ADVISORY AGREEMENT
THIS AGREEMENT is made this ______ day of ___________________ 1998, by and
between THE ADVISOR'S FUND, a Kansas Corporation (the "Fund"), and PRIVATE
CONSULTING GROUP, INC., an Oregon corporation (the "Adviser"),
WITNESSETH:
WHEREAS, the Fund is engaged in business as a diversified, open-end, management
investment company registered under the Investment Company Act of 1940 (the
"1940 Act"); and
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Fund desires to retain the Adviser to furnish advisory services to
the series of the Fund listed in Exhibit A (the series so listed being referred
to herein as the "Series");
WHEREAS, the Adviser is a registered investment adviser under the Investment
Advisers Act of 1940 (the "Investment Advisers Act"), as amended, and engages in
the business of acting as an investment adviser;
WHEREAS, the Adviser is willing to provide research and advice to the Series
on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Appointment. The Fund hereby appoints Adviser to act as investment adviser
to the Series with respect to the investment of its assets and to supervise
and arrange the purchase of securities for the Series and the sale of
securities held in the portfolios of the Series, subject always to the
supervision of the Board of Directors of the Fund (or a duly appointed
committee thereof) during the period and upon and subject to the terms and
conditions herein set forth. The Adviser hereby accepts such appointment
and agrees to perform the services required by this Agreement for the
compensation herein provided.
2. Investment Advice. The Adviser shall have investment discretion with
respect to the Series and will have the authority to purchase and sell
securities and other investments for the Series as it, in its best
judgment, deems appropriate subject to the investment objective, policies
and restrictions in the Prospectus and Statement of Additional Information
of the Fund. The investment advice rendered hereunder is subject further to
any requirements imposed by the Fund's Articles of Incorporation and
Bylaws, the 1940 Act and the rules and regulations promulgated thereunder,
any other applicable provisions of law, and the terms of the registration
statements of the Fund under the federal securities laws, all as from time
to time amended. The Adviser shall give the Series the benefit of its best
judgment, efforts and facilities in rendering its services as Adviser.
3. Investment Analysis and Implementation. In carrying out its obligation
under paragraph 2 hereof, the Adviser shall: (a) determine which issuers
and securities shall be represented in the Series' portfolio and regularly
report thereon to the Fund's Board of Directors; (b) formulate and
implement continuing programs for the purchase and sale of the securities
of such issuers and regularly report thereon to the Fund's Board of
Directors; (c) continuously review the Series' security holdings and the
investment program and the investment policies of the Series; and (d) take,
on behalf of the Series, all actions which appear necessary to carry into
effect such purchase and sale programs, including the placement of orders
for the purchase and sale of securities for the Series.
4. Broker-Dealer Relationships. The Adviser is responsible for decisions to
buy and sell securities for the Series, broker/dealer selection, and
negotiation of brokerage commission rates. The Adviser's primary
consideration in effecting a security transaction will be execution at the
most favorable price. In selecting a broker/dealer to execute each
particular transaction, the Adviser will take the following into
consideration: the best net price available; the reliability, integrity and
financial condition of the broker/dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker/dealer to the investment performance of the Series on a continuing
basis. Accordingly, the price to the Series in any transaction may be less
favorable than that available from another broker/dealer if the difference
is reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies as the Board of Directors may
determine, the Adviser shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by
reason of its having caused a Series to pay a broker for effecting a
portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if the Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with
respect to the Series and to its other clients as to which it exercises
investment discretion (as that term is defined under Section 3(a)(35) of
the Securities Exchange Act of 1934). The Adviser is further authorized to
place and/or to effect orders with such brokers and dealers who may provide
research or statistical material or other services to the Series or to the
Adviser. Such allocation shall be in such amounts and proportions as the
Adviser shall determine. On occasions when the Adviser deems the purchase
or sale of a security to be in the best interest of a Series as well as
other clients of the Adviser, the Adviser, to the extent permitted by
applicable law and regulations, may, but shall not be obligated to,
aggregate the securities to be purchased or sold to attempt to obtain a
more favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or
sold, as well the expenses incurred in the transaction, will be made by the
Adviser in the manner the Adviser considers to be most equitable and
consistent with its fiduciary obligations to the Series and to its other
clients.
5. Principal Transactions and Code of Ethics. The Adviser and any affiliated
person of the Adviser will not purchase securities or other financial
instruments from or sell securities or other financial instruments to the
Series ("Principal Transactions"); provided however, the Adviser may enter
into a Principal Transaction with a Series if (i) the transaction is
permissible under applicable laws and regulations, including, without
limitation, the 1940 Act and the Investment Advisers Act and the rules and
regulations promulgated thereunder, and (ii) the transaction receives the
express written approval of the Fund.
The Adviser agrees to observe and comply with Rule 17j-1 under the 1940 Act
and its Code of Ethics, as the same may be amended from time to time. The
Adviser agrees to provide the Fund with a copy of such Code of Ethics.
6. Control by Board of Directors. Any investment program undertaken by the
Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Adviser on behalf of the Series pursuant thereto, shall
at all times be subject to any directives of the Board of Directors of the
Fund.
7. Compliance with Applicable Requirements. In carrying out its obligations
under this Agreement, the Adviser shall ensure that each Series complies
with:
(a) all applicable provisions of the 1940 Act;
(b) the provisions of the Registration Statement of the Fund, as amended,
under the Securities Act of 1933 and the 1940 Act;
(c) all applicable statutes and regulations necessary to qualify a Series
as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code (or any successor or similar provision), and shall notify
the Board of Directors immediately upon having a reasonable basis for
believing that a Series has ceased to so qualify or that it might not
so qualify in the future;
(d) the diversification provisions of Section 817(h) of the Internal
Revenue Code and the regulations issued thereunder relating to the
diversification requirements for variable insurance contracts and any
prospective amendments or other modifications to Section 817 or
regulations thereunder. Adviser shall notify the Board of Directors
immediately upon having a reasonable basis for believing that a Series
has ceased to comply and will take all reasonable steps to adequately
diversify such Series so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
(e) the provisions of the Fund's Articles of Incorporation, as amended;
(f) the provisions of the Bylaws of the Fund, as amended; and
(g) any other applicable provisions of state and federal law.
8. Records. The Adviser hereby agrees to maintain all records relating to its
activities and obligations under this Agreement which are required to be
maintained by Rule 31a-1 under the 1940 Act and agrees to preserve such
records for the periods prescribed by Rule 31a-2 under the 1940 Act. The
Adviser further agrees that all such records are the property of the Fund
and agrees to surrender promptly to the Fund any such records upon the
Fund's request.
9. Expenses. The expenses connected with the Fund shall be borne by the
Adviser as follows:
(a) The Adviser shall maintain, at its expense and without cost to the
Fund, a trading function in order to carry out its obligations under
subparagraph (d) of paragraph 3 hereof to place orders for the
purchase and sale of portfolio securities for the Series.
(b) The Adviser shall pay any expenses associated with carrying out its
obligation under subparagraph (b) of paragraph 3 hereof to prepare
reports for the Fund's Board of Directors concerning issuers and
securities represented in the Series' portfolio and the expenses of
any travel by employees of the Adviser in connection with such reports
to the Fund's Board of Directors.
(c) The Adviser shall pay any expenses that it may incur in communicating
with the Board of Directors of the Fund in connection with its
obligations under this Agreement, including the expenses of telephone
calls, special mail services and telecopier charges.
(d) Other than as specifically set forth above, the Adviser shall not be
required to pay any expenses of the Fund, and in particular, but
without limiting the generality of the foregoing, the Adviser shall
not be required to pay office rental or general administrative
expenses; board of directors' fees, legal, auditing, and accounting
expenses, brokerage commissions, taxes and governmental fees,
membership dues, fees of custodian, transfer agent, registrar and
dividend disbursing agent, expenses of issue sale or redemption of
shares of the Fund, costs and expenses in connection with the
registration of such stock under the Securities Act of 1933 and
qualification of the Fund's stock under Blue Sky laws, expenses of
preparing and distributing reports, proxy statements, expenses of
printing prospectuses and such other nonrecurring expenses as may
arise from time to time.
10. Representations and Warranties of Adviser. The Adviser represents and
warrants to the Fund as follows:
(a) the Adviser is registered as an investment adviser under the
Investment Advisers Act;
(b) the Adviser will immediately notify the Fund of the occurrence of any
event that would disqualify the Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940
Act;
(c) the Adviser will file a notice of exemption pursuant to Rule 4.14
under the Commodity Exchange Act with the Commodity Futures Trading
Commission and the National Futures Association prior to providing any
futures contract or commodity trading advice to the Fund;
(d) the Adviser is duly organized and validly existing under the laws of
the State of Oregon with the power to own and possess its assets and
carry on its business as it is now being conducted;
(e) the execution, delivery and performance by the Adviser of this
Agreement are within the Adviser's powers and have been duly
authorized by all necessary actions on the part of its shareholders,
and no action by or in respect of, or filing with, any governmental
body, agency or official is required on the part of the Adviser for
the execution, delivery and performance by the Adviser of this
Agreement, and the execution, delivery and performance by the Adviser
of this Agreement do not contravene or constitute a default under (i)
any provision of applicable law, rule or regulation, (ii) the
Adviser's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree, or other instrument binding upon the
Adviser;
(f) This Agreement is a valid and binding agreement of the Adviser;
(g) The Form ADV of the Adviser previously provided to the Fund is a true
and complete copy of the form filed with the Securities and Exchange
Commission and the information contained therein is accurate in all
material respects and does not omit to state any material fact
necessary in order to make the statement made, in light of the
circumstances under which they were made, not misleading;
11. Delegation of Duties. The Adviser may delegate, assign or subcontract any
of the duties, responsibilities and services governed by this agreement to
a third party, but only by a written agreement approved by the Board of
Directors of the Fund. The Adviser shall, however, retain ultimate
responsibility to the Fund and shall implement such reasonable procedures
as may be necessary for assuring that any duties, responsibilities or
services so assigned, subcontracted or delegated are performed in
conformity with the terms and conditions of this Agreement.
