EXHIBIT A
ADVISORY AGREEMENT
between
THE XXXXXX SQUARE EQUITY FUND
and
WILMINGTON TRUST COMPANY
AGREEMENT made this _____ day of January, 1998, by and
between The Xxxxxx Square Equity Fund, a Massachusetts
business trust (hereinafter called the "Fund"), and Wilmington
Trust Company, a Delaware corporation (hereinafter called the
"Adviser").
WHEREAS, the Fund is registered under the Investment Company
Act of 1940, as amended ("Investment Company Act"), as an open-
end management investment company, and offers for sale distinct
series of shares of beneficial interest ("Series") each
corresponding to a distinct portfolio; and
WHEREAS, the Fund desires to avail itself of the services,
information, advice, assistance and facilities of an investment
adviser on behalf of one or more Series of the Fund, and to have
that investment adviser provide or perform for the Series various
research, statistical and investment services; and
WHEREAS, the Adviser is willing to furnish such services to
the Fund with respect to each of the Series listed on Schedule A
to this Agreement (the "Portfolio" or "Portfolios") on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and the
mutual covenants herein contained, it is agreed between the
parties as follows:
1. EMPLOYMENT OF THE ADVISER. The Fund hereby employs the
Adviser to invest and reinvest the assets of the Portfolio in the
manner set forth in Section 2 of this Agreement subject to the
direction of the Trustees and the officers of the Fund, for the
period, in the manner, and on the terms set forth hereinafter.
The Adviser hereby accepts such employment and agrees during such
period to render the services and to assume the obligations
herein set forth. The 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 for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY, THE
ADVISER. The Adviser undertakes to provide the services
hereinafter set forth and to assume the following obligations:
A. INVESTMENT ADVISORY SERVICES.
(a) The Adviser shall direct the investments of
each Portfolio, subject to and in accordance with the Portfolio's
investment objective, policies and limitations as provided in its
Prospectus and Statement of Additional Information ("the
Prospectus") and other governing instruments, as amended from
time to time, and any other directions and policies which the
Trustees may issue to the Adviser from time to time.
(b) The Adviser is authorized, in its discretion
and without prior consultation with the Fund, to purchase and
sell securities and other investments of each Portfolio.
B. CORPORATE MANAGEMENT SERVICES.
(a) The Adviser shall furnish for the use of the
Fund office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Fund.
(b) The Adviser shall pay the salaries of all
personnel of the Fund or the Adviser performing services relating
to research, statistical and investment activities.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION
OF REGISTRATION STATEMENT, AMENDMENTS AND OTHER MATERIALS. The
Adviser will make available and provide such information as the
Fund or its administrator may reasonably request for use in the
preparation of its registration statement, reports and other
documents required by any applicable federal, foreign or state
statutes or regulations.
D. CODE OF ETHICS. The Adviser will adopt a written
code of ethics complying with the requirements of Rule 17j-1
under the Investment Company Act and Section 204A of the
Investment Advisers Act of 1940 and will provide the Fund and its
administrator with a copy of the code of ethics and evidence of
its adoption. Within forty-five (45) days of the end of the last
calendar quarter of each year while this Agreement is in effect,
an executive officer of the Adviser shall certify to the Trustees
that the Adviser has complied with the requirements of Rule 17j-1
and Section 204A during the previous year and that there has been
no violation of the Adviser's code of ethics or, if such a
violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of the Fund
or its administrator, the Adviser shall permit the Fund or its
administrator to examine the reports required to be made to the
Adviser by Rule 17j-l(c)(l).
E. DISQUALIFICATION. The Adviser shall immediately
notify the Trustees of the occurrence of any event which would
disqualify the Adviser from serving as an investment adviser of
an investment company pursuant to Section 9 of the Investment
Company Act or any other applicable statute or regulation.
F. OTHER OBLIGATIONS AND SERVICES. The Adviser shall
make its officers and employees available to the Trustees and
officers of the Fund for consultation and discussion regarding
the management of each Portfolio and its investment activities.
3. EXECUTION AND ALLOCATION OF PORTFOLIO BROKERAGE.
A. The Adviser, subject to the control and direction
of the Trustees, shall have authority and discretion to select
brokers and dealers to execute portfolio transactions for each
Portfolio, and for the selection of the markets on or in which
the transactions will be executed.
B. In acting pursuant to Section 3A, the Adviser will
place orders through such brokers or dealers in conformity with
the policies with respect to portfolio transactions set forth in
the Fund's registration statement.
C. It is understood that neither the Fund nor the
Adviser will adopt a formula for allocation of a Portfolio's
brokerage.
D. It is understood that the Adviser may, to the
extent permitted by applicable laws and regulations, aggregate
securities to be sold or purchased for any Portfolio and for
other clients in order to obtain the most favorable price and
efficient execution. In that event, allocation of the securities
purchased or sold, as well as 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 its other clients.
E. It is understood that the Adviser may, in its
discretion, use brokers who provide a Portfolio with research,
analysis, advice and similar services to execute portfolio
transactions on behalf of the Portfolio, and the Adviser may pay
to those brokers in return for brokerage and research services a
higher commission than may be charged by other brokers, subject
to the Adviser determining in good faith that such commission is
reasonable in terms either of the particular transaction or of
the overall responsibility of the Adviser to the Portfolio and
its other clients and that the total commissions paid by such
Portfolio will be reasonable in relation to the benefits to the
Portfolio over the long term.
F. It is understood that the Adviser may use brokers
who (i) are affiliated with the Adviser provided that no such
broker will be utilized in any transaction in which such broker
acts as principal; and (ii) the commissions, fees or other
remuneration received by such brokers is reasonable and fair
compared to the commissions fees or other remuneration paid to
other brokers in connection with comparable transactions
involving similar securities being purchased or sold during a
comparable period of time.
G. The Adviser shall provide such reports as the
Trustees may reasonably request with respect to each Portfolio's
total brokerage and portfolio transaction activities and the
manner in which that business was allocated.
4. DELEGATION OF ADVISER'S OBLIGATIONS AND SERVICES. With
respect to any or all Portfolios, the Adviser may enter into one
or more contracts ("Sub-Advisory Contract") with a sub-adviser in
which the Adviser delegates to such sub-adviser any or all of its
obligations or services specified in Section 2 of this Agreement,
provided that each Sub-Advisory Agreement imposes on the sub-
adviser bound thereby all the duties and conditions the Adviser
is subject to under this Agreement, and further provided that
each Sub-Advisory Agreement meets all requirements of the
Investment Company Act and rules thereunder.
5. EXPENSES OF THE FUND. It is understood that the Fund
will pay all its expenses other than those expressly stated to be
payable by the Adviser hereunder, which expenses payable by the
Fund shall include, without limitation:
A. fees payable for administrative services;
B. fees payable for accounting services;
C. the cost of obtaining quotations for calculating
the value of the assets of each Portfolio;
D. interest and taxes;
E. brokerage commissions, dealer spreads and other
costs in connection with the purchase or sale of
securities;
F. compensation and expenses of its Trustees other
than those who are "interested persons" of the
Fund within the meaning of the Investment Company
Act;
G. Legal and audit expenses;
H. fees and expenses related to the registration and
qualification of the Fund and its shares for
distribution under state and federal securities
laws;
I. expenses of typesetting. printing and mailing
reports, notices and proxy material to
shareholders of the Fund:
J. all other expenses incidental to holding meetings
of the Fund's shareholders, including proxy
solicitations therefor:
K. premiums for fidelity bond and other insurance
coverage;
L. the Fund's association membership dues;
M. expenses of typesetting for printing Prospectuses;
N. expenses of printing and distributing Prospectuses
to existing shareholders;
O. out-of-pocket expenses incurred in connection with
the provision of custodial and transfer agency
services;
P. service fees payable by each Portfolio to the
Distributor for providing personal services to the
shareholders of each Portfolio and for maintaining
shareholder accounts for those shareholders;
Q. distribution fees; and
R. such non-recurring expenses as may arise,
including costs arising from threatened actions,
actions, suits and proceedings to which the Fund
is a party and the legal obligation which the Fund
may have to indemnify its Trustees and officers
with respect thereto.
6. Compensation of the Adviser. For the services and
facilities to be furnished hereunder, the Adviser shall receive
an advisory fee equivalent to the annual rate listed along with
each Portfolio's name in Schedule B attached hereto. This
advisory fee shall be payable monthly as soon as practicable
after the last day of each month based on the average of the
daily values placed on the net assets of the Fund as determined
at the close of business on each day throughout the month, with
each Portfolio to contribute pro-rata to the payment to the
Adviser on the basis of its net assets. The assets of each
Portfolio will be valued separately as of the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m.,
Eastern time) on each business day throughout the month or, if
the Fund lawfully determines the value of the net assets of any
Portfolio as of some other time on each business day, as of such
time with respect to that Portfolio. If the Fund determines the
value of the net assets of any Portfolio more than once on any
business day, the last such determination on that day shall be
deemed to be the sole determination on that day. The value of net
assets shall be determined pursuant to the applicable provisions
of the Fund's Declaration of Trust, its Bylaws and the Investment
Company Act. If, pursuant to such provisions, the determination
of the net asset value of any Portfolio of the Fund is suspended
for any particular business day, then the value of the net assets
of that Portfolio on that day shall be deemed to be the value of
its net assets as determined on the preceding business day. If
the determination of the net asset value of any Portfolio has
been suspended for more than one month, the Adviser's
compensation payable at the end of that month shall be computed
on the basis of the value of the net assets of the Portfolio as
last determined (whether during or prior to such month). This
advisory fee shall also serve as compensation for the additional
services also listed on Schedule B provided by the Adviser under
separate agreements with the Fund, with respect to each
Portfolio, provided that any related reasonable out-of-pocket
expenses incurred in the provision of services under those
agreements shall be borne by the Fund.
7. ACTIVITIES AND AFFILIATES OF THE ADVISER.
A. The services of the Adviser to the Fund are not to
be deemed exclusive, the Adviser being free to render services to
others and engage in other activities, provided, however, that
such other services and activities do not, during the term of
this Agreement, interfere, in a material manner, with the
Adviser's ability to meet all of its obligations with respect to
rendering services to the Fund hereunder.
B. The Fund acknowledges that the Adviser or one or
more of its "affiliated persons" may have investment
responsibilities or render investment advise to or perform other
investment advisory services for other individuals or entities
and that the Adviser, its "affiliated persons" or any of its or
their directors, officers, agents or employees may buy, sell or
trade in securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph
3, the Fund agrees that the Adviser or its "affiliated persons"
may give advice or exercise investment responsibility and take
such other action with respect to Affiliated Accounts which may
differ from the advice given or the timing or nature of action
with respect to the Portfolios of the Fund, provided that the
Adviser acts in good faith. The Fund 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 one or more Portfolios may have an
interest. The Adviser shall have no obligation to recommend for
any Portfolio a position in any investment which an Affiliated
Account may acquire, and the Fund shall have no first refusal, co-
investment or other rights in respect of any such investment,
either for its Portfolios or otherwise.
C. Subject to and in accordance with the Declaration
of Trust and Bylaws of the Fund as currently in effect and the
Investment Company Act and the rules thereunder, it is understood
that Trustees, officers and agents of the Fund and shareholders
of the Fund are or may be interested in the Adviser or its
"affiliated persons" as directors, officers, agents or
shareholders of the Adviser or its "affiliated persons"; that
directors, officers, agents and shareholders of the Adviser or
its "affiliated persons" are or may be interested in the Fund as
trustees, officers, agents, shareholders or otherwise; that the
Adviser or its "affiliated persons" may be interested in the Fund
as shareholders or otherwise; and that the effect of any such
interests shall be governed by said Declaration of Trust, Bylaws
and the Investment Company Act and the rules thereunder.
8. LIABILITIES OF THE ADVISER.
A. Except as provided below, in the absence of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of obligations or duties hereunder on the part of the
Adviser, the Adviser shall not be subject to liability to the
Fund or to any shareholder of the Fund or its Portfolios for any
act or omission in the course of, or connected with, rendering
services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security or the making of any
investment for or on behalf of the Fund.
B. No provision of this Agreement shall be construed
to protect any Trustee or officer of the Fund, or the Adviser,
from liability in violation of Sections 17(h), 17(i), 36(a) or
36(b) of the Investment Company Act.
9. EFFECTIVE DATE; TERM. This Agreement shall become
effective on the date first written above and shall remain in
force for a period of two years from such date, and from year to
year thereafter, but only so long as such continuance is
specifically approved at least annually by the Board of Trustees,
including the vote of a majority of the Trustees who are not
"interested persons" of the Fund, cast in person at a meeting
called for the purpose of voting on such approval, or by vote of
a majority of the outstanding voting securities. The aforesaid
provision shall be construed in a manner consistent with the
Investment Company Act and the rules and regulations thereunder.
10. ASSIGNMENT. No "assignment" of this Agreement shall be
made by the Adviser, and this Agreement shall terminate
automatically in event of such assignment. The Adviser shall
notify the Fund in writing in advance of any proposed change of
"control" to enable the Fund to take the steps necessary to enter
into a new advisory agreement.
11. AMENDMENT. This Agreement may be amended at any time,
but only by written agreement between the Adviser and the Fund,
which amendment is subject to the approval of the Trustees of the
Fund and, where required by the Investment Company Act, the
shareholders of any affected Portfolio in the manner required by
the Investment Company Act and the rules thereunder.
12. TERMINATION. This Agreement:
A. may at any time be terminated without payment of
any penalty by the Fund with respect to any
Portfolio (by vote of the Board of Trustees of the
Fund or by "vote of a majority of the outstanding
voting securities") on sixty (60) days' written
notice to the Adviser;
B. shall immediately terminate in the event of its
"assignment"; and
C. may be terminated with respect to any Portfolio by
the Adviser on sixty (60) days' written notice to
the Fund.
13. DEFINITIONS. As used in this Agreement, the terms
"affiliated person," "assignment," 'control," "interested person"
and "vote of a majority of the outstanding voting securities"
shall have the meanings set forth in the Investment Company Act
and the rules and regulations thereunder, subject to any
applicable orders of exemption issued by the Securities and
Exchange Commission.
14. NOTICE. Any notice under this Agreement shall be given
in writing addressed and delivered or mailed postage prepaid to
the other party to this Agreement at its principal place of
business.
15. 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.
16. SHAREHOLDER LIABILITY. The Adviser is hereby expressly
put on notice of the limitation of shareholder liability as set
forth in the Declaration of Trust of the Fund and agrees that
obligations assumed by the Fund pursuant to this Agreement shall
be limited in all cases to the Fund and its assets, and if the
liability relates to one or more Portfolios, the obligations
hereunder shall be limited to the respective assets of such
Portfolio or Portfolios. The Adviser further agrees that it shall
not seek satisfaction of any such obligation from the
shareholders or any individual shareholder of the Portfolios of
the Fund, nor from the Trustees or any individual Trustee of the
Fund.
17. 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 Delaware.
IN WITNESS WHEREOF the parties have caused this instrument
to be signed on their behalf by their respective officers
thereunto duly authorized, and their respective seals to be
hereunto affixed, all as of the date first written above.
THE XXXXXX SQUARE EQUITY FUND
(SEAL) By:
President
WILMINGTON TRUST COMPANY
(SEAL) By:
Senior Vice President
SCHEDULE A
THE XXXXXX SQUARE EQUITY FUND
PORTFOLIO LISTING
SCHEDULE B
THE XXXXXX SQUARE EQUITY FUND
FEE AND SERVICES SCHEDULE
