INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of August 13, 2002 between THE BLUE AND WHITE FUNDS
TRUST, a Delaware business trust (the "Fund" or the "Trust"), and BLUE AND WHITE
INVESTMENT MANAGEMENT, LLC ("the Adviser"), a Delaware limited liability company
registered, and which will remain registered for the term of the Agreement, as
an investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act").
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a management investment company and desires to
retain the Adviser as investment adviser to furnish certain investment advisory
and portfolio management services to the Fund, and the Adviser is willing to
furnish these services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Adviser as investment adviser
of the Fund for the period and on the terms set forth in this Agreement. The
Adviser accepts this appointment and agrees to render the services herein set
forth, for the compensation herein described.
2. Duties as Investment Adviser.
(a) Subject to the supervision of the Fund's Board of Trustees (the
"Board" or the "Trustees"), the Adviser will have full discretion and
authority (i) to manage the assets and liabilities of the Fund and (ii) to
manage the day-to-day business and affairs of the Fund except as otherwise
delegated by the Board. In furtherance of and subject to the foregoing, the
Adviser will have full power and authority on behalf of the Fund, among
other matters:
(1) to purchase, sell, exchange, trade and otherwise deal in and
with securities and other property of the Fund and to loan securities
of the Fund;
(2) to open, maintain and close accounts with brokers and
dealers, to make all decisions relating to the manner, method and
timing of securities and other investment transactions, to select and
place orders with brokers, dealers or other financial intermediaries
for the execution, clearance or settlement of any transactions on
behalf of the Fund on such terms as the Adviser considers appropriate,
and to grant limited discretionary authorization to such persons with
respect to price, time and other terms of investment and trading
transactions, subject to Paragraph 2(b);
(3) to borrow from banks or other financial institutions and to
pledge Fund assets as collateral therefor, to trade on margin, to
exercise or refrain from exercising all rights regarding the Fund's
investments, and to instruct custodians regarding the settlement of
transactions, the disbursement of payments to the Fund's investors
(the "Shareholders") with respect to repurchases of interests in the
Fund ("Interests") and the payment of Fund expenses, including those
relating to the organization and registration of the Fund;
(4) to call and conduct meetings of Shareholders at the Fund's
principal office or elsewhere as it may determine and to assist the
Board in calling and conducting meetings of the Board;
(5) with the Board's consent to engage and terminate such
attorneys, accountants and other professional advisers and consultants
as the Adviser may deem necessary or advisable in connection with the
affairs of the Fund or as may be directed by the Board;
(6) with the Board's consent to engage and terminate the services
of persons to assist the Adviser in providing, or to provide under the
Adviser's control and supervision, advice and management to the Fund
and to terminate such services;
(7) as directed by the Board, to commence, defend and conclude
any action, suit, investigation or other proceeding that pertains to
the Fund or any assets of the Fund;
(8) if directed by the Board, to arrange for the purchase of (A)
one or more "key man" insurance policies on the life of any principal
of a shareholder of the Adviser, the benefits of which are payable to
the Fund, or (B) any insurance covering the potential liabilities of
the Fund or relating to the performance of the Board or the Adviser,
or any of their principals, directors, officers, members, employees
and agents; and
(9) to execute, deliver and perform such contracts, agreements
and other undertakings, and to engage in such activities and
transactions as are, in the opinion of the Adviser, necessary and
appropriate for the conduct of the business of the Fund without the
act, vote or approval of any other person.
(b) The Adviser, in its discretion, may use brokers who provide the
Fund with research, analysis, advice and similar services to execute
portfolio transactions on behalf of the Fund, and the Adviser may pay to
those brokers in return for brokerage and research services a higher
commission than may be charged by other brokers, subject to the Adviser's
good faith determination that such commission is reasonable in terms either
of the particular transaction or of the overall responsibility of the
Adviser to the Fund and its other clients and that the total commissions
paid by the Fund will be reasonable in relation to the benefits to the Fund
over the long term. 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 Fund on a continuing basis. Accordingly,
the price to a 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.
Whenever the Adviser simultaneously places orders to purchase or sell the
same security on behalf of the Fund and one or more other accounts advised
by the Adviser, such orders will be allocated as to price and amount among
all such accounts in a manner believed to be equitable to each account. The
Fund recognizes that in some cases this procedure may adversely affect the
results obtained for the Fund.
(c) The Fund hereby authorizes the Adviser and any entity or person
associated with the Adviser which is a member of a national securities
exchange to effect any transaction on such exchange for the account of the
Fund, which transaction is permitted by Section 11(a) of the Securities
Exchange Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and
Section 17(e)(2) and Rule 17e-1 under the 1940 Act and the Fund hereby
consents to the retention of compensation by the Adviser or any person or
entity associated with the Adviser.
