EXHIBIT (D)(17)
INVESTMENT ADVISORY AGREEMENT
n/i Small Cap Value Fund
AGREEMENT made as of November 12, 2004 between THE RBB FUND, INC., a
Maryland corporation (herein called the "Fund"), and Numeric Investors LLC
(formerly Numeric Investors L.P.) (herein called the "Investment Adviser").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "1940 Act") and currently
offers or proposes to offer shares representing interests in separate investment
portfolios; and
WHEREAS, the Fund desires to retain the Investment Adviser to render
certain investment advisory services to the Fund with respect to the Fund's n/i
Small Cap Value Fund (the "Portfolio"), and the Investment Adviser is willing to
so render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints the Investment Adviser to
act as investment adviser for the Portfolio for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. DELIVERY OF DOCUMENTS. The Fund has furnished the Investment
Adviser with copies properly certified or authenticated of each of the
following:
(a) Resolutions of the Board of Directors of the Fund
authorizing the appointment of the Investment Adviser and the execution and
delivery of this Agreement;
(b) Each prospectus and statement of additional information
relating to any class of Shares representing interests in the Portfolio of the
Fund in effect under the 1933 Act (such prospectus and statement of additional
information, as presently in effect and as they shall from time to time be
amended and supplemented, are herein collectively called the "Prospectus" and
"Statement of Additional Information," respectively).
The Fund will promptly furnish the Investment Adviser from time
to time with copies, properly certified or authenticated, of all amendments of
or supplements to the foregoing, if any.
In addition to the foregoing, the Fund will also provide the
Investment Adviser with copies of the Fund's Charter and By-laws, and any
registration statement or service
contracts related to the Portfolio, and will promptly furnish the Investment
Adviser with any amendments of or supplements to such documents.
3. MANAGEMENT OF THE PORTFOLIO. Subject to the supervision of the
Board of Directors of the Fund, the Investment Adviser will provide for the
overall management of the Portfolio including (i) the provision of a continuous
investment program for the Portfolio, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Portfolio, (ii) the determination from time to time of what
securities and other investments will be purchased, retained, or sold by the
Fund for the Portfolio, and (iii) the placement from time to time of orders for
all purchases and sales made for the Portfolio. The Investment Adviser will
provide the services rendered by it hereunder in accordance with the Portfolio's
investment objectives, restrictions and policies as stated in the applicable
Prospectus and the Statement of Additional Information, provided that the
Investment Adviser has actual or constructive notice or knowledge of any changes
by the Board of Directors to such investment objectives, restrictions or
policies. The Investment Adviser further agrees that it will render to the
Fund's Board of Directors such periodic and special reports regarding the
performance of its duties under this Agreement as the Board may reasonably
request. The Investment Adviser agrees to provide to the Fund (or its agents and
service providers) prompt and accurate data with respect to the Portfolio's
transactions and, where not otherwise available, the daily valuation of
securities in the Portfolio.
4. BROKERAGE. Subject to the Investment Adviser's obligation to
obtain best price and execution, the Investment Adviser shall have full
discretion to select brokers or dealers to effect the purchase and sale of
securities. When the Investment Adviser places orders for the purchase or sale
of securities for the Portfolio, in selecting brokers or dealers to execute such
orders, the Investment Adviser is expressly authorized to consider the fact that
a broker or dealer has furnished statistical, research or other information or
services for the benefit of the Portfolio directly or indirectly. Without
limiting the generality of the foregoing, the Investment Adviser is authorized
to cause the Portfolio to pay brokerage commissions which may be in excess of
the lowest rates available to brokers who execute transactions for the Portfolio
or who otherwise provide brokerage and research services utilized by the
Investment Adviser, provided that the Investment Adviser determines in good
faith that the amount of each such commission paid to a broker is reasonable in
relation to the value of the brokerage and research services provided by such
broker viewed in terms of either the particular transaction to which the
commission relates or the Investment Adviser's overall responsibilities with
respect to accounts as to which the Investment Adviser exercises investment
discretion. The Investment Adviser may aggregate securities orders so long as
the Investment Adviser adheres to a policy of allocating investment
opportunities to the Portfolio over a period of time on a fair and equitable
basis relative to other clients. In no instance will the Portfolio's securities
be purchased from or sold to the Fund's principal underwriter, the Investment
Adviser, or any affiliated person thereof, except to the extent permitted by SEC
exemptive order or by applicable law.
The Investment Adviser shall report to the Board of Directors of the
Fund at least quarterly with respect to brokerage transactions that were entered
into by the Investment Adviser, pursuant to the foregoing paragraph, and shall
certify to the Board that the commissions paid
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were reasonable in terms either of that transaction or the overall
responsibilities of the Adviser to the Fund and the Investment Adviser's other
clients, that the total commissions paid by the Fund were reasonable in relation
to the benefits to the Fund over the long term, and that such commissions were
paid in compliance with Section 28(e) of the Securities Exchange Act of 1934.
5. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Adviser
further agrees that it will comply with all applicable rules and regulations of
all federal regulatory agencies having jurisdiction over the Investment Adviser
in the performance of its duties hereunder. The Investment Adviser will treat
confidentially and as proprietary information of the Fund all records and other
information relating to the Fund and prior, present or potential shareholders
(except clients of the Investment Adviser and its affiliates), and will not use
such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Investment Adviser may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Fund.
6. SERVICES NOT EXCLUSIVE. The Investment Adviser and its officers
may act and continue to act as investment managers for others, and nothing in
this Agreement shall in any way be deemed to restrict the right of the
Investment Adviser to perform investment management or other services for any
other person or entity, and the performance of such services for others shall
not be deemed to violate or give rise to any duty or obligation to the Portfolio
or the Fund.
Nothing in this Agreement shall limit or restrict the Investment Adviser
or any of its partners, officers, affiliates or employees from buying, selling
or trading in any securities for its or their own account. The Fund acknowledges
that the Investment Adviser and its partners, officers, affiliates, employees
and other clients may, at any time, have, acquire, increase, decrease, or
dispose of positions in investments which are at the same time being acquired or
disposed of for the Portfolio. The Investment Adviser shall have no obligation
to acquire for the Portfolio a position in any investment which the Investment
Adviser, its partners, officers, affiliates or employees may acquire for its or
their own accounts or for the account of another client, so long as it continues
to be the policy and practice of the Investment Adviser not to favor or disfavor
consistently or consciously any client or class of clients in the allocation of
investment opportunities so that, to the extent practical, such opportunities
will be allocated among clients over a period of time on a fair and equitable
basis.
The Investment Adviser agrees that this Paragraph 6 does not constitute
a waiver by the Fund of the obligations imposed upon the Investment Adviser to
comply with Sections 17(d) and 17(j) of the 1940 Act, and the rules thereunder,
nor constitute a waiver by the Fund of the obligations imposed upon the
Investment Adviser under Section 206 of the Investment Advisers Act of 1940 and
the rules thereunder. Further, the Investment Adviser agrees that this Paragraph
6 does not constitute a waiver by the Fund of the fiduciary obligation of the
Investment Adviser arising under federal or state law, including Section 36 of
the 1940 Act. The
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Investment Adviser agrees that this Paragraph 6 shall be interpreted consistent
with the provisions of Section 17(i) of the 1940 Act.
7. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all records
which it maintains for the Portfolio are the property of the Fund and further
agrees to surrender promptly to the Fund any of such records upon the Fund's
request. The Investment Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
8. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement. The Portfolio shall bear all of its own expenses not
specifically assumed by the Investment Adviser. General expenses of the Fund not
readily identifiable as belonging to a portfolio of the Fund shall be allocated
among all investment portfolios by or under the direction of the Fund's Board of
Directors in such manner as the Board determines to be fair and equitable.
Expenses borne by the Portfolio shall include, but are not limited to, the
following (or the portfolio's share of the following): (a) the cost (including
brokerage commissions) of securities purchased or sold by the Portfolio and any
losses incurred in connection therewith; (b) fees payable to and expenses
incurred on behalf of the Portfolio by the Investment Adviser; (c) filing fees
and expenses relating to the registration and qualification of the Fund and the
Portfolio's shares under Federal and/or state securities laws and maintaining
such registrations and qualifications; (d) fees and salaries payable to the
Fund's directors and officers; (e) taxes (including any income or franchise
taxes) and governmental fees; (f) costs of any liability and other insurance or
fidelity bonds; (g) any costs, expenses or losses arising out of a liability or
claim for damages or other relief asserted against the Fund or the Portfolio for
violation of any law; (h) legal, accounting and auditing expenses, including
legal fees of special counsel for the independent directors; (i) charges of
custodians and other agents; (j) expenses of setting in type and printing
prospectuses, statements of additional information and supplements thereto for
existing shareholders, reports, statements, and confirmations to shareholders
and proxy material that are not attributable to a class; (k) costs of mailing
prospectuses, statements of additional information and supplements thereto to
existing shareholders, as well as reports to shareholders and proxy material
that are not attributable to a class; (l) any extraordinary expenses; (m) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment company organizations; (n) costs of mailing and tabulating proxies
and costs of shareholders' and directors' meetings; (o) costs of independent
pricing services to value a portfolio's securities; and (p) the costs of
investment company literature and other publications provided by the Fund to its
directors and officers. Distribution expenses, transfer agency expenses,
expenses of preparation, printing and mailing, prospectuses, statements of
additional information, proxy statements and reports to shareholders, and
organizational expenses and registration fees, identified as belonging to a
particular class of the Fund are allocated to such class.
If the expenses borne by the Portfolio in any fiscal year exceed the
most restrictive applicable expense limitations imposed by the securities
regulations of any state in which the Shares of the Portfolio are registered or
qualified for sale to the public, the Investment Adviser
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shall reimburse the Portfolio for any excess up to the amount of the fees
payable by the Portfolio to it during such fiscal year pursuant to Paragraph 9
hereof in the same proportion that its fees bear to the total fees paid by the
Fund for investment advisory services in respect of the Portfolio; provided,
however, that notwithstanding the foregoing, the Investment Adviser shall
reimburse the Portfolio for such excess expenses regardless of the amount of
such fees payable to it during such fiscal year to the extent that the
securities regulations of any state in which the Shares are registered or
qualified for sale so require.
9. VOTING. The Investment Adviser shall have the authority to vote
as agent for the Fund, either in person or by proxy, tender and take all actions
incident to the ownership of all securities in which the Portfolio's assets may
be invested from time to time, subject to such policies and procedures as the
Board of Directors of the Fund may adopt from time to time.
10. RESERVATION OF NAME. The Investment Adviser shall at all times
have all rights in and to the Portfolio's name and all investment models used by
or on behalf of the Portfolio. The Investment Adviser may use the Portfolio's
name or any portion thereof in connection with any other mutual fund or business
activity without the consent of any shareholder and the Fund shall execute and
deliver any and all documents required to indicate the consent of the Fund to
such use.
No public reference to, or description of, the Investment Adviser or its
methodology or work shall be made by the Fund, whether in the Prospectus,
Statement of Additional Information or otherwise, without the prior written
consent of the Investment Adviser, which consent shall not be unreasonably
withheld. In each case, the Fund shall provide the Investment Adviser a
reasonable opportunity to review any such reference or description before being
asked for such consent.
11. DISCONTINUATION OF PUBLIC OFFERING. Subject to the prior
approval of the Fund's Board of Directors, the Investment Adviser may instruct
the Fund's distributor to cease sales of shares of the Portfolio to new
investors due to concerns that an increase in the size of the Portfolio may
adversely affect the implementation of the Portfolio's investment strategy.
Subject to prior Board approval, the Investment Adviser may subsequently
instruct the Fund's distributor to recommence the sale of shares of the
Portfolio.
12. COMPENSATION.
(a) The Portfolio will pay the Investment Adviser from the
assets of the Portfolio and the Investment Adviser will accept as full
compensation therefor fees calculated as follows:
(i) There shall be a fee, computed daily and payable
monthly, at the annual rate of 0.85% of the Portfolio's average daily net assets
(the "Base Fee"), provided, however, that if subparagraph (ii) below is
applicable, the fee shall be calculated pursuant to subparagraph (iii) below.
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(ii) After each calendar month, it shall be
determined whether the investment performance of the Portfolio (calculated in
accordance with subparagraph (v) below) has exceeded or lagged the Target (as
hereinafter defined) within the parameters of one of subparagraphs (A) through
(E) during the immediately preceding twelve months:
(A) the investment performance of the
Portfolio lagged the Target;
(B) the investment performance of the
Portfolio exceeded the Target by at least 0 but less than 100 basis points;
(C) the investment performance of the
Portfolio exceeded the Target by at least 100 but less than 200 basis points;
(D) the investment performance of the
Portfolio exceeded the Target by at least 200 but less than 300 basis points;
(E) the investment performance of the
Portfolio exceeded the Target by at least 300 but less than 400 basis points;
(F) the investment performance of the
Portfolio exceeded the Target by at least 400 but less than 500 basis points;
(G) the investment performance of the
Portfolio exceeded the Target by at least 500 but less than 600 basis points;
(H) the investment performance of the
Portfolio exceeded the Target by at least 600 but less than 700 basis points;
(I) the investment performance of the
Portfolio exceeded the Target by at least 700 but less than 800 basis points;
(J) the investment performance of the
Portfolio exceeded the Target by at least 800 but less than 900 basis points; or
(K) the investment performance of the
Portfolio exceeded the Target by 900 basis points or more;
(iii) If subparagraph (ii) applies, the rate of the
Base Fee for such calendar month should be adjusted as follows:
(A) If subparagraph (ii)(A) applies, the
annual rate of the Base Fee shall be 0.35%;
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(B) If subparagraph (ii)(B) applies, the
annual rate of the Base Fee shall be 0.45%;
(C) If subparagraph (ii)(C) applies, the
annual rate of the Base Fee shall be 0.55%;
(D) If subparagraph (ii)(D) applies, the
annual rate of the Base Fee shall be 0.65%;
(E) If subparagraph (ii)(E) applies, the
annual rate of the Base Fee shall be 0.75%;
(F) If subparagraph (ii)(F) applies, the
annual rate of the Base Fee shall be 0.85%;
(G) If subparagraph (ii)(G) applies, the
annual rate of the Base Fee shall be 0.95%;
(H) If subparagraph (ii)(H) applies, the
annual rate of the Base Fee shall be 1.05%;
(I) If subparagraph (ii)(I) applies, the
annual rate of the Base Fee shall be 1.15%;
(J) If subparagraph (ii)(J) applies, the
annual rate of the Base Fee shall be 1.25%; or
(K) If subparagraph (ii)(K) applies, the
annual rate of the Base Fee shall be 1.35%.
(iv) The "Target" means the investment record of the
Xxxxxxx 2000 Value Index.
(v) The investment record of the Xxxxxxx 2000 Value
Index shall be calculated in accordance with Rule 205-1(b) under the Investment
Advisers Act of 1940, as amended (the "Advisers Act") as such Rule shall be
amended from time to time or any successor regulation. The investment
performance of the Fund shall be calculated in accordance with Rule 205-1(a)
under the Advisers Act as such Rule shall be amended from time to time or any
successor regulation.
(b) The fee attributable to the Fund shall be satisfied only
against assets of the Portfolio and not against the assets of any other
investment portfolio of the Fund.
13. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER. The
Investment Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the
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Fund in connection with the matters to which this Agreement relates, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement ("disabling conduct"). The Portfolio will
indemnify the Investment Adviser against and hold it harmless from any and all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses) resulting from any claim, demand, action or suit not
resulting from disabling conduct by the Investment Adviser. Indemnification
shall be made only following: (i) a final decision on the merits by a court or
other body before whom the proceeding was brought that the Investment Adviser
was not liable by reason of disabling conduct or (ii) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that the
Investment Adviser was not liable by reason of disabling conduct by (a) the vote
of a majority of a quorum of directors of the Portfolio who are neither
"interested persons" of the Portfolio nor parties to the proceeding
("disinterested non-party directors") or (b) an independent legal counsel in a
written opinion. The Investment Adviser shall be entitled to advances from the
Portfolio for payment of the reasonable expenses incurred by it in connection
with the matter as to which it is seeking indemnification in the manner and to
the fullest extent permissible under the Maryland General Corporation Law. The
Investment Adviser shall provide to the Portfolio a written affirmation of its
good faith belief that the standard of conduct necessary for indemnification by
the Portfolio has been met and a written undertaking to repay any such advance
if it should ultimately be determined that the standard of conduct has not been
met. In addition, at least one of the following additional conditions shall be
met: (a) the Investment Adviser shall provide a security in form and amount
acceptable to the Portfolio for its undertaking; (b) the Portfolio is insured
against losses arising by reason of the advance; or (c) a majority of a quorum
of disinterested non-party directors, or independent legal counsel, in a written
opinion, shall have determined, based upon a review of facts readily available
to the Portfolio at the time the advance is proposed to be made, that there is
reason to believe that the Investment Adviser will ultimately be found to be
entitled to indemnification. Any amounts payable by the Portfolio under this
Section shall be satisfied only against the assets of the Portfolio and not
against the assets of any other investment portfolio of the Fund.
14. DURATION AND TERMINATION. This Agreement shall become effective
with respect to the Portfolio upon approval of this Agreement by vote of a
majority of the outstanding voting securities of the Portfolio and unless sooner
terminated as provided herein, shall continue with respect to the Portfolio
until August 16, 2005. Thereafter, if not terminated, this Agreement shall
continue with respect to the Portfolio for successive annual periods ending on
August 16, provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Board of Directors of the
Fund who are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Directors of the Fund or by vote of a majority
of the outstanding voting securities of the Portfolio; provided, however, that
this Agreement may be terminated with respect to the Portfolio by the Fund at
any time, without the payment of any penalty, by the Board of Directors of the
Fund or by vote of a majority of the outstanding voting securities of the
Portfolio, on 60 days' prior written notice
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to the Investment Adviser, or by the Investment Adviser at any time, without
payment of any penalty, on 60 days' prior written notice to the Fund. This
Agreement will immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act).
15. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, discharged or terminated orally, except by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought, and no amendment of this Agreement affecting the
Portfolio shall be effective until approved by vote of the holders of a majority
of the outstanding voting securities of the Portfolio.
16. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
17. CHANGE IN MEMBERSHIP. The Investment Adviser shall notify the
Fund of any change in its membership within a reasonable time after such change.
18. COUNTERPARTS. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the state of Delaware without giving
effect to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE RBB FUND, INC.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
President
NUMERIC INVESTORS LLC
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Managing Director & CFO
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