INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated as of July 26, 2000, between the Stockback Trust, a
Delaware business trust ("Trust"), and Stockback Advisers, LLC, a Delaware
limited liability company ("Adviser").
WHEREAS, the Trust is registered as an investment company under the
Investment Company Act of 1940, as amended ("Investment Company Act");
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
WHEREAS, the Trust is and will continue to be a series fund having one
or more investment portfolios, each with its own investment objectives,
investment policies and restrictions;
WHEREAS, the Investment Company Act prohibits any person from acting as
an investment adviser to a registered investment company except pursuant to a
written contract; and
WHEREAS, the Board of Trustees of the Trust wishes to appoint the
Adviser as the investment adviser of the Trust;
NOW, THEREFORE, the Trust and the Adviser hereby agree as follows:
1. APPOINTMENT OF ADVISER
The Trust hereby appoints the Adviser as the investment adviser for
each of the portfolios of the Trust specified in Appendix A to this Agreement,
as such Appendix A may be amended by the Adviser and the Trust from time to time
("Portfolios"), subject to the supervision of the Trustees of the Trust and in
the manner and under the terms and conditions set forth in this Agreement. The
Adviser accepts such appointment and agrees to render the services and to assume
the obligations set forth in this Agreement commencing on its effective date.
The Adviser will be an independent contractor and will have no authority to act
for or represent the Trust in any way or otherwise be deemed an agent unless
expressly authorized in this Agreement or another writing by the Trust and the
Adviser.
2. DUTIES OF THE ADVISER
A. Subject to the general supervision and control of the Trustees of
the Trust and under the terms and conditions set forth in this Agreement, the
Trust acknowledges and agrees that it is contemplated that the Adviser will, at
its own expense, select and contract with one or more investment sub-advisers
("Sub-advisers") to manage the investment operations and composition of each and
every Portfolio of the Trust and render investment advice for each Portfolio,
including the purchase, retention, and disposition of the investments,
securities and cash contained in each Portfolio, in accordance with each
Portfolio's investment objectives, policies and restrictions as stated in the
Trust's Amended and Restated Trust Instrument, By-Laws, and such Portfolio's
Prospectus and Statement of Additional Information ("SAI"), as is from time to
time in effect; provided, that any contract with a Sub-adviser (a "Subadvisory
Agreement") shall be in compliance with and approved as required by the
Investment Company Act or in accordance with exemptive relief granted by the
Securities and Exchange Commission ("SEC") under the Investment Company Act.
B. Subject always to the direction and control of the Trustees of the
Trust, the Adviser will have (i) overall supervisory responsibility for the
general management and investment of each Portfolio's assets; (ii) full
discretion to recommend to the Trustees of the Trust the selection of new or
additional Sub-advisers for each Portfolio; (iii) full discretion to recommend
to the Trustees of the Trust the entering into and material modification of
existing Subadvisory Agreements with Sub-advisers; (iv) full discretion to
recommend to the Trustees of the Trust the termination and replacement of any
Sub-adviser; and (v) full investment discretion to make all determinations with
respect to the investment of a Portfolio's assets not then managed by a
Sub-adviser. In connection with the Adviser's responsibilities herein, the
Adviser will assess each Portfolio's investment focus and will seek to implement
decisions with respect to the allocation and reallocation of each Portfolio's
assets among one or more current or additional Sub-advisers from time to time,
as the Adviser deems appropriate, to enable each Portfolio to achieve its
investment goals. In addition, the Adviser will monitor compliance of each
Sub-adviser with the investment objectives, policies and restrictions of any
Portfolio or Portfolios (or portions of any Portfolio) under the management of
such Sub-adviser, and review and report to the Trustees of the Trust on the
performance of each Sub-adviser. The Adviser will furnish, or cause the
appropriate Sub-adviser(s) to furnish, to the Trust such statistical
information, with respect to the investments that a Portfolio (or portions of
any Portfolio) may hold or contemplate purchasing, as the Trust may reasonably
request. On the Adviser's own initiative, the Adviser will apprise, or cause the
appropriate Sub-adviser(s) to apprise, the Trust of important developments
materially affecting each Portfolio (or any portion of a Portfolio that they
advise) and will furnish the Trust, from time to time, with such information as
may be appropriate for this purpose. Further, the Adviser agrees to furnish, or
cause the appropriate Sub-adviser(s) to furnish, to the Trustees of the Trust
such periodic and special reports as the Trustees of the Trust may reasonably
request. In addition, the Adviser agrees to cause the appropriate Sub-adviser(s)
to furnish to third-party data reporting services all currently available
standardized performance information and other customary data.