3. Services Not Exclusive. The services furnished by the Adviser hereunder
are not to be deemed exclusive and the Adviser shall be free to furnish similar
services to others. Nothing in this Agreement shall limit or restrict the right
of any director, officer or employee of the Adviser or its affiliates, who also
may be a Trustee, officer or employee of the Fund, to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar or dissimilar nature.
4. Expenses.
(a) During the term of this Agreement, the Fund will bear all expenses
incurred in the business of the Fund other than those specifically assumed
by the Adviser and other service providers pursuant to their agreements
with the Fund. Expenses to be borne by the Fund will include, but are not
limited to, the following:
(1) all costs and expenses directly related to portfolio
transactions and positions for the Fund's account, including, but not
limited to, brokerage commissions, research fees, interest and
commitment fees on loans and debit balances, borrowing charges on
securities sold short, dividends on securities sold short but not yet
purchased, custodial fees, shareholder servicing fees, margin fees,
transfer taxes and premiums and taxes withheld on foreign dividends;
(2) all costs and expenses associated with the organization,
operation and registration of the Fund, certain offering costs and the
costs of compliance with any applicable Federal or state laws;
(3) the costs and expenses of holding any meetings of any Members
that are regularly scheduled, permitted ( or required to be held under
the terms of the Fund's Trust Instrument or By-Laws or other
applicable law;
(4) the fees and disbursements of any attorneys, accountants,
auditors and other consultants and professionals engaged on behalf of
the Fund;
(5) the costs of a fidelity bond and any liability insurance
obtained on behalf of the Fund, the Adviser or its affiliates or the
Trustees;
(6) all costs and expenses of preparing, setting in type,
printing and distributing reports and other communications to
Shareholders;
(7) all expenses of computing the Fund's net asset value,
including any equipment or services obtained ( for the purpose of
valuing the Fund's investment portfolio, including appraisal and
valuation services provided by third parties;
(8) all charges for equipment or services used for communications
between the Fund and any custodian, or other agent engaged by the
Fund;
(9) the fees of custodians and other persons providing
administrative services to the Fund; and
(10) such other types of expenses as may be approved from time to
time by the Board.
(b) The payment or assumption by the Adviser of any expenses of the
Fund 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 Fund on any subsequent occasion.
5. Compensation. As full compensation for the services provided to the Fund
and the expenses assumed by the Adviser under this Agreement, the Fund will pay
the Adviser a fee computed daily and paid monthly in arrears at an annual rate
of 1.50% of the Fund's average daily net assets. If the fees payable to the
Adviser begin to accrue before the end of any month, or if this Agreement
terminates before the end of any month, then such fees for such month shall be
prorated according to the proportion which the partial period bears to the full
month in which such effectiveness or termination occurs. The Adviser may from
time to time and for such periods as it deems appropriate voluntarily reduce its
compensation hereunder (and/or voluntarily assume expenses) for the Fund.
6. Limitation of Liability of the Adviser. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
or any Shareholders in connection with the matters to which this Agreement
relates, except to the extent that such a loss results from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also an officer, director, employee, or agent
of the Adviser or its affiliates, who may be or become an officer, Trustee,
employee or agent of the Fund, shall be deemed, when rendering services to the
Fund or acting with respect to any business of the Fund, to be rendering such
service to or acting solely for the Fund and not as an officer, director,
employee, or agent or one under the control or direction of the Adviser even
though compensated by it.
7. Indemnification.
(a) The Fund will indemnify the Adviser and its affiliates, and each
of their members, directors, officers and employees and any of their
affiliated persons, executors, heirs, assigns, successors or other legal
representatives (each an "Indemnified Person") against any and all costs,
losses, claims, damages or liabilities, joint or several, including,
without limitation, reasonable attorneys' fees and disbursements, resulting
in any way from the performance or non-performance of any Indemnified
Person's duties in respect of the Fund, except those resulting from the
willful malfeasance, bad faith or gross negligence of an Indemnified Person
or the Indemnified Person's reckless disregard of such duties and, in the
case of criminal proceedings, unless such Indemnified Person had reasonable
cause to believe its actions unlawful (collectively, "disabling conduct").
Indemnification shall be made following: (i) a final decision on the merits
by a court or other body before whom the proceeding was brought that the
Indemnified Person was not liable by reason of disabling conduct or (ii) a
reasonable determination, based upon a review of the facts and reached by
(A) the vote of a majority of the Trustees who are not parties to the
proceeding or (B) legal counsel selected by a vote of a majority of the
Board in a written advice, that the Indemnified Person is entitled to
indemnification hereunder. The Fund shall advance to an Indemnified Person
reasonable attorney fees and other costs and expenses incurred in
connection with defense of any action or proceeding arising out of such
performance or non-performance. The Adviser agrees, and each other
Indemnified Person will be required to agree as a condition to any such
advance, that if one of the foregoing parties receives any such advance,
the party will reimburse the Fund for such fees, costs and expenses to the
extent that it shall be determined that the party was not entitled to
indemnification under this Paragraph. The rights of indemnification
provided hereunder shall not be exclusive of or affect any other rights to
which any person may be entitled by contract or otherwise under law.
