INVESTMENT ADVISORY AND MANAGMENT AGREEMENT
THIS INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT is made as of this
___day of ____, 2001, between FIRST FUNDS, a business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust"), on behalf of the
Portfolios listed on Schedule A attached hereto (the "Portfolios") and First
Tennessee Bank National Association ("Bank").
WHEREAS, the Trust has been organized to operate as an investment company
registered under the Investment Company Act of 1940, as amended, (the "1940
Act") with multiple series of shares (hereinafter referred to as Classes) having
varying preferences, limitations and relative rights, and to invest and reinvest
the assets of the Portfolio in securities pursuant to investment objectives and
policies for the Portfolios; and
WHEREAS, the Trust, under separate agreement (the "Investment Advisory
and Management Agreement"), has engaged the services of BlackRock Institutional
Management Corporation ("BlackRock") as co-investment adviser to the Portfolios
to provide day-to-day investment management of the Portfolios' assets and
securities, to conduct a continuous program of investment of the Portfolios'
assets, and to provide other advisory services as outlined in the Investment
Advisory and Management Agreement (BlackRock hereinafter being referred to as
"Investment Adviser" and Bank hereinafter being referred to as "Co-Adviser");
and
WHEREAS, the Trust desires to obtain the services, information, advice,
assistance and facilities of an investment adviser and to have an investment
adviser provide or perform for it various investment advisory, monitoring,
statistical, research, investment adviser selection and counseling and other
services with respect to the Portfolio as set forth more fully herein, but
exclusive of day-to-day investment management services;
NOW, THEREFORE, the Trust, on behalf of the Portfolios, and Co-Adviser
agree as follows:
1. EMPLOYMENT OF THE CO-ADVISER. The Trust hereby employs the
Co-Adviser to provide investment advisory services in the manner set forth in
Section 2A of this Agreement, subject to the direction of the Trustees, for the
period, in the manner, and on the terms hereinafter set forth. The Co-Adviser
hereby accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth. The Co-Adviser shall
for all purposes herein be deemed to be an independent contractor and shall,
except as expressly provided or authorized (whether herein or otherwise), have
no authority to act or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. OBLIGATIONS OF, AND SERVICES TO BE PROVIDED BY, THE CO-ADVISER. The
Co-Adviser undertakes to provide the services hereinafter set forth and to
assume the following obligations:
A. Investment Advisory Services.
(1) The Co-Adviser will provide the Trust with research, analyses
and recommendations with respect to the investment objective,
guidelines for and risk characteristics of the Portfolios.
(2) The Co-Adviser will monitor the investment and management
activities of the Investment Adviser relative to the Portfolios,
including, but not limited to, purchase and sale transactions
following settlement thereof, and report to the Trustees on
compliance
by the Investment Adviser with the investment objective and
policies of the Portfolios, any directions which the Trustees and
officers of the Trust may issue to the Investment Adviser from time
to time and the requirements of the 1940 Act and all applicable
rules and regulations of the Securities and Exchange Commission
("SEC") with respect to the Portfolios. In performing its
monitoring services under this sub-section, the Co-Adviser may
rely, among other things, upon reports, data and information
furnished to it by the Investment Adviser, custodian or other
service providers to the Portfolios.
(3) The Co-Adviser will make recommendations with respect to the
engagement and termination of investment advisers and sub-advisers
for the Portfolios and provide research, analyses and
recommendations on qualified candidates to perform the investment
advisory and, if applicable, sub-advisory duties and
responsibilities for the day-to-day management of a continuous
investment program for the Portfolios and the related functions to
sustain that role.
(4) The Co-Adviser will perform or obtain research and analysis on
the investment performance of the Investment Adviser, or other
investment advisers or sub-advisers (collectively, the "Advisers")
with respect to the Portfolios and comparisons of its absolute and
relative performance to relevant indices and investment universes.
(5) The Co-Adviser will determine and recommend allocation of
assets between multiple active Advisers at such time that the
assets of the Portfolios reach such size that multiple active
Advisers are warranted.
(6) The Co-Adviser may make presentations or reports on behalf of
the Investment Adviser, or other Advisers, at the request of the
Investment Adviser or such other Advisers in meetings and other
settings where the presence of a representative of any such
investment adviser is needed or requested but is unable to attend.
Such meetings and settings may include, but are not limited to, (i)
Board of Trustee meetings, (ii) meetings with broker-dealers, and
(iii) meetings with other channels of distribution. Such meetings
shall not include regulatory meetings.
(7) The Co-Adviser will coordinate its activities with the
Investment Adviser and the activities of the Investment Adviser or
other Advisers, with the Portfolio's transfer agent, administrator,
custodian and independent accountants.
B. Provision of Information Necessary for Preparation of Securities
Registration Statements, Amendments and Other Materials.
The Co-Adviser will make available and provide such financial,
accounting, statistical and other information related to its duties
and responsibilities hereunder as required by the Trustees and
necessary for the preparation of registration statements, reports
and other documents required by federal and state securities laws
and such other information as the Trustees may reasonably request
for use by the Trust and its distributor for the underwriting and
distribution of the Portfolios' shares.
C. Other Obligations and Services.
The Co-Adviser agrees to make available its officers and employees
to the Trustees and officers of the Trust for consultation and
discussions regarding the activities of the
Investment Adviser and the Co-Adviser's duties hereunder and their
activities with respect to the Portfolios.
3. COVENANTS BY CO-ADVISER. The Co-Adviser covenants with the Trust
that, with respect to the services provided to the Portfolios, it:
(a) will comply with all applicable provisions of the 1940 Act and
applicable rules and regulations of the Securities and Exchange
Commission ("SEC") and will in addition conduct its activities
under this Agreement in accordance with the Portfolios' current
registration statement and applicable regulations of the Office of
the Comptroller of the Currency pertaining to the investment
advisory activities of national banks which are applicable to the
Co-Adviser;
(b) will not make loans to any person for the purpose of purchasing
or carrying Trust or Portfolio shares, or make loans to the Trust
or the Portfolios;
(c) will not purchase shares of the Trust or the Portfolios for its
own investment account;
(d) will maintain all books and records with respect to its duties
set forth herein, and furnish the Trustees such periodic and
special reports as the Trustees may request with respect to the
Portfolios;
(e) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and
the Portfolios and prior, present or potential shareholders (other
than any information which Co-Adviser may have obtained about
shareholders from other business relationships with such
shareholders), and will not use such records and information for
any purpose other than performance of its responsibilities and
duties hereunder (except after prior notification to and approval
in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld and will be deemed granted where
the Co-Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, when so requested by
the Trust or when otherwise required or permitted by law);
(f) will, to the best of its knowledge and ability, immediately
notify the Trust of the occurrence of any event which would
disqualify Co-Adviser or the Investment Adviser from serving as
investment adviser of an investment company; and
(g) will determine that all information furnished to the Trust by
the Co-Adviser pursuant to this Agreement is accurate in all
material respects.
4. EXPENSES OF THE PORTFOLIOS. The Portfolios or Trust will pay, or
will enter into arrangements that require third parties to pay, all expenses
other than those expressly assumed by the Co-Adviser herein, which expenses
payable by the Portfolios or Trust shall include:
(a) Expenses of all audits by independent public accountants;
(b) Expenses of Investment Adviser, transfer agent, registrar,
dividend disbursing agent and shareholder recordkeeping services;
(c) Expenses of custodial services including recordkeeping services
provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of
the Portfolios' net assets;
(e) Salaries and other compensation of any of its executive
officers or employees, if any, who are not officers, directors,
stockholders or employees of the Investment Adviser, the
Co-Adviser, the Administrator or the Distributor;
(f) Taxes levied against the Portfolios;
(g) Brokerage fees and commissions in connection with the purchase
and sale of portfolio securities for the Portfolios;
(h) Costs, including the interest expense, of borrowing money;
(i) Costs and/or fees incident to Trustees and shareholder meetings
of the Trust and the Portfolios, the preparation and mailings of
prospectuses and reports of the Portfolios to its existing
shareholders, the filing of reports with regulatory bodies, the
maintenance of the Portfolios' legal existence, and the
registration of shares with federal and state securities
authorities;
(j) Legal fees, including the legal fees related to the
registration and continued qualification of the Portfolios' shares
for sale;
(k) Costs of printing any share certificates representing shares of
the Portfolios;
(l) Fees and expenses of Trustees who are not affiliated persons,
as defined in the 1940 Act, of the Co-Adviser, the Investment
Adviser, the Distributor or any of their affiliates; and
(m) Its pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or of other insurance premiums.
5. ACTIVITIES AND AFFILIATES OF THE CO-ADVISER. The Trustees
acknowledge that the Co-Adviser, or one or more of its affiliates, may have
investment responsibilities or render investment advice to or perform other
investment advisory services for other individuals or entities and that the
Co-Adviser, its affiliates or any of its or their directors, officers, agents or
employees may buy, sell or trade in any securities for its or their respective
accounts (such individuals, entities and accounts hereinafter referred to as
"Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the
Trustees agree that the Co-Adviser or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Portfolios, provided that the
Co-Adviser acts in good faith and in accordance with applicable law or as
permitted by an exemption order issued by the SEC, and provided further, that,
as applicable to the Portfolios, it is the Co-Adviser's policy to allocate
within its reasonable discretion, investment opportunities to the Portfolios
over a period of time on a fair and equitable basis relative to the Affiliated
Accounts, taking into account the investment objectives and policies of the
Portfolios and any specific investment restrictions applicable thereto. The
Trust acknowledges that one or more of the Affiliated Accounts may at any time
hold, acquire, increase, decrease, dispose of or otherwise deal with positions
in investments in which the Portfolios may have an interest from time to time,
whether
in transactions which involve the Portfolios or otherwise. The Co-Adviser shall
not have any obligation to acquire for the Portfolios a position in any
investment which any Affiliated Account may acquire, and the Portfolios shall
have no first refusal, coinvestment or other rights in respect of any
investment, either for the Portfolios or otherwise.
6. COMPENSATION OF THE CO-ADVISER.
A. For all services provided to the Portfolios pursuant to this
Agreement, the Trust shall pay the Co-Adviser, and the Co-Adviser
agrees to accept as full compensation therefor, an investment
advisory fee, payable as soon as practicable after the last day of
each month, calculated using an annual rate of the average daily
net assets of the Portfolios (the "Annual Rate"), as set forth on
Schedule A attached hereto. The monthly investment advisory fee to
be paid by the Trust to the Co-Adviser shall be determined as of
the close of business on the last business day of each month by
multiplying one-twelfth of the Annual Rate by the Average Portfolio
Net Assets (hereinafter defined), calculated monthly as of such
day.
B. For purposes of this paragraph 6, the "Average Portfolio Net
Assets" shall be calculated monthly as of the last business day of
each month and shall mean the sum of the net assets of each
Portfolio calculated each business day during the month divided by
the number of business days in the month (such net assets to be
determined as of the close of business each business day and
computed in the manner set forth in the Declaration of Trust of the
Trust).
7. PROXIES. The Trustees will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Portfolios may be
invested from time to time, unless the Trustees delegate such right to the
Investment Adviser.
8. LIABILITIES OF THE CO-ADVISER.
A. The Co-Adviser will not be liable for any loss suffered by the
Portfolios or the Trust as the result of any error of judgment or
mistake of law in connection with its performance of this
Agreement; PROVIDED, HOWEVER, that the Co-Adviser shall be liable
to the Portfolios and the Trust for any loss resulting from (i) a
breach of fiduciary duty with respect to the receipt of
compensation for services; (ii) willful misfeasance, bad faith or
gross negligence in, or reckless disregard by the Co-Adviser of,
the performance of its duties and obligations under this Agreement;
or (iii) any material breach of any of its covenants contained in
this Agreement.
B. No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or the Co-Adviser, from liability
in violation of Sections 17(h) and (i) of the 1940 Act.
9. RENEWAL, AMENDMENT AND TERMINATION.
A. This Agreement shall become effective on the date first written
above and shall remain in force for a period of two (2) years from
such date and from year to year thereafter but only so long as such
continuance is specifically approved at least annually (i) by the
vote of a majority of the Trustees who are not interested persons
of the Portfolios, the Investment Adviser or the Co-Adviser, cast
in person at a meeting called for the purpose of voting on such
approval and by a vote of the Board of Trustees or (ii) by the vote
of a majority of the outstanding voting securities of the
Portfolios. The aforesaid provision
that this Agreement may be continued "annually" shall be construed
in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
B. This Agreement may be amended at any time, but only by written
agreement between the Trust and the Co-Adviser, which amendment is
subject to the approval of the Trustees and the shareholders of the
Trust in the manner required by the 1940 Act, subject to any
applicable exemption order of the SEC modifying the provisions of
the 1940 Act with respect to approval of amendments to this
Agreement.
C. This Agreement:
(i) may at any time be terminated without the payment of any
penalty either by vote of the Trustees or by vote of a
majority of the outstanding voting securities of the
Portfolios, on sixty (60) days' written notice to the
Co-Adviser;
(ii) shall immediately terminate in the event of its
assignment; and
(iii) may be terminated by the Co-Adviser on sixty (60) days'
written notice to the Trust.
D. As used in this Section 9, the terms "assignment", "interested
person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and
the rules and regulations thereunder, subject to any applicable
orders of exemption issued by the SEC.
10. BOOKS AND RECORDS.
A. The Trustees shall provide to the Co-Adviser copies of the Trust's
most recent prospectus and statement of additional information (as
each may be amended or supplemented from time to time) which relate
to any class of shares representing interests in the Portfolios.
B. In compliance with the requirements of Rule 3la-3 of the rules
promulgated under the 1940 Act ("Rules"), the Co-Adviser hereby
agrees that all records which it maintains for the Trust are the
property of the Trust and further agrees to surrender promptly to
the Trust any such records upon the Trust's request. The Co-Adviser
further agrees to preserve for the periods prescribed by Rule
3la-2, the records required to be maintained by the Co-Adviser
hereunder pursuant to Rule 3la-1 of the Rules.
11. NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed given, if delivered
personally, on the day delivered or if mailed, by certified or registered mail,
postage prepaid, return receipt requested, three (3) days after placement in the
United States mail, to the addresses below:
If to Trust: First Funds
c/o Xxxxxxx X. Xxxx, Esq.
ALPS Mutual Fund Services, Inc.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
With a copy to: Xxxxxxx Xxxxxxxx, Esq.
Baker, Donelson, Bearman, Caldwell, P.C.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
If to Co-Adviser: C. Xxxxxxx Xxxxx, III
c/o: First Tennessee Bank National Association
0000 Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, XX 00000
With a copy to: Xxxxxx Xxxxx, Esq.
First Tennessee Bank National Corporation
000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, XX 00000
12. 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.
13. LIMITATION ON LIABILITY. Co-Adviser is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust and agrees that obligations assumed by the Portfolios
pursuant to this Agreement shall be limited in all cases to the Portfolios and
its assets. Co-Adviser agrees that it shall not seek satisfaction of any such
obligation from the shareholders or any individual shareholder of the
Portfolios, nor from the Trustees or any individual Trustee of the Portfolios.
14. GOVERNING LAW. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Tennessee without giving effect to the choice of laws provisions thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
FIRST FUNDS
By:
--------------------------------------
Secretary
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By:
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SCHEDULE A
PORTFOLIO CO-ADVISER FEE
U.S. Treasury Money Market Portfolio .05%
U.S. Government Money Market Portfolio .05%
Municipal Money Market Portfolio .05%
Cash Reserve Portfolio .05%
