such prospectuses
together with the related statement of additional information, as
presently filed with the Securities and Exchange Commission and all
amendments and supplements thereto, are herein called "Prospectuses").
The Trust will furnish the Investment Adviser from time to time with copies of
all amendments of or supplements to the foregoing, if any.
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3. SERVICES.
Subject to the supervision of the Trust's Board of Trustees, the
Investment Adviser will be responsible for the management of, and will provide a
continuous investment program for, the investment portfolio of each Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents in the Funds. The Investment Adviser
will determine from time to time what securities and other investments will be
purchased, retained or sold by each of the Funds. The Investment Adviser will
provide the services rendered by it under this Agreement in accordance with each
Fund's investment objective, policies and restrictions as stated in the
Prospectus for each Fund and resolutions of the Trust's Board of Trustees.
Without limiting the generality of the foregoing, the Investment Adviser is
hereby specifically authorized to invest and reinvest the assets of a Fund, in
its discretion as investment adviser, in (i) variable amount demand notes of
corporate borrowers held by the Investment Adviser for the investment of monies
held by the Investment Adviser in its capacity as fiduciary, agent and custodian
and (ii) securities of other investment companies whether or not the same are
advised or managed by the Investment Adviser or another affiliated person of the
Trust. The Investment Adviser further agrees that it will:
(a) Establish and monitor investment criteria and policies for
each Fund;
(b) Update each Fund's cash availability throughout the day as
required;
(c) Maintain historical tax lots for each portfolio security
held by the Funds;
(d) Transmit trades to the Trust's custodian for proper
settlement;
(e) Maintain all books and records with respect to each Fund's
securities transactions;
(f) Supply the Trust and its Board of Trustees with reports,
statistical data and economic information as requested; and
(g) Prepare a quarterly broker security transaction summary and
monthly security transaction listing for each Fund.
4. OTHER COVENANTS.
The Investment Adviser agrees that it:
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(a) will comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its activities
under this Agreement in accordance with other applicable law;
(b) will use the same skill and care in providing such services
as it uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(c) will place orders pursuant to its investment determinations
for each Fund either directly with the issuer or with any broker or dealer. In
executing portfolio transactions and selecting brokers or dealers, the
Investment Adviser will use its best efforts to seek on behalf of the Funds the
best overall terms available. In assessing the best overall terms available for
any transaction, the Investment Adviser shall consider all factors that it deems
relevant, including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best overall terms
available, and in selecting the broker-dealer to execute a particular
transaction, the Investment Adviser may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) provided to the Funds and other accounts over which the Investment
Adviser or an affiliate of the Investment Adviser exercises investment
discretion. The Investment Adviser is authorized, subject to the prior approval
of the Trust's Board of Trustees, to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
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 Investment 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 that particular
transaction or in terms of the overall responsibilities of the Investment
Adviser to the Funds. In addition, the Investment Adviser is authorized to take
into account the sale of shares of the Trust in allocating purchase and sale
orders for portfolio securities to brokers or dealers (including brokers and
dealers that are affiliated with the Investment Adviser or the Trust's principal
underwriter), provided that the Investment Adviser believes that the quality of
the transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will portfolio securities be
purchased from or sold to the Investment Adviser, the Trust's principal
underwriter, or any affiliated person of either the Trust, the Investment
Adviser, or the principal underwriter, acting as principal in the
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transaction, except to the extent permitted by the Securities and Exchange
Commission; and
(d) will maintain a policy and practice of conducting its
investment advisory services hereunder independently of the commercial banking
operations of its affiliates. When the Investment Adviser makes investment
recommendations for a Fund, its investment advisory personnel will not inquire
or take into consideration whether the issuer of securities proposed for
purchase or sale for the Fund's account are customers of the commercial
department of any of the Investment Adviser's affiliates. In dealing with
commercial customers, the Investment Adviser's affiliates will not inquire or
take into consideration whether securities of those customers are held by the
Funds.
5. SERVICES NOT EXCLUSIVE.
The services furnished by the Investment Adviser hereunder are deemed
not to be exclusive, and the Investment Adviser shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby. To the extent that the purchase or sale of securities or other
investments of the same issuer may be deemed by the Investment Adviser to be
suitable for two or more accounts managed by the Investment Adviser, the
available securities or investments may be allocated in a manner believed by the
Investment Adviser to be equitable to each account. It is recognized that in
some cases this procedure may adversely affect the price paid or received by a
Fund or the size of the position obtainable for or disposed of by a Fund.
6. BOOKS AND RECORDS.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Investment Adviser hereby agrees that all records which it maintains for
each Fund 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 Investment
Adviser 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.
7. EXPENSES.
During the term of this Agreement, the Investment Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased or sold
for the Funds. In addition, if in any fiscal year the aggregate expenses of any
Fund (as defined under the
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securities regulations of any state having jurisdiction over such Fund) exceed
the expense limitations of any such state, the Trust may deduct from the fees to
be paid hereunder, or the Investment Adviser will bear, to the extent required
by state law, that portion of the excess which bears the same relation to the
total of such excess as the Investment Adviser's fee hereunder with respect to
such Fund bears to the total fee otherwise payable for the fiscal year by the
Trust pursuant to this Agreement and the administration agreement between the
Trust and its administrator with respect to such Fund. The Investment Adviser's
obligation is not limited to the amount of its fees hereunder. Such deduction
or payment, if any, will be estimated and accrued daily and paid on a monthly
basis.
8. COMPENSATION.
For the services provided and the expenses assumed pursuant to this
Agreement, the Trust will pay the Investment Adviser, and the Investment Adviser
will accept as full compensation therefor from the Trust, a fee, computed daily
and payable monthly, at the following annual rates of the average daily net
assets of each respective Fund as follows: Equity Fund -- 0.60%; Equity Income
Fund -- 0.60%; Short-Term Fixed Income Fund -- 0.35%; U.S. Government Securities
Fund -- 0.40%; Florida Tax-Exempt Fund -- 0.40%; Tax-Exempt Target Fund
(Maturity 1995) -- O.40%; Tax-Exempt Target Fund (Maturity 2000) -- 0.40%; and
Tax-Exempt Target Fund (Maturity 2005) -- 0.40%. Such respective fee as is
attributable to each Fund shall be a separate charge to such Fund and shall be
the several (and not joint or joint and several) obligation of each such Fund.
9. LIMITATION OF LIABILITY.
The Investment Adviser 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
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 negligence on the part of
the Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
10. DURATION AND TERMINATION.
This Agreement shall become effective as of the date hereof with
respect to the Funds listed in Section 1(a) hereof, and with respect to any
additional Fund, on the date of receipt by the Trust of notice from the
Investment Adviser in accordance with Section 1(b) hereof that the Investment
Adviser is willing to serve as investment adviser with respect to such Fund,
provided that this Agreement (as supplemented by the terms
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specified in any notice and agreement pursuant to Section 1(b) hereof) shall
have been approved by the shareholders of the Funds in accordance with the
requirements of the 1940 Act, and unless sooner terminated as provided herein,
shall continue in effect until November 30, 1992. Thereafter, if not
terminated, this Agreement shall automatically continue in effect as to a
particular Fund for successive annual periods ending on November 30, PROVIDED
such continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Trust's Board of Trustees 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, and (b) by the Trust's Board
of Trustees or by vote of a majority of the outstanding voting securities of
such Fund. Notwithstanding the foregoing, this Agreement may be terminated as
to any Fund at any time, without the payment of any penalty, by the Trust (by
vote of the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Fund), or by the Investment Adviser, on
sixty days' written notice. This Agreement will immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning as such terms have in the 1940 Act.)
11. 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. No amendment of this Agreement shall be effective as to a particular
Fund until approved by vote of a majority of the outstanding voting securities
of such Fund.
12. 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. 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 New York law.
13. NAMES.
The names "Emerald Funds" and "Trustees of Emerald Funds" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated
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March 15, 1988, which is hereby referred to and a copy of which is on file at
the office of the State Secretary of the Commonwealth of Massachusetts and at
the principal office of the Trust. The obligations of "Emerald 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 Trust Property, and all persons dealing with any
class of shares of the Trust must look solely to the Trust Property belonging to
such class for the enforcement of any claims against the Trust.
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.
EMERALD FUNDS
Attest: (a Massachusetts business trust)
/s/ Xxxxxxx X. Xxxxx By/s/ Xxxx X. Xxxxxxxx
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[Seal]
XXXXXXX XXXXX TRUST COMPANY, N.A.
Attest:
/s/ Xxxxx X. Xxxxx By/s/ XxXxxxx Xxxxx, Jr.
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[Seal]
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