(b) Notwithstanding any of the foregoing, the provisions of this
Paragraph shall not be construed so as to relieve the Indemnified Person
of, or provide indemnification with respect to, any liability (including
liability under Federal securities laws, which, under certain
circumstances, impose liability even on persons who act in good faith) to
the extent (but only to the extent) that such liability may not be waived,
limited or modified under applicable law or that such indemnification would
be in violation of applicable law, but shall be construed so as to
effectuate the provisions of this Paragraph to the fullest extent permitted
by law.
8. Duration and Termination.
(a) This Agreement will become effective on the date the Fund
commences investment operations, provided that this Agreement will not take
effect unless it has first been approved (i) by a vote of a majority of
those Trustees 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 outstanding
voting securities of the Fund.
(b) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from the date the Fund commences
investment operations. Thereafter, if not terminated, this Agreement shall
continue automatically for successive one-year periods, provided that such
continuance is specifically approved at least annually (i) by a vote of a
majority of those Trustees 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 the Board or by
vote of a majority of the outstanding voting securities of the Fund.
(c) Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by vote of the Board or by a
vote of a majority of the Fund's outstanding voting securities on 60 days'
written notice to the Adviser or by the Adviser at any time, without the
payment of any penalty, on 60 days' written notice to the Fund. This
Agreement will automatically terminate in the event of its assignment.
9. Amendment of this Agreement. 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. Further, any material amendment, as
determined by the parties thereto with the assistance of legal counsel, shall
not be effective until approved: (a)(i) by the Board and (ii) by the vote of a
majority of the Fund's outstanding voting securities; and (b) by the affirmative
vote of a majority of the Trustees who are not parties to this Agreement or
interested persons of a party to this Agreement (other than as Trustees), by
votes cast in person at a meeting specifically called for such purpose.
10. Governing Law. This Agreement shall be construed in accordance with the
laws of Delaware, without giving effect to the conflicts of laws principles
thereof, and in accordance with the 1940 Act. To the extent that the applicable
laws of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
11. License Agreement. The Fund shall have the non-exclusive right to use
the name "Blue and White" to designate itself and any current or future series
of shares only so long as the Adviser serves as investment manager or adviser to
the Fund with respect to such series of shares and the Adviser has rights to the
name from Eplboim, Xxxxxx & Co. In the event that the Adviser ceases to act as
the investment adviser to the Fund or have rights to the name from Eplboim,
Xxxxxx & Co., the Fund shall cease using the name "Blue and White" upon the
Adviser's written request.
12. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Adviser shall at all times conform to: (a)
all applicable provisions of the 1940 Act and the Advisers Act and any rules and
regulations adopted thereunder as amended; and (b) the provisions of the
Registration Statement of the Fund under the Securities Act of 1933, as amended,
and the 1940 Act; and (c) the provisions of the Fund's Trust Instrument and
By-Laws, as amended; and (d) the provisions of Procedures of the Fund provided
to the Adviser, as amended; and (e) any other applicable provisions of state and
federal law. Adviser will maintain books and records with respect to the Fund's
securities transactions as are required by applicable laws and regulations to be
maintained and will furnish the Board such periodic and special reports as are
required by applicable laws and regulations to be furnished or as the Board may
reasonable request. Adviser will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
and will not use records and information for any purpose other than performance
of its responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Adviser may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by the
Fund.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. 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. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment
adviser," "national securities exchange," "sell" and "security" shall have the
same meaning as such terms have in the 1940 Act, subject to such exemption as
may be granted by the Securities and Exchange Commission by any rule, regulation
or order. Where the effect of a requirement of the 1940 Act reflected in any
provision of this contract 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. This Agreement may be executed in counterparts, each of
which shall constitute an original and both of which, collectively, shall
constitute one agreement.
The terms the "Blue and White Funds Trust" and "Trustees" (of the Trust)
refer, respectively to the trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Trust's
organizational documentation, to which reference is hereby made. The obligations
of the "Blue and White Funds Trust" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities and are not biding upon any of the
Trustees, Shareholders or representatives of the Trust personally, but bind only
the assets of the Fund, and all persons dealing with the Fund or other series of
the Trust must look solely to the assets of the Fund for the enforcement of any
claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
THE BLUE AND WHITE FUNDS TRUST
By:/s/ Xxxxxx Eplboim
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BLUE AND WHITE INVESTMENT
MANAGEMENT, LLC
By: /s/ Xxxxxx Eplboim
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