INVESTMENT ADVISORY AGREEMENT
This Agreement is made and entered into effective as of June 20, 2003, by
and between the PMFM Investment Trust, a Delaware statutory trust (the "Trust")
on behalf of the PMFM ETF Portfolio Trust, a series of shares of the Trust (the
"Fund"), and PMFM, Inc., a Georgia corporation (hereinafter referred to as
"Advisor").
WHEREAS, the Trust is an open-end management investment company, registered
under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Trust has designated the Fund as a series of interests in the
Trust; and
WHEREAS, the Advisor is registered as an investment advisor under the
Investment Advisers Act of 1940 ("Advisers Act"), and engages in the business of
asset management; and
WHEREAS, the Trust desires to retain the Advisor to render certain
investment management services to the Fund, and the Advisor is willing to render
such services;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Obligations of Investment Advisor
(a) Services. The Advisor agrees to perform the following services
(the "Services") for the Trust:
(1) manage the investment and reinvestment of the assets of the
Fund;
(2) continuously review, supervise, and administer the investment
program of the Fund;
(3) determine, in its discretion, the securities to be purchased,
retained or sold (and implement those decisions) with respect to the
Fund;
(4) provide the Trust and the Fund with records concerning the
Advisor's activities under this Agreement which the Trust and the Fund
are required to maintain; and
(5) render regular reports to the Trust's trustees and officers
concerning the Advisor's discharge of the foregoing responsibilities.
The Advisor shall discharge the foregoing responsibilities subject to the
control of the trustees and officers of the Trust and in compliance with
(i) such policies as the trustees may from time to time establish; (ii) the
Fund's objectives, policies, and limitations as set forth in its prospectus
and statement of additional information, as the same may be amended from
time to time; and (iii) with all applicable laws and regulations. All
Services to be furnished by the Advisor under this Agreement may be
furnished through the medium of any directors, officers or employees of the
Advisor or through such other parties as the Advisor may determine from
time to time.
(b) Expenses and Personnel. The Advisor agrees, at its own expense or
at the expense of one or more of its affiliates, to render the Services and
to provide the office space, furnishings, equipment and personnel as may be
reasonably required in the judgment of the trustees and officers of the
Trust to perform the Services on the terms and for the compensation
provided herein. The Advisor shall authorize and permit any of its
officers, directors and employees, who may be elected as trustees or
officers of the Trust, to serve in the capacities in which they are
elected. Except to the extent expressly assumed by the Advisor herein and
except to the extent required by law to be paid by the Advisor, the Trust
shall pay all costs and expenses in connection with its operation.
(c) Books and Records. All books and records prepared and maintained
by the Advisor for the Trust and the Fund under this Agreement shall be the
property of the Trust and the Fund and, upon request therefor, the Advisor
shall surrender to the Trust and the Fund such of the books and records so
requested.
2. Fund Transactions. The Advisor is authorized to select the brokers or
dealers that will execute the purchases and sales of portfolio securities for
the Fund. With respect to brokerage selection, the Advisor shall seek to obtain
the best overall execution for fund transactions, which is a combination of
price, quality of execution and other factors. The Advisor may, in its
discretion, purchase and sell portfolio securities from and to brokers and
dealers who provide the Advisor with brokerage, research, analysis, advice and
similar services, and the Advisor may pay to these brokers and dealers, in
return for such services, a higher commission or spread than may be charged by
other brokers and dealers, provided that the Advisor determines in good faith
that such commission is reasonable in terms either of that particular
transaction or of the overall responsibility of the Advisor to the Fund and its
other clients and that the total commission paid by the Fund will be reasonable
in relation to the benefits to the Fund and its other clients over the
long-term. The Advisor will promptly communicate to the officers and the
trustees of the Trust such information relating to portfolio transactions as
they may reasonably request.
3. Compensation of the Advisor. The Fund will pay to the Advisor an
investment advisory fee (the "Fee") equal to an annualized rate of 1.25% of the
average daily net assets of the Fund. The Fee shall be calculated as of the last
business day of each month based upon the average daily net assets of the Fund
determined in the manner described in the Fund's Prospectus and/or Statement of
Additional Information, and shall be paid to the Advisor by the Fund within five
(5) days after such calculation.
4. Status of Investment Advisor. The services of the Advisor to the Trust
and the Fund are not to be deemed exclusive, and the Advisor shall be free to
2
render similar services to others so long as its services to the Trust and the
Fund are not impaired thereby. The Advisor shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust or the Fund in any way or otherwise
be deemed an agent of the Trust or the Fund. Nothing in this Agreement shall
limit or restrict the right of any director, officer or employee of the Advisor,
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 other business, whether of a similar nature
or a dissimilar nature.
5. Permissible Interests. Trustees, agents, and stockholders of the Trust
are or may be interested in the Advisor (or any successor thereof) as directors,
partners, officers, or stockholders, or otherwise; and directors, partners,
officers, agents, and stockholders of the Advisor are or may be interested in
the Trust as trustees, stockholders or otherwise; and the Advisor (or any
successor) is or may be interested in the Trust as a stockholder or otherwise.