C. The Adviser will also furnish to the Trust, at its own expense and
without renumeration from or other cost to the Trust, the following:
(i) Office Space. The Adviser will provide office space in the
offices of the Adviser or in such other place as may be reasonably agreed upon
by the parties hereto from time to time, and all necessary office facilities and
equipment;
(ii) Personnel. The Adviser will provide necessary executive and
other personnel, including personnel for the performance of clerical and other
office functions, exclusive of those functions: (a) related to and to be
performed under the Trust's contract or contracts for administration, custodial,
accounting, bookkeeping, transfer, and dividend disbursing agency or similar
services by any entity, including the Adviser or its affiliates, selected to
perform such services under such contracts; and (b) related to the services to
be provided by any Sub-adviser pursuant to a Subadvisory Agreement; and
(iii)Preparation of Prospectus and Other Documents. The Adviser will
provide other information and services, other than services of outside counsel
or independent accountants or services to be provided by any Sub-adviser under
any Subadvisory Agreement, required in connection with the preparation of all
registration statements and Prospectuses, prospectus supplements, SAIs, all
annual, semiannual, and periodic reports to shareholders of the Trust,
regulatory authorities, or others, and all notices and proxy solicitation
materials, furnished to shareholders of the Trust or regulatory authorities, and
all tax returns.
D. Limitations on Liability. The Adviser will exercise its best
judgment in rendering its services to the Trust, and the Trust agrees, as an
inducement to the Adviser's undertaking to do so, that the Adviser will not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the matters to which this Agreement relates, but
will be liable only for willful misconduct, bad faith, gross negligence,
reckless disregard of its duties or its failure to exercise due care in
rendering its services to the Trust as specified in this Agreement. Any person,
even though an officer, director, employee or agent of the Adviser, who may be
or become an officer, Trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or when acting on any business of the
Trust, to be rendering such services to or to be acting solely for the Trust and
not as an officer, director, employee or agent, or one under the control or
direction of the Adviser, even though paid by it.
E. Section 11 of the Securities Exchange Act of 1934, as amended. The
Trust hereby agrees that any entity or person associated with the Adviser that
is a member of a national securities exchange is authorized to effect any
transaction on such exchange for the account of a Portfolio to the extent and as
permitted by Section 11(a)(1)(H) of the Securities Exchange Act of 1934, as
amended ("1934 Act").
F. Section 28(e) of the 1934 Act. Subject to the appropriate policies
and procedures approved by the Board of Trustees, the Adviser may, to the extent
authorized by Section 28(e) of the 1934 Act, cause a Portfolio to pay a broker
or dealer that provides brokerage or research services to the Adviser, a
Sub-adviser to that Portfolio, the Trust and the Portfolio 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 is reasonable in relationship to the value of such brokerage or
research services provided in terms of that particular transaction or the
Adviser's overall responsibilities to the Portfolio, the Trust or its other
investment advisory clients. To the extent authorized by said Section 28(e) and
the Board of Trustees, 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 such action. In addition, subject to seeking the most favorable price
and best execution available and in compliance with the Conduct Rules of the
National Association of Securities Dealers, Inc., the Adviser may also consider
sales of shares of the Trust as a factor in the selection of brokers and
dealers.
