INVESTMENT ADVISORY AGREEMENT
IAA TRUST TAXABLE FIXED INCOME SERIES FUND, INC.
(Long-Term Bond Series)
AGREEMENT, effective commencing on October 1, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ Trust Company,
an Illinois corporation, (the "Adviser") and IAA Trust Taxable Fixed Income
Series Fund, Inc., a Maryland corporation, IAA Trust Long-Term Bond Series (the
"Fund").
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end, diversified management investment
company.
WHEREAS, the Fund wishes to retain the Adviser to render investment advisory
services to the Fund with respect to the capital received from the sale of the
Fund's IAA Trust Long-Term Bond Fund Common Stock, and the Adviser is willing to
furnish such services to the Fund;
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Fund and the Adviser as follows:
1. Appointment. The Fund hereby appoints the Adviser to act as investment
adviser to the Fund for the periods and on the terms set forth in this
Agreement with respect to the capital received from the sale of the Fund's
IAA Trust Long-Term Bond Fund Common Stock. The Adviser accepts such
appointment and agrees to furnish the services herein set forth, for the
compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the Directors of
the Fund, the Adviser will (a) provide a program of continuous investment
management for the Fund in accordance with the Fund's investment
objectives, policies and limitations as stated in the Fund's Prospectus
and Statement of Additional Information included as part of the Fund's
Registration Statement filed with the Securities and Exchange Commission
("SEC"), as they may be amended from time to time, copies of which shall
be provided to the Adviser by the Fund; (b) make investment decisions for
the Fund; and (c) place orders to purchase and sell securities for the
Fund.
In performing its investment management services to the Fund hereunder,
the Adviser will provide the Fund with ongoing investment guidance and
policy direction, including oral and written research, analysis, advice,
statistical and economic data and judgments regarding individual
investments, general economic conditions and trends and long-range
investment policy. The Adviser will determine the securities, instruments,
repurchase agreements, options and other investments and techniques that
the Fund will purchase, sell, enter into or use, and will provide an
ongoing evaluation of the Fund's portfolio. The Adviser will determine
what portion of the Fund's portfolio shall be invested in securities and
other assets, and what portion if any, should be held uninvested.
The Adviser further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Act and all rules and regulations thereunder,
the Internal Revenue Code (the "Code") and all other applicable
federal and state laws and regulations, and with any applicable
procedures adopted by the Directors, including, but not limited to,
the Fund's Code of Ethics;
(b) use reasonable efforts to manage the Fund so that it will qualify,
and continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for the Fund
directly with the issuer, or with any broker or dealer, in
accordance with applicable policies expressed in the Fund's
Prospectus and/or Statement of Additional Information and in
accordance with applicable legal requirements;
(d) furnish to the Fund whatever statistical information the Fund may
reasonably request with respect to the Fund's assets or contemplated
investments. In addition, the Adviser will keep the Fund and the
Directors informed of developments materially affecting the Fund's
portfolio and shall, on the Adviser's own initiative, furnish to the
Fund from time to time whatever information the Adviser believes
appropriate for this purpose;
(e) make available to the Fund's administrator, Fund/Plan Services, Inc.
(the "Administrator"), and the Fund, promptly upon their request,
such copies of its investment records and ledgers with respect to
the Fund as may be required to assist the Administrator and the Fund
in their compliance with applicable laws and regulations. The
Adviser will furnish the Directors with such periodic and special
reports regarding the Fund as they may reasonably request;
(f) immediately notify the Fund in the event that the Adviser or any of
its affiliates (1) becomes aware that it is subject to a statutory
disqualification that prevents the Adviser from serving as
investment adviser pursuant to this Agreement; or (2) becomes aware
that it is the subject of an administrative proceeding or
enforcement action by the SEC or other regulatory authority. The
Adviser further agrees to notify the Fund immediately of any
material fact known to the Adviser respecting or relating to the
Adviser that is not contained in the Fund's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but that
is required to be disclosed thereon, and of any statement contained
therein that becomes untrue in any material respect.
3. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this Section 3, the Adviser shall pay the compensation and
expenses, including office expenses, of all its directors, officers and
employees who serve as directors, officers and employees of the Fund
(including the Fund's share of payroll taxes), and the Adviser shall make
available, without expense to the Fund, the service of its directors,
officers and employees who may be duly elected directors and officers of
the Fund, subject to their individual consent to serve and to any
limitations imposed by law.
The Adviser shall not be required to pay any expenses of the Fund other
than those specifically allocated to the Adviser in this Section 3. In
particular, but without limiting the generality of the foregoing, the
Adviser shall not be responsible, except to the extent of the reasonable
compensation of such of the Fund's employees as are directors, officers or
employees of the Adviser whose services may be involved, for
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the following expenses of the Fund: organization and certain offering
expenses of the Fund (including out-of-pocket expenses, but not including
the Adviser's overhead and employee costs); fees payable to the Adviser
and to any other Fund advisers or consultants; legal expenses, auditing
and accounting expenses; interest expenses; telephone, telex, facsimile,
postage and other communications expenses; taxes and governmental fees;
fees, dues and expenses incurred by or with respect to the Fund in
connection with membership in investment company trade organizations; cost
of insurance relating to fidelity coverage for the Fund's directors,
officers and employees, fees and expenses of the Fund's Administrator or
of any custodian, subcustodian, transfer agent, registrar, or dividend
disbursing agent of the Fund; payments to the Administrator for
maintaining the Fund's financial books and records and calculating its
daily net asset value; other payments for portfolio pricing or valuation
services to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates; other expenses in
connection with the issuance, offering, distribution or sale of securities
issued by the Fund; expenses relating to investor and public relations;
expenses of registering and qualifying shares of the Fund for sale;
freight, insurance and other charges in connection with the shipment of
the Fund's portfolio securities; brokerage commissions or other costs of
acquiring or disposing of any portfolio securities or other assets of the
Fund, or of entering into other transactions or engaging in any investment
practices with respect to the Fund; expenses of printing and distributing
Prospectuses, Statements of Additional Information, reports, notices and
dividends to stockholders; costs of stationery; any litigation expenses;
costs of stockholders' and other meetings; the compensation and all
expenses (specifically including travel expenses relating to the Fund's
business) of officers, directors and employees of the Fund who are not
officers, directors, employees, or otherwise interested persons of the
Adviser.
4. Compensation. As compensation for the services provided and expenses
assumed by the Adviser under this Agreement, the Fund will pay the Adviser
on the tenth day of each calendar month an advisory fee computed daily at
an annual rate equal to 3/4 of 1% of the Fund's average daily net assets.
The value of net assets of the Fund shall always be determined pursuant to
the applicable provisions of the Articles, the Registration Statement and
the 1940 Act. If the determination of net asset value is suspended for any
particular business day, then for the purposes of this Section 4, the
value of the net assets of the Fund as last determined shall be deemed to
be the value of its net assets for that day. If the determination of the
net asset value of the shares of the Fund has been so suspended for a
period including any month end when the Adviser's compensation is payable
at the end of such month, then such compensation shall be computed on the
basis of the value of the net assets of the Fund as last determined
(whether during or prior to such month). If the Fund determines the value
of the net assets of its portfolio more than once on any day, then the
last such determination thereof on that day shall be deemed to be the sole
determination thereof on that day for the purposes of this Section 4.
5. Books and Records. The Adviser agrees to maintain such books and records
with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable
legal provisions, and to preserve such records for the periods and in the
manner required by that Section, and those rules and legal provisions. The
Adviser also agrees that records it maintains and preserves pursuant to
Rules 31a-1 and 31a-2 under the 1940 Act and otherwise
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in connection with its services hereunder are the property of the Fund and
will be surrendered promptly to the Fund upon its request. The Adviser
further agrees that it will furnish to regulatory authorities having the
requisite authority any information or reports in connection with its
services hereunder which may be requested in order to determine whether
the operations of the Fund are being conducted in accordance with
applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Adviser shall exercise
its best judgment in rendering the services provided by it under this
Agreement. The Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund or the holders of the
Fund's shares in connection with the matters to which this Agreement
relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect the Adviser against any liability to the
Fund or to holders of the Fund's shares to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or
negligence on its part in the performance of its duties or by reason of
the Adviser's reckless disregard of its obligations and duties under this
Agreement. As used in this Section 6, the term "Adviser" shall include any
officers, directors, employees, or other affiliates of the Adviser
performing services with respect to the Fund.
7. Services Not Exclusive. It is understood that the services of the Adviser
are not exclusive, and that nothing in this Agreement shall prevent the
Adviser from providing similar services to other investment companies or
to other series of investment companies, or from engaging in other
activities, provided such other services and activities do not, during the
term of this Agreement, interfere in a material manner with the Adviser's
ability to meet its obligations to the Fund hereunder. When the Adviser
recommends the purchase or sale of a security for other investment
companies and other clients, and at the same time the Adviser recommends
the purchase or sale of the same security for the Fund, it is understood
that in light of its fiduciary duty to the Fund, such transactions will be
executed on a basis that is fair and equitable to the Fund. In connection
with purchases or sales of portfolio securities for the account of the
Fund, neither the Adviser nor any of its directors, officers or employees
shall act as a principal or agent or receive any commission. If the
Adviser provides any advice to its clients concerning the shares of the
Fund, the Adviser shall act solely as investment counsel for such clients
and not in any way on behalf of the Fund.
8. Duration and Termination. This Agreement shall continue through September
30, 1997, and thereafter shall continue automatically for successive
annual periods, provided such continuance is specifically approved at
least annually by (i) the Directors or (ii) a vote of a "majority" (as
defined in the ▇▇▇▇ ▇▇▇) of the Fund's outstanding voting securities (as
defined in the 1940 Act), provided that in either event the continuance is
also approved by a majority of the Directors who are not "interested
persons" (as defined in the ▇▇▇▇ ▇▇▇) of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. Notwithstanding the foregoing, this Agreement may be terminated:
(a) at any time without penalty by the Fund upon the vote of a majority of
the Directors or by vote of the majority of the Fund's outstanding voting
securities, upon sixty (60) days' written notice to the Adviser or (b) by
the Adviser at any time without penalty, upon sixty (60)
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days' written notice to the Fund. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act).
9. Amendments. 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, and no amendment of this Agreement
shall be effective until approved by an affirmative vote of (i) a majority
of the outstanding voting securities of the Fund, and (ii) a majority of
the Directors, including a majority of Directors 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, if such approval is required
by applicable law.
10. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of
Illinois, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act or rules or orders of the SEC
thereunder.
(b) The captions of this Agreement are included for convenience only and
in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
(c) 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 and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
(d) Nothing herein shall be construed as constituting the Adviser as an
agent of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of September _____, 1996.
IAA TRUST TAXABLE FIXED INCOME
SERIES FUND, INC.
By:_____________________________________
President
IAA TRUST COMPANY
By:_____________________________________
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Executive Vice President
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