12. Compensation. The Fund shall pay to the Adviser, for the services rendered
hereunder, the fee set forth in Exhibit B attached hereto.
13. Non-Exclusivity. The services of the Adviser to the Fund are not to be
deemed to be exclusive, and the Adviser shall be free to render investment
advisory or other services to others and to engage in other activities, so
long as its services under this Agreement are not impaired thereby.
14. Term. This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect with respect to
a Series unless it has first been approved (i) by a vote of a majority of
those 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 (ii) by vote of a majority
of the Series outstanding voting securities. This Agreement shall continue
in effect for a period of two years from the date hereof, subject
thereafter to being continued in force and effect from year to year with
respect to each Series if specifically approved each year by either (i) the
Board of Directors of the Series, or (ii) by the affirmative vote of a
majority of the Series outstanding voting securities. In addition to the
foregoing, each renewal of this Agreement with respect to a Series must be
approved by the vote of a majority of the Fund's directors 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.
Prior to voting on the renewal of this Agreement , the Board of Directors
of the Fund may request and evaluate, and the Adviser shall furnish, such
information as may reasonably be necessary to enable the Fund's Board of
Directors to evaluate the terms of this Agreement.
15. Termination. This Agreement may be terminated at any time, without the
payment of any penalty: (i) by vote of the Fund's Board of Directors or by
vote of a majority of the Series' outstanding voting securities (as defined
in Section 2(a)(42) of the 1940 Act), or by the Adviser on sixty (60) days'
written notice to the other party; (ii) upon twenty (20) days written
notice by the Fund due to breach by the Adviser of any representation or
warranty contained in paragraph 10 hereof, which shall not have been cured
during the notice period; (iii) by the Fund immediately upon written notice
to the Adviser if the Adviser becomes unable to discharge its duties and
obligations under this Agreement. This Agreement shall automatically
terminate in the event of its "assignment" as that term is defined in
Section 2(a)(4) of the 1940 Act.
16. Limitation of Liability of the Adviser. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against the Adviser hereunder. In the absence
of willful misfeasance, bad faith or gross negligence on the part of the
Adviser or its officers, directors or employees, or breach of its duties
hereunder, the Adviser shall not be liable to the Fund or to any
shareholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, provided the
Adviser has acted in good faith; provided further that nothing herein shall
relieve the Adviser from any obligations under applicable law, including,
without limitation, the federal and state securities laws.
17. Indemnification. The Adviser shall indemnify the Fund, and its officers and
directors, for any liability and expenses, including attorney's fees, which
may be sustained as a result of the Adviser's willful misfeasance, bad
faith, gross negligence, breach of its duties hereunder or violation of
applicable law, including without limitation, the federal and state
securities laws.
18. Notices. Any notices under this Agreement shall be in writing, addressed
and delivered or mailed postage-paid to the other party at such address as
such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the
Adviser for this purpose shall be 0000 XX Xxxxxxx, Xxxxxxxx, Xxxxxx, 00000,
and the address of the Fund for this purpose shall be 000 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxx 00000-0000.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Kansas. Any question of
interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940
Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretations thereof, if any, by the U.S. courts or, in the
absence of any controlling decisions of any such court, by rules,
regulation or order of the Securities and Exchange Commission validly
issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
relaxed by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or general application, such provision shall
be deemed to incorporate the effect of such rule, regulation or order.
20. Captions. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.
21. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision or applicable law, the remainder of the
Agreement shall not be affected adversely and shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the day and year first above
written.
ATTEST: THE ADVISOR'S FUND
____________________________________ By:________________________________
Title
ATTEST: PRIVATE CONSULTING GROUP, INC.
____________________________________ By:________________________________
Title:
