EX-23A(3)
INVESTMENT ADVISOR AGREEMENT
As Amended April 1, 2002
AGREEMENT, made this 30th day of September, 1998, between The Santa ▇▇▇▇▇▇▇
Group of Mutual Funds, Inc. (the "Company") and SBG Capital Management, Inc.
(the "Adviser"), a California Corporation, is amended as of the 1st day of
April, 2002, as follows
WHEREAS, the Company is a Maryland Corporation authorized to issue shares in
series and is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ( "Advisers Act");
WHEREAS, The Company presently offers the following series
The ▇▇▇▇▇▇ Growth Fund
The Montecito Fund
(each a "Fund" and together the "Funds");
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Company and the Adviser as follows:
1. Appointment
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The Company hereby appoints the Adviser to act as Investment Adviser to the
Funds for the periods and on the terms set forth herein. The Adviser accepts the
appointment and agrees to furnish the services set forth herein for the
compensation provided herein.
2. Services as Investment Adviser
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Subject to the general supervision and direction of the Board of Directors of
the Company, the Adviser will (a) manage the Funds in accordance with the Fund's
investment objective and policies as stated in each Fund's Prospectus and the
Statement of Additional Information filed with the Securities and Exchange
Commission, as they may be amended from time to time; (b) make investment
decisions for the Funds; (c) place purchase and sale orders on behalf of the
Funds; and, (d) employ professional portfolio managers and securities analysts
to provide research services to the Funds. In providing those services, the
Adviser will provide the Funds with ongoing research, analysis, advice, and
judgments regarding individual investments, general economic conditions and
trends and long-range investment policy. In addition, the Adviser will furnish
the Funds with whatever statistical information the Funds may reasonably request
with respect to the securities that the Funds may hold or contemplate
purchasing.
The Adviser further agrees that, in performing it's duties hereunder, it will:
a. comply with the 1940 Act and all rules and regulations thereunder, the
Adviser's Act, the Internal Revenue Code of 1986, as amended (the
"Code") and all other applicable federal and state laws and
regulations, and with any applicable procedures adopted by the
Directors;
b. use reasonable efforts to manage the Funds so that each will qualify,
and continue to qualify, as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder;
c. maintain books and records with respect to each Fund's securities
transactions, render to the Board of Directors of the Company such
periodic and special reports as the Board may reasonably request, and
keep the Directors informed of developments materially affecting each
Fund's portfolio;
d. make available to the Funds' administrator, and the Company, promptly
upon their request, such copies of its investment records and ledgers
with respect to each Fund as may be required to assist the
Administrator and the Company in their compliance with applicable laws
and regulations. The Adviser will furnish the Directors with such
periodic and special reports regarding each Fund as they may
reasonably request;
e. immediately notify the Company in the event that the Adviser or any of
its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Adviser from serving as an
investment adviser pursuant to this Agreement; or (2) becomes aware
that it is the subject of an administrative proceeding or enforcement
action by the Securities and Exchange Commission or other regulatory
authority. The Adviser further agrees to notify the Company
immediately of any material fact known to the Adviser respecting or
relating to the Adviser that is not contained in the Company's
Registration Statement regarding the Funds, or any amendment or
supplement thereto, but that is required to be disclosed therein, and
of any statement contained therein that becomes untrue in any material
respect.
3. Investment Adviser
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The Company authorizes Adviser to enter into such Investment Advisory Agreements
as the Adviser deems necessary to carry out the terms of this Agreement and to
meet investment objectives of the individual series of Funds that may be offered
from time to time by the Company. Adviser is responsible for the payment of all
compensation to any Sub-investment Advisor.
4. Documents
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The Company has delivered properly certified or authenticated copies of each of
the following documents to the Advisor and will deliver to it all future
amendments and supplements thereto, if any:
a. certified resolution of the Board of Directors of the Company
authorizing the appointment of the Adviser and approving the form of
this Agreement;
b. The Registration Statement as filed with the Securities and Exchange
Commission and any amendments thereto;
c. Exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration
Statement described above.
5. Brokerage
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In selecting brokers or dealers to execute transactions on behalf of the Fund,
the Adviser will use its best efforts to seek the best overall terms available.
In assessing the best overall terms available for any Fund transaction, the
Adviser will consider all factors it deems relevant, including, but not limited
to, the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on a
continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, the Adviser is
authorized to consider the brokerage and research services (as those terms are
defined in section 28(e) of the Securities Exchange Act of 1934, as amended (the
"1934 Act") provided to the Fund and/or other accounts over which the Adviser or
its affiliates exercise investment discretion. In accordance with Section 11(a)
of the 1934 Act and Rule 11a2-2(T) thereunder, and subject to any other
applicable laws and regulations, the Adviser and its affiliates are authorized
to effect portfolio transactions for the Fund and to retain brokerage
commissions on such transactions.
6. Records
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The Advisor agrees to maintain and to preserve for the periods prescribed under
the 1940 Act any such records as are required to be maintained by the Advisor
with respect to the Fund by the 1940 Act. The Adviser further agrees that all
records which it maintains for the Funds are the property of the Funds and it
will promptly surrender any of such records upon request.
7. Standard of Care
----------------
The Adviser shall exercise its best judgment in rendering the services under
this Agreement. The Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Funds or any Fund's shareholders
in connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Adviser
against any liability to the Funds or to their shareholders to which the Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of the
Adviser's reckless disregard of its obligations and duties under this Agreement.
As used in this Section 7, the term "Adviser" shall include any officers,
directors, employees, or other affiliates of the Adviser performing services
with respect to the Fund.
8. Compensation
------------
In consideration of the services rendered pursuant to this Agreement, the Funds
will pay the Adviser the following fees, at an annual rate as follows:
FOR THE ▇▇▇▇▇▇ GROWTH FUND
APPLICABLE ASSETS MANAGEMENT FEE
($000)
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$0 - $250,000........... 0.50%
$250,000 - $1,000,000........... 0.50%
$1,000,000 - $2,500,000........... 0.50%
$2,500,000 - $5,000,000........... 0.50%
$5,000,000 - $7,500,000........... 0.50%
$7,500,000 - $10,000,000........... 0.50%
$10,000,000 - $12,500,000........... 0.50%
Over $12,500,000.................... 0.50%
FOR THE MONTECITO FUND
$0 - $100 million 0.30%
In excess of $100 million 0.25%
These fees shall be computed and accrued daily and payable monthly. For the
purpose of determining fees payable to the Adviser, the value of each Fund's
average daily net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus or Statement of Additional Information.
9. Expenses
--------
The Adviser will bear all expenses in connection with the performance of its
services under this Agreement. Each Fund will bear certain other expenses to be
incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any, fees of Directors of the Company who are not officers,
directors, or employees of the Adviser; Securities and Exchange Commission fees
and state blue sky qualification fees; charges of custodians and transfer and
dividend disbursing agents; the Fund's proportionate share of insurance
premiums; outside auditing and legal expenses; costs of maintenance of the
Fund's existence; costs attributable to investor services, including, without
limitation, telephone and personnel expenses; charges of an independent pricing
service; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders, costs of shareholders' reports and meetings of the shareholders of
the Fund and of the officers or Board of Directors of the Company; and any
extraordinary expenses. In addition, each Fund will pay distribution fees
pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940 Act.
10. Reduction of Fees or Reimbursement to the Fund
----------------------------------------------
If in any fiscal year, the aggregate expenses of the Fund (including fees
pursuant to this Agreement and the Fund's administration agreement, but
excluding distribution fees, interest, taxes, brokerage and extraordinary
expenses) exceed the expense limitation of any state having jurisdiction over
the Fund, the Adviser will reduce its fees or reimburse the Fund for such excess
expense in the same proportion as its advisory fee bears to the Fund's combined
fee for investment advice and administration. The Adviser's obligation to reduce
its fees or reimburse the Fund will be limited to the amount of its fees
received pursuant to this Agreement. Such reduction in fees or reimbursement, if
any, will be estimated, reconciled and, in the case of reimbursement, paid on a
quarterly basis.
