INTERIM INVESTMENT ADVISORY AGREEMENT
This Interim Investment Advisory Agreement ("Agreement") is made and
entered into effective as of May 9, 2006, by and between The Piedmont Investment
Trust, a Delaware statutory trust (the "Trust") on behalf of The Piedmont Select
Value Fund, a series of shares of the Trust (the "Fund"), and Sheets, Xxxxx &
Associates, Inc., a North Carolina 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 "1940 Act"); and
WHEREAS, Xxxxx Capital Management, LLC ("Xxxxx") entered into that certain
Investment Advisory Agreement ("Original Advisory Agreement") dated April 26,
2005 between Xxxxx and the Trust; and
WHEREAS, Xxxxx assigned the Original Advisory Agreement to the Advisor
pursuant to an assignment and assumption agreement between Xxxxx and Advisor
dated as of the date hereof, resulting in an "assignment" for purposes of
Section 15(a)(4) of the 1940 Act, and immediate termination of the Original
Advisory Agreement; and
WHEREAS, the Advisor is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended ("Advisers Act"), and engages in the
business of asset management; and
WHEREAS, the Trust desires to retain the Advisor, on an interim basis and
subject to Rule 15(a)(4) under the 1940 Act, to render certain investment
management services to the Fund on the terms and conditions outlined herein, 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;
(5) render regular reports to the Trust's trustees and officers
concerning the Advisor's discharge of the foregoing responsibilities;
and
(6) perform such other services as agreed by the Advisor and the
Trust from time to time.
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
("Prospectus") and statement of additional information ("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
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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 the Advisor an investment
advisory fee (the "Fee") as follows:
(a) A fee equal to an annualized rate of 0.90% of the average daily
net assets of the Fund to be held in an interest-bearing escrow account
with the Fund's custodian ("Escrow Amount"). The Escrow Amount 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 into the escrow account within five (5) days after such calculation;
(b) If a majority of the Fund's outstanding voting securities
("majority of shareholders") approve a new investment advisory contract
with the Advisor within 150 days of this Agreement ("New Advisory
Agreement"), the Escrow Amount (including interest, but less any bank fee
on the escrow account) will be paid to the Advisor; or
(c) If a majority of shareholders do not approve a New Advisory
Agreement within 150 days of this Agreement, Advisor will be paid, out of
the escrow account, the lesser of: (i) any costs incurred by the Advisor in
performing services under this Agreement (including interest, but less any
bank fee on the escrow account); or (ii) the Escrow Amount (including
interest, but less any bank fee on the escrow account). Any fee paid to the
Advisor under this subparagraph 3(c) must be pre-approved by the Trust's
Trustees.
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
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.
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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,
gross negligence, or reckless disregard 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, as amended ("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 a term of 150 days from
the date hereof, provided, however, that:
(a) The Trust may, at any time and without the payment of any penalty,
terminate this Agreement on 10 calendar days' written notice to the Advisor
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 1940 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;
(d) The Agreement shall terminate immediately upon approval by the
Fund's shareholders of a new investment advisory agreement between the
Trust and Advisor; and
(e) The terms of paragraph 6 of this Agreement shall survive the
termination or expiration 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 substantive laws of the State of Delaware without regard to
the principles of the conflict of laws or the choice of laws.
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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, validly existing, and in good standing under
the laws of the State of North Carolina 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 Securities
and Exchange Commission ("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 registered as an investment company with the SEC under
the 1940 Act; (iii) shares of the Fund are registered for offer and sale to
the public under the 1933 Act; and (iv) such registration 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. 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 and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
13. 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 Piedmont Investment Trust at 000 Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx
XX 00000, Attention: Xxxx X. Xxxxxxx, with a copy to The Nottingham Company at
000 Xxxxx Xxxxxxxx Xxxxxx, Post Xxxxxx Xxx 00, Xxxxx Xxxxx, XX 00000-0000,
Attention: Xxxxxx X. Xxxxxxx 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 Sheets, Xxxxx & Associates, Inc., 000 Xxxx
Xxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx XX 00000, Attention: Xxxx X. Xxxxxx, or at
such other address or to such individual as shall be so specified by the Advisor
to the Trust. Notices shall be deemed received when delivered in person or
within four (4) days after being deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested or upon receipt
of proof of delivery when sent by overnight mail or overnight courier, addressed
as stated above.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and the year first written above.
THE PIEDMONT INVESTMENT TRUST SHEETS, XXXXX & ASSOCIATES, INC.
/s/ Xxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
_____________________________ ________________________________
By: Xxxx X. Xxxxxxx Print Name: Xxxxx X. Xxxxxxx
Title: Chairman Title: Executive Vice President
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