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EXHIBIT (d)(2)
E-XXXXXX FUNDS
E-XXXXXX NET30 INDEX FUND
ADVISORY AGREEMENT
Agreement made this ___ day of , 2000, between e-xxxxxx Funds (the
"Trust") on behalf of the e-xxxxxx Net30 Index Fund (the "Fund"), and e-xxxxxx
Capital Management LLC, a Delaware limited liability company (the "Adviser").
W I T N E S S E T H
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Fund is a series or portfolio of the Trust; and
WHEREAS, the Trust desires to retain the Adviser to render or contract
to obtain as hereinafter provided investment advisory services to the Fund and
the Trust also desires to avail itself of the facilities available to the
Adviser to oversee the administration of its day to day business affairs, and
the Adviser is willing to render such investment advisory and administrative
services;
NOW, THEREFORE, the parties agree as follows:
1. The Trust hereby appoints the Adviser to act as investment adviser
to the Trust and to oversee the administration of its business affairs for the
period and on the terms set forth in this Agreement. The Adviser accepts such
appointment and agrees to render the services herein described, for the
compensation herein provided.
2. Subject to the supervision of the Board of Trustees of the Trust,
the Adviser shall oversee the administration of the Fund's business affairs and,
in connection therewith, shall furnish the Fund with office facilities and with
clerical, bookkeeping and recordkeeping services at such office facilities and,
subject to Section 1 hereof, the Adviser shall manage the investment operations
of the Trust and the composition of the Fund's portfolio, including the
purchase, retention and disposition thereof, in accordance with the Fund's
investment objective, policies and restrictions as stated in the Prospectus
(hereinafter defined) and subject to the following understandings:
(a) The Adviser shall provide supervision of the Fund's
investments and determine from time to time what investments or
securities will be purchased, retained, sold or loaned by the Fund, and
what portion of the assets will be invested or held uninvested as cash.
(b) The Adviser, in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
Declaration of Trust and By-Laws of the Trust and the Prospectus
(hereinafter defined) of the Fund and with the instructions and
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directions of the Board of Trustees of the Trust and will conform to
and comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations.
(c) The Adviser shall determine the securities and futures
contracts to be purchased or sold by the Fund and will place orders
pursuant to its determinations with or through such persons, brokers,
dealers or futures commission merchants (including but not limited to
an affiliate of the Adviser) in conformity with the policy with respect
to brokerage as set forth in the Trust's Registration Statement and the
Fund's Prospectus (hereinafter defined) or as the Board of Trustees may
direct from time to time. In providing the Fund with investment
supervision, it is recognized that the Adviser will give primary
consideration to securing the most favorable price and efficient
execution. Consistent with this policy, the Adviser may consider the
financial responsibility, research and investment information and other
services provided by brokers, dealers or futures commission merchants
who may effect or be a party to any such transaction or other
transactions to which other clients of the Adviser may be a party. [It
is understood that __________________________________ may be used as
principal broker for securities transactions but that no formula has
been adopted for allocation of the Fund's investment transaction
business.] It is also understood that it is desirable for the Trust
that the Adviser have access to supplemental investment and market
research and security and economic analysis provided by brokers or
futures commission merchants and that such brokers may execute
brokerage transactions at a higher cost to the Fund than may result
when allocating brokerage to other brokers or futures commission
merchants on the basis of seeking the most favorable price and
efficient execution. Therefore, the Adviser is authorized to pay higher
brokerage commissions for the purchase and sale of securities and
futures contracts for the Fund to brokers or futures commission
merchants who provide such research and analysis, subject to review by
the Trust's Board of Trustees from time to time with respect to the
extent and continuation of this practice. It is understood that the
services provided by such broker or futures commission merchant may be
useful to the Adviser in connection with its services to other clients.
On occasions when the Adviser deems the purchase or sale of a
security or a futures contract to be in the best interest of the Fund
as well as other clients of the Adviser, the Adviser, to the extent
permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities or futures contracts to be
so sold or purchased in order to obtain the most favorable price or
lower brokerage commissions and efficient execution. In such event,
allocation of the securities or futures contracts 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 Fund and to such other
clients.
(d) The Adviser shall maintain all books and records with
respect to the Fund's portfolio transactions and shall render to the
Trust's Board of Trustees such periodic and special reports as the
Board may reasonably request. The Adviser may delegate this
responsibility to another entity.
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(e) The Adviser shall be responsible for the financial and
accounting records to be maintained by the Fund (including those being
maintained by the Trust's Custodian).
(f) The Adviser shall provide the Trust's Custodian on each
business day with information relating to all transactions concerning
the Fund's assets.
(g) The investment management services of the Adviser to the
Fund under this Agreement are not to be deemed exclusive, and the
Adviser shall be free to render similar services to others.
3. The Trust has delivered to the Adviser copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) Agreement and Declaration of Trust, as registered pursuant
to a Certificate of Business Trust filed with the Secretary of State of
Delaware (such a Declaration of Trust, as in effect on the date hereof
and as amended from time to time, is herein called the "Declaration of
Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the
date hereof and as amended from time to time, are herein called the
"By-Laws");
(c) Resolutions of the Board of Trustees of the Trust
authorizing the appointment of the Adviser and approving the form of
this agreement;
(d) Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-IA (the Registration
Statement), as filed with the Securities and Exchange Commission (the
Commission) relating to the Trust and its shares of beneficial interest
and all amendments thereto;
(e) Notification of Registration of the Trust under the 1940
Act on Form N-8A as filed with the Commission and all amendments
thereto; and
(f) Prospectus of the Fund (such Prospectus and Statement of
Additional Information, as currently in effect and as amended or
supplemented from time to time, being herein called the "Prospectus").
4. The Adviser shall authorize and permit any of its officers and
employees who may be elected as trustees or officers of the Trust to serve in
the capacities in which they are elected. All services to be furnished by the
Adviser under this Agreement may be furnished through the medium of any such
officers or employees of the Adviser.
5. The Adviser shall keep the Trust's books and records required to be
maintained by it pursuant to paragraph 2 hereof, including all books and records
prescribed by Rule 31a-1 under the 1940 Act other than those books and records
maintained by the Trust or its other service providers. The Adviser agrees that
all records that it maintains for the Trust are the property of the Trust and it
will surrender promptly to the Trust any such records upon the
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Trust's request, provided however that the Adviser may retain a copy of such
records. The Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records as are required to be maintained
by the Adviser pursuant to Paragraph 2 hereof.
6. During the term of this Agreement, the Adviser shall pay the
following expenses:
(a) the salaries and expenses of all personnel of the Trust
and the Adviser except the fees and expenses of trustees who are not
affiliated persons of the Adviser, and
(b) all expenses incurred by the Adviser or by the Fund in
connection with managing the ordinary course of the Fund's business
other than those assumed by the Fund herein.
The Fund assumes and will pay the expenses described below:
(a) the fees and expenses incurred by the Fund in connection
with the management of the investment and reinvestment of the Fund's
assets,
(b) the fees and expenses of trustees who are not affiliated
persons of the Adviser,
(c) the fees and expenses of the Custodian that relate to (i)
the custodial function and the recordkeeping connected therewith, (ii)
preparing and maintaining the general accounting records of the Fund
and the providing of any such records to the Adviser useful to the
Adviser in connection with the Adviser's responsibility for the
accounting records of the Fund pursuant to Section 31 of the 1940 Act
and the rules promulgated thereunder, (iii) the pricing of the shares
of the Fund, including the cost of any pricing service or services
which may be retained pursuant to the authorization of the Board of
Trustees of the Trust, and (iv) for both mail and wire orders, the
cashiering function in connection with the issuance and redemption of
the Fund's securities,
(d) the fees and expenses of the Trust's Transfer Agent that
relate to the maintenance of each shareholder account,
(e) the fees and expenses of the Trust's Administrator,
(f) the charges and expenses of legal Counsel and independent
accountants for the Trust,
(g) brokers' commissions and any issue or transfer taxes
chargeable to the Fund in connection with its securities and futures
transactions,
(h) all taxes and corporate fees payable by the Fund to
federal, state or other governmental agencies,
(i) the fees of any trade associations of which the Trust may
be a member,
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(j) the cost of share certificates representing, and/or
non-negotiable share deposit receipts evidencing, shares of the Fund,
(k) the cost of fidelity, trustees and officers and errors and
omissions insurance,
(l) the fees and expenses involved in registering and
maintaining registration of the Trust and of its shares with the
Securities and Exchange Commission, registering the Trust as a broker
or dealer and paying notice filings under state securities laws,
including the preparation and printing of the Trust's registration
statements, prospectuses and statements of additional information for
filing under federal and state securities laws for such purposes,
(m) allocable communications expenses with respect to investor
services and expenses of shareholders' and trustees' meetings and of
preparing, printing and mailing reports to shareholders in the amount
necessary for distribution to the shareholders,
(n) litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the
Fund's business, and
(o) any expenses assumed by the Fund pursuant to a Plan of
Distribution adopted in conformity with Rule 12b-1 under the 1940 Act.
7. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Adviser as full compensation therefor a fee
at an annual rate of .40% of the Fund's average daily net assets. This fee will
be computed daily and will be paid to the Adviser monthly. Any reduction in the
fee payable and any payment by the Adviser to the Fund pursuant to paragraph 7
shall be made monthly. Any such reductions or payments are subject to
readjustment during the year.
8. The Adviser 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 the 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 0000 Xxx) or loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
9. The Adviser may voluntarily reduce any portion of the compensation
or reimbursement of expenses due it pursuant to this Agreement and may agree to
make payments to limit expenses that are the responsibility of the Fund under
this Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to Adviser hereunder or to continue
future payments. Any such reduction will be agreed upon prior to accrual of the
related expense or fee and will be estimated daily. Any fee withheld shall be
voluntarily reduced and any Fund expense paid by the Adviser voluntarily or
pursuant to an
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agreed expense limitation shall be reimbursed by the Fund to the Adviser in the
first, second, or third (or any combination thereof) fiscal year next succeeding
the fiscal year of the withholding, reduction, or payment to the extent
permitted by applicable law if the aggregate expenses for the next succeeding
fiscal year, second fiscal year of third succeeding fiscal year do not exceed
any limitation to with the Adviser has agreed.
10. This Agreement shall continue in effect for a period of more than
two years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Trust at any
time, without the payment of any penalty, by the Board of Trustees of the Trust
or by vote of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of the Fund, or by the Adviser at any time, without the payment of any
penalty, on not more than 60 days' or less than 30 days' written notice to the
other party. This Agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act).
11. Nothing in this Agreement shall limit or restrict the right of any
officer or employee of the Adviser 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 business,
whether of a similar or dissimilar nature, nor limit or restrict the right of
the Adviser to engage in any other business or to render services of any kind to
any other corporation, firm, individual or association.
12. Except as otherwise provided herein or authorized by the Board of
Trustees of the Trust from time to time, the Adviser shall for all purposes
herein be deemed to be an independent contractor and shall have no authority to
act for or represent the Trust in any way or otherwise be deemed an agent of the
Trust.
13. This Agreement may be amended by mutual consent, but the consent of
the Trust must be obtained in conformity with the requirements of the 1940 Act.
14. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (1) to the Adviser at 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: President; or (2) to the Trust at
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention:
President.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
16. The Trust may use the name "e-xxxxxx Funds" or any name including
the word "e-xxxxxx" or "Xxxxxx" only for so long as this Agreement or any
extension, renewal or amendment hereof remains in effect, including any similar
agreement with any organization which shall have succeeded to the Adviser's
business as Adviser or any extension, renewal or amendment thereof remain in
effect. At such time as such an agreement shall no longer be in effect, the
Trust will (to the extent that it lawfully can) cease to use such a name or any
other name indicating that it is advised by, managed by or otherwise connected
with the Adviser, or
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any organization which shall have so succeeded to such businesses. In no event
shall the Trust use the name "e-xxxxxx Funds" or any name including the word
"e-xxxxxx" or "Xxxxxx" if the Adviser's function is transferred or assigned to a
company of which x-xxxxxx.xxx, Inc. does not have control. In addition, these
same provisions apply to the use of the name "Net30 Index."
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
e-xxxxxx Funds
By:
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Xxxxxx X. Xxx Xxxxxxxx
President
e-xxxxxx Capital Management LLC
By:
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Xxxxx Xxxxxxxx
President
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