MP 63 FUND, INC.
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT is made as of the _____ day
of _________, 1998, by and between MP 63 FUND, INC., a Maryland corporation
(hereinafter called the "Fund") and The Moneypaper Advisor, Inc., a New York
corporation (hereinafter called the "Adviser").
WITNESSETH:
WHEREAS, the Fund is an open-end management investment
company, registered as such under the Investment Company Act of 1940 (the
"Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940 and is engaged in the business of
providing investment advice to investment companies; and
WHEREAS, the Fund desires to retain the Adviser to render
advice and services to it pursuant to the terms and provisions of this
Agreement, and the Adviser desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the
mutual promises hereinafter set forth, the parties to this Agreement, intending
to be legally bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISER. The Fund hereby employs the Adviser and the Adviser
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hereby accepts such employment, to render investment advice and related services
with respect to the assets of the Fund for the period and on the terms set forth
in this Agreement, subject to the supervision and direction of the Board of
Directors.
2. DUTIES OF ADVISER.
(1) GENERAL DUTIES. The Adviser shall act as investment adviser to the
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Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objective, policies and restrictions of the Fund
as set forth in the Fund's governing documents, including, without limitation,
the Fund's Articles of Incorporation and By-Laws; the prospectus and statement
of additional information; and such other limitations, policies and procedures
as the Directors may impose from time to time in writing to the Adviser. In
providing such services, the Adviser shall at all times adhere to the provisions
and restrictions contained in the federal securities laws, applicable state
securities laws, the Internal Revenue Code, the Uniform Commercial Code and
other applicable law.
Without limiting the generality of the foregoing, the Adviser shall: (i)
furnish the Fund with advice and recommendations with respect to the investment
of the Fund's assets and the purchase and sale of portfolio securities for the
Fund, including the taking of such steps as may be necessary to implement such
advice and recommendations (I.E., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Board of Directors; (iii) vote proxies for the Fund, file ownership
reports under Section 13 of the Securities Exchange Act of 1934 for the Fund,
and take other actions on behalf of the Fund; (iv) maintain the books and
records required to be maintained by the Fund except to the extent arrangements
have been made for such books and records to be maintained by American Data
Services, Inc. (the "Administrator") or another agent of the Fund; (v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets which the Board of
Directors or the officers of the Fund may reasonably request; and (vi) render to
the Board of Directors such periodic and special reports with respect to the
Fund's investment activities as the Board may reasonably request, including at
least one in-person appearance annually before the Board of Directors.
(2) BROKERAGE. The Adviser shall be responsible for decisions to buy and
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sell securities for the Fund, for broker-dealer selection, and for negotiation
of brokerage commission rates, provided that the Adviser shall not direct orders
to an affiliated person of the Adviser without general prior authorization to
use such affiliated broker or dealer from the Board of Directors. The Adviser's
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primary consideration in effecting a securities transaction will be execution at
the most favorable price. In selecting a broker-dealer to execute each
particular transaction, the Adviser may 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 Fund on a continuing basis. The price to the Fund 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 the Fund to pay a broker or dealer that provides (directly or indirectly)
brokerage or research services to the Adviser an amount of commission for
effecting a portfolio 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 Fund. The Adviser is
further authorized to allocate the orders placed by it on behalf of the Fund to
such brokers or dealers who also provide research or statistical material, or
other services, to the Fund, the Adviser, or any affiliate of either. Such
allocation shall be in such amounts and proportions as the Adviser shall
determine, and the Adviser shall report on such allocations regularly to the
Fund, indicating the broker-dealers to whom such allocations have been made and
the basis therefor. The Adviser is also authorized to consider sales of shares
as a factor in the selection of brokers or dealers to execute portfolio
transactions, subject to the requirements of best execution, I.E., that such
brokers or dealers are able to execute the order promptly and at the best
obtainable securities price.
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On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as of other clients (to the
extent that the Adviser may, in the future, have other clients), the Adviser, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
3. REPRESENTATIONS OF THE ADVISER.
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(1) The Adviser shall use its best judgment and efforts in rendering the
advice and services to the Fund as contemplated by this Agreement.
(2) The Adviser shall maintain all licenses and registrations necessary
to perform its duties hereunder in good order.
(3) The Adviser shall conduct its operations at all times in conformance
with the Investment Advisers Act of 1940, the Investment Company Act of 1940,
and any other applicable state and/or self-regulatory organization regulations.
4. INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be deemed
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to be an independent contractor, and shall, unless otherwise expressly provided
and authorized to do so, have no authority to act for or represent the Fund in
any way, or in any way be deemed an agent for the Fund. It is expressly
understood and agreed that the services to be rendered by the Adviser to the
Fund under the provisions of this Agreement are not to be deemed exclusive, and
the Adviser shall be free to render similar or different services to others so
long as its ability to render the services provided for in this Agreement shall
not be impaired thereby.
