INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made as of the 18th day of April, 2005 by and between Destination
Capital Management, Inc. (the "Investment Adviser"), a Delaware Corporation, and
The Destination Funds (the "Trust"), an Ohio business trust.
WHEREAS, the Trust is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"), and
is currently authorized to issue separate series of shares, each having its own
investment objective, policies and restrictions, all as more fully described in
the prospectus and the statement of additional information constituting parts of
the Trust's Registration Statement on Form N-1A filed the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, and the Act (the "Registration Statement"); and
WHEREAS, the Trust is engaged in the business of investing and reinvesting the
assets of each of its series in securities ("the portfolio assets") of the type
and in accordance with the limitations specified in the Trust's Agreement and
Declaration of Trust (the "Declaration") and Registration Statement, and any
representations made in its prospectus and statement of additional information,
all in such manner and to such extent as may from time to time be authorized by
the Trustees; and
WHEREAS, the Trust established The Destination Select Equity Fund (the "Fund")
as a series of the Trust, and wishes to employ the Investment Adviser to manage
the investment and reinvestment of the Fund's portfolio assets as above
specified and, without limiting the generality of the foregoing, to provide
management and other services specified below and acknowledges that it has
received prior to entering into this Agreement a copy of Form ADV-Part II as
filed by the Investment Adviser with the Commission.
NOW, THEREFORE, the parties agree as follows:
1. The Trust hereby appoints the Investment Adviser to supervise and
direct the investments of and for the Fund and as the Fund's agent and
attorney-in-fact with full discretionary and exclusive power and
authority to establish, maintain and trade in brokerage accounts for
and in the name of the Fund and to buy, sell and trade in all stocks,
bonds and other assets of the Fund. The Investment Adviser hereby
accepts such appointment and agrees to manage the portfolio assets in
a manner consistent with the investment objective, policies and
restrictions of the Fund and with applicable law.
2. Unless advised by the Trustees of the Trust of an objection, the
Investment Adviser may, to the extent permitted by applicable laws and
regulations, direct that a portion of the brokerage commissions that
may be generated by the Fund be applied to payment for brokerage and
research services. Brokerage and research services furnished by
brokers may include, but are not
limited to, written information and analyses concerning specific
securities, companies or sectors; market, financial and economic
studies and forecasts as well as discussions with research personnel;
financial publications; and statistic and pricing services utilized in
the investment management process. Brokerage and research services
obtained by the use of commissions arising from the Fund's portfolio
transactions may be used by the Investment Adviser in its other
investment activities. In selecting brokers and negotiating commission
rates, the Investment Adviser will take into account the financial
stability and reputation of brokerage firms and the brokerage,
execution and research services provided by such brokers. The benefits
which the Fund may receive from such services may not be in direct
proportion to the commissions generated by the Fund. The Trust
acknowledges that since commission rates are generally negotiable,
selecting brokers on the basis of considerations which are not limited
to applicable commission rates may result in higher transaction costs
that would otherwise by obtainable.
3. The Investment Adviser may bunch orders for the Fund with orders for
the same security for other accounts managed by the Investment Adviser
or its affiliates. In such instances, the Fund will be charged the
average price per unit for the security in such transactions. Complete
records of such transactions will be maintained by the Investment
Adviser and will be made available to the Trust upon request.
4. The Investment Adviser shall report to the Board of Trustees at each
meeting thereof important developments affecting the portfolio assets
and on the Investment Adviser's own initiative will furnish the
Trustees from time to time with such information as the Investment
Adviser may believe appropriate for this purpose, whether concerning
the individual issuers whose securities are included in the portfolio
assets, the industries in which they engage, or the conditions
prevailing in the economy generally. The Investment Adviser will also
furnish the Trustees with such statistical and analytical information
with respect to the portfolio assets as the Investment Adviser may
believe appropriate or as the Trustees reasonably may request. In
making purchases and sales of the portfolio assets, the Investment
Adviser will bear in mind the policies set from time to time by the
Board of Trustees as well as the limitations imposed by the Trust's
Agreement and Declaration of Trust, and in the Trust's Registration
Statement, in each case as amended from time to time, the limitations
in the Act and of the Internal Revenue Code of 1986, as amended, in
respect of regulated investment companies and the investment
objective, policies and practices, including restrictions applicable
to the Fund's portfolio.
5. The Investment Adviser shall not be liable for any mistake of judgment
or in any event whatsoever, except for lack of good faith, provided
that nothing herein shall be deemed to protect, or purport to protect,
the Investment Adviser against any liability to the Fund or to its
security holders to which the
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Investment Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties hereunder, or by reason of the Investment Adviser's reckless
disregard of its obligations and duties hereunder. It is understood
that the Investment Adviser may perform various investment advisory
and managerial services for others, and the Trust agrees that the
Investment Adviser may give advice and take action in the performance
of its duties with respect to others which may differ from advice
given or action taken with respect to the Fund. Nothing contained
herein shall in any way constitute a waiver or limitation of any
rights which the Fund or its shareholders may have under common law,
or any federal or state securities laws.
