PROFESSIONALLY MANAGED PORTFOLIOS
INVESTMENT ADVISORY AGREEMENT
The Technical Chart Fund
THIS INVESTMENT ADVISORY AGREEMENT is made as of the 11th day of June,
2003, by and between Professionally Managed Portfolios, a Massachusetts business
trust (hereinafter called the "Trust"), on behalf of the following series of the
Trust, The Technical Chart Fund (the "Fund") and ▇▇▇▇▇▇ Management, LLC
(hereinafter called the "Advisor").
WITNESSETH:
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940 (the "Investment Company Act");
and
WHEREAS, the Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act") (or is exempt from
registration) and is engaged in the business of supplying investment advice as
an independent contractor; and
WHEREAS, the Trust desires to retain the Advisor to render investment
advice and investment management services to the Fund pursuant to the terms and
provisions of this Agreement, and the Advisor desires to furnish said advice and
services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF ADVISOR. The Trust hereby employs the Advisor and the
Advisor hereby accepts such employment, to render investment advice and
investment management services with respect to the assets of the Fund for the
period and on the terms set forth in this Agreement, subject to the supervision
and direction of the Trust's Board of Trustees.
2. DUTIES OF ADVISOR.
(a) GENERAL DUTIES. The Advisor shall act as investment adviser to the Fund
and shall supervise investments of the Fund on behalf of the Fund in accordance
with the investment objectives, policies and restrictions of the Fund as set
forth in the Fund's prospectus, statement of additional information and such
other limitations, policies and procedures as the Trustees may impose from time
to time in writing to the Advisor. In providing such services, the Advisor shall
at all times adhere to the provisions and restrictions contained in the federal
securities laws, applicable state securities laws, the Internal Revenue Code,
the Uniform Commercial Code and other applicable law.
Without limiting the generality of the foregoing, the Advisor shall: (i)
furnish the Fund with advice with respect to the investment of the Fund's assets
and the purchase and sale of portfolio securities for the Fund, including the
taking of such steps as may be necessary to implement such advice (i.e., placing
the orders); (ii) manage and oversee the investments of the Fund, subject to the
ultimate supervision and direction of the Trust's Board of Trustees; (iii) vote
proxies for the Fund and file ownership reports under Section 13 of the
Securities Exchange Act of 1934 for the Fund, as applicable; (iv) maintain
records related to the services to be performed hereunder in the form and
manner, and for such period, as it may deem advisable and is agreeable to the
Trust, but not inconsistent with Section 31 of the Investment Company Act and
the rules thereunder, except to the extent arrangements have been made for such
records to be maintained by the Fund's administrator or another agent of the
Fund; (v) furnish reports, statements and other data on securities, economic
conditions and other matters related to the investment of the Fund's assets
which the Fund's administrator or distributor or the officers of the Trust may
reasonably request; and (vi) render to the Trust's Board of Trustees such
periodic and special reports with respect to each Fund's investment activities
as the Board may reasonably request, including at least one in-person appearance
annually before the Board of Trustees.
(b) BROKERAGE. The Advisor shall be responsible for decisions to buy and
sell securities for the Fund, for broker-dealer selection, and for negotiation
of brokerage commission rates, provided that the Advisor shall not direct order
to an affiliated person of the Advisor without general prior authorization to
use such affiliated broker or dealer from the Trust's Board of Trustees. The
Advisor's primary consideration in effecting a securities transaction will be
best execution. In selecting a broker-dealer to execute each particular
transaction, the Advisor may take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the
broker dealer; the size of and difficulty in executing the order; and the value
of an ongoing relationship of the Advisor with the broker-dealer. The price to
the Fund in any transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified by other aspects
of the portfolio execution and research services offered.
Subject to such policies as the Board of Trustees of the Trust may
determine, the Advisor shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides (directly or
indirectly) brokerage or research services to the Advisor an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities with respect to
the Fund and any other accounts as to which the Advisor exercises investment
discretion. The Advisor is further authorized to allocate the orders placed by
it on behalf of the Fund to such brokers or dealers who also provide research or
statistical material, or other services, to the Trust, the Advisor, or any
affiliate of either. Such allocation shall be in such amounts and proportions as
the Advisor shall determine, and the Advisor shall report on such allocations
regularly to the Trust, indicating the broker-dealers to whom such allocations
have been made and the basis therefor. The Advisor is also authorized to
consider sales of shares as a factor in the selection of brokers or dealers to
execute portfolio transactions, subject to the requirements of best execution,
i.e., that such brokers or dealers are able to execute the order in accordance
with best execution.
On occasions when the Advisor deems the purchase or sale of a security to
be in the best interest of the Fund as well as of other clients, the Advisor, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in an effort to obtain best execution. In
such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Advisor in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
3. REPRESENTATIONS OF THE ADVISOR.
(a) The Advisor shall use its best judgment and efforts in rendering the
advice and services to the Fund as contemplated by this Agreement.
(b) The Advisor shall maintain all licenses and registrations necessary to
perform its duties hereunder in good order.
(c) The Advisor shall conduct its operations at all times in conformance
with the Advisers Act, the Investment Company Act , and any other applicable
state and/or self-regulatory organization regulations.
(d) The Advisor shall maintain errors and omissions insurance in an amount
at least equal to that disclosed to the Board of Trustees in connection with
their approval of this Agreement.
4. INDEPENDENT CONTRACTOR. The Advisor shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Advisor to the Fund under the provisions of this Agreement are
not to be deemed exclusive, and the Advisor shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. ADVISOR'S PERSONNEL. The Advisor shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Advisor shall
include persons who may be employed or retained by the Advisor to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Advisor deems prudent in light of its fiduciary obligation to the Fund.
6. EXPENSES.
(a) With respect to the operation of the Fund, the Advisor shall be
responsible for (i) providing the personnel, office space and equipment
reasonably necessary for the Advisor to perform the services to the Fund
contemplated by this Agreement, (ii) the expenses of printing and distributing
copies of the Fund's prospectus, statement of additional information, and sales
and advertising materials (but not the legal, auditing or accounting fees
attendant thereto) to prospective investors (but not to existing shareholders),
and (iii) the costs of any special Board of Trustees meetings or shareholder
meetings convened at the request of and for the primary benefit of the Advisor.
If the Advisor has agreed to limit the operating expenses of the Fund pursuant
to an expense limitation agreement, the Advisor shall also be responsible on a
monthly basis for any operating expenses that exceed the agreed upon expense
limit.
(b) The Fund is responsible for and has assumed the obligation for payment
of all of its expenses, other than as stated in Subparagraph 6(a) above,
including but not limited to: fees and expenses incurred in connection with the
issuance, registration and transfer of its shares; brokerage and commission
expenses; all expenses of transfer, receipt, safekeeping, servicing and
accounting for the cash, securities and other property of the Trust for the
benefit of the Fund including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the
Investment Company Act; taxes, if any; expenditures in connection with meetings
of the Fund's shareholders and the Trust's Board of Trustees that are properly
payable by the Fund; salaries and expenses of officers and fees and expenses of
members of the Trust's Board of Trustees or members of any advisory board or
committee who are not members of, affiliated with or interested persons of the
Advisor; insurance premiums on property or personnel of each Fund which inure to
its benefit, including liability and fidelity bond insurance; the cost of
preparing and printing reports, proxy statements, prospectuses and statements of
additional information of the Fund or other communications for distribution to
existing shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of registering and maintaining
registration of its shares for sale under federal and applicable state and
foreign securities laws; all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit of the Fund,
if any; and all other charges and costs of its operation plus any extraordinary
and non-recurring expenses, except as herein otherwise prescribed.
(c) The Advisor may voluntarily absorb certain Fund expenses or waive all
or a portion of the Advisor's own advisory fee.
(d) To the extent the Advisor incurs any costs by assuming expenses which
are an obligation of the Fund as set forth herein, the Fund shall promptly
reimburse the Advisor for such costs and expenses, except to the extent the
Advisor has otherwise agreed in