Exhibit 23(d)
THE KELMOORE STRATEGY(TM) VARIABLE TRUST
INVESTMENT ADVISORY AGREEMENT
--------------------------------------------------------------------------------
This INVESTMENT ADVISORY AGREEMENT ("Agreement") is made this 2nd day
of March, 2000, by and between the Kelmoore Strategy(TM) Variable Trust (the
"Trust"), a business trust organized and existing under the laws of the state of
Delaware and Kelmoore Investment Company, Inc. (the "Adviser"), a corporation
organized and existing under the laws of the state of California.
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust is authorized to issue separate series of shares of
beneficial interest (hereinafter referred to individually as a "Fund" and
collectively as the "Funds") listed on Schedule A hereto, as such may be amended
from time to time;
WHEREAS, the Adviser is principally engaged in rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act");
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory services to the Trust pursuant to the terms and provisions of this
Agreement, and the Adviser is willing to provide said services;
NOW, THEREFORE, in consideration of the premises and the covenants
contained in this Agreement, the parties hereto agree as follows:
1. Appointment. The Trust hereby appoints the Adviser to act as
investment adviser to the Trust for the period and on the terms and subject to
the conditions set forth in this Agreement. The Adviser accepts such appointment
and agrees to furnish the services herein set forth for the compensation herein
provided. Additional series of the Trust may from time to time be added to those
covered by this Agreement by the parties executing a new Schedule A that shall
become effective upon its execution and shall supersede any Schedule A having an
earlier date.
2. Investment Advisory Services. Subject to the supervision of the
Board of Trustees of the Trust (the "Board"), the Adviser shall provide a
continuous investment program for each Fund, shall determine from time to time
which securities or other investments shall be purchased, sold or exchanged and
what portions of each Fund shall be held in the various securities or other
investments or cash, and shall take such steps as are necessary to implement an
overall investment plan for each Fund. The Adviser may delegate any or all of
its responsibilities to one or more sub-advisers, subject to the approval of the
Board. Such delegation shall not relieve the Adviser of its duties and
responsibilities hereunder. The Adviser shall provide the services under this
Agreement in accordance with each Fund's investment objectives, policies, and
restrictions as stated in such Fund's most current Prospectus and Statement of
Additional Information, including all amendments or supplements thereto, and in
such resolutions of the Board as may be adopted from time to time. The Adviser
further agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to any fiduciary accounts for which it has
investment responsibilities;
(b) will conform with all applicable rules and regulations of the U.S.
Securities and Exchange Commission (the "Commission") as they pertain
to the registration of the Trust and, in addition, will conduct its
activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment
advisory activities of the Adviser;
(c) will place orders pursuant to its investment determinations for
each Fund either directly with the issuer or with any broker or dealer.
In placing orders with brokers and dealers, the Adviser will attempt to
obtain and is hereby directed to obtain prompt execution of orders in
an effective manner at the most favorable price. Under such conditions
as may be specified by the Board in the interest of its shareholders
and to ensure compliance with applicable law and regulations, the
Adviser may (i) place orders for the purchase or sale of each Fund's
portfolio securities with its affiliated broker-dealer, Kelmoore
Investment Company, Inc. (the "Affiliated Broker"), a registered
broker-dealer; (ii) pay commissions to brokers other than the
Affiliated Broker which are higher than might be charged by another
qualified broker to obtain brokerage and/or research services
considered by the Adviser to be useful or desirable in the performance
of its duties hereunder and for the investment management of other
advisory accounts over which the Adviser or the Affiliated Broker
exercise investment discretion; and (iii) consider sales by brokers
(other than the Affiliated Broker) of shares of each Fund and any other
mutual fund for which it acts as investment adviser, as a factor in its
selection of brokers and dealers for each Fund's portfolio
transactions.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of one or more of the Funds as well as of
other clients, the Adviser may, to the extent permitted by applicable
laws and regulations, aggregate the securities to be so purchased or
sold in order to obtain the most favorable price or lower brokerage
commissions and the most 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 Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Funds and to such other clients. In placing orders
with the Adviser for the Trust, the Adviser will comply with the
procedures adopted by the Trust pursuant to Rule 17e-1 under the 1940
Act;
(d) will maintain, or cause the custodian to maintain, all books and
records with respect to the securities transactions executed for each
Fund;
(e) will advise and assist the officers of the Trust in taking such
actions as may be necessary or appropriate to carry out the decisions
of the Board and of the appropriate committees of such Board regarding
the conduct of the business of the Trust;
(f) will furnish the Trust's Board such periodic and special reports
with respect to each Fund's investment activities as the Board may
reasonably request;
2
(g) will seek to provide qualified personnel to fulfill its duties
hereunder and will bear all costs and expenses;
(h) will seek to manage the Trust in accordance with any restrictions
set forth in the Trust Instrument or By-Laws, or the Trust's
then-current registration statement on Form N-1A, and the prospectus
and Statement of Additional Information as updated from time to time;
and
(i) will make every effort to ensure that (1) each Fund shall comply
with Section 817(h) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations issued thereunder, specifically
Regulation Section 1.817-5 relating to the diversification requirements
for variable annuity, endowment, and life insurance contracts, and any
amendments or other modifications to such Section or regulations; (2)
each Fund continuously qualifies as a regulated investment company
under Subchapter M of the Code or any successor provision; and (3) any
and all applicable state law restrictions on investments that operate
to limit or restrict the investments that a Fund may otherwise make are
complied with as well as any changes thereto.
3. Expenses. During the term of this Agreement, the Adviser shall
assume the expense of and shall pay for maintaining the staff and personnel
necessary to perform its obligations under this Agreement, and shall at its own
expense provide the office space, equipment and facilities that it is obligated
to provide under this Agreement.
The Adviser shall not be liable for any expenses of the Trust
including, without limitation, (a) taxes, (b) brokerage fees and commissions and
other costs in connection with the purchase or sale of securities or other
investment instruments with respect to the Trust, (c) legal, auditing and
accounting fees and expenses, (d) the cost of liability insurance or fidelity
bond coverage, (e) charges of the Trust's administrator, custodian, transfer
agent and other service providers, and (f) the fees and expenses involved in
registering and maintaining registration of the Trust's shares with the
Commission.
4. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, each of the Funds will pay the Adviser and the
Adviser will accept as full compensation therefor the annual fee set forth on
Schedule I hereto. The obligations of the Funds to pay the fee to the Adviser
will begin as of the respective dates of the initial public sale of shares in
the Funds, including any shares sold or exchanged in connection with a merger,
consolidation or reorganization involving one or more of the Funds. Such fee
shall be paid monthly based upon each respective Fund's average daily net assets
calculated in the manner provided in the Prospectus and Statement of Additional
Information then in effect.
The fee shall be accrued daily by each Fund and paid to the Adviser
within five (5) business days after the end of each calendar month. If this
Agreement is terminated before the end of any month, the fee to the Adviser
shall be prorated for the portion of any month in which this Agreement is in
effect and shall be payable within ten (10) days after the date of termination.
The Adviser may voluntarily waive fees or reimburse expenses at any
time. Any amounts waived or reimbursed by the Adviser are subject to
reimbursement by the relevant Fund
3
within the following three years, to the extent such reimbursement by the Fund
would not cause the Fund to exceed any current expense limitation.
5.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 arising out
of any investment or for any act or omission in the management of the Trust,
except for (i) willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties hereunder, and (ii) to the extent specified in section 26(b) of the
1940 Act concerning loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation.
6. Duration and Termination. This Agreement shall not become effective
unless and until it is approved by the Board, including a majority of trustees
who are not parties to this Agreement or interested persons of any such party,
and by the vote of a majority of the outstanding voting shares of each Fund of
the Trust. As to each Fund of the Trust, the Agreement shall continue in effect
for two years and shall thereafter continue in effect from year to year so long
as such continuance is specifically approved for each Fund at least annually by
(i) the Board, or by the vote of a majority of the outstanding votes
attributable to the shares of the applicable Fund; and (ii) 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.
This Agreement may be terminated at any time as to any Fund, without
the payment of any penalty, by the Board, or by vote of a majority of the
outstanding votes attributable to the shares of the applicable Fund, or by the
Adviser, on sixty days' written notice to the other party. If this Agreement is
terminated only with respect to one or more, but less than all, of the Funds,
the Agreement shall remain in effect with respect to the remaining Funds. This
Agreement will automatically terminate in the event of its assignment. Any
notice under this Agreement shall be given in writing, addressed and delivered
or mailed to the other party at the principal office of such party.
7. Books and Records. The Adviser hereby undertakes and agrees to
maintain, in the form and for the period required by the rules adopted under the
1940 Act, all records relating to the Trust's investments that are required to
be maintained by the Trust pursuant to the requirements of Rule 31a-1 and Rule
2a-7 of the 1940 Act. The foregoing notwithstanding, the Adviser may appoint a
qualified third party, such as the Custodian of the Trust, to maintain the books
and records of the Trust on its behalf; provided, however, that such appointment
shall not relieve the Adviser of its obligations with respect to the books and
records of the Trust hereunder.
The Adviser agrees that all books and records which it may maintain
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such books, records or information upon the Trust's
request. All such books and records shall be made available, within five
business days of a written request, to the Trust's accountants or auditors
during regular business hours at the Adviser's offices. The Trust or its
authorized representative shall have the right to copy any records in the
possession of the Adviser that pertain to the Trust. Such books, records,
information or reports shall be made available to properly authorized government
representatives consistent with state and federal law and/or regulations. In the
event of the termination of this Agreement, all such books, records or other
information shall be returned to the Trust free from any claim or assertion of
rights by the Adviser.
4
The Adviser further agrees that it will not disclose or use any
records or information obtained pursuant to this Agreement in any manner
whatsoever except as authorized in this Agreement and that it will keep
confidential any information obtained pursuant to this Agreement and disclose
such information only if the Trust has authorized such disclosure, or if such
disclosure is required by federal or state regulatory authorities.
8. Name. The parties agree that the Adviser has a proprietary interest
in the name "Kelmoore" and the Trust hereby agrees to promptly take such action
as may be necessary to delete from its name and/or the name of any Fund any
reference to such name promptly after receipt from the Adviser of a written
request therefore.
9. Adviser's Representations. The Adviser hereby represents and
warrants that it is willing, and possesses all requisite legal authority, to
provide the services contemplated by this Agreement without violation of
applicable laws and regulations.
10. Amendments of this Agreement. This Agreement may be amended as to a
Fund by the parties only if such amendment specifically is approved by (i) the
vote of a majority of the outstanding shares of the Fund, if and to the extent
required by applicable law, and (ii) 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.
11. Definitions of Certain Terms. The terms "assignment," "affiliated
person," and "interested person," when used in this Agreement, shall have the
respective meanings specified in the 1940 Act. The term "majority of the
outstanding votes" attributable to the shares of a Fund means the lesser of (a)
67% or more of the votes attributable to the shares of a Fund present at a
meeting if the holders of more than 50% of such votes are present or represented
by proxy, or (b) more than 50% of the votes attributable to shares of the Fund.
12. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of California, without giving effect to conflicts of law
provisions thereof, and applicable provisions of the 1940 Act, the Advisers Act,
and the Securities Exchange Act of 1934.
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 Agreement shall not be affected thereby.
14. Limitation of Liability. It is expressly acknowledged and agreed
that the obligations of the Trust shall not be binding upon any of the
shareholders, trustees, officers, employees or agents of the Trust, personally,
but shall bind only the trust property of the Trust, as provided in its Trust
Instrument. The execution and delivery of this Agreement has been authorized by
the Board and such authorization shall not be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in its Trust
Instrument.
15. 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
5
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.
IN WITNESS WHEREOF, the parties hereto executed and delivered this
Agreement as of the date first above written.
KELMOORE STRATEGY(TM)VARIABLE KELMOORE INVESTMENT COMPANY,
TRUST INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Kelmon, Jr.
---------------------------- --------------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Kelmon, Jr.
Title: President and Treasurer Title: President and Chief Executive Officer
---------------------------- --------------------------------------
6
Schedule A
----------
As Amended July 28, 2000
------------------------
KELMOORE STRATEGY(TM) VARIABLE TRUST
------------------------------------
Name of Each Fund
-----------------
1. Kelmoore Strategy(TM) Variable Fund
2. Kelmoore Strategy(TM) Variable Eagle Fund
7
Schedule I
----------
As Amended July 28, 2000
------------------------
KELMOORE STRATEGY(TM) VARIABLE TRUST
------------------------------------
Name of Fund Annual Fee
------------ ----------
Kelmoore Strategy(TM)Variable Fund 1.00%
Kelmoore Strategy(TM)Variable Eagle Fund 1.00%
Dated: July 28, 2000
KELMOORE STRATEGY(TM)VARIABLE KELMOORE INVESTMENT COMPANY,
TRUST INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Kelmon, Jr.
---------------------------- --------------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Kelmon, Jr.
Title: President and Treasurer Title: President and Chief Executive Officer
---------------------------- --------------------------------------
8