11. Services to Other Companies or Accounts
---------------------------------------
The investment advisory services of the Adviser to the Fund under this Agreement
are not to be deemed exclusive, and the Adviser, or any affiliate thereof, shall
be free to render similar services to other investment companies and other
clients (whether or not their investment objectives and policies are similar to
those of the Fund) and to engage in other activities, so long as its services
hereunder are not impaired thereby.
12. Duration and Termination
------------------------
This Agreement became effective on September 30, 1998, and is amended as of
April 1, 2002. The Agreement shall remain in effect, unless sooner terminated as
provided herein, for two years from such date and shall continue from year to
year thereafter, provided each continuance is specifically approved at least
annually by:
(i) the vote of a majority of the Board of Directors of the Company or,
(ii) a vote of a "majority" (as defined in the ▇▇▇▇ ▇▇▇) of the Fund's
outstanding voting securities;
Provided that in either event the continuance is also approved by a majority of
the Board of Directors who are not "interested persons" (as defined in the ▇▇▇▇
▇▇▇) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on sixty (60) days written notice by the Board of Directors of
the Company or by vote of holders of a majority of the Fund's shares or upon
ninety (90) day's written notice by the Advisor. This Agreement will also
terminate automatically in the event of its "assignment" (as defined in the 1940
Act).
13. Amendment
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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 an affirmative
vote of:
(i) a majority of the outstanding voting securities of the Funds, and
(ii) a majority of the Directors of the Company, including a majority of
Directors who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of
voting on such approval, if such approval is required by applicable
law
14. Use of Name
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It is understood that the name of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Associates, Inc. or any
derivative thereof or logo associated with that name is the valuable property of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Associates, Inc. and its affiliates, and that the Fund has the
right to use such name (or derivative or logo) only so long as this Agreement
shall continue with respect to the Fund. Upon termination of this Agreement, the
Fund shall forthwith cease to use such name (or derivative or logo) and shall
promptly amend its Articles of Incorporation to change its name to comply
herewith.
15. Miscellaneous
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(i) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(ii) Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no
way define, limit, extend or describe the scope of this Agreement or
the intent of any provisions thereof.
(iii) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one agreement, binding on
all the Parties.
(iv) This Agreement and the rights and obligations of the parties
hereunder shall be governed by, and interpreted, construed and
enforced in accordance with the laws of the State of California.
(v) If any provision of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement or the application of such provision to
such person or circumstance, other than those to which it is so
determined to be invalid or unenforceable, shall not be affected
thereby, and each provision hereof shall be valid and shall be
enforced to the fullest extent permitted by law.
(vi) Notices of any kind to be given to the Advisor by the Company shall
be in writing and shall be duly given if mailed or delivered to the
Advisor at: SBG Capital Management Company, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, or at
such other address or to such individual as shall be specified by the
Advisor to the Company. Notices of any kind to be given to the
Company by the Advisor shall be in writing and shall be duly given if
mailed or delivered to The Santa ▇▇▇▇▇▇▇ Group of Mutual Funds, Inc.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇, or at such other address or to such individual as
shall be specified by the Company to the Advisor.
IN WITNESS WHEREOF, The Company, on behalf of the Fund, and SBG have executed
this Amended Investment Management Agreement as of the 1st day of April, 2002,
to be effective as of that date and to terminate as of August 31, 2002, unless
renewed in the manner set forth .herein.
THE SANTA ▇▇▇▇▇▇▇ GROUP OF MUTUAL FUNDS, INC.
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
SBG CAPITAL MANAGEMENT, INC.
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By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
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