1
EXHIBIT (d)(1)
E-XXXXXX FUNDS
E-XXXXXX INTERNET FUND
ADVISORY AGREEMENT
Agreement made this ___ day of , 2000, between e-xxxxxx Funds (the "Trust")
on behalf of the e-xxxxxx Internet Fund (the "Fund"), and e-xxxxxx Capital
Management LLC, a Delaware limited liability company (the "Adviser").
W I T N E S S E T H
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Fund is a series or portfolio of the Trust; and
WHEREAS, the Trust desires to retain the Adviser to render or contract to
obtain as hereinafter provided investment advisory services to the Fund and the
Trust also desires to avail itself of the facilities available to the Adviser to
oversee the administration of its day to day business affairs, and the Adviser
is willing to render such investment advisory and administrative services;
NOW, THEREFORE, the parties agree as follows:
1. The Trust hereby appoints the Adviser to act as investment adviser to
the Trust and to oversee the administration of its business affairs for the
period and on the terms set forth in this Agreement. The Adviser accepts such
appointment and agrees to render the services herein described, for the
compensation herein provided.
2. Subject to the supervision of the Board of Trustees of the Trust, the
Adviser shall oversee the administration of the Fund's business affairs and, in
connection therewith, shall furnish the Fund with office facilities and with
clerical, bookkeeping and recordkeeping services at such office facilities and,
subject to Section 1 hereof, the Adviser shall manage the investment operations
of the Trust and the composition of the Fund's portfolio, including the
purchase, retention and disposition thereof, in accordance with the Fund's
investment objective, policies and restrictions as stated in the Prospectus
(hereinafter defined) and subject to the following understandings:
(a) The Adviser shall provide supervision of the Fund's investments
and determine from time to time what investments or securities will be
purchased, retained, sold or loaned by the Fund, and what portion of the
assets will be invested or held uninvested as cash.
(b) The Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Declaration of Trust
and By-Laws of the Trust and the Prospectus (hereinafter defined) of the
Fund and with the instructions and
2
directions of the Board of Trustees of the Trust and will conform to and
comply with the requirements of the 1940 Act and all other applicable
federal and state laws and regulations.
(c) The Adviser shall determine the securities and futures contracts
to be purchased or sold by the Fund and will place orders pursuant to its
determinations with or through such persons, brokers, dealers or futures
commission merchants (including but not limited to an affiliate of the
Adviser) in conformity with the policy with respect to brokerage as set
forth in the Trust's Registration Statement and the Fund's Prospectus
(hereinafter defined) or as the Board of Trustees may direct from time to
time. In providing the Fund with investment supervision, it is recognized
that the Adviser will give primary consideration to securing the most
favorable price and efficient execution. Consistent with this policy, the
Adviser may consider the financial responsibility, research and investment
information and other services provided by brokers, dealers or futures
commission merchants who may effect or be a party to any such transaction
or other transactions to which other clients of the Adviser may be a party.
[It is understood that __________________________________ may be used as
principal broker for securities transactions but that no formula has been
adopted for allocation of the Fund's investment transaction business.] It
is also understood that it is desirable for the Trust that the Adviser have
access to supplemental investment and market research and security and
economic analysis provided by brokers or futures commission merchants and
that such brokers may execute brokerage transactions at a higher cost to
the Fund than may result when allocating brokerage to other brokers or
futures commission merchants on the basis of seeking the most favorable
price and efficient execution. Therefore, the Adviser is authorized to pay
higher brokerage commissions for the purchase and sale of securities and
futures contracts for the Fund to brokers or futures commission merchants
who provide such research and analysis, subject to review by the Trust's
Board of Trustees from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided
by such broker or futures commission merchant may be useful to the Adviser
in connection with its services to other clients.
On occasions when the Adviser deems the purchase or sale of a security
or a futures contract to be in the best interest of the Fund as well as
other clients of the Adviser, the Adviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities or futures contracts to be so sold or purchased in
order to obtain the most favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities or futures
contracts so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Adviser in the manner it considers to be
the most equitable and consistent with its fiduciary obligations to the
Fund and to such other clients.
(d) The Adviser shall maintain all books and records with respect to
the Fund's portfolio transactions and shall render to the Trust's Board of
Trustees such periodic and special reports as the Board may reasonably
request. The Adviser may delegate this responsibility to another entity.
2
3
(e) The Adviser shall be responsible for the financial and accounting
records to be maintained by the Fund (including those being maintained by
the Trust's Custodian).
(f) The Adviser shall provide the Trust's Custodian on each business
day with information relating to all transactions concerning the Fund's
assets.
(g) The investment management services of the Adviser to the Fund
under this Agreement are not to be deemed exclusive, and the Adviser shall
be free to render similar services to others.
3. The Trust has delivered to the Adviser copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:
(a) Agreement and Declaration of Trust, as registered pursuant to a
Certificate of Business Trust filed with the Secretary of State of Delaware
(such a Declaration of Trust, as in effect on the date hereof and as
amended from time to time, is herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the "By-Laws");
(c) Resolutions of the Board of Trustees of the Trust authorizing the
appointment of the Adviser and approving the form of this agreement;
(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-IA (the Registration Statement), as filed
with the Securities and Exchange Commission (the Commission) relating to
the Trust and its shares of beneficial interest and all amendments thereto;
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus of the Fund (such Prospectus and Statement of
Additional Information, as currently in effect and as amended or
supplemented from time to time, being herein called the "Prospectus").
4. The Adviser shall authorize and permit any of its officers and employees
who may be elected as trustees or officers of the Trust to serve in the
capacities in which they are elected. All services to be furnished by the
Adviser under this Agreement may be furnished through the medium of any such
officers or employees of the Adviser.
5. The Adviser shall keep the Trust's books and records required to be
maintained by it pursuant to paragraph 2 hereof, including all books and records
prescribed by Rule 31a-1 under the 1940 Act other than those books and records
maintained by the Trust or its other service providers. The Adviser agrees that
all records that it maintains for the Trust are the property of the Trust and it
will surrender promptly to the Trust any such records upon the
3
4
Trust's request, provided however that the Adviser may retain a copy of such
records. The Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records as are required to be maintained
by the Adviser pursuant to Paragraph 2 hereof.
6. During the term of this Agreement, the Adviser shall pay the following
expenses:
(a) the salaries and expenses of all personnel of the Trust and the
Adviser except the fees and expenses of trustees who are not affiliated
persons of the Adviser, and
(b) all expenses incurred by the Adviser or by the Fund in connection
with managing the ordinary course of the Fund's business other than those
assumed by the Fund herein.
The Fund assumes and will pay the expenses described below:
(a) the fees and expenses incurred by the Fund in connection with the
management of the investment and reinvestment of the Fund's assets,
(b) the fees and expenses of trustees who are not affiliated persons
of the Adviser,
(c) the fees and expenses of the Custodian that relate to (i) the
custodial function and the recordkeeping connected therewith, (ii)
preparing and maintaining the general accounting records of the Fund and
the providing of any such records to the Adviser useful to the Adviser in
connection with the Adviser's responsibility for the accounting records of
the Fund pursuant to Section 31 of the 1940 Act and the rules promulgated
thereunder, (iii) the pricing of the shares of the Fund, including the cost
of any pricing service or services which may be retained pursuant to the
authorization of the Board of Trustees of the Trust, and (iv) for both mail
and wire orders, the cashiering function in connection with the issuance
and redemption of the Fund's securities,
(d) the fees and expenses of the Trust's Transfer Agent that relate to
the maintenance of each shareholder account,
(e) the fees and expenses of the Trust's Administrator,
(f) the charges and expenses of legal Counsel and independent
accountants for the Trust,
(g) brokers' commissions and any issue or transfer taxes chargeable to
the Fund in connection with its securities and futures transactions,
(h) all taxes and corporate fees payable by the Fund to federal, state
or other governmental agencies,
(i) the fees of any trade associations of which the Trust may be a
member,
4
5
(j) the cost of share certificates representing, and/or non-negotiable
share deposit receipts evidencing, shares of the Fund,
(k) the cost of fidelity, trustees and officers and errors and
omissions insurance,
(l) the fees and expenses involved in registering and maintaining
registration of the Trust and of its shares with the Securities and
Exchange Commission, registering the Trust as a broker or dealer and paying
notice filings under state securities laws, including the preparation and
printing of the Trust's registration statements, prospectuses and
statements of additional information for filing under federal and state
securities laws for such purposes,
(m) allocable communications expenses with respect to investor
services and expenses of shareholders' and trustees' meetings and of
preparing, printing and mailing reports to shareholders in the amount
necessary for distribution to the shareholders,
(n) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business, and
(o) any expenses assumed by the Fund pursuant to a Plan of
Distribution adopted in conformity with Rule 12b-1 under the 1940 Act.
7. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Adviser as full compensation therefor a fee
at an annual rate of 1.25% of the Fund's average daily net assets. This fee will
be computed daily and will be paid to the Adviser monthly. Any reduction in the
fee payable and any payment by the Adviser to the Fund pursuant to paragraph 7
shall be made monthly. Any such reductions or payments are subject to
readjustment during the year.
8. The Adviser may voluntarily reduce any portion of the compensation or
reimbursement of expenses due it pursuant to this Agreement and may agree to
make payments to limit expenses that are the responsibility of the Fund under
this Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to Adviser hereunder or to continue
future payments. Any such reduction will be agreed upon prior to accrual of the
related expense or fee and will be estimated daily. Any fee withheld shall be
voluntarily reduced and any Fund expense paid by the Adviser voluntarily or
pursuant to an agreed expense limitation shall be reimbursed by the Fund to the
Adviser in the first, second, or third (or any combination thereof) fiscal year
next succeeding the fiscal year of the withholding, reduction, or payment to the
extent permitted by applicable law if the aggregate expenses for the next
succeeding fiscal year, second fiscal year of third succeeding fiscal year do
not exceed any limitation to with the Adviser has agreed.
9. The Adviser shall not be liable for any error of judgment or for any
loss suffered by the Trust or the Fund in connection with the matters to which
this Agreement relates, except a
5
6
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages shall be limited
to the period and the amount set forth in Section 36(b)(3) of the 0000 Xxx) or
loss resulting 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.
10. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Trust at any
time, without the payment of any penalty, by the Board of Trustees of the Trust
or by vote of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of the Fund, or by the Adviser at any time, without the payment of any
penalty, on not more than 60 days' or less than 30 days' written notice to the
other party. This Agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act).
11. Nothing in this Agreement shall limit or restrict the right of any
officer or employee of the Adviser who may also be a trustee, officer or
employee of the Trust 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 business,
whether of a similar or dissimilar nature, nor limit or restrict the right of
the Adviser to engage in any other business or to render services of any kind to
any other corporation, firm, individual or association.
12. Except as otherwise provided herein or authorized by the Board of
Trustees of the Trust from time to time, the Adviser shall for all purposes
herein be deemed to be an independent contractor and shall have no authority to
act for or represent the Trust in any way or otherwise be deemed an agent of the
Trust.
13. This Agreement may be amended by mutual consent, but the consent of the
Trust must be obtained in conformity with the requirements of the 1940 Act.
14. Any notice or other communication required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (1) to the Adviser at 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: President; or (2) to the Trust at 000
Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention:
President.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
16. The Trust may use the name "e-xxxxxx Funds" or any name including the
word "e-xxxxxx" or "Xxxxxx" only for so long as this Agreement or any extension,
renewal or amendment hereof remains in effect, including any similar agreement
with any organization which shall have succeeded to the Adviser's business as
Adviser or any extension, renewal or amendment thereof remain in effect. At such
time as such an agreement shall no longer be in effect, the Trust will (to the
extent that it lawfully can) cease to use such a name or any other name
indicating that it is advised by, managed by or otherwise connected with the
Adviser, or
6
7
any organization which shall have so succeeded to such businesses. In no event
shall the Trust use the name "e-xxxxxx Funds" or any name including the word
"e-xxxxxx" or "Xxxxxx" if the Adviser's function is transferred or assigned to a
company of which x-xxxxxx.xxx, Inc. does not have control.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
e-xxxxxx Funds
By:
---------------------------------------------
Xxxxxx X. Xxx Xxxxxxxx
President
e-xxxxxx Capital Management LLC
By:
---------------------------------------------
Xxxxx Xxxxxxxx
President
7