G. Directed Brokerage. Subject to the requirement to seek best price
and execution, and to the appropriate policies and procedures approved by the
Board of Trustees, the Trust reserves the right to direct the Adviser to cause
Sub-advisers to effect transactions in portfolio securities through
broker-dealers in a manner that will help generate resources to: (i) pay the
cost of certain expenses which the Trust is required to pay or for which the
Trust is required to arrange payment pursuant to Section 3.B. of this Agreement
("Trust Expenses"); or (ii) finance activities that are primarily intended to
result in the sale of Trust shares. At the discretion of the Board of Trustees,
such resources may be used to pay or cause the payment of Trust Expenses or may
be used to finance activities that are primarily intended to result in the sale
of Trust shares.
3. ALLOCATION OF EXPENSES
A. Expenses Paid by the Adviser:
(i) Salaries, Expenses and Fees of Certain Persons. The Adviser (or
its affiliates) shall pay all salaries, expenses, and fees of the Trustees and
officers of the Trust who are officers, directors/trustees, partners, or
employees of the Adviser or its affiliates; and
(ii) Assumption of Trust Expenses. The payment or assumption by the
Adviser of any expense of the Trust that the Adviser is not required by this
Agreement to pay or assume shall not obligate the Adviser to pay or assume the
same or any similar expense of the Trust on any subsequent occasion.
B. Expenses Paid by the Trust: The Trust will pay all expenses of its
organization, operations, and business not specifically assumed or agreed to be
paid by the Adviser, as provided in this Agreement, or by an Adviser, as
provided in an Advisory Agreement. Without limiting the generality of the
foregoing, the Trust shall pay or arrange for the payment of the following:
(i) Preparing, Printing and Mailing of Certain Documents. The costs
of preparing, setting in type, printing and mailing of Prospectuses, Prospectus
supplements, SAIs, annual, semiannual and periodic reports, and notices and
proxy solicitation materials required to be furnished to shareholders of the
Trust or regulatory authorities, and all tax returns;
(ii) Officers and Trustees. Compensation of the officers and Trustees
of the Trust who are not officers, directors/trustees, partners or employees of
the Adviser or its affiliates;
(iii) Registration Fees and Expenses. All legal and other fees and
expenses incurred in connection with the affairs of the Trust, including those
incurred with respect to registering its shares with regulatory authorities and
all fees and expenses incurred in connection with the preparation, setting in
type, printing, and filing with necessary regulatory authorities of any
registration statement and Prospectus, and any amendments or supplements that
may be made from time to time, including registration, filing and other fees in
connection with requirements of regulatory authorities;
(iv) Custodian and Accounting Services. All expenses of the transfer,
receipt, safekeeping, servicing and accounting for the Trust's cash, securities,
and other property, including all charges of depositories, custodians, and other
agents, if any;
(v) Independent Legal and Accounting Fees and Expenses. The charges
for the services and expenses of the independent accountants and legal counsel
retained by the Trust, for itself or its Independent Trustees (as defined
herein);
(vi) Transfer Agent. The charges and expenses of maintaining
shareholder accounts, including all charges of transfer, bookkeeping, and
dividend disbursing agents appointed by the Trust;
(vii) Brokerage Commissions. All brokers' commissions and issue and
transfer taxes chargeable to the Trust in connection with securities
transactions to which the Trust is a party;
(viii) Taxes. All taxes and corporate fees payable by or with respect
to the Trust to federal, state, or other governmental agencies;
(ix) Trade Association Fees. Any membership fees, dues or expenses
incurred in connection with the Trust's membership in any trade association or
similar organizations;
(x) Bonding and Insurance. All insurance premiums for fidelity and
other coverage;
(xi) Shareholder and Board Meetings. All expenses incidental to
holding shareholders and Trustees meetings, including the printing of notices
and proxy materials and proxy solicitation fees and expenses;
(xii) Pricing. All expenses of pricing of the net asset value per
share of each Portfolio, including the cost of any equipment or services to
obtain price quotations; and
(xiii) Nonrecurring and Extraordinary Expenses. Such extraordinary
expenses, such as indemnification payments or damages awarded in litigation or
settlements made.