6. Limits of Liability; Indemnification. The Advisor assumes no
responsibility under this Agreement other than to render the services called for
hereunder. The Advisor 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 loss resulting from a breach of fiduciary duty
with respect to 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 Act) or a loss resulting from willful misfeasance, bad faith or
gross negligence on its part in the performance of, or from reckless disregard
by it of its obligations and duties under, this Agreement. It is agreed that the
Advisor shall have no responsibility or liability for the accuracy or
completeness of the Trust's registration statement under the Act or the
Securities Act of 1933 ("1933 Act"), except for information supplied by the
Advisor for inclusion therein. The Trust agrees to indemnify the Advisor to the
full extent permitted by the Trust's Declaration of Trust.
7. Term. This Agreement shall remain in effect for an initial term of two
years from the date hereof, and from year to year thereafter provided such
continuance is approved at least annually by the vote of a majority of the
trustees of the Trust who are not "interested persons" (as defined in the Act)
of the Trust, which vote must be cast in person at a meeting called for the
purpose of voting on such approval; provided, however, that:
(a) the Trust may, at any time and without the payment of any penalty,
terminate this Agreement upon 60 days written notice of a decision to
terminate this Agreement by (i) the Trust's trustees; or (ii) the vote of a
majority of the outstanding voting securities of the Fund;
(b) the Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rules thereunder);
(c) The Advisor may, at any time and without the payment of any
penalty, terminate this Agreement upon 60 days written notice to the Trust
and the Fund; and
3
(d) the terms of paragraph 6 of this Agreement shall survive the
termination of this Agreement.
8. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by vote of the holders of a majority of the Trust's outstanding
voting securities.
9. Applicable Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Delaware.
10. Representations and Warranties.
(a) Representations and Warranties of the Advisor. The Advisor hereby
represents and warrants to the Trust as follows: (i) the Advisor is a
corporation duly organized and in good standing under the laws of the State
of Georgia and is fully authorized to enter into this Agreement and carry
out its duties and obligations hereunder; and (ii) the Advisor is
registered as an investment advisor with the SEC under the Advisers Act,
and shall maintain such registration in effect at all times during the term
of this Agreement.
(b) Representations and Warranties of the Trust. The Trust hereby
represents and warrants to the Advisor as follows: (i) the Trust has been
duly organized as a statutory trust under the laws of the State of Delaware
and is authorized to enter into this Agreement and carry out its terms;
(ii) the Trust is (or will be) registered as an investment company with the
Commission under the Act; (iii) shares of each Fund are (or will be)
registered for offer and sale to the public under the 1933 Act; and (iv)
such registrations will be kept in effect during the term of this
Agreement.
11. Structure of Agreement. The Trust is entering into this Agreement
solely on behalf of the Fund. No breach of any term of this Agreement shall
create a right or obligation with respect to any series of the Trust other than
the Fund; (b) under no circumstances shall the Advisor have the right to set off
claims relating to the Fund by applying property of any other series of the
Trust; and (c) the business and contractual relationships created by this
Agreement, consideration for entering into this Agreement, and the consequences
of such relationship and consideration relate solely to the Trust and the Fund.
12. Use of Names. The Trust acknowledges that all rights to the name "PMFM"
belongs to the Advisor, and that the Trust is being granted a limited license to
use such words in its name, the name of its series and the name of its classes
of shares.
13. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
4
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
14. Notice. Notices of any kind to be given to the Trust hereunder by the
Advisor shall be in writing and shall be duly given if mailed or delivered to
the PMFM Investment Trust at 0000 Xxxxxxxx Xxxx Xxxx - Xxxxx 0000X, Xxxxxx,
Xxxxxxx 00000, with a copy to The Nottingham Company at 000 Xxxxx Xxxxxxxx
Xxxxxx, Post Xxxxxx Xxx 00, Xxxxx Xxxxx, XX 00000-0000, Attention: C. Xxxxx
Xxxxxx III or to such other address or to such individual as shall be so
specified by the Trust to the Advisor. Notices of any kind to be given to the
Advisor hereunder by the Trust shall be in writing and shall be duly given if
mailed or delivered to PMFM, Inc. at 0000 Xxxxxxxx Xxxx Xxxx - Xxxxx 0000X,
Xxxxxx, Xxxxxxx 00000 Attention: Xxxxxx X. Xxxxxxx, or at such other address or
to such individual as shall be so specified by the Advisor to the Trust. Notices
shall be effective upon delivery.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and the year first written above.
PMFM INVESTMENT TRUST PMFM, INC.
/s/ Xxxxxx Xxxxx XxXxxx /s/ Xxxxxx X. Xxxxxxx
__________________________ ____________________________
Xxxxxx Xxxxx XxXxxx, Trustee By: Xxxxxx X. Xxxxxxx
Title: President
ATTEST: ATTEST:
/s/ C. Xxxxx Xxxxxx III /s/ Xxxxxxx X. Xxxxxxx
__________________________ _____________________________
Secretary Secretary
[Seal] [Corporate Seal]
5
