INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT, entered into as of November 28, 2000, by and between AYCO
SERIES TRUST ("Trust"), a Delaware business trust, and THE AYCO COMPANY, L.P., a
Delaware limited partnership ("Manager").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust is and will continue to be a series fund having one or
more investment portfolios, each with its own investment objectives, policies
and restrictions; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act"), and is the
investment manager to the Trust; and
WHEREAS, the 1940 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 desires to retain the Manager
to render investment advisory and other services to each of the investment
portfolios of the Trust set forth in Appendix A attached hereto (each, a
"Fund") in the manner and on the terms hereinafter set forth; and
WHEREAS, each Fund's shareholders will include: (i) separate accounts
maintained by insurance companies that have entered into participation
agreements with the Trust in order to fund variable life insurance policies and
variable annuity contracts; (ii) qualified retirement plans outside the separate
account context ("Qualified Plans"); and (iii) the Manager and/or any of its
affiliates;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, the adequacy and sufficiency of which are hereby acknowledged, it is
agreed between the parties hereto as follows:
1. Appointment. The Trust on behalf of each Fund set forth in Appendix A
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hereby appoints the Manager to act as investment adviser to such Fund for the
period and on the terms set forth in this Agreement. The Manager accepts such
appointment and agrees to furnish the services set forth herein, for the
compensation as indicated in Appendix B.
2. Delivery of Documents. The Trust has furnished the Manager with
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copies properly certified or authenticated of each of the following:
(a) The Trust's Declaration of Trust ("Declaration");
(b) The Trust's By-Laws ("By-Laws");
(c) Resolutions of the Trust's Board of Trustees and a resolution approved
by the sole initial shareholder of the Fund authorizing the appointment of the
Manager and approving this Agreement;
(d) The Trust's Registration Statement on Form N-1A under the 1940 Act and
under the Securities Act of 1933 as amended ("1933 Act"), relating to shares of
beneficial interest of the Fund ("Shares") as filed with the Securities and
Exchange Commission ("SEC") and as amended from time to time;
(e) Each Fund's currently effective Prospectus and Statement of Additional
Information (collectively, "Prospectus").
The Trust will furnish the Manager from time to time with copies of all
amendments of or supplements to the foregoing at the same time as such documents
are required to be filed with the SEC.
3. Management. With respect to each Fund, subject to the supervision of
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the Trust's Board of Trustees, the Manager will provide a continuous investment
program for the Fund, including investment research and management with respect
to all of the Fund's assets, including securities, investments, cash and cash
equivalents in the Fund. The Manager will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Fund. The Manager will provide the services under this Agreement in accordance
with the Fund's investment objectives, policies and restrictions as stated in
the Prospectus.
As part of the services it will provide hereunder, the Manager will:
(a) obtain and evaluate pertinent economic, statistical, financial, and
other information affecting the economy generally and individual companies or
industries, the securities of which are included in the Fund or are under
consideration for inclusion in the Fund (i) consistent with the investment
objectives, policies and restrictions of the Fund as stated in the Declaration,
By-Laws, and the currently effective Prospectus, as amended from time to time,
and provided to the Manager pursuant to Section 2 of this Agreement, and (ii) in
compliance with the requirements applicable to both regulated investment
companies and segregated asset accounts under Subchapters M and L of the
Internal Revenue Code of 1986, as amended ("Code");
(b) formulate and implement a continuous investment program for the Fund
by the purchase, sale and exchange of securities and other investments,
including cash, authorized under the Declaration, By-Laws, and the currently
effective Prospectus, as amended from time to time, and provided to the Manager
pursuant to Section 2 of this Agreement, including the placing of orders for all
purchases, sales and exchanges for the account of the Fund with such brokers and
dealers as the Manager shall have selected. To this end, the Manager is
expressly authorized as the agent for the Fund to give instructions to the
Custodian of the Trust as to deliveries of securities and payments of cash for
the account of the Fund;
(c) take whatever other steps are reasonably necessary to implement the
investment program for the Fund;
(d) keep the Board of Trustees of the Trust fully informed in writing, on
an ongoing basis, of all material facts concerning the investment and
reinvestment of the Fund's assets as well as the Manager and its personnel and
operations; make regular and special written reports of such additional
information concerning the same as may reasonably be requested from time to time
by Board of the Trustees of the Trust; and will attend all quarterly and special
meetings with the Board of Trustees, to discuss the foregoing;
(e) provide assistance in determining the fair value of portfolio
securities, when market quotations are not readily available, for the purpose of
calculating the Fund's net asset value in accordance with procedures and methods
established by the Board of Trustees of the Trust;
(f) provide any and all information, records and supporting documentation
about accounts the Manager manages, if appropriate, that have investment
objectives, policies, and strategies substantially similar to those employed by
the Manager in managing the Fund that may be reasonably necessary, under
applicable laws, to allow the Trust or its agent to present information
concerning Manager's prior performance in the Prospectus and any permissible
reports and sales materials prepared by the Trust or its agent; and
(g) cooperate with and provide reasonable assistance to the Trust's
Administrator, the Trust's Custodian and any foreign custodians, the Trust's
Transfer Agent and Fund Accounting Agent and all other agents and
representatives of the Trust, with respect to the Fund, keep all such persons
fully informed as to such matters as they may reasonably deem necessary to the
performance of their obligations to the Trust, with respect to the Fund, provide
prompt responses to reasonable requests made by such persons and establish
appropriate interfaces with each so as to promote the efficient exchange of
information.
(h) comply with Subchapter M and Subchapter L of the Code in advising the
Fund. In this regard, the Manager shall promptly notify the Administrator or
its designated agent if the Manager believes that the Fund is not in compliance
with Subchapter M or Subchapter L of the Code.
4. Brokerage Services.
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With respect to each Fund, the Manager will select brokers and dealers
to effect all portfolio transactions for the Fund, subject to the conditions set
forth herein. The Manager will place all necessary orders with brokers,
dealers, or issuers, and will negotiate brokerage commissions, if applicable.
The Manager is directed at all times to seek to execute brokerage transactions
for the Fund (i) in accordance with any written policies, practices or
procedures that may be established by the Board of Trustees, from time to time,
or (ii) as described in the Prospectus. In placing any orders for the purchase
or sale of investments for the Fund, in the name of the Fund or its nominees,
the Manager shall use its best efforts to obtain for the Fund the most favorable
overall terms and best execution, considering all of the circumstances, and
shall maintain records adequate to demonstrate compliance with this requirement.
Subject to the appropriate policies and procedures approved by the Board of
Trustees, the Manager may, to the extent authorized by Section 28(e) of the
Securities Exchange Act of 1934, as amended ("1934 Act"), cause a Fund to pay a
broker or dealer that provides brokerage or research services to the Manager or
that Fund, 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 Manager determines, in good faith, that
such amount of commission is reasonable in relationship to the value of the
brokerage or research services provided, viewed in terms of that particular
transaction or the Manager's overall responsibilities to that Fund or its other
advisory clients. To the extent authorized by Section 28(e) and the Trust's
Board of Trustees, the Manager shall not be deemed to have acted unlawfully or
to have breached any duty created by this Agreement or otherwise solely by
reasons of those actions. In addition, subject to seeking the most favorable
overall terms and best execution available, the Manager may also consider sales
of shares of the Trust as a factor in the selection of brokers and dealers.
Subject to seeking the most favorable overall terms and best execution, the
Board of Trustees may cause or direct the Manager 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; or (ii) finance
activities that are primarily intended to result in the sale of Trust shares.
On occasions when the Manager deems the purchase or sale of a security to
be in the best interest of a Fund as well as other clients of the Manager, the
Manager to the extent permitted by applicable laws and regulations, may, but
shall be under no obligation to, aggregate the securities to be purchased or
sold to attempt to obtain a more favorable price or lower brokerage commissions
and more 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 Manager in the manner that it considers to be the most equitable and
consistent with its fiduciary obligations to that Fund and to its other clients.
The Trust hereby agrees that any entity or person associated with the
Manager that is a member of a national securities exchange is authorized to
effect any transaction on such exchange for the account of the Fund to the
extent and as permitted by Section 11(a)(1)(H) of the 1934 Act.
5. Services Not Exclusive. The services furnished by the Manager
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hereunder are not to be deemed exclusive, and the Manager shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby; provided, however, that the Manager will not serve as
investment adviser to any other registered investment company or portfolio
thereof having a similar investment objective and program to that of the Fund
without first informing the Board of Trustees of its intention to do so.
6. Books and Records. In compliance with the requirements of Rule 31a-3
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under the 1940 Act, the Manager hereby agrees that all records which it
maintains for the benefit of the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the Trust's
request. The Manager further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by it
pursuant to Rule 31a-1 under the 1940 Act that are not maintained by others on
behalf of the Trust. The Manager shall file with the SEC all necessary forms
pursuant to Section 13 of the 1934 Act, with respect to its duties herein.
Although the parties hereto recognize that the records relating to the services
provided under this Agreement shall be the property of the Trust and shall be
under its control, the Trust shall furnish to the Manager such records or permit
the Manager to retain such records (in duplicate form) as the Manager shall
reasonably require in order to carry out its duties or for regulatory purposes.
In the event of the termination of this Agreement, all records shall promptly be
returned to the Trust by the Manager free from any claim or retention of rights
therein. The Manager 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.
7. Allocation of Expenses
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(a) Expenses Paid by the Manager:
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(i) Salaries, Expenses and Fees of Certain Persons. The Manager or
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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 Manager or its affiliates; and
(ii) Assumption of Trust Expenses. The payment or assumption by
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the Manager of any expense of the Trust that the Manager is not required by
this Agreement to pay or assume shall not obligate the Manager 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
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organization, operations, and business not specifically assumed or agreed to be
paid by the Manager, as provided in this 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
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of preparing, setting in type, printing and mailing of Prospectuses,
Prospectus supplements, 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
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Trustees of the Trust who are not officers, directors/trustees, partners or
employees of the Manager or its affiliates;
(iii) Registration Fees and Expenses. All legal and other fees
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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 Fund Accounting Services. All expenses of the
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transfer, receipt, safekeeping, servicing and fund accounting for each
Fund'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
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charges for the services and expenses of the independent accountants and
legal counsel retained by the Trust, for itself and/or its Independent
Trustees (as defined herein);
(vi) Transfer Agent. The charges and expenses of maintaining
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shareholder accounts, including all charges of transfer, bookkeeping, and
dividend disbursing agents appointed by the Trust on behalf of each Fund;
(vii) Brokerage Commissions. All brokers' commissions and issue
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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
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respect to the Trust to federal, state, or other governmental agencies;
(ix) Trade Association Fees. Any membership fees, dues or expenses
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incurred in connection with the Trust's membership in any trade association
or similar organizations;
(x) Bonding and Insurance. All insurance premiums for fidelity,
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officers and trustees/errors and omissions, and other coverage;
(xi) Shareholder and Board Meetings. All expenses incidental to
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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
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share of each Fund, including the cost of any equipment or services to
obtain price quotations; and
(xiii) Nonrecurring and Extraordinary Expenses. Such extraordinary
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expenses, such as indemnification payments or damages awarded in litigation
or settlements made.
8. Compensation. The Trust will pay the Manager the compensation
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specified in Appendix B to this Agreement as an management fee with respect to
each Fund. Payments shall be made to the Manager on or about the first day of
each month; however, the Manager shall calculate the management fee on the
average daily net assets of each Fund (based on calendar days) and the
management fee shall be accrued on a daily basis.
