INVESTMENT ADVISORY AGREEMENT
BETWEEN CONSECO FUND GROUP
ON BEHALF OF ASSET ALLOCATION FUND
AND
CONSECO CAPITAL MANAGEMENT, INC.
THIS INVESTMENT ADVISORY AGREEMENT is entered into as of this 28th day of
March, 1997, by and between Conseco Fund Group (the "Trust"), a Massachusetts
business trust, on behalf of its series Asset Allocation Fund (the "Fund"), and
Conseco Capital Management, Inc. (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company,
registered as such pursuant to the provisions of the Investment Company Act of
1940 (the "1940 Act");
WHEREAS, the Fund is a diversified series of the Trust operating as an
open-end management investment company under the 1940 Act, and is currently
divided into Class A and Class Y shares to be offered to individual and
institutional investors, respectively;
WHEREAS, the Adviser is an investment adviser, registered as such pursuant
to the provisions of the Investment Advisers Act of 1940, and is engaged in the
business of rendering investment advice and investment management services as an
independent contractor;
WHEREAS, the Fund desires and has agreed to retain the Adviser to render
advice and services to the Fund in connection with management and operation of
the Fund pursuant to terms and conditions set forth herein; and
WHEREAS, the Adviser desires and has agreed to render such advice and
furnish such services pursuant to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants, conditions and agreements contained herein, and for such
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties, each intending to be legally bound hereby,
mutually agree as follows:
1. EMPLOYMENT. The Fund hereby employs the Adviser and the Adviser hereby
accepts such employment, to render investment advice and investment management
services with respect to the Fund, subject to the supervision and direction of
the Board of Trustees of the Trust (the "Trustees"). The Adviser shall, except
as otherwise provided herein, render or make available all services needed for
the management and operation of the Fund, and shall, as part of its duties
hereunder, (i) furnish the Fund with advice and recommendations with respect to
the investment of the assets of the Fund and the purchase and sale of the
portfolio securities of the Fund, including the taking of such other steps as
may be necessary to implement such advice and recommendations, (ii) furnish the
Fund with reports, statements and other data on securities, economic conditions
and other pertinent subjects which the Trustees may request, (iii) furnish such
office space and personnel as is needed by the Fund, and (iv) in general,
superintend and manage the investments of the Fund, subject to the ultimate
supervision and direction of the Trustees.
2. BEST EFFORTS. The Adviser hereby agrees to use its best judgment and
efforts in rendering the advice and services with respect to the Fund as
contemplated by this Agreement. The Adviser further agrees to use its best
efforts in the furnishing of such advice and recommendations with respect to the
Fund, in the preparation of reports and information, and in the management of
the respective assets of the Fund pursuant to this Agreement. For this purpose
the Adviser 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 Adviser shall be deemed to include persons employed or retained
by the Adviser to furnish statistical, 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 Adviser may desire and request.
3. INDEPENDENT CONTRACTOR STATUS. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent of the Trust or
the Fund. It is expressly understood and agreed that the services to be rendered
by the Adviser to the Fund pursuant to the provisions of this Agreement are not
to be deemed exclusive with respect to the Adviser's rendering of services, and
the Adviser shall therefore be free to render similar or different services to
others, PROVIDED THAT, its ability to render the services described herein shall
not be impaired thereby.
4. FURNISHING OF INFORMATION. The Fund shall from time to time furnish to
the Adviser detailed statements of the investments and assets of the Fund and
information pertaining to the investment objectives and needs of the Fund, and
shall make available to the Adviser such financial reports, proxy statements,
legal and other information in the possession of or available to the Fund
relating to its investments, as the same may be relevant to the performance by
the Adviser of its obligations hereunder. The Fund shall furnish such other
information as the Adviser may reasonably request.
5. FUND RECORDS. The Adviser agrees that all records which it maintains
for the Fund shall be the property of the Fund and that it will surrender
promptly to the designated officers of the Fund any of such records upon
request. The Adviser further agrees to preserve for the period prescribed by the
rules and regulations of the Securities and Exchange Commission all such records
as are required to be maintained pursuant to said rules. The Adviser agrees that
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it will maintain all records and accounts regarding the investment activities of
the Fund in a confidential manner. All such accounts or records shall be made
available within five (5) business days of request to the accountants or
auditors of the Fund during regular business hours at the Adviser's offices upon
reasonable prior written notice. In addition, the Adviser will provide any
materials reasonably related to the investment advisory services provided
hereunder as may be reasonably requested in writing by the designated officers
of the Fund or as may be required by any governmental agency having
jurisdiction.
6. TENDER OFFERS. The Adviser hereby agrees that whenever the Adviser has
determined that the Fund should tender securities pursuant to a "tender offer
solicitation," the Adviser shall designate an affiliate as the "tendering
dealer," so long as such affiliate is legally permitted to act in such capacity
under the federal securities laws, the rules promulgated thereunder and the
rules of any securities exchange or association of which such affiliate may be a
member. Such affiliated dealer shall not be obligated to make any additional
commitments of capital, expense or personnel beyond that committed as of the
date of this Agreement (other than normal periodic fees or payments necessary to
maintain its corporate existence and its membership in the National Association
of Securities Dealers, Inc.). This Agreement shall not obligate the Adviser or
such affiliate to (i) act pursuant to the foregoing requirement under any
circumstance in which either might reasonably believe that liability might be
imposed upon it as a result of so acting, or (ii) institute legal or other
proceedings to collect fees which may be considered to be due to it from others
as a result of such a tender, unless the Fund shall enter into an agreement with
the Adviser or such affiliate to reimburse it for all expenses connected with
attempting to collect such fees (including legal fees and expenses and that
portion of the compensation due to their respective employees, which amount is
directly attributable to the time involved in attempting to collect such fees).
7. ALLOCATION OF COSTS AND EXPENSES. The Adviser shall bear and pay the
costs of rendering its services pursuant to the terms of this Agreement,
including the fees paid to any sub-adviser which the Adviser may retain and any
value added taxes due in connection therewith. The Fund shall bear and pay for
all other expenses of its operation, including but not limited to,
organizational and offering expenses of the Fund and expenses incurred in
connection with the issuance and registration of shares of the Fund; fees of the
Fund's custodian, transfer and shareholder servicing agent; costs and expenses
of pricing and calculating the daily net asset value of the shares of the Fund
and of maintaining the books of account required by the 1940 Act; expenditures
in connection with meetings of shareholders and Trustees, other than those
called solely to accommodate the Adviser; salaries of officers and fees and
expenses of Trustees or members of any advisory board or committee who are not
affiliated with or interested persons of the Fund or the Adviser; salaries of
personnel involved in placing orders for the execution of the portfolio
transactions of the Fund or in maintaining registration of shares of the Fund
under state securities laws; insurance premiums on property or personnel of the
Fund which inure to its benefit; the cost of preparing and printing reports,
proxy statements and prospectuses of the Trust or other communications for
distribution to its shareholders; legal, auditing, and accounting fees; trade
association dues; fees and expenses or registering and maintaining registration
of shares of the Fund for sale under applicable federal and state securities
laws; and all other charges and costs associated with the Fund's operations,
plus any extraordinary and non-recurring expenses, except as otherwise
prescribed herein. To the extent the Adviser incurs any costs or performs any
services which are an obligation of the Fund as set forth herein and to the
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extent such costs or services have been reasonably rendered, (a) the Fund shall
promptly reimburse the Adviser for such costs and expenses, and (b) the Adviser
shall be entitled to recover from the Fund the actual costs incurred by the
Adviser in rendering such services.
8. MANAGEMENT FEES. (a) In exchange for the rendering of advice and
services pursuant hereto, the Fund shall pay to the Adviser, and the Adviser
shall accept as full compensation for all investment management services
furnished or provided to the Fund and as full reimbursement for all expenses
assumed by the Adviser, a management fee computed at the annual rate of .70% of
the average daily net assets of the Fund.
(b) The management fee shall be accrued daily by the Fund and paid
to the Adviser at the end of each calendar month.
(c) In the case of termination of this Agreement during any month,
the management fee for that month shall be calculated on the basis of the number
of business days during which it is in effect for that month.
(d) To the extent that the gross operating costs and expenses of the
Fund (excluding any interest, taxes, brokerage commissions, distribution
expenses and, to the extent permitted, any extraordinary expenses, such as
litigation and non-recurring expenses) exceed the allowable expense limitations
of the state in which shares of the Fund are registered for sale having the most
stringent expenses reimbursement provisions, the Adviser shall reimburse the
Fund for the amount of such excess.
(e) The management fee payable by the Fund hereunder shall be
reduced to the extent that an affiliate of the Adviser has actually received
cash payments of tender offer solicitation fees (less certain costs and expenses
incurred in connection therewith) as referred to in Paragraph 6 hereof.
9. PROHIBITION ON PURCHASE OF SHARES. The Adviser agrees that neither it
nor any of its officers or employees shall take any short position in the shares
of beneficial interest of the Fund. This prohibition shall not prevent the
purchase of such shares by any of the officers and directors or bona fide
employees of the Adviser or any trust, pension, profit-sharing or other benefit
plan for such persons or affiliates thereof, at a price not less than the net
asset value thereof at the time of purchase, as allowed pursuant to rules
promulgated under the 1940 Act.
10. COMPLIANCE WITH APPLICABLE LAW. Nothing contained herein shall be
deemed to require the Fund to take any action contrary to (a) the Agreement and
Declaration of Trust of the Trust, (b) the By-laws of the Trust, or (c) any
applicable statute or regulation. Nothing contained herein shall be deemed to
relieve or deprive the Trustees of their responsibility for and control of the
conduct of the affairs of the Fund.
11. LIABILITY. (a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties hereunder on the part
of the Adviser, the Adviser shall not be subject to liability to the Fund or to
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any shareholder of the Fund for any act or omission in the course of or in
connection with rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security by the Fund.
(b) Notwithstanding the foregoing, the Adviser agrees to reimburse
the Fund for any and all costs, expenses, and counsel and Trustees' fees
reasonably incurred by the Fund in connection with (i) preparation, printing and
distribution of proxy statements, (ii) amendments to its Registration Statement,
(iii) the holding of meetings of shareholders or Trustees, (iv) the conduct of
factual investigations, (v) any legal or administrative proceedings (including
any applications for exemptions or determinations by the Securities and Exchange
Commission) which the Fund incurs as a result of action or inaction on the part
of the Adviser or any of its shareholders where the action or inaction
necessitating such expenditures is (A) directly or indirectly related to any
transactions or proposed transaction in the shares or control of the Adviser or
its affiliates (or litigation related to any transactions or proposed
transaction involving such shares or control) which shall have been undertaken
without the prior express approval of the Trustees, or (B) within the sole
control of the Adviser or any of its affiliates or any of their respective
officers, directors, employees or shareholders. The Adviser shall not be
obligated pursuant to the provisions of this Subparagraph 10(b) to reimburse the
Fund for any expenditures related to the institution of an administrative
proceeding or related to civil litigation by the Fund or by a shareholder of the
Trust seeking to recover all or a portion of the proceeds derived by any
shareholder of the Adviser or any of its affiliates from the sale of shares of
the Adviser or similar matters. So long as this Agreement remains in effect, the
Adviser shall pay to the Fund the amount due for expenses subject to this
Subparagraph 10(b) within thirty (30) days after a xxxx or statement has been
received by the Fund therefor. This provision shall not be deemed to be a waiver
of any claim which the Fund may have or may assert against the Adviser or others
for costs, expenses, or damages heretofore incurred by the Trust or for costs,
expenses, or damages the fund may hereafter incur which are not reimbursable to
it hereunder.
(c) No provision of this Agreement shall be construed to protect any
Trustee of the Trust or officer of the Fund, or any director or officer of the
Adviser, from liability in violation of Sections 17(h) and (i) of the 1940 Act.
(d) The Adviser understands that the obligations of this Agreement
are not personally binding upon any shareholder of the Fund, but bind only the
Trust's property. The Adviser represents that it has notice of the provisions of
the Declaration of Trust of the Trust disclaiming shareholder liability for acts
or obligations of the Trust.
12. TERM OF AGREEMENT. This Agreement shall become effective on the date
hereof and shall continue in effect for two years from such date unless sooner
terminated as hereinafter provided, and shall continue in effect from year to
year thereafter so long as such continuation is approved at least annually by
(i) the 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 or interested persons of any
such party, with such vote being cast in person at a meeting called for the
purpose of voting on such approval.
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13. TERMINATION. This Agreement may be terminated at any time without
payment of any penalty (a) by the Trustees of the Trust or by vote of a majority
of the outstanding voting securities of the Fund, upon delivery of sixty (60)
days' written notice to the Adviser, or (b) by the Adviser upon sixty (60) days'
written notice to the Fund. This Agreement shall terminate automatically in the
event of any transfer or assignment hereof, as defined in the 1940 Act.
14. NO WAIVER. The waiver by any party of any breach of or default
under any provision or portion of this Agreement shall not operate as or be
construed to be a waiver of any subsequent breach or default.
15. SEVERABILITY. The provisions of this Agreement shall be considered
severable and if for any reason any provision of this Agreement which is not
essential to the effectuation of the basic purpose of this Agreement is deemed
to be invalid or contrary to any existing or future law, such invalidity shall
not impair the operation of or affect any other provision of this Agreement
which is valid.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
17. ENTIRE AGREEMENT. This Agreement represents the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior understandings or agreements between the parties
pertaining to the subject matter hereof, whether oral or written. This Agreement
may only be modified or amended by mutual written agreement of the parties
hereto and, as required, upon approval of a majority of the outstanding voting
securities of the Fund.
18. DEFINITIONS. For purposes of application and operation of the
provisions of this Agreement, the term "majority of the outstanding voting
securities" shall have the meaning as set forth in the 1940 Act.
19. USE OF NAME. In consideration of the execution of this Agreement, the
Adviser hereby grants to the Trust the right to use the name "Conseco" as part
of its name and the names of series thereof. The Trust agrees that in the event
this Agreement is terminated, it shall immediately take such steps as are
necessary to amend its name to remove the reference to "Conseco."
20. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers on the day and year
first above written.
ATTEST: CONSECO FUND GROUP,
on behalf of Asset Allocation Fund
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Esq. Xxxxxxx X. Xxxxxxx
President
ATTEST: CONSECO CAPITAL MANAGEMENT, INC.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Esq. Xxxxxxx X. Xxxxxxx
President