4. COMPENSATION OF ADVISER
For its services performed hereunder, the Trust will pay the Adviser
with respect to each Portfolio the compensation specified in Appendix B to this
Agreement. Such compensation shall be paid to the Adviser by the Trust on the
first day of each month, in arrears; however, the Trust will calculate this
charge on the daily average value of the assets of each Portfolio and accrue it
on a daily basis.
5. NON-EXCLUSIVITY
The services of the Adviser to the Trust are not to be deemed to be
exclusive, and the Adviser shall be free to render investment management,
advisory or other services to others (including other investment companies) and
to engage in other activities so long as the services provided hereunder by the
Adviser are not impaired. It is understood and agreed that the directors,
officers and employees of the Adviser are not prohibited from engaging in any
other business activity or from rendering services to any other person, or from
serving as partners, officers, directors/trustees, or employees of any other
firm or corporation, including other investment companies.
6. SUPPLEMENTAL ARRANGEMENTS
The Adviser may enter into arrangements with its parent or other
persons affiliated or unaffiliated with the Adviser for the provision of certain
personnel and facilities to the Adviser to enable the Adviser to fulfill its
duties and obligations under this Agreement.
7. REGULATION
The Adviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports, or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. RECORDS
The records relating to the services provided under this Agreement
shall be the property of the Trust and shall be under its control; however, the
Trust shall furnish to the Adviser such records and permit it to retain such
records (either in original or in duplicate form) as it shall reasonably require
in order to carry out its duties. In the event of the termination of this
Agreement, such records shall promptly be returned to the Trust by the Adviser
free from any claim or retention of rights therein. The Adviser shall keep
confidential any information obtained in connection with its duties hereunder
and disclose such information only if the Trust has authorized such disclosure
or if such disclosure is expressly required or lawfully requested by applicable
federal or state regulatory authorities.
9. DURATION OF AGREEMENT
This Agreement, as amended and restated, shall become effective for
each Portfolio on the date indicated in Appendix A. Further amendments to this
Agreement shall become effective on the later of the date specified in such
amendment (after execution by all parties) or the date of any meeting of the
shareholders of the Trust relating to such amendment, which for these purposes
may be the sole initial shareholder of the Trust, at which meeting this
Agreement is approved by the vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act) of the Portfolios. The
Agreement will continue in effect for a period more than one year from the date
of its execution only so long as such continuance is specifically approved at
least annually either by (i) the Trustees of the Trust or (ii) by the vote of
either a majority of the outstanding voting securities of the Trust or, as
appropriate, a majority of the outstanding voting securities of any affected
Portfolio, provided that, in either event, such continuance shall also be
approved by the vote of a majority of the Trustees of the Trust who are not
"interested persons" ("Independent Trustees") of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval.
The required shareholder approval of the Agreement or of any continuance of the
Agreement shall be effective with respect to any affected Portfolio if a
"majority of the outstanding voting securities" (as defined in Rule 18f-2(h)
under the Investment Company Act) of the affected Portfolio votes to approve the
Agreement or its continuance, notwithstanding that the Agreement or its
continuance may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the Agreement or (b) all the
Portfolios of the Trust.
If the shareholders of any Portfolio fail to approve the Agreement or
any continuance of the Agreement, the Adviser will continue to act as investment
adviser with respect to such Portfolio pending the required approval of the
Agreement or its continuance or of a new contract with the Adviser or a
different investment manager or other definitive action; provided, that the
compensation received by the Adviser in respect of such Portfolio during such
period will be no more than its actual costs incurred in furnishing investment
advisory and management services to such Portfolio or the amount it would have
received under the Agreement in respect of such Portfolio, whichever is less.
10. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees, including a majority of the Independent Trustees
of the Trust, by the vote of a majority of the outstanding voting securities of
the Trust, or with respect to any affected Portfolio, by the vote of a majority
of the outstanding voting securities of such Portfolio, on sixty (60) days'
written notice to the Adviser, or by the Adviser on sixty (60) days' written
notice to the Trust. This Agreement will automatically terminate, without
payment of any penalty, in the event of its assignment.
11. PROVISION OF CERTAIN INFORMATION BY ADVISER
The Adviser will promptly notify the Trust in writing of the occurrence
of any of the following events:
A. The Adviser fails to be registered as an investment adviser under
the Advisers Act or under the laws of any jurisdiction in which the Adviser is
required to be registered as an investment adviser in order to perform its
obligations under this Agreement;
B. The Adviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before or by
any court, public board or body, involving the affairs of the Trust; and/or
C. The chief executive officer or controlling stockholder of the
Adviser or the portfolio manager of any Portfolio changes or there is otherwise
an actual change in control or management of the Adviser.
12. AMENDMENTS TO THE AGREEMENT
Except to the extent permitted by the Investment Company Act or the
rules or regulations thereunder or pursuant to any exemptive relief granted by
the SEC, this Agreement may be amended by the parties only if such amendment, if
material, is specifically approved by the vote of a majority of the outstanding
voting securities of each of the Portfolios affected by the amendment (unless
such approval is not required by Section 15 of the Investment Company Act as
interpreted by the SEC or its staff or unless the SEC has granted an exemption
from such approval requirement) and by the vote of a majority of the Independent
Trustees of the Trust cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Portfolio if a majority of the outstanding voting securities
of the [series of] shares of that Portfolio vote to approve the amendment,
notwithstanding that the amendment may not have been approved by a majority of
the outstanding voting securities of (a) any other Portfolio affected by the
amendment or (b) all the Portfolios of the Trust.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
15. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or the
Adviser in person or by registered mail or a private mail or delivery service
providing the sender with notice of receipt. Notice shall be deemed given on the
date delivered or mailed in accordance with this section.
16. FORCE MAJEURE
The Adviser shall not be liable for delays or errors occurring by
reason of circumstances beyond its control, including but not limited to acts of
civil or military authority, national emergencies, work stoppages, fire, flood,
catastrophe, acts of God, insurrection, war, riot, or failure of communication
or power supply. In the event of equipment breakdowns beyond its control, the
Adviser shall take reasonable steps to minimize service interruptions but shall
have no liability with respect thereto.
17. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
18. INTERPRETATION
Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Amended and Restated Trust Instrument or By-Laws, or
any applicable statutory or regulatory requirements to which it is subject or by
which it is bound, or to relieve or deprive the Trustees of their responsibility
for and control of the conduct of the affairs of the Trust.
19. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York (without giving effect to its
conflict of laws principles), or any of the applicable provisions of the
Investment Company Act. To the extent that the laws of the State of New York, or
any of the provisions in this Agreement, conflict with applicable provisions of
the Investment Company Act, the latter shall control. 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 Investment Company Act
shall be resolved by reference to such term or provision of the Investment
Company Act and to interpretations thereof, if any, by the United States courts
or, in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC validly issued pursuant to the Investment
Company Act. Specifically, the terms "vote of a majority of the outstanding
voting securities," "interested persons," "assignment," and "affiliated
persons," as used herein shall have the meanings assigned to them by Section
2(a) of the Investment Company Act unless otherwise stated herein. In addition,
where the effect of a requirement of the Investment Company Act reflected in any
provision of this Agreement is relaxed by a rule, regulation or order of the
SEC, whether of special or of general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first mentioned above.
THE STOCKBACK TRUST
By:/s/ Xxxxxx X. Xxxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
STOCKBACK ADVISERS, LLC
By:/s/ C. Xxxx Xxxxxx
------------------------
C. Xxxx Xxxxxx
Chief Operating Officer
APPENDIX A
TO THE
INVESTMENT ADVISORY AGREEMENT
Portfolio
Stockback Fund
Date: July 26, 0000
XXXXXXXX X
The Trust shall pay the Adviser, at the end of each calendar month,
compensation computed daily at an annual rate equal to the following, provided
however, the Adviser has contractually agreed to waive its management fee for a
period of one year from the date of effectiveness of the Trust's registration
statement.
Portfolio Fee
Stockback Fund 0.55%
Date: July 26, 2000