9. Limitations on Liability. The Manager will exercise its best judgment
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in rendering its services to the Trust, and the Trust agrees, as an inducement
to the Manager's undertaking to do so, that the Manager 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 in rendering its services to the Trust as specified in this
Agreement. Any person, even though an officer, director, employee or agent of
the Manager, 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 Manager, even though paid by the Manager.
10. Supplemental Arrangements. The Manager may enter into arrangements
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with other persons affiliated or unaffiliated with the Manager for the
provision of certain personnel and facilities to the Manager to enable the
Manager to fulfill its duties and obligations under this Agreement.
11. Regulation. The Manager shall submit to all regulatory and
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administrative bodies having jurisdiction over the services provided pursuant to
this Agreement any information, reports, or other material that any such body,
by reason of this Agreement, may request or require pursuant to applicable laws
and regulations.
12. Duration of Agreement. With respect to each Fund, this Agreement
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shall become effective on the later of the date of its execution or the date of
the commencement of operations of that Fund. This Agreement will continue in
effect for a period more than two years from the date of its execution or
commencement of operations of the Fund only so long as such continuance is
specifically approved at least annually by the Board of Trustees or by a vote of
the majority of the Fund's outstanding, voting securities (as defined in the
1940 Act), provided that any continuance shall also be approved by the vote of a
majority of the Trustees who are not "interested persons" (as defined in the
0000 Xxx) of any party to this Agreement ("Independent Trustees") cast in person
at a meeting called for the purpose of voting on such approval.
13. Termination of Agreement. This Agreement may be terminated at any
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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, on sixty (60) days' written notice
to the Manager, or by the Manager 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 for purposes of the 1940 Act.
14. Provision of Certain Information by the Manager. The Manager will
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promptly notify the Trust in writing of the occurrence of any of the following
events:
(a) The Manager fails to be registered as an investment adviser under the
Advisers Act or under the laws of any jurisdiction in which it is required to be
registered as an investment adviser in order for the Manager to perform its
obligations under this Agreement;
(b) The Manager 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 owner of the Manager
changes, the general partner of the Manager changes, or there is otherwise an
actual change in control or management of the Manager.
15. Amendments to the Agreement. Except to the extent permitted by the
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1940 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 the Fund (unless such approval is not
required by Section 15 of the 1940 Act as interpreted by the SEC or its staff)
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.
16. Entire Agreement. This Agreement contains the entire understanding
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and agreement of the parties.
17. Headings. The headings in the sections of this Agreement are inserted
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for convenience of reference only and shall not constitute a part hereof.
18. Notices.
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(a) 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
Manager 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.
(b) Manager, a limited partnership, shall notify xxxX xxxx of any change
in Manager's general partner within a reasonable time of such change.
19. Force Majeure. The Manager shall not be liable for delays or errors
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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 Manager shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
20. Severability. Should any portion of this Agreement for any reason be
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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.
21. Interpretation. Nothing herein contained shall be deemed to require
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the Trust to take any action contrary to the Declaration 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.
22. Governing Law. The provisions of this Agreement shall be construed
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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 1940 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 1940 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 1940 Act shall be
resolved by reference to such term or provision of the 1940 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 1940 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 1940 Act unless otherwise stated herein.
In addition, where the effect of a requirement of the 1940 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.
AYCO SERIES TRUST
By:/s/Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx, III
Title:-------------------------------------
Chief Financial Officer and Controller
THE AYCO COMPANY, L.P.
By: HAMBRE, INC., in its capacity as general
partner of The Ayco Company, L.P.
By:/s/Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Title:--------------------------------------
Vice President and Secretary
APPENDIX A
FUNDS OF
AYCO SERIES TRUST
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AYCO LARGE CAP GROWTH FUND I
APPENDIX B
The Trust shall pay the Manager, at the end of each calendar month,
compensation computed daily at an annual rate equal to the following:
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS) (FEE ON ALL ASSETS)
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INVESTMENT PORTFOLIO
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Ayco Large Cap Growth Fund I 0.80%
