INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated October 22,
1996, between the Winthrop Opportunity Funds for two of its
series, the Winthrop Municipal Money Fund and the Winthrop
U.S. Government Money Fund (individually, each a "Fund" and
collectively, the "Trust"), a Delaware business trust, and DLJ
Investment Management Corp. (the "Adviser"), a Delaware
corporation.
In consideration of the mutual promises and
agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged, it
is agreed by and between the parties hereto as follows:
1. In General
The Adviser agrees, all as more fully set forth
herein, to act as investment adviser to the Trust with respect
to the investment of the Trust's assets and to supervise and
arrange the purchase of securities and other assets and the
sale of securities and other assets held in the investment
portfolio of the Trust in accordance with the Trust's
objectives and policies.
2. Duties and obligations of the Adviser with
respect to investments of assets of the Trust
(a) Subject to the succeeding provisions of
this section and subject to the direction and control of the
Trust's Board of Trustees, the Adviser shall (i) act as
investment adviser for and supervise and manage the investment
and reinvestment of the Trust's assets in accordance with the
Trust's objectives and policies and in connection therewith
have complete discretion in purchasing and selling securities
and all other assets for the Trust and in voting, exercising
consents and exercising all other rights appertaining to such
securities and other assets on behalf of the Trust, (ii)
supervise continuously the investment program of the Trust and
the composition of its investment portfolio, (iii) arrange,
subject to the provisions of Section 3 hereof, for the
purchase and sale of securities and all other assets held in
the investment portfolio of the Trust, (iv) retain, from time
to time, in its sole discretion, one or more sub-adviser(s)
(each, a "Sub-Adviser") that shall act as sub-adviser with
respect to certain assets designated by the Adviser, in its
sole discretion, to be managed by such Sub-Adviser in
accordance with the terms and conditions set forth herein and
to supervise each Sub-Adviser and (v) provide, from time to
time, certain administrative services listed in Section 8
herein to the Trust in accordance with the terms and
conditions provided herein.
(b) In the performance of its duties under this
Agreement, the Adviser shall at all times conform to, and act
in accordance with, any requirements imposed by (i) the
provisions of the Investment Company Act of 1940, as amended
(the "Act"), and of any rules or regulations in force
thereunder, (ii) any other applicable provision of law, (iii)
the provisions of the Declaration of Trust and By-Laws of the
Trust, as such documents are amended from time to time, (iv)
the investment objective and policies of the Trust as set
forth in its Registration Statement on Form N-1A and (v) any
policies and determinations of the Board of Trustees of the
Trust.
(c) The Adviser shall bear all costs and
expenses of its officers, directors and employees and any
overhead incurred in connection with its duties hereunder and
shall bear the costs of any salaries or trustees fees of any
officers or trustees of the Trust who are affiliated persons
(as defined in the Act) of the Adviser except that the Board
of Trustees of the Trust may approve reimbursement to the
Adviser of the pro rata portion of the salaries, bonuses,
health insurance, retirement benefits and all similar
employment costs for the time spent on Trust and Fund
operations (other than the provision of investment advice) of
all personnel employed by the Adviser who devote substantial
time to Trust operations.
(d) The Adviser shall give the Trust the
benefit of its best judgment and effort in rendering services
hereunder, but the Adviser shall not be liable for any act or
omission or for any loss sustained by the Trust in connection
with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties under
this Agreement.
(e) Nothing in this Agreement shall prevent
the Adviser or any director, officer, employee or other
affiliate thereof from acting as investment adviser for any
other person, firm or corporation, or from engaging in any
other lawful activity, and shall not in any way limit or
restrict the Adviser or any of its directors, officers,
employees or agents from buying, selling or trading any
securities for its or their own accounts or for the accounts
of others for whom it or they may be acting, provided, however
that the Adviser will undertake no activities which, in its
judgment, will adversely affect the performance of its
obligations under this Agreement.
3. Portfolio Transactions and Brokerage
The Adviser is authorized, for the purchase and sale
of the Trust's portfolio securities, to employ such securities
brokers and dealers as may, in the judgment of the Adviser,
implement the policy of the Trust to obtain the best net
results taking into account such factors as price, including
commission or dealer spread, the size, type and difficulty of
the transaction involved, the firm's general execution and
operational facilities and the firm's risk in positioning the
securities involved. Consistent with this policy, the Adviser
is authorized to direct the execution of the Trust's portfolio
transactions to dealers and brokers furnishing statistical
information or research deemed by the Adviser to be useful or
valuable to the performance of its investment advisory
functions for the Trust in accordance with the requirements of
Section 28(e) of the Securities Exchange Act of 1934, as
amended.
4. Agency Cross Transactions. From time to time,
the Adviser or brokers or dealers affiliated with it may find
themselves in a position to buy for certain of their brokerage
clients securities which the Adviser's investment advisory
clients wish to sell, and to sell for certain of their
brokerage clients securities which advisory clients wish to
buy. Where one of the parties is an advisory client, the
Adviser or the affiliated broker or dealer cannot participate
in this type of transaction (known as a cross transaction) on
behalf of an advisory client and retain commissions from both
parties to the transaction without the advisory client's
consent. This is because in a situation where the Adviser is
making the investment decision (as opposed to a brokerage
client who makes his own investment decisions), and the
Adviser or an affiliate is receiving commissions from one or
both sides of the transaction, there is a potential
conflicting division of loyalties and responsibilities on the
Adviser's part regarding the advisory client. The Securities
and Exchange Commission has adopted a rule under the
Investment Advisers Act of 1940, as amended which permits the
Adviser or its affiliates to participate on behalf of the
Account in agency cross transactions if the advisory client
has given written consent in advance. By execution of this
Agreement, each Fund authorizes the Adviser or its affiliates
to participate in agency cross transactions involving the
Account. Each Fund may revoke its consent at any time by
written notice to the Adviser.
5. Compensation of the Adviser
(a) With respect to each Fund the Trust agrees
to pay to the Adviser and the Adviser agrees to accept as full
compensation for all services rendered by the Adviser as such,
a fee computed and payable monthly in an amount equal to the
aggregate of .40 of 1% of each Fund's average daily net asset
value on an annualized basis of each Fund with such amount
reduced to .35 of 1% of each Fund's average daily net assets
over $1 billion until termination of the Trust pursuant to its
Agreement and Declaration of Trust. For any period less than
a month during which this Agreement is in effect, the fee
shall be prorated according to the proportion which such
period bears to a full month of 28, 29, 30 or 31 days, as the
case may be.
(b) For purposes of this Agreement, the net
assets of the Trust shall be calculated pursuant to the
procedures for calculating the net asset value of the Trust's
shares adopted by resolutions of the Trustees of the Trust.
6. Net Asset Value Calculation Errors
To the extent the Adviser provides inaccurate
information to the transfer agent or any other party that
calculates either Fund's daily net asset value and such
information results in an error in the calculation of such
Fund's net asset value, the Adviser shall bear all costs and
expenses in connection with such error.
7. Indemnity
(a) The Trust hereby agrees to indemnify the
Adviser and each of the Adviser's directors, officers,
employees, agents- (including any sub-advisers), associates
and controlling persons and the partners, directors, officers,
employees and agents thereof (including any individual who
serves at the Adviser's request as director, officer, partner,
trustee or the like of another entity) (each such person being
an "Indemnitee") against any liabilities and expenses,
including amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees (all as
provided in accordance with applicable corporate law)
reasonably incurred by such Indemnitee in connection with the
defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or
administrative or investigative body in which such Indemnitee
may be or may have been involved as a party or otherwise or
with which such Indemnitee may be or may have been threatened,
while acting in any capacity set forth herein or thereafter by
reason of such Indemnitee having acted in any such capacity,
except with respect to any matter as to which such Indemnitee
shall have been adjudicated not to have acted in good faith in
the reasonable belief that such Indemnitee action was in the
best interest of the Trust and furthermore, in the case of any
criminal proceeding, so long as such Indemnitee had no
reasonable cause to believe that the conduct was unlawful,
provided, however, that (1) no Indemnitee shall be indemnified
hereunder against any liability to the Trust or its
shareholders or any expense of such Indemnitee arising by
reason of (i) willful misfeasance, (ii) bad faith, (iii) gross
negligence or (iv) reckless disregard of the duties involved
in the conduct of such Indemnitee's position (the conduct
referred to in such clauses (i) through (iv) being sometimes
referred to herein as "disabling conduct"), (2) as to any
matter disposed of by settlement or a compromise payment by
such Indemnitee, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other
expenses shall be provided unless there has been a
determination that such settlement or compromise is in the
best interests of the Trust and that such Indemnitee appears
to have acted in good faith in the reasonable belief that such
Indemnitee's action was in the best interest of the Trust and
did not involve disabling conduct by such Indemnitee and (3)
with respect to any action, suit or other proceeding
voluntarily prosecuted by any Indemnitee as plaintiff,
indemnification shall be mandatory only if the prosecution of
such action, suit or other proceeding by such Indemnitee was
authorized by a majority of the full Board of Trustees of the
Trust.
(b) The Trust shall make advance payments in
connection with the expenses of defending any action with
respect to which indemnification might be sought hereunder if
the Trust receives a written affirmation of the Indemnitee's
good faith belief that the standard of conduct necessary for
indemnification has been met and a written undertaking to
reimburse the Trust unless it is subsequently determined that
such Indemnitee is entitled to such indemnification and if the
trustees of the Trust determine that the facts then known to
them would not preclude indemnification. In addition, at
least one of the following conditions must be met: (A) the
Indemnitee shall provide a security for such Indemnitee's
undertaking, (B) the Trust shall be insured against losses
arising by reason of any lawful advances, or (C) a majority of
a quorum consisting of trustees of the Trust who are neither
"interested persons" of the Trust (as defined in Section
2(a)(19) of the Act) nor parties to the proceeding
("Disinterested Non-Party Trustees") or an independent legal
counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-
type inquiry), that there is reason to believe that the
Indemnitee ultimately will be found entitled to
indemnification.
(c) All determinations with respect to
indemnification hereunder shall be made (1) by a final
decision on the merits by a court or other body before whom
the proceeding was brought that such Indemnitee is not liable
by reason of disabling conduct or, (2) in the absence of such
a decision, by (i) a majority vote of a quorum of the
Disinterested Non-party Trustees of the Trust, or (ii) if such
a quorum is not obtainable or even, if obtainable, if a
majority vote of such quorum so directs, independent legal
counsel in a written opinion. All determinations that advance
payments in connection with the expense of defending any
proceeding shall be authorized shall be made in accordance
with the immediately preceding clause (2) above.
The rights accruing to any Indemnitee under
these provisions shall not exclude any other right to which
such Indemnitee may be lawfully entitled.
8. Duration and Termination
This Agreement shall become effective on the date it
is approved by the shareholders of the Trust and shall
continue in effect for a period of two years and thereafter
from year to year, but only so long as such continuation is
specifically approved at least annually in accordance with the
requirements of the Act.
This Agreement may be terminated by the Adviser at
any time without penalty upon giving the Trust sixty days
written notice (which notice may be waived by the Trust) or
may be terminated by the Trust at any time without penalty
upon giving the Adviser sixty days notice (which notice may be
waived by the Adviser), provided that such termination by the
Trust shall be directed or approved by the vote of a majority
of the Trustees of the Trust in office at the time or by the
vote of the holders of a "majority" (as defined in the Act) of
the voting securities of the Trust at the time outstanding and
entitled to vote. This Agreement shall terminate
automatically in the event of its assignment (as assignment is
defined in the Act).
9. Administrative Services
(a) The Adviser may, from time to time,
provide administrative services for the Trust including the
following: (i) maintaining each Fund's books and records, such
as journals, ledger accounts and other records in accordance
with applicable laws and regulations to the extent not
maintained by each Fund's custodian, transfer agent and
dividend disbursing agent, (ii) transmitting purchase and
redemption orders for each Fund's shares to the extent not
transmitted by each Fund's distributor or others who purchase
and redeem shares, (iii) initiating all money transfers to
each Fund's custodian and from each Fund's custodian for the
payment of each Fund's expenses, investments, dividends and
share redemptions, (iv) reconciling account information and
balances among each Fund's custodian, transfer agent,
distributor, dividend disbursing agent and the Adviser, (v)
providing the Funds, upon request, with such office space and
facilities, utilities and office equipment as are adequate for
each Fund's needs, (vi) preparing, but not paying for, all
reports by the Trust, on behalf of each Fund, to their
shareholders and all reports and filings required to maintain
the registration and qualification of each Fund's shares under
federal and state law including periodic updating of the
Trust's registration statement and Prospectus (including its
Statement of Additional Information), (vii) supervising the
calculation of the net asset value of each Fund's shares,
(viii) preparing notices and agendas for meetings of each
Fund's shareholders and the Trust's Board of Trustees as well
as minutes of such meetings in all matters required by
applicable law to be acted upon by the Board of Trustees and
(ix) other services generally performed by administrators of
funds.
(b) In connection with such administrative
services described in paragraph (a) of this Section and in
addition to the compensation described in Section 4 herein,
the Adviser shall be reimbursed by the Trust for all costs and
expenses (including out-of-pocket expenses) and the pro rata
portion of the direct and indirect costs of personnel
including, but not limited to, the salaries, bonuses, health
insurance, retirement benefits and all similar employment
costs of such persons for the time spent providing such
administrative services.
10. Notices
Any notice under this Agreement shall be in writing
to the other party at such address as the other party may
designate from time to time for the receipt of such notice and
shall be deemed to be received on the earlier of the date
actually received or on the fourth day after the postmark if
such notice is mailed first class postage prepaid.
11. Governing Law
This Agreement shall be construed in accordance with
the laws of the State of New York for contracts to be
performed entirely therein without reference to choice of law
principles thereof and in accordance with the applicable
provisions of the Act.
IN WITNESS WHEREOF, the parties hereto have caused
the foregoing instrument to be executed by their duly
authorized officers, all as of the day and the year first
above written.
WINTHROP OPPORTUNITY FUNDS
WINTHROP MUNICIPAL MONEY FUND
WINTHROP U.S. GOVERNMENT MONEY FUND
By_________________________________
Name:
Title:
DLJ INVESTMENT MANAGEMENT CORP.
By_________________________________
Name:
Title