5. ADVISER'S PERSONNEL. The Adviser shall, at its own expense, maintain such
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staff and employ or retain such personnel and consult with such other persons as
it shall from time to time determine to be necessary to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Adviser shall be deemed to include
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persons employed or retained by the Adviser to furnish statistical information,
research, and other factual information, advice regarding economic factors and
trends, information with respect to technical and scientific developments, and
such other information, advice and assistance as the Adviser or the Board of
Directors may desire and reasonably request.
6. EXPENSES.
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(1) With respect to the operation of the Fund, the Adviser shall be
responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the investment management of the Fund, and (ii) the
costs of any special Board of Directors meetings or shareholder meetings
convened for the primary benefit of the Adviser. If the Adviser has agreed to
limit the operating expenses of the Fund, the Adviser shall also be responsible
on a monthly basis for any operating expenses that exceed the agreed upon
expense limitation.
(2) The Fund is responsible for and has assumed the obligation for
payment of all of its expenses, other than as stated in Subparagraph 6(a) above,
including but not limited to: investment advisory and administrative fees
payable to the Adviser or the Administrator under the appropriate agreements
entered into with the Adviser or the Administrator, as the case may be; fees and
expenses incurred in connection with the issuance, registration and transfer of
its shares; brokerage and commission expenses; all expenses of transfer,
receipt, safekeeping, servicing and accounting for the cash, securities and
other property of the Fund including all fees and expenses of its custodian,
shareholder services agent and accounting services agent, to the extent not
already covered under the Fund's Administrative Services Agreement with the
Administrator; interest charges on any borrowings; costs and expenses of pricing
and calculating its daily net asset value and of maintaining its books of
account required under the Investment Company Act, to the extent not already
covered under the Administrative Services Agreement; taxes, if any; a pro rata
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portion of expenditures in connection with meetings of the Fund's shareholders
and Board of Directors that are properly payable by the Fund; salaries and
expenses of officers and fees and expenses of members of the Board of Directors
or members of any advisory board or committee who are not members of, affiliated
with or interested persons of the Adviser or the Administrator; insurance
premiums on property or personnel of the Fund which inure to its benefit,
including liability and fidelity bond insurance; the cost of preparing and
printing reports, proxy statements, prospectuses and statements of additional
information of the Fund or other communications for distribution to existing
shareholders, to the extent not already covered under the Administrative
Services Agreement; legal, auditing and accounting fees; trade association dues;
fees and expenses (including legal fees) of registering and maintaining
registration of its shares for sale under federal and applicable state and
foreign securities laws; all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit of the Fund,
to the extent not already covered under the Administrative Services Agreement;
and all other charges and costs of its operation plus any extraordinary and
non-recurring expenses, except as herein otherwise prescribed or, to the extent
covered under the Administrative Services Agreement.
(3) The Adviser may voluntarily absorb certain Fund expenses or waive the
Adviser's own advisory fee. (1)
(4) To the extent the Adviser incurs any costs by assuming expenses which
are an obligation of the Fund as set forth herein, the Fund shall promptly
reimburse the Adviser for such costs and expenses, except to the extent the
Adviser has otherwise agreed to bear such expenses. To the extent the services
for which the Fund is obligated to pay are performed by the Adviser, the Adviser
shall be entitled to recover from the Fund to the extent of the Adviser's actual
costs for providing such services. In determining the Adviser's actual costs,
the Adviser may take into account an allocated portion of the salaries and
overhead of personnel performing such services.
7. INVESTMENT ADVISORY FEE.
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(1) The Fund shall pay to the Adviser, and the Adviser agrees to accept, as full
compensation for all investment and advisory services furnished or provided to
the Fund pursuant to this Agreement, an annual investment advisory fee at the
rate set forth in Schedule A to this Agreement.
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(2) The investment advisory fee shall be accrued daily by the Fund and
paid to the Adviser on the first business day of the succeeding month.
(3) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Adviser shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(4) The fee payable to the Adviser under this Agreement will be reduced
to the extent of any receivable owed by the Adviser to the Fund and as required
under any expense limitation applicable to the Fund.
(5) The Adviser voluntarily may reduce any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement and may agree to
make payments to limit the expenses which are the responsibility of the Fund
under this Agreement. Any such reduction or payment shall be applicable only to
such specific reduction or payment and shall not constitute an agreement to
reduce any future compensation or reimbursement due to the Adviser hereunder or
to continue future payments. Any such reduction will be agreed to prior to
accrual of the related expense or fee and will be estimated daily and reconciled
and paid on a monthly basis.
(6) Any fee withheld or voluntarily reduced and any Fund expense absorbed
by the Adviser voluntarily or pursuant to an agreed upon expense cap shall be
reimbursed by the Fund to the Adviser, if so requested by the Adviser, no later
than the fifth fiscal year succeeding the fiscal year of the withholding,
reduction or absorption if the aggregate amount actually paid by the Fund toward
the operating expenses for such fiscal year (taking into account the
reimbursement) do not exceed the applicable limitation on Fund expenses. Such
reimbursement may be paid prior to the Fund's payment of current expenses if so
requested by the Adviser even if such practice may require the Adviser to waive,
reduce or absorb current Fund expenses.
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(7) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
8. NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of its
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officers or employees shall take any short position in the shares of the Fund.
This prohibition shall not prevent the purchase of such shares by any of the
officers or employees of the Adviser or any trust, pension, profit-sharing or
other benefit plan for such persons or affiliates thereof, at a price not less
than the net asset value thereof at the time of purchase, as allowed pursuant to
rules promulgated under the Investment Company Act. The Adviser agrees that
neither it nor any of its officers or employees shall borrow from the Fund or
pledge or use the Fund's assets in connection with any borrowing not directly
for the Fund's benefit. For this purpose, failure to pay any amount due and
payable to the Fund for a period of more than thirty (30) days shall constitute
a borrowing.
9. CONFLICTS WITH THE FUND'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
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herein contained shall be deemed to require the Fund to take any action contrary
to its Articles of Incorporation, By-Laws, or any applicable statute or
regulation, or to relieve or deprive the Board of Directors of its
responsibility for and control of the conduct of the affairs of the Fund. In
this connection, the Adviser acknowledges that the Directors retain ultimate
plenary authority over the Fund and may take any and all actions necessary and
reasonable to protect the interests of shareholders.
10. REPORTS AND ACCESS. The Adviser agrees to supply such information to the
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Administrator and to permit such compliance inspections by the Administrator as
shall be reasonably necessary to permit the Administrator to satisfy its
obligations and respond to the reasonable requests of the Directors.
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11. ADVISER'S LIABILITIES AND INDEMNIFICATION.
(1) The Adviser shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of the statements in the
Fund's offering materials (including the prospectus, the statement of additional
information, advertising and sales materials), except for information supplied
by the Administrator or the Fund or another third party for inclusion therein.
(2) The Adviser shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Adviser.
(3) In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties hereunder on the part of the
Adviser, the Adviser shall not be subject to liability 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 by the Fund.
(4) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, directors, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any duties under this Agreement
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties under this Agreement.
(5) No provision of this Agreement shall be construed to protect any
Director or officer of the Fund, or officer of the Adviser, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
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12. NON-EXCLUSIVITY; TRADING FOR ADVISER'S OWN ACCOUNT. The Fund's
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employment of the Adviser is not an exclusive arrangement. The Fund may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Adviser may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from having, 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 Adviser expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that the Adviser will adhere to a code of ethics
governing employee trading and trading for proprietary accounts that conforms to
the requirements of the Investment Company Act and the Investment Advisers Act
of 1940 and has been approved by the Fund's Board of Directors.
13. TERM. This Agreement shall become effective at the time the Fund
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commences operations pursuant to an effective amendment to the Fund's
Registration Statement under the Securities Act of 1933 and shall remain in
effect for a period of two (2) years, unless sooner terminated as hereinafter
provided. This Agreement shall continue in effect thereafter for additional
periods not exceeding one (1) year so long as such continuation is approved for
the Fund at least annually by (i) the Board of Directors or by the vote of a
majority of the outstanding voting securities of the Fund and (ii) the vote of a
majority of the Directors of the Fund who are not parties to this Agreement nor
interested persons thereof, cast in person at a meeting called for the purpose
of voting on such approval. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
Investment Company Act.
14. TERMINATION; NO ASSIGNMENT.
(1) This Agreement may be terminated by the Fund at any time without
payment of any penalty, by the Board of Directors or by vote of a majority of
the outstanding voting securities of the Fund, upon sixty (60) days' written
notice to the Adviser, and by the Adviser upon sixty (60) days' written notice
to the Fund. In the event of a termination, the Adviser shall cooperate in the
orderly transfer of the Fund's affairs and, at the request of the Board of
Directors, transfer any and all books and records of the Fund maintained by the
Adviser on behalf of the Fund.
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(2) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
15. SEVERABILITY. If any provision of this Agreement shall be held or
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made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
16. CAPTIONS. The captions in this Agreement are included for convenience
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of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and construed in
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accordance with, the laws of the State of New York without giving effect to the
conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act of
1940 and any rules and regulations promulgated thereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
MP 63 FUND, INC. THE MONEYPAPER ADVISOR, INC.
By: By:
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Name: Name:
Title: Title:
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Schedule A
ANNUAL FEE RATE
MP 63 Fund, Inc. 0.35% of average daily net assets
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