INVESTMENT ADVISORY AGREEMENT
IAA TRUST ASSET ALLOCATION FUND, INC.
AGREEMENT, effective commencing on April 26, 0000, xxxxxxx XXX Trust
Company, an Illinois corporation, (the "Adviser") and IAA Trust Asset Allocation
Fund, Inc., a Maryland corporation, (the "Fund").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company;
WHEREAS, the Fund wishes to retain the Adviser to render investment
advisory services to the Fund, and the Adviser is willing to furnish such
services to the Fund;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the Fund and the Adviser as
follows:
1. Appointment. The Fund hereby appoints the Adviser to act as
investment adviser to the Fund for the periods and on the terms set forth in
this Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth, for the compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the
Directors of the Fund, the Adviser will (a) provide a program of continuous
investment management for the Fund in accordance with the Fund's investment
objectives, policies and limitations as stated in the Fund's Prospectus and
Statement of Additional Information included as part of the Fund's Registration
Statement filed with the Securities and Exchange Commission, as they may be
amended from time to time, copies of which shall be provided to the Adviser by
the Fund; (b) make investment decisions for the Fund; and (c) place orders to
purchase and sell securities for the Fund.
In performing its investment management services to the Fund
hereunder, the Adviser will provide the Fund with ongoing investment guidance
and policy direction, including oral and written research, analysis, advice,
statistical and economic data and judgments regarding individual investments,
general economic conditions and trends and long-range investment policy. The
Adviser will determine the securities, instruments, repurchase agreements,
options and other investments and techniques that the Fund will purchase, sell,
enter into or use, and will provide an ongoing evaluation of the Fund's
portfolio. The Adviser will determine what portion of the Fund's portfolio shall
be invested in securities and other assets, and what portion, if any, should be
held uninvested.
The Adviser further agrees that, in performing its duties hereunder,
it will:
(a) comply with the 1940 Act and all rules and regulations
thereunder, the Internal Revenue Code (the "Code") and all other applicable
federal and state laws and regulations, and with any applicable procedures
adopted by the Directors;
(b) use reasonable efforts to manage the Fund so that it will
qualify, and continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for the
Fund directly with the issuer, or with any broker or dealer, in accordance with
applicable policies expressed in the Fund's Prospectus and/or Statement of
Additional Information and in accordance with applicable legal requirements;
(d) furnish to the Fund whatever statistical information the Fund
may reasonably request with respect to the Fund's assets or contemplated
investments. In addition, the Adviser will keep the Fund and the Directors
informed of developments materially affecting the Fund's portfolio and shall, on
the Adviser's own initiative, furnish to the Fund from time to time whatever
information the Adviser believes appropriate for this purpose;
(e) make available to the Fund's administrator, Fund/Plan Services,
Inc. (the "Administrator"), and the Fund, promptly upon their request, such
copies of its investment records and ledgers with respect to the Fund as may be
required to assist the Administrator and the Fund in their compliance with
applicable laws and regulations. The Adviser will furnish the Directors with
such periodic and special reports regarding the Fund as they may reasonably
request;
(f) immediately notify the Fund in the event that the Adviser or any
of its affiliates (1) becomes aware that it is subject to a statutory
disqualification that prevents the Adviser from serving as investment adviser
pursuant to this Agreement; or (2) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and Exchange
Commission ("SEC") or other regulatory authority. The Adviser further agrees to
notify the Fund immediately of any material fact known to the Adviser respecting
or relating to the Adviser that is not contained in the Fund's Registration
Statement regarding the Fund, or any amendment or supplement thereto, but that
is required to be disclosed thereon, and of any statement contained therein that
becomes untrue in any material respect.
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3. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this Section 3, the Adviser shall pay the compensation
and expenses, including office expenses, of all its directors, officers and
employees who serve as directors, officers and employees of the Fund (including
the Fund's share of payroll taxes), and the Adviser shall make available,
without expense to the Fund, the service of its directors, officers and
employees who may be duly elected directors and officers of the Fund, subject to
their individual consent to serve and to any limitations imposed by law.
The Adviser shall not be required to pay any expenses of the Fund
other than those specifically allocated to the Adviser in this Section 3. In
particular, but without limiting the generality of the foregoing, the Adviser
shall not be responsible, except to the extent of the reasonable compensation of
such of the Fund's employees as are directors, officers or employees of the
Adviser whose services may be involved, for the following expenses of the Fund:
organization and certain offering expenses of the Fund (including out-of-pocket
expenses, but not including the Adviser's overhead and employee costs); fees
payable to the Adviser and to any other Fund advisers or consultants; legal
expenses, auditing and accounting expenses; interest expenses; telephone, telex,
facsimile, postage and other communications expenses; taxes and governmental
fees; fees, dues and expenses incurred by or with respect to the Fund in
connection with membership in investment company trade organizations; cost of
insurance relating to fidelity coverage for the Fund's directors, officers and
employees, fees and expenses of the Fund's Administrator or of any custodian,
subcustodian, transfer agent, registrar, or dividend disbursing agent of the
Fund; payments to the Administrator for maintaining the Fund's financial books
and records and calculating its daily net asset value; other payments for
portfolio pricing or valuation services to pricing agents, accountants, bankers
and other specialists, if any; expenses of preparing share certificates; other
expenses in connection with the issuance, offering, distribution or sale of
securities issued by the Fund; expenses relating to investor and public
relations; expenses of registering and qualifying shares of the Fund for sale;
freight, insurance and other charges in connection with the shipment of the
Fund's portfolio securities; brokerage commissions or other costs of acquiring
or disposing of any portfolio securities or other assets of the Fund, or of
entering into other transactions or engaging in any investment practices with
respect to the Fund; expenses of printing and distributing Prospectuses,
Statements of Additional Information, reports, notices and dividends to
stockholders; costs of stationery; any litigation expenses; costs of
stockholders' and other meetings; the compensation and all expenses
(specifically including travel expenses relating to the Fund's business) of
officers, directors and employees of the Fund who are not officers, directors,
employees, or otherwise interested persons of the Adviser.
4. Compensation. As compensation for the services provided and
expenses assumed by the Adviser under this Agreement, the Fund will pay the
Adviser on the tenth day of each calendar month an advisory fee computed daily
at an annual rate equal to 3/4ths of 1% of the Fund's average daily net assets.
The value of net assets of the Fund shall always be determined pursuant to the
applicable provisions of the Articles, the
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Registration Statement and the 1940 Act. If the determination of net asset value
is suspended for any particular business day, then for the purposes of this
Section 4, the value of the net assets of the Fund as last determined shall be
deemed to be the value of its net assets for that day. If the determination of
the net asset value of the shares of the Fund has been so suspended for a period
including any month end when the Adviser's compensation is payable at the end of
such month shall be computed on the basis of the value of the net assets of the
Fund as last determined (whether during or prior to such month). If the Fund
determines the value of the net assets of its portfolio more than once on any
day, then the last such determination thereof on that day shall be deemed to be
the sole determination thereof on that day for the purposes of this Section 4.
5. Books and Records. The Adviser agrees to maintain such books and
records with respect to its services to the Fund as are required by Section 31
under the 1940 Act, and rules adopted thereunder, and by other applicable legal
provisions, and to preserve such records for the periods and in the manner
required by that Section, and those rules and legal provisions. The Adviser also
agrees that records it maintains and preserves pursuant to Rules 31a-1 and 31a-2
under the 1940 Act and otherwise in connection with its services hereunder are
the property of the Fund and will be surrendered promptly to the Fund upon its
request. The Adviser further agrees that it will furnish to regulatory
authorities having the requisite authority any information or reports in
connection with its services hereunder which may be requested in order to
determine whether the operations of the Fund are being conducted in accordance
with applicable laws and regulations.
6. Standard of Care and Limitation of Liability. The Adviser shall
exercise its best judgment in rendering the services provided by it under this
Agreement. The Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund or the holders of the Fund's shares
in connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Adviser against any liability to the Fund or to holders of the Fund's shares to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith or negligence on its part in the performance of its duties or by
reason of the Adviser's reckless disregard of its obligations and duties under
this Agreement. As used in this Section 6, the term "Adviser" shall include any
officers, directors, employees, or other affiliates of the Adviser performing
services with respect to the Fund.
7. Services Not Exclusive. It is understood that the services of the
Adviser are not exclusive, and that nothing in this Agreement shall prevent the
Adviser from providing similar services to other investment companies or to
other series of investment companies, or from engaging in other activities,
provided such other services and activities do not, during the term of this
Agreement, interfere in a material manner with the Adviser's ability
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to meet its obligations to the Fund hereunder. When the Adviser recommends the
purchase or sale of a security for other investment companies and other clients,
and at the same time the Adviser recommends the purchase or sale of the same
security for the Fund, it is understood that in light of its fiduciary duty to
the Fund, such transactions will be executed on a basis that is fair and
equitable to the Fund. In connection with purchases or sales of portfolio
securities for the account of the Fund, neither the Adviser nor any of its
directors, officers or employees shall act as a principal or agent or receive
any commission. If the Adviser provides any advice to its clients concerning the
shares of the Fund, the Adviser shall act solely as investment counsel for such
clients and not in any way on behalf of the Fund.
8. Duration and Termination. This Agreement shall continue until
April 26, 1995, and thereafter shall continue automatically for successive
annual periods, provided such continuance is specifically approved at least
annually by (i) the Directors or (ii) a vote of a "majority" (as defined in the
0000 Xxx) of the Fund's outstanding voting securities (as defined in the 1940
Act), provided that in either event the continuance is also approved by a
majority of the Directors who are not "interested persons" (as defined in the
0000 Xxx) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. Notwithstanding the
foregoing, this Agreement may be terminated: (a) at any time without penalty by
the Fund upon the vote of a majority of the Directors or by vote of the majority
of the Funds' outstanding voting securities, upon sixty (60) days' written
notice to the Adviser or (b) by the Adviser at any time without penalty, upon
sixty (60) days' written notice to the Fund. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act).
9. 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 an affirmative vote of (i) a majority of the outstanding
voting securities of the Fund, and (ii) a majority of the Directors, including a
majority of Directors who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
10. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of
Illinois, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act or rules or orders of the SEC thereunder.
(b) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
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(c) 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 and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
(d) Nothing herein shall be construed as constituting the Adviser as
an agent of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of April 26, 1993.
IAA TRUST ASSET ALLOCATION FUND, INC.
By:_____________________________________
President
IAA TRUST COMPANY
By:_____________________________________
Executive Vice President
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