FIRST FIDUCIARY TRUST
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT (the "Agreement") made as of the ___
day of _______________, 2003, by and between First Fiduciary Trust, a Delaware
statutory trust (the "Trust"), on behalf of each series of the Trust listed in
Appendix A hereto (hereinafter referred to individually as a "Fund" and
collectively as the "Funds") and [Financial Counselors, Inc., a Delaware
corporation] [Xxxxxx Bash Xxxxx, Inc., a Kansas corporation] (the "Manager").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Manager is an investment adviser, registered as such under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
supplying investment advice, investment management and administrative services,
as an independent contractor; and
NOW, THEREFORE, in consideration of the covenants and the mutual premises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. Appointment of Manager. The Trust hereby appoints the Manager and the
Manager hereby accepts such appointment, to render investment advice and
management services with respect to the assets of the Funds for the period and
on the terms set forth in this Agreement, subject to the supervision and
direction of the Trust's Board of Trustees.
2. Duties of Manager.
(a) General Duties. The Manager shall perform the management and
administrative services necessary for the operation of the Funds that are not
otherwise provided by third party service providers. The Manager shall, subject
to the supervision of the Board of Trustees, perform various services for the
Funds, including but not limited to: (1) providing the Funds with office space,
equipment and facilities (which may be its own) for maintaining their
organization; and (2) on behalf of each Fund, supervising relations with, and
monitoring the performance of, custodians, depositories, fund administrators,
transfer, dividend disbursing, accounting and pricing agents, independent
auditors, attorneys, underwriters, brokers and dealers, insurers and other
persons in any capacity deemed to be necessary or desirable.
(b) Investment Advisory Services. The Manager shall act as investment
manager to the Funds and shall manage the investments of the Funds on behalf of
the Funds in accordance with the investment objectives, programs and
restrictions of the Funds as provided in the Trust's governing documents,
including, without limitation, the Trust's Agreement and Declaration of Trust
and By-Laws, or otherwise and such other limitations as the Trustees may impose
from time to time in writing to the Manager. In this regard, the Manager shall
regularly make decisions as to what securities and other investments to purchase
and sell on behalf of the Funds, and shall effect the purchase and sale of such
investments. The Manager shall also have discretion to vote any proxy solicited
by a Funds' portfolio company, again subject to the ultimate supervision of the
Board. In performing these services, the Manager may hire one or more
sub-advisers (the "Sub-Advisers") for each Fund to carry out the investment
program of the Funds (subject to the approval of the Trust's Board of Trustees
and shareholders of the Fund, except as otherwise permitted under the terms of
any exemptive relief obtained by the Manager from the Securities and Exchange
Commission ("SEC"), or by rule or regulation). To the extent that the Manager
does hire any Sub-Advisor, it will thereafter continuously review, supervise and
(where appropriate) administer the investment program of the Funds. Without
limiting the generality of the foregoing, the Manager shall, or direct any
sub-advisor to: (i) furnish the Funds with advice and recommendations with
respect to the investment of each Fund's assets and the purchase and sale of
portfolio securities for the Funds, including selecting brokers and effecting
transactions or taking of such other steps as may be necessary to implement such
advice and recommendations; (ii) furnish the Funds with reports, statements and
other data on securities, economic conditions and other pertinent subjects which
the Trust's Board of Trustees may reasonably request; (iii) manage the
investments of the Funds, subject to the ultimate supervision and direction of
the Trust's Board of Trustees; (iv) vote proxies solicited by portfolio
companies; (v) provide persons satisfactory to the Trust's Board of Trustees to
act as officers and employees of the Trust and the Funds (such officers and
employees, as well as certain trustees, may be trustees, directors, officers,
partners, or employees of the Manager or its affiliates) but not including
personnel to provide administrative services or distribution services to the
Fund; and (vi) render to the Trust's Board of Trustees such periodic and special
reports with respect to each Fund's investment activities as the Board may
reasonably request. The investment policies and all other actions of each Fund
are and shall at all times be subject to the control and direction of the Fund's
Board of Trustees.
(c) Brokerage. The Manager or a Sub-Advisor shall place orders for the
purchase and sale of securities either directly with the issuer or with a broker
or dealer selected by the Manager or the Sub-Advisor. In placing each Fund's
securities trades, it is recognized that the Manager or Sub-Advisor will give
primary consideration to securing the most favorable price and efficient
execution, so that each Fund's total cost or proceeds in each transaction will
be the most favorable under all the circumstances. Within the framework of this
policy, the Manager may consider 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 Manager or Sub-Advisor may be a party.
It is also understood that it is desirable for the Funds that the Manager
and each Sub-Advisor have access to investment and market research and
securities and economic analyses provided by brokers and others. It is also
understood that brokers providing such services may execute brokerage
transactions at a higher cost to the Funds than might result from the allocation
of brokerage to other brokers on the basis of seeking the most favorable price
and efficient execution. Therefore, the purchase and sale of securities for the
Funds may be made with brokers who provide such research and analysis, subject
to review by the Trust's Board of Trustees from time to time with respect to the
extent and continuation of this practice to determine whether each Fund
benefits, directly or indirectly, from such practice. It is understood by both
parties that the Manager may select broker-dealers for the execution of the
Funds' portfolio transactions who provide research and analysis as the Manager
may lawfully and appropriately use in its investment management and advisory
capacities, whether or not such research and analysis may also be useful to the
Manager or Sub-Advisor in connection with its services to other clients.
On occasions when the Manager or a Sub-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 Manager or the Sub-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 Manager or Sub-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.
The Manager is authorized to direct, or to permit any sub-adviser to
direct, portfolio transactions to a broker-dealer which is an affiliated person
of the Manager or the Trust in accordance with such standards and procedures as
may be approved by the Board in accordance with 1940 Act Rule 17e-1, or other
rules promulgated by the Securities and Exchange Commission. Any transaction
placed with an affiliated broker-dealer must (i) be placed at the best available
execution, and (ii) may not be a principal transaction.
(d) Administrative Services. The Manager shall oversee the administration
of the Funds' business and affairs although the provision of administrative
services, to the extent not covered by subparagraphs (a) or (b) above, is not
the obligation of the Manager under this Agreement. Notwithstanding any other
provisions of this Agreement, the Manager shall be entitled to reimbursement
from the Funds for all or a portion of the reasonable costs and expenses,
including salary, associated with the provision by Manager of personnel to
render administrative services to the Funds.
3. Best Efforts and Judgment. The Manager shall use its best judgment and
efforts in rendering the advice and services to the Funds as contemplated by
this Agreement.
4. Independent Contractor. The Manager shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Funds in any way, or in any way be deemed an agent for the Trust or
for the Funds. It is expressly understood and agreed that the services to be
rendered by the Manager to the Funds under the provisions of this Agreement are
not to be deemed exclusive, and the Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. Manager's Personnel. The Manager shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Manager or the Trust's Board of Trustees may desire and reasonably request.
6. Reports by Funds to Manager. Each Fund will from time to time furnish to
the Manager detailed statements of its investments and assets, and information
as to its investment objective and needs, and will make available to the Manager
such financial reports, proxy statements, legal and other information relating
to each Fund's investments as may be in its possession or available to it,
together with such other information as the Manager may reasonably request.
7. Expenses.
(a) With respect to the operation of each Fund, the Manager is responsible
for (i) the compensation of any of the Trust's trustees, officers, and employees
who are affiliates of the Manager (but not the compensation of employees
performing services in connection with expenses which are the Fund's
responsibility under Subparagraph 7(b) below), and (ii) providing personnel,
office space and equipment reasonably necessary to fulfill the Manager's duties
under this Agreement.
(b) Each Fund is responsible for and has assumed the obligation for payment
of all of its expenses, other than as stated in Subparagraph 7(a) above,
including but not limited to: fees and expenses incurred in connection with the
issuance, registration and transfer of its shares; brokerage and commission
expenses; all expenses of transfer, receipt, safekeeping, servicing and
accounting for the cash, securities and other property of the Trust for the
benefit of the Funds including all fees and expenses of its custodian, fund
administrator, shareholder services agent and accounting services agent;
interest charges on any borrowings; costs and expenses of pricing and
calculating its daily net asset value and of maintaining its books of account
required under the 1940 Act; taxes, if any; expenditures in connection with
meetings of each Fund's shareholders and Board of Trustees that are properly
payable by the Fund; salaries and expenses of officers and fees and expenses of
members of the Trust's Board of Trustees or members of any advisory board or
committee who are not members of, affiliated with or interested persons of the
Manager; insurance premiums on property or personnel of each Fund which inure to
its benefit, including liability and fidelity bond insurance; the cost of
preparing and printing reports, proxy statements, prospectuses and statements of
additional information of the Fund or other communications for distribution to
existing shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of obtaining and maintaining any
required registration or notification for its shares for sale under federal and
applicable state and foreign securities laws; all expenses of maintaining and
servicing shareholder accounts, including all charges for transfer, shareholder
recordkeeping, dividend disbursing, redemption, and other agents for the benefit
of the Funds, if any; and all other charges and costs of its operation plus any
extraordinary and non-recurring expenses, except as herein otherwise prescribed.