6. This Agreement shall become effective on the date hereof and shall
remain in effect for a period of two years from such date, and shall
continue in effect from year to year thereafter so long as its
continuance is specifically approved at least annually by the Board of
Trustees or by a vote of a majority of the outstanding voting
securities (as defined in the Act) of the Fund, and, in either case,
by a vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trust's Trustees who are
not parties to this Agreement or interested persons, as defined in the
Act, of any party to this Agreement, and provided further, however,
that if the continuation of this Agreement is not approved, the
Investment Adviser may continue to render to the Fund the services
described herein in the manner and to the extent permitted by the Act
and the rules and regulations thereunder. Upon the effectiveness of
this Agreement, it shall supersede all previous agreements between the
parties covering the subject matter hereof. This Agreement may be
terminated at any time, without the payment of any penalty, by vote of
a majority of the outstanding voting securities (as defined in the
Act) of the Fund, or by a vote of the Board of Trustees on 60 days'
written notice to the Investment Adviser, or by the Investment Adviser
on 60 days' written notice to the Trust.
7. This Agreement shall not be amended unless such amendment is approved
by vote, cast in person at a meeting called for the purpose of voting
on such approval, of a majority of the Trust's Trustees who are not
parties to this Agreement or interested persons, as defined in the
Act, of any party to this Agreement (other than as Trustees of the
Trust), and, if required by law, by vote of a majority of the
outstanding voting securities (as defined in the Act) of the Fund.
8. This Agreement may not be assigned by the Investment Adviser and shall
terminate automatically in the event of any assignment by the
Investment Adviser. The term "assignment" as used in this paragraph
shall have the meaning ascribed thereto by the Act and any regulations
or interpretations of the Commission thereunder.
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9. The Fund shall pay the Investment Adviser an investment advisory fee
equal to 0.75% per annum of the average daily net assets of the Fund.
The investment advisory fee will be computed and accrued daily and
paid monthly. The Investment Adviser's compensation for the period
from the date hereof through the last day of the month of the
effective date hereof will be prorated based on the proportion that
such period bears to the full month. In the event of any termination
of this Agreement, the Investment Adviser's compensation will be
calculated on the basis of a period ending on the last day on which
this Agreement is in effect, subject to proration based on the number
of days elapsed in the current period as a percentage of the total
number of days in such period.
10. Unless otherwise agreed to in writing by the parties, the Fund shall
be responsible and hereby assumes the obligation for payment of all of
its expenses, including, but not limited to: (a) payment to the
Investment Adviser of the fee provided for in the foregoing paragraph;
(b) custody, administration and transfer and dividend disbursing
expenses; (c) fees of trustees who are not affiliated persons of the
Investment Adviser or any administrator of the Trust; (d) legal and
auditing expenses; (e) clerical, accounting and other office costs;
(f) the cost of personnel providing services to the Fund, including
Chief Compliance Officer services; (g) costs of printing the Fund's
prospectuses and shareholder reports for existing shareholders; (h)
cost of maintenance of the Fund's corporate existence; (i) interest
charges, taxes, brokerage fees and commissions; (j) costs of
stationery and supplies; (k) expenses and fees related to registration
and filing with the Commission and with state regulatory authorities;
and (l) such promotional, shareholder servicing and other expenses as
may be contemplated by one or more effective plans pursuant to Rule
12b-1 under the Act or one or more effective non-Rule 12b-1
shareholder servicing plans, in each case provided, however, that the
Fund's payment of such promotional, shareholder servicing and other
expenses shall be in the amounts, and in accordance with the
procedures, set forth in such plan or plans.
11. Except to the extent necessary to perform the Investment Adviser's
obligations hereunder, nothing herein shall be deemed to limit or
restrict the right of the Investment Adviser or its members, officers
or employees to engage in any other business or to devote time and
attention to the management of other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of
any kind to any other individual or entity.
12. The validity of the Agreement and the rights and liabilities of the
parties hereunder shall be determined in accordance with the laws of
the State of Delaware without regard to its conflict of laws
provisions, provided, however, that nothing herein shall be construed
as being inconsistent with the Act.
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13. A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of the State of Ohio, and notice is hereby
given that this instrument is executed on behalf of the Board of
Trustees of the Trust and not individually and that the obligations of
this instrument are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets and
property of the Fund, and the Investment Adviser shall look only to
the assets of the Fund for the satisfaction of such obligations.
14. The Investment Adviser shall promptly notify the Trust of any change
in the ownership or control of the Investment Adviser.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
THE DESTINATION FUNDS
By: /s/ Xxxxxxx X. Xxxxxxxxx
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DESTINATION CAPITAL MANAGEMENT, INC
By: /s/ Xxxxxxx X. Xxxxxxxxx
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