EXHIBIT (D)
THE EXCHANGE TRADED TRUST
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 8th day of December, 2005, by and between THE
EXCHANGE TRADED TRUST, a Delaware Statutory Trust (the "Trust"), and XXXXXXX
CAPITAL MANAGEMENT, LLC, a Wisconsin limited liability company (the "Advisor").
WITNESSETH:
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 hereby agreed by and between the parties hereto as follows:
1. In General
The Trust hereby appoints the Advisor to act as investment advisor
with respect to the portfolio series of the Trust's common stock listed on
Exhibit A attached hereto. The portfolio series is referred to herein as the
"Fund." The Advisor agrees to provide professional investment management with
respect to the investment of the assets of the Fund and to supervise and arrange
the purchase and sale of securities held in the portfolio of the Fund. The
Advisor may engage, on behalf of the Fund, the services of a Sub-Advisor,
subject to any limitations imposed by the Investment Company Act of 1940 (the
"Act"). It is understood that the Trust may create one or more additional
separate portfolio series of shares and that, if it does so, this Agreement may
be amended to include additional portfolio series under the terms of this
Agreement.
2. Duties and Obligations of the Advisor With Respect to Management of the
Fund
(a) Subject to the succeeding provisions of this section and subject
to the direction and control of the Board of Trustees of the Fund, the
Advisor shall:
(i) Decide what securities shall be purchased or sold by the
Fund and when; and
(ii) Arrange for the purchase and the sale of securities held
in the portfolio of the Fund by placing purchase and sale orders for
the Fund.
(b) Any purchases or sales of portfolio securities on behalf of the
Fund shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the provisions of the Act and of any rules or
regulations in force thereunder; (2) any other applicable provisions of
law; (3) the provisions of the Agreement and Declaration of Trust and
By-Laws of the Trust as amended from time to time; (4) any policies and
determinations of the Board of Trustees; and (5) the fundamental policies
of the Fund, as reflected in its registration statement under the Act, or
as amended by the shareholders of the Fund.
(c) The Advisor shall give the Fund the benefit of its best judgment
and effort in rendering services hereunder. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties ("disabling conduct") hereunder on the part of the
Advisor (and its officers, directors, agents, employees, controlling
persons, shareholders and any other person or entity affiliated with the
Advisor) the Advisor shall not be subject to liability to the Trust or to
any shareholder of the Fund for any act or omission in the course of, or
connected with rendering services hereunder, including without limitation,
any error of judgment or mistake of law or for any loss suffered by any of
them in connection with the matters to which this Agreement related,
except to the extent specified in Section 36(b) of the Act concerning loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services. Except for such disabling conduct, the Trust
shall indemnify the Advisor (and its officers, directors, agents,
employees, controlling persons, shareholders and any other person or
entity affiliated with the Advisor) from any liability arising from the
Advisor's conduct under this Agreement to the extent permitted by the
Trust's Agreement and Declaration of Trust, By-Laws and applicable law.
(d) Nothing in this Agreement shall prevent the Advisor or any
affiliated person (as defined in the Act) of the Advisor from acting as
investment advisor or manager and/or principal underwriter for any other
person, firm or corporation and shall not in any way limit or restrict the
Advisor or any such affiliated person from buying, selling or trading any
securities for its or their own accounts or the accounts of others for
whom it or they may be acting, provided, however, that the Advisor
expressly represents that it will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations to the
Trust under this Agreement.
(e) It is agreed that the Advisor shall have no responsibility or
liability for the accuracy or completeness of the Trust's Registration
Statement under the Act or the Securities Act of 1933 except for
information supplied by the Advisor for inclusion therein.
3. Broker-Dealer Relationships
In connection with its duties set forth in Section 2(a)(ii) of this
Agreement to arrange for the purchase and the sale of securities held by the
Fund by placing purchase and sale orders for the Fund, the Advisor and/or any
Sub-Advisor shall select such broker-dealers ("brokers") as shall, in the
Advisor's or Sub-Advisor's judgment, implement the policy of the Fund to achieve
"best execution," i.e., prompt and efficient execution at the most favorable
securities price. In making such selection, the Advisor and/or Sub-Advisor is
also authorized to consider whether the broker provides brokerage and/or
research services to the Fund and/or other accounts of the Advisor or
Sub-Advisor. The commissions paid to such brokers may be higher than another
broker would have charged if a good faith determination is made by the Advisor
and/or Sub-Advisor that the commission is reasonable in relation to the services
provided, viewed in terms of either that particular transaction or the Advisor's
or the Sub-Advisor's overall responsibilities as to the accounts as to which it
exercises investment discretion. The Advisor and/or Sub-Advisor shall use its
judgment in determining that the amount of commissions paid are reasonable in
relation to the value of brokerage and research services provided and need not
place or attempt to place a specific dollar value on such services or on the
portion of commission rates reflecting such services. To demonstrate that such
determinations were in good faith, and to show the overall reasonableness of
commissions paid, the Advisor and/or Sub-Advisor shall be prepared to show that
commissions paid (i) were for purposes contemplated by this Agreement; (ii)
provide lawful and appropriate assistance to the Advisor and/or Sub-Advisor in
the performance of its decision-making responsibilities; and (iii) were within a
reasonable range as compared to the rates charged by qualified brokers to other
institutional investors as such rates may become known from available
information. The Trust recognizes that, on any particular transaction, a higher
than usual commission may be paid due to the difficulty of the transaction in
question.
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4. Allocation of Expenses
The Advisor agrees that it will furnish the Trust, at the Advisor's
expense, with all office space and facilities, and equipment and clerical
personnel necessary for carrying out its duties under this Agreement. The
Advisor will also pay all compensation of all Trustees, officers and employees
of the Trust who are affiliated persons of the Advisor. All costs and expenses
not expressly assumed by the Advisor under this Agreement shall be paid by the
Trust, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its
Trustees other than those affiliated with the Advisor; (v) legal and audit
expenses; (vi) fees and expenses of the Fund's administrator, custodian,
shareholder servicing or transfer agent and accounting and/or pricing services
agent; (vii) expenses incident to the issuance of its shares, including stock
certificates and issuance of shares on the payment of dividends; (viii) fees and
expenses incident to the registration under federal or state securities laws of
the Fund or its shares; (ix) expenses of preparing, printing and mailing reports
and notices proxy material and prospectuses to shareholders of the Fund; (x) all
other expenses incidental to holding meetings of the Fund's shareholders; (xi)
dues or assessments of or contributions to the Investment Company Institute or
any successor or other industry association; (xii) such non-recurring expenses
as may arise, including litigation affecting the Trust and the legal obligations
which the Trust may have to indemnify its officers and Trustees with respect
thereto; and (xiii) all expenses which the Trust or the Fund agrees to bear in
any distribution agreement or in any plan adopted by the Trust and/or a Fund
pursuant to Rule 12b-1 under the Act.
5. Compensation of the Advisor
The Trust agrees to pay the Advisor, out of the assets of the Fund,
and the Advisor agrees to accept as full compensation for all services rendered
by the Advisor as such, an annual management fee, payable monthly and computed
on the value of the average daily net asset value of the Fund as shown on
Exhibit A attached hereto.
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6. Duration and Termination
(a) This Agreement shall go into effect as to the Fund on the date
set forth on Exhibit A attached hereto and shall, unless terminated as
hereinafter provided, continue in effect for a period of two years and
thereafter from year to year, but only so long as such continuance is
specifically approved at least annually by: (i) the vote of a majority of
the Trustees who are not parties to this Agreement or "interested persons"
(as defined in the Act) of any such party cast in person at a meeting
called for the purpose of voting on such approval; and (ii) either by a
vote of a majority of the Board of Trustees or by the vote of the holders
of a "majority" (as defined in the Act) of the outstanding voting
securities of the Fund.
(b) This Agreement may be terminated by the Advisor with respect to
the Fund at any time without penalty upon giving the Trust sixty (60)
days' written notice (which notice may be waived by the Fund) and may be
terminated by the Trust with respect to a Fund at any time without penalty
upon giving the Advisor sixty (60) days' written notice (which notice may
be waived by the Advisor), provided that such termination by the Trust
shall be directed or approved by the vote of a majority of all of its
Trustees 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 Fund. This
Agreement shall automatically terminate in the event of its assignment (as
defined in the Act).
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by duly authorized persons and their seals to be
hereunto affixed, all as of the date first above written.
THE EXCHANGE TRADED TRUST
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, President
XXXXXXX CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx,
Senior Managing Director and
Chief Investment Officer
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EXHIBIT A
THE EXCHANGE TRADED TRUST
INVESTMENT ADVISORY AGREEMENT
1. ArcaEx Tech 100 ETF
(a) Effective Date: _________, 2006
(b) Management Fee: The management fee for this Fund, calculated in
accordance with paragraph 5 of this Agreement, shall be at an annual rate of
0.30% on the first $250 million in average daily net assets; 0.25% on the next
$250 million in average daily net assets; 0.20% on the next $500 million in
average net daily assets; and 0.15% on average daily net assets in excess of $1
billion.