(c) To the extent the Manager incurs any costs by assuming expenses which
are an obligation of a Fund as set forth herein, such Fund shall promptly
reimburse the Manager for such costs and expenses, except to the extent the
Manager has otherwise agreed to bear such expenses. To the extent the services
for which a Fund is obligated to pay are performed by the Manager, the Manager
shall be entitled to recover from such Fund to the extent of the Manager's
actual costs for providing such services.
8. Management Fee.
(a) Each Fund shall pay to the Manager, and the Manager agrees to accept,
as full compensation for all administrative and investment management and
advisory services furnished or provided to such Fund pursuant to this Agreement,
a management fee as set forth in the Fund and Fee Schedule attached hereto as
Appendix A, as may be amended in writing from time to time by the Trust and the
Manager.
(b) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated before
the end of any month, the fee to the Manager shall be prorated for the portion
of any month in which this Agreement is in effect which is not a complete month
according to the proportion which the number of calendar days in the month
during which the Agreement is in effect bears to the number of calendar days in
the month, and shall be payable within ten (10) days after the date of
termination.
(c) Fee Reduction. The Manager may, but is not required to, voluntarily or
contractually reduce all or a portion of its fees and/or make payments for other
expenses in order to decrease the operating expenses of a Fund. Any such
reduction or payment (collectively "subsidies") shall be applicable only to such
specific subsidy and shall not constitute an agreement to continue such subsidy
in the future. Any such subsidy will be agreed to prior to accrual of the
related expense or fee and will be estimated daily and reconciled and paid on a
monthly basis. The Manager may seek reimbursement of any subsidies made by the
Manager either voluntarily or pursuant to contract. The reimbursement of any
subsidy must be approved by the Trust's Board of Trustees and must be sought no
later than the end of the third fiscal year following the year to which the
subsidy relates if the aggregate expenses for that period do not exceed any more
restrictive limitation to which the Manager has agreed (subsidies available for
reimbursement to the Manager are collectively referred to as the "Recoupment
Balance") and the Board of Trustees approves the reimbursement. For example,
subsidized Operating Expenses relating to the period July 1, 2003 through June
30, 2004 would no longer be eligible for reimbursement after July 1, 2007. The
Manager agrees not to request or seek reimbursement of subsidized Operating
Expenses that are no longer eligible for reimbursement. The Manager may not
request or receive reimbursement of the Recoupment Balance before payment of the
Fund's operating expenses for the current year and cannot cause the Fund to
exceed any agreed upon expense limitation for that year in making such
reimbursement.
(d) The Manager may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement prior to the time such compensation or reimbursement has accrued as a
liability of the Fund. Any such agreement shall be applicable only with respect
to the specific items covered thereby and shall not constitute an agreement not
to require payment of any future compensation or reimbursement due to the
Manager hereunder.
9. Conflicts with Trust's Governing Documents and Applicable Laws. Nothing
herein contained shall be deemed to require the Trust or the Funds to take any
action contrary to the Trust's Agreement and Declaration of Trust, By-Laws, or
any applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of the conduct of
the affairs of the Trust and Funds.
10. Manager's Liabilities.
(a) In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to liability to the Trust or the Funds
or to any shareholder of the Funds for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security by the Funds.
(b) The Funds shall indemnify and hold harmless the Manager, its managing
member and the shareholders, directors, officers and employees of each of them
(any such person, an "Indemnified Party") against any loss, liability, claim,
damage or expense (including the reasonable cost of investigating and defending
any alleged loss, liability, claim, damage or expenses and reasonable counsel
fees incurred in connection therewith) arising out of the Indemnified Party's
performance or non-performance of any duties under this Agreement; provided,
however, that nothing herein shall be deemed to protect any Indemnified Party
against any liability to which such Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties under this Agreement; and provided, further, that this
provision shall not be construed as a waiver or limitation of any rights which
the Trust or the Funds may have under applicable federal securities laws.
(c) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or managing member, director or officer of the
Manager, from liability in violation of Sections 17(h) and (i) of the 1940 Act.
11. Non-Exclusivity. The Trust's employment of the Manager is not an
exclusive arrangement, and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein. If
this Agreement is terminated with respect to any Fund, this Agreement shall
remain in full force and effect with respect to all other Funds listed on
Appendix A hereto, as the same may be amended.
12. Term. This Agreement shall become effective as to any Fund on the date
that is the latest of (1) the execution of this Agreement, (2) the approval of
this Agreement for the Fund by the Board of Trustees of the Trust (as required
under Section 15 of the 0000 Xxx) or (3) the approval of this Agreement by the
shareholders of the affected Fund. This Agreement shall remain in effect as to
any Fund for an initial period of two (2) years or such shorter initial period
as may be approved by the Board of Trustees and shareholders of the Fund in the
matter required under Section 15 of the 1940 Act (including SEC interpretations
thereof), 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 the Fund at least annually by (i)
the Board of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the 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.
13. Termination. This Agreement may be terminated by the Trust on behalf of
any one or more of the Funds at any time without payment of any penalty, by the
Board of Trustees of the Trust or by the vote of a majority of the outstanding
voting securities of the affected Fund, upon thirty (30) days' written notice to
the Manager, and by the Manager upon sixty (60) days' written notice to the
Trust.
14. Amendment. This Agreement may be modified by mutual consent subject to
the provisions of Section 15 of the 1940 Act, as modified by or interpreted by
any applicable order or orders of the Securities and Exchange Commission (the
"Commission") or any rules or regulations adopted by, or interpretative releases
of, the Commission. In addition to the requirements of paragraph 12 and this
paragraph 14, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the Fund
who are not parties to the Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
15. Termination by Assignment. This Agreement shall terminate automatically
in the event of any assignment thereof, as defined in the 1940 Act.
16. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
17. Definitions. The terms "majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as hereafter
amended, and subject to such orders as may be granted by the Commission.
18. Notice of Declaration of Trust. The Manager agrees that the Trust's
obligations under this Agreement shall be limited to the Funds and to their
assets, and that the Manager shall not seek satisfaction of any such obligation
from the shareholders of the Funds nor from any trustee, officer, employee or
agent of the Trust or the Funds.
19. Captions. 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.
20. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect to the
conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Investment Advisers Act of 1940 and any
rules and regulations promulgated thereunder.
21. Nonpublic Personal Information. Notwithstanding any provision herein to
the contrary, the Manager agrees on behalf of itself and its directors,
officers, and employees (1) to treat confidentially and as proprietary
information of the Trust (a) all records and other information relative to the
series of the Trust and their prior, present, or potential shareholders (and
clients of said shareholders) and (b) any Nonpublic Personal Information, as
defined under Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated
under the Xxxxx-Xxxxx-Xxxxxx Act (the "Privacy Act"), and (2) not to use such
records and information for any purpose other than the performance of its
responsibilities and duties hereunder, or as otherwise permitted by the privacy
policies adopted by the Trust, Regulation S-P or the Privacy Act, except after
prior notification to and approval in writing by the Trust. Such written
approval shall not be unreasonably withheld by the Trust and may not be withheld
where the Manager may be exposed to civil or criminal contempt proceedings for
failure to comply after being requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
22. Anti-Money Laundering Compliance. The Manager acknowledges that, in
compliance with the Bank Secrecy Act, as amended, and implementing regulations
("BSA"), the Funds have adopted an Anti-Money Laundering Policy. The Manager
agrees to comply with the Funds' Anti-Money Laundering Policy and the BSA, as
the same may apply to the Manager, now and in the future. The Manager further
agrees to provide to the Funds and/or the Trust such reports, certifications and
contractual assurances as may be requested by the Funds or the Trust. The Trust
and the Funds may disclose information respecting the Manager to governmental
and/or regulatory or self-regulatory authorities to the extent required by
applicable law or regulation and may file reports with such authorities as may
be required by applicable law or regulation.
22. Certifications; Disclosure Controls and Procedures. The Manager
acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act of 2002, and the
implementing regulations promulgated thereunder, the Funds are required to make
certain certifications and have adopted disclosure controls and procedures. To
the extent reasonably requested by the Trust or the Funds, the Manager agrees to
use its best efforts to assist the Trust and the Funds in complying with the
Xxxxxxxx-Xxxxx Act and implementing the Funds' disclosure controls and
procedures. The Manager agrees to inform the Trust and the Funds of any material
development related to the Trust or the Funds that the Manager reasonably
believes is relevant to the certification obligations of the Funds under the
Xxxxxxxx-Xxxxx Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day and
year first above written.
[FINANCIAL COUNSELORS, INC.]
[XXXXXX BASH XXXXX, INC.]
FIRST FIDUCIARY TRUST
By: By:
---------------------------------- -----------------------------------
Name: Name:
Title: Title:
Appendix A-1
Fund and Fee Schedule - First Fiduciary Trust
[First Fiduciary Trust Growth Fund] [0.60% of the net assets]
[First Fiduciary Trust Core Value Fund] [0.60% of the net assets]
[First Fiduciary Trust Intermediate Fixed Income Fund] [0.45% of the net assets]
[FINANCIAL COUNSELORS, INC.]
[XXXXXX BASH XXXXX, INC.]
FIRST FIDUCIARY TRUST
By: By:
---------------------------------- ------------------------------
Name: Name:
Title: Title:
Date: Date:
