EXHIBIT (D)(5)
--------------
NORTH TRACK FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 17th day of December, 2004, by and between
NORTH TRACK FUNDS, INC., a Maryland corporation (the "Company"), and X.X.
XXXXXXX AND COMPANY, a Wisconsin corporation (the "Advisor").
W I T N E S S E T H:
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 Company hereby appoints the Advisor to act as investment advisor
with respect to each series of its common stock listed on Exhibit A attached
hereto. Each series is referred to herein as a "Fund," and collectively as the
"Funds." The Advisor agrees to provide professional investment management with
respect to the investment of the assets of each Fund and to supervise and
arrange the purchase and sale of securities held in the portfolio of each Fund.
The Advisor may engage, on behalf of any 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 Company may create one or more additional
series of shares and that, if it does so, this Agreement may be amended to
include additional 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 Directors of the Fund, the Advisor
shall:
(i) Decide what securities shall be purchased or sold by each
Fund and when; and
(ii) Arrange for the purchase and the sale of securities held
in the portfolio of each Fund by placing purchase and sale orders for
each Fund.
(b) Any purchases or sales of portfolio securities on behalf of each
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 Articles of Incorporation and By-Laws of the Fund as amended from time to
time; (4) any policies and determinations of the Board of Directors of the Fund;
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
EXHIBIT (D)(5)
--------------
or entity affiliated with the Advisor) the Advisor shall not be subject to
liability to the Company or to any shareholder of a 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 Company 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 Company's Articles of Incorporation,
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 Company under this Agreement.
(e) It is agreed that the Advisor shall have no responsibility or
liability for the accuracy or completeness of the Company'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 each
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 Company recognizes that, on any particular transaction, a
higher than usual commission may be paid due to the difficulty of the
EXHIBIT (D)(5)
--------------
transaction in question. The Advisor and/or Sub-Advisor is also authorized to
consider sales of shares as a factor in the selection of brokers to execute
brokerage and principal transactions, subject to the requirements of "best
execution," as defined above.
4. ALLOCATION OF EXPENSES
The Advisor agrees that it will furnish the Company, 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 Directors, officers and employees
of the Company 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
Company, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its
Directors other than those affiliated with the Advisor; (v) legal and audit
expenses; (vi) fees and expenses of the Funds' 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, or reinvestment of,
dividends; (viii) fees and expenses incident to the registration under federal
or state securities laws of the Funds or their shares; (ix) expenses of
preparing, printing and mailing reports and notices proxy material and
prospectuses to shareholders of the Funds; (x) all other expenses incidental to
holding meetings of the Funds' 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 Company and the legal obligations which the Company may
have to indemnify its officers and Directors with respect thereto; and (xiii)
all expenses which the Company or a Fund agrees to bear in any distribution
agreement or in any plan adopted by the Company and/or a Fund pursuant to Rule
12b-1 under the Act.
5. COMPENSATION OF THE ADVISOR
The Company agrees to pay the Advisor, out of the assets of the
relevant 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
relevant Fund as shown on Exhibit A attached hereto.
6. DURATION AND TERMINATION
(a) This Agreement shall go into effect as to each 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 Directors who are not parties to
this Agreement or "interested persons" (as defined in the Act) of any such party
case 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 Directors or by the vote
of the holders of a "majority" (as defined in the Act) of the outstanding voting
securities of such Fund.
(b) This Agreement may be terminated by the Advisor with respect to a
Fund at any time without penalty upon giving the Company sixty (60) days'
written notice (which notice may be waived by the Fund) and may be terminated by
the Company with respect to a Fund at any time without penalty upon giving the
Advisor sixty (60) days' written notice (which notice may be
EXHIBIT (D)(5)
--------------
waived by the Advisor), provided that such termination by the Company shall be
directed or approved by the vote of a majority of all of its Directors 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 such 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.
NORTH TRACK FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx, President
X.X. XXXXXXX AND COMPANY
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Xxxx X. Xxxxxxxx, Chief Executive
Officer
EXHIBIT (D)(5)
--------------
EXHIBIT A
---------
NORTH TRACK FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
1. DOW XXXXX DIVIDEND INCOME FUND
(a) Effective Date: Xxxxx 0, 0000
(x) Management Fee: The management fee for this Fund, calculated in
accordance with paragraph 5 of this Agreement, shall be at an annual rate of
0.55% on the first $100 million in average daily assets; 0.50% on the next $400
million in average daily assets; and 0.45% on average daily assets in excess of
$500 million.
