INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of August 1, 1997
between STONEBRIDGE AGGRESSIVE GROWTH FUND, INC. a Delaware corporation (the
"Fund"), and STONEBRIDGE CAPITAL MANAGEMENT, INCORPORATED, a California
corporation (the "Investment Adviser").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund desires to retain the Investment Adviser to furnish
investment advisory services to the Fund;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. APPOINTMENT. The Fund hereby appoints the Investment Adviser to
serve as investment adviser to the Fund for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
2. SERVICES. Subject to the supervision of the Fund's Board of
Directors (the "Board"), the Investment Adviser will provide a continuous
investment program for the Fund, including investment research and management
with respect to all securities and investments and cash equivalents held by the
Fund. The Investment Adviser will determine from time to time what securities
and other investments will be purchased, retained or sold by the Fund. The
Investment Adviser will provide its services under this Agreement in accordance
with the Fund's investment objective, policies and restrictions as stated in the
Fund's prospectus and statement of additional information, as currently in
effect and as amended from time to time (collectively, the "Prospectus"), and
resolutions of the Board. The Investment Adviser further agrees that it:
(a) Will conform with all applicable rules and regulations of the
Securities and Exchange Commission and will conduct its activities under this
Agreement in accordance with all other applicable laws.
(b) Will place all orders for the purchase and sale of portfolio
securities for the account of the Fund with brokers or dealers selected by the
Investment Adviser. In executing portfolio transactions and selecting brokers
or dealers, the Investment Adviser will use its best efforts to seek on behalf
of the Fund the best available price and execution. In assessing the best
overall terms available for any transaction, the Investment Adviser will
consider all factors it deems relevant, including the breadth of the market in
the security, the price of the security, the size of the order, the difficulty
and risk of execution, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis.
In evaluating the best overall terms available, and in selecting the
broker or dealer to execute a particular transaction, the Investment Adviser may
also consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to
the Fund and/or other accounts over which the Investment Adviser exercises
investment discretion. The Investment Adviser is authorized to pay to a broker
or dealer who provides such brokerage and research services a commission or
spread for executing a portfolio transaction for the Fund which is in excess of
the amount of commission or spread another broker or dealer would have charged
for effecting that transaction, if the Investment Adviser determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer viewed in
terms of that particular transaction or in terms of the overall responsibilities
of the Investment Adviser to the Fund. The Investment Adviser may also select
brokers who sell shares Fund to execute portfolio transactions. The extent and
continuation of these practices will be subject to periodic review by the Board.
In executing portfolio transactions for the Fund, the Investment
Adviser may, but will not be obligated to, aggregate the securities to be sold
or purchased with those of its other clients where such aggregation is not
inconsistent with the policies set forth in the Prospectus, to the extent
permitted by applicable laws and regulations. In such event, the Investment
Adviser will allocate the securities so purchased or sold, and the expenses
incurred in the transaction, in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and such other
clients.
(c) Will maintain all books and records with respect to the
securities transactions of the Fund, keep books of account with respect to the
Fund and furnish the Board with such periodic and special reports as the Board
may request.
(d) Will treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and shareholders
of the Fund or those persons or entities who respond to inquiries concerning
investment in the Fund, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder or
under any other agreement with the Fund except after prior notification to and
approval in writing by the Fund, which approval will 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. Nothing contained herein, however,-will prohibit the Investment
Adviser from advertising to or soliciting the public generally with respect to
other products or services, including, but not limited to, any advertising or
marketing via radio, television, newspapers, magazines or direct mail
solicitation, regardless of whether
such advertisement or solicitation may coincidentally include prior or present
Investors or those persons or entities who have responded to inquiries regarding
the Fund.
3. SERVICES NOT EXCLUSIVE. The Investment Adviser will for all
purposes herein be deemed to be an independent contractor and will, unless
otherwise expressly provided herein or authorized by the Board from time to
time, have no authority to act for or represent the Fund in any way or otherwise
be deemed its agent. The investment management services furnished by the
Investment Adviser hereunder are not deemed exclusive, and the Investment
Adviser will be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule
3la-3 under the 1940 Act, the Investment Adviser agrees that all records which
it maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any such
records upon the Fund's request. In addition, the Investment Adviser agrees to
preserve for the periods prescribed by Rule 3la-2 under the 1940 Act the records
required to be maintained by Rule 3la-1 under the 1940 Act.
5. 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 other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund.
6. COMPENSATION. For the services provided and the expenses
assumed pursuant to this Agreement, the Fund will pay the Investment Adviser
and the Investment Adviser will accept as full compensation therefor a fee,
computed daily and paid monthly (in arrears), at the annual rate of 1.00% of the
average daily net assets of the Fund.
The Investment Adviser may from time to time voluntarily agree to
reduce its fees or absorb other operating expenses to ensure that the expenses
of the Fund do not exceed certain limitations. In such event, any such
reductions and other expenses paid by the Investment Adviser will be repaid to
the Investment Adviser by the Fund, without interest, at such later time or
times as they may be repaid without causing the aggregate operating expenses of
the Fund to exceed such voluntary expense limitation. In the event this
Agreement is terminated for any reason, any such repayment obligation will also
be terminated without further liability to the Fund.
7. REPRESENTATIONS AND WARRANTIES.
(a) The Fund represents and warrants to the Investment Adviser that:
(i) it is a corporation duly organized and existing and in good standing under
the laws of the State of Delaware and is duly qualified to conduct its business
in the State of Delaware and in such other jurisdictions where the nature of its
activities or its properties owned or leased makes such qualification necessary;
(ii) it is a registered open-end management investment company under the 1940
Act; (iii) a registration statement on Form N-lA under the Securities Act of
1933, as
amended, on behalf of the Fund is currently effective and will remain effective,
and appropriate state securities law filings have been made and will continue to
be made, with respect to all shares of the Fund being offered for sale; (iv) it
is empowered under applicable laws and by its Articles of Incorporation and
Bylaws to enter into and perform this Agreement; and (v) all requisite corporate
proceedings have been taken to authorize it to enter into and perform this
Agreement.
(b) The Investment Adviser represents and warrants to the Fund that:
(i) it is a corporation duly organized and existing and in good standing under
the laws of the State of California and is duly qualified to conduct its
business in the State of California and in such other jurisdictions where the
nature of its activities or its properties owned or leased makes such
qualification necessary; (ii) it is empowered under applicable laws and by its
Articles of Incorporation and Bylaws to enter into and perform this Agreement;
(iii) all requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement; and (iv) it is a registered investment
adviser under the Investment Advisers Act of 1940 and applicable state laws.
8. LIMITATION OF LIABILITY; INDEMNIFICATION.
(a) The Investment Adviser will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except for liability resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Investment Adviser in the performance of its duties, or by reason of the
Investment Adviser's reckless disregard of its obligations and duties under this
Agreement.
(b) The Fund will indemnify and hold harmless the Investment Adviser
from and against all liabilities, damages, costs and expenses that the
Investment Adviser may incur in connection with any action, suit, investigation
or proceeding arising out of or otherwise based on any action actually or
allegedly taken or omitted to be taken by the Investment Adviser with respect to
the performance of its duties or obligations hereunder or otherwise as an
investment adviser of the Fund; provided, however, that the Investment Adviser
will not be entitled to indemnification with respect to any liability to the
Fund or the shareholders of the Fund by reason of willful misfeasance, bad faith
or gross negligence on the part of the Investment Adviser in the performance of
its duties, or by reason of the Investment Adviser's reckless disregard of its
obligations and duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective
on the date first written above. Unless sooner terminated as provided herein,
this Agreement will continue in effect for a period of two years from the date
hereof. Thereafter, if not terminated, this Agreement will continue in effect
for successive annual periods, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Board who are not interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board or by vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by the Fund (by vote of the
Board or by vote of a majority of the outstanding voting securities of such
Fund), or by the Investment Adviser, upon not less than 60 days' written notice.
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 persons" and "assignment" have the same meaning as the
meaning of such terms in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement will be
effective as to the Fund until approved by vote of a majority of the outstanding
voting securities of the Fund, except as may be permitted by the 1940 Act.
11. NOTICES. Notices of any kind to be given to the either party
will be in writing and will be duly given if mailed, delivered or communicated
by answer back facsimile transmission to the party at 0000 Xxxxxxx Xxxx Xxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Facsimile 310/277-1456, Attention:
President, or at such other address or to such individual as will be so
specified by the party.
12. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof.
(b) 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.
(c) If any provision of this Agreement is held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby.
(d) This Agreement will be binding upon and will inure to the benefit
of the parties hereto and their respective successors and will be governed by
the internal laws, and not the law of conflicts of laws, of the State of
Delaware; provided that nothing herein will be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of 1940, as amended,
or any rule or regulation of. the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the date first above
written.
STONEBRIDGE AGGRESSIVE GROWTH FUND, INC.
BY:
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PRESIDENT
STONEBRIDGE CAPITAL MANAGEMENT,
INCORPORATED
BY:
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PRESIDENT
