MANAGEMENT AGREEMENT
TO: Catalyst Capital Advisors LLC
0 Xxxxxxxxx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx
Dear Sirs:
Catalyst Funds (the "Trust") herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an open-end
management investment company. The Trust currently offers several series of
shares to investors.
You have been selected to act as the sole investment manager of the series
of the Trust set forth on the Exhibits to this Agreement (each, a "Fund,"
collectively, the "Funds") and to provide certain other services, as more fully
set forth below, and you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Trust agrees with you as follows effective upon the date of the
execution of this Agreement.
1. ADVISORY SERVICES
Subject to the supervision of the Board of Trustees of the Trust, you will
provide or arrange to be provided to each Fund such investment advice as you in
your discretion deem advisable and will furnish or arrange to be furnished a
continuous investment program for each Fund consistent with the Fund's
investment objective and policies. You will determine or arrange for others to
determine the securities to be purchased for each Fund, the portfolio securities
to be held or sold by each Fund and the portion of each Fund's assets to be held
uninvested, subject always to the Fund's investment objective, policies and
restrictions, as each of the same shall be from time to time in effect, and
subject further to such policies and instructions as the Board may from time to
time establish. You will furnish such reports, evaluations, information or
analyses to the Trust as the Board of Trustees of the Trust may request from
time to time or as you may deem to be desirable. You also will advise and assist
the officers of the Trust in taking such steps as are necessary or appropriate
to carry out the decisions of the Board and the appropriate committees of the
Board regarding the conduct of the business of the Trust.
2. USE OF SUB-ADVISERS
You may delegate any or all of the responsibilities, rights or duties
described above to one or more sub-advisers who shall enter into agreements with
you, provided the agreements are approved and ratified (i) by the Board
including a majority of the trustees who are not interested persons of you or of
the Trust, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) if required under interpretations of the Investment Company
Act of 1940, as amended (the "Act") by the Securities and Exchange Commission or
its staff, by vote of the holders of a majority of the outstanding voting
securities of the applicable Fund (unless the Trust has obtained an exemption
from the provisions of Section 15(a) of the Act). Any such delegation shall not
relieve you from any liability hereunder.
3. ALLOCATION OF CHARGES AND EXPENSES
You will pay the compensation of any sub-adviser retained pursuant to
paragraph 2 above and the compensation and expenses of any persons rendering any
services to the Trust who are directors, officers, employees, members or
stockholders of your corporation or limited liability company and will make
available, without expense to the Funds, the services of such of your employees
as may duly be elected trustees or officers of the Trust, subject to their
individual consent to serve and to any limitations imposed by law.
Notwithstanding the foregoing, you are not obligated to pay the compensation or
expenses of the Trust's Chief Compliance Officer, regardless of whether the
Chief Compliance Officer is affiliated with the Adviser. The compensation and
expenses of any trustees, officers and employees of the Trust who are not
directors, officers, employees, members or stockholders of your corporation or
limited liability company will be paid by the Funds.
Each Fund will be responsible for the payment of all operating expenses of
the Fund, including the compensation and expenses of any employees of the Trust
and of any other persons rendering any services to the Fund; clerical and
shareholder service staff salaries; office space and other office expenses; fees
and expenses incurred by the Fund in connection with membership in investment
company organizations; legal, auditing and accounting expenses; expenses of
registering shares under federal and state securities laws, including expenses
incurred by the Fund in connection with the organization and initial
registration of shares of the Fund; insurance expenses; fees and expenses of the
custodian, transfer agent, dividend disbursing agent, shareholder service agent,
plan agent, administrator, accounting and pricing services agent and underwriter
of the Fund; expenses, including clerical expenses, of issue, sale, redemption
or repurchase of shares of the Fund; the cost of preparing and distributing
reports and notices to shareholders, the cost of printing or preparing
prospectuses and statements of additional information for delivery to
shareholders; the cost of printing or preparing stock certificates or any other
documents, statements or reports to shareholders; expenses of shareholders'
meetings and proxy solicitations; advertising, promotion and other expenses
incurred directly or indirectly in connection with the sale or distribution of
the Fund's shares that the Fund is authorized to pay pursuant to Rule 12b-1
under the Act; and all other operating expenses not specifically assumed by you.
Each Fund will also pay all brokerage fees and commissions, taxes, borrowing
costs (such as (a) interest and (b) dividend expenses on securities sold short),
fees and expenses of the non-interested person Trustees and such extraordinary
or non-recurring expenses as may arise, including litigation to which the Fund
may be a party and indemnification of the Trust's Trustees and officers with
respect thereto.
You may obtain reimbursement from each Fund, at such time or times as you
may determine in your sole discretion, for any of the expenses advanced by you,
which the Fund is obligated to pay, and such reimbursement shall not be
considered to be part of your compensation pursuant to this Agreement.
4. COMPENSATION OF THE MANAGER
For all of the services to be rendered as provided in this Agreement, as
of the last business day of each month, each Fund will pay you a fee based on
the average value of the daily net assets of the Fund and paid at an annual rate
as set forth on the Exhibit executed with respect to such Fund and attached
hereto.
The average value of the daily net assets of a Fund shall be determined
pursuant to the applicable provisions of the Agreement and Declaration of Trust
or a resolution of the Board of Trustees, if required. If, pursuant to such
provisions, the determination of net asset value of a Fund is suspended for any
particular business day, then for the purposes of this paragraph, the value of
the net assets of the Fund as last determined shall be deemed to be the value of
the net assets as of the close of the business day, or as of such other time as
the value of the Fund's net assets may lawfully be determined, on that day. If
the determination of the net asset value of a Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
5. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities for the
account of a Fund, it is understood that you (or the applicable sub-adviser
retained pursuant to paragraph 2 above) will arrange for the placing of all
orders for the purchase and sale of portfolio securities for the account with
brokers or dealers selected by you (or the sub-adviser), subject to review of
this selection by the Board of Trustees from time to time. You (or the
sub-adviser) will be responsible for the negotiation and the allocation of
principal business and portfolio brokerage. In the selection of such brokers or
dealers and the placing of such orders, you (or the sub-adviser) are directed at
all times to seek for the Funds the best qualitative execution, taking into
account such factors as price (including the applicable brokerage commission or
dealer spread), the execution capability, financial responsibility and
responsiveness of the broker or dealer and the brokerage and research services
provided by the broker or dealer.
You (or the sub-adviser) should generally seek favorable prices and
commission rates that are reasonable in relation to the benefits received. In
seeking best qualitative execution, you (or the sub-adviser) are authorized to
select brokers or dealers who also provide brokerage and research services to
the Fund and/or the other accounts over which you exercise investment
discretion. You (or the sub-adviser) are authorized to pay a broker or dealer
who provides such brokerage and research services a commission for executing a
Fund portfolio transaction which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
you (or the sub-adviser) determine in good faith that the amount of the
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or your (or the
sub-adviser's) overall responsibilities with respect to the Fund and to accounts
over which you (or the sub-adviser) exercise investment discretion. The Funds
and you (and the sub-adviser) understand and acknowledge that, although the
information may be useful to the Funds and you (and the sub-adviser), it is not
possible to place a dollar value on such information. The Board of Trustees
shall periodically review the commissions paid by each Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
A broker's or dealer's sale or promotion of Fund shares shall not be a
factor considered by your personnel responsible for selecting brokers to effect
securities transactions on behalf of the Fund. You and your personnel shall not
enter into any written or oral agreement or arrangement to compensate a broker
or dealer for any promotion or sale of Fund shares by directing to such broker
or dealer (i) the Fund's portfolio securities transactions or (ii) any
remuneration, including but not limited to, any commission, mark-up, mark down
or other fee received or to be received from the Fund's portfolio transactions
through such broker or dealer. However, you may place Fund portfolio
transactions with brokers or dealers that sell or promote shares of the Fund
provided the Board of Trustees has adopted policies and procedures under Rule
12b-1(h) under the Act and such transactions are conducted in compliance with
those policies and procedures.
Subject to the provisions of the Act, and other applicable law, you (or
the sub-adviser), any of your (and the sub-adviser's) affiliates or any
affiliates of your (or the sub-adviser's) affiliates may retain compensation in
connection with effecting a Fund's portfolio transactions, including
transactions effected through others. If any occasion should arise in which you
(or the sub-adviser) give any advice to your clients (or clients of the
sub-adviser) concerning the shares of a Fund, you (or the sub-adviser) will act
solely as investment counsel for such client and not in any way on behalf of the
Fund.
6. PROXY VOTING
You will vote, or make arrangements to have voted, all proxies solicited
by or with respect to the issuers of securities in which assets of the Funds may
be invested from time to time. Such proxies will be voted in a manner that you
deem, in good faith, to be in the best interest of the Funds and in accordance
with your proxy voting policy. You agree to provide a copy of your proxy voting
policy, and any amendments thereto, to the Trust prior to the execution of this
Agreement
7. CODE OF ETHICS
You have adopted a written code of ethics complying with the requirements
of Rule 17j-1 under the Act and will provide the Trust with a copy of the code
and evidence of its adoption. Within 45 days of the last calendar quarter of
each year while this Agreement is in effect, you will provide to the Board of
Trustees of the Trust a written report that describes any issues arising under
the code of ethics since the last report to the Board of Trustees, including,
but not limited to, information about material violations of the code and
sanctions imposed in response to the material violations; and which certifies
that you have adopted procedures reasonably necessary to prevent access persons
(as that term is defined in Rule 17j-1) from violating the code.
8. SERVICES NOT EXCLUSIVE/USE OF NAME
Your services to a Fund pursuant to this Agreement are not to be deemed to
be exclusive, and it is understood that you may render investment advice,
management and other services to others, including other registered investment
companies, provided, however, that such other services and activities do not,
during the term of this Agreement, interfere in a material manner, with your
ability to meet all of your obligations with respect to rendering services to
the Funds.
The Trust and you acknowledge that all rights to the name "Catalyst" or
any variation thereof belong to you, and that the Trust is being granted a
limited license to use such words in its Fund name or in any class name. In the
event you cease to be the adviser to the Fund, the Trust's right to the use of
the name "Catalyst" shall automatically cease on the ninetieth day following the
termination of this Agreement. The right to the name may also be withdrawn by
you during the term of this Agreement upon ninety (90) days' written notice by
you to the Trust. Nothing contained herein shall impair or diminish in any
respect, your right to use the name "Catalyst" in the name of, or in connection
with, any other business enterprises with which you are or may become
associated. There is no charge to the Trust for the right to use this name.
9. LIMITATION OF LIABILITY OF MANAGER
You may rely on information reasonably believed by you to be accurate and
reliable. Except as may otherwise be required by the Act or the rules
thereunder, neither you nor your directors, officers, employees, shareholders,
members, agents, control persons or affiliates of any thereof shall be subject
to any liability for, or any damages, expenses or losses incurred by the Trust
in connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under, or payments made
pursuant to, this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of any such persons in the performance of your duties under this Agreement,
or by reason of reckless disregard by any of such persons of your obligations
and duties under this Agreement.
Any person, even though also a director, officer, employee, shareholder,
member or agent of you, who may be or become a trustee, officer, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee,
shareholder, member, or agent of you, or one under your control or direction,
even though paid by you.
10. DURATION AND TERMINATION OF THIS AGREEMENT
The term of this Agreement shall begin on the date of this Agreement for
each Fund that has executed an Exhibit hereto as of the date of this Agreement
and shall continue in effect with respect to each such Fund (and any subsequent
Fund added pursuant to an Exhibit executed during the initial two-year term of
this Agreement) for a period of two years. This Agreement shall continue in
effect from year to year thereafter, subject to termination as hereinafter
provided, if such continuance is approved at least annually by (a) a majority of
the outstanding voting securities of such Fund or by vote of the Trust's Board
of Trustees, cast in person at a meeting called for the purpose of voting on
such approval, and (b) by vote of a majority of the Trustees of the Trust who
are not parties to this Agreement or "interested persons" of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. If a Fund is added pursuant to an Exhibit executed after the date of
this Agreement as described above, this Agreement shall become effective with
respect to that Fund upon execution of the applicable Exhibit and shall continue
in effect for a period of two years from the date thereof and from year to year
thereafter, subject to approval as described above.
This Agreement may, on sixty (60) days written notice, be terminated with
respect to the Fund, at any time without the payment of any penalty, by the
Board of Trustees, by a vote of a majority of the outstanding voting securities
of the Fund, or by you. This Agreement shall automatically terminate in the
event of its assignment.
11. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by the Board of Trustees, including a majority of the Trustees who are
not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
interpretations of the Act by the Securities and Exchange Commission or its
staff) by vote of the holders of a majority of the outstanding voting securities
of the Fund to which the amendment relates.
12. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "Catalyst Funds" means and refers to the Trustees from time to
time serving under the Trust's Agreement and Declaration of Trust as the same
may subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of Trustees, officers, employees, agents or nominees of the
Trust, or any shareholders of any series of the Trust, personally, but bind only
the trust property of the Trust (and only the property of the applicable Fund),
as provided in the Agreement and Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and shareholders
of the applicable Fund and signed by officers of the Trust, acting as such, and
neither such authorization by such Trustees and shareholders nor such execution
and delivery by such officers shall 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 (and only the property of applicable
Fund) as provided in its Agreement and Declaration of Trust. A copy of the
Agreement and Declaration of Trust is on file with the Secretary of State of
Ohio.
13. SEVERABILITY
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
14. BOOKS AND RECORDS
In compliance with the requirements of Rule 31a-3 under the Act, you agree
that all record which you maintain for the Trust are the property of the Trust
and you agree to surrender promptly to the Trust such records upon the Trust's
request. You further agree to preserve for the periods prescribed by Rule 31a-2
under the Act all records which you maintain for the Trust that are required to
be maintained by Rule 31a-1 under the Act.
15. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State of New York.
(b) For the purpose of this Agreement, the terms "assignment," "majority
of the outstanding voting securities," "control" and "interested person" shall
have their respective meanings as defined in the Act and rules and regulations
thereunder, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under the Act; and the term "brokerage and
research services" shall have the meaning given in the Securities Exchange Act
of 1934.
(c) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court, by the Securities and
Exchange Commission or its staff. In addition, where the effect of a requirement
of the Act, reflected in any provision of this Agreement, is revised by rule,
regulation, order or interpretation of the Securities and Exchange Commission or
its staff, such provision shall be deemed to incorporate the effect of such
rule, regulation, order or interpretation.
16. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust is 0 Xxxxxxxxx
Xxxxx, Xxxxx Xxxxxx, Xxx Xxxx, 00000.
17. CONFIDENTIALITY
You agree to treat all records and other information relating to the Trust
and the securities holdings of the Fund as confidential and shall not disclose
any such records or information to any other person unless (i) the Board of
Trustees of the Trust has approved the disclosure or (ii) such disclosure is
compelled by law. In addition, you, and your officers, directors and employees
are prohibited from receiving compensation or other consideration, for
themselves or on behalf of the Fund, as a result of disclosing the Fund's
portfolio holdings. You agree that, consistent with your Code of Ethics, neither
your nor your officers, directors or employees may engage in personal securities
transactions based on nonpublic information about the Fund's portfolio holdings.
18. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
19. BINDING EFFECT
Each of the undersigned expressly warrants and represents that he has the
full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
20. CAPTIONS
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 construction or effect.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.
Yours very truly,
Catalyst Funds
Dated: as of______, 2006 By:
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Print Name:
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Title:
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ACCEPTANCE:
The foregoing Agreement is hereby accepted.
Catalyst Capital Advisors LLC
Dated: as of______, 2006 By:
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Print Name:
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Title:
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Exhibit 1
Dated: June 21, 2006
Percentage of Average
Fund Daily Net Assets
---- ----------------
Catalyst Value Fund 1.25%
Catalyst Alternative Strategy Fund 1.25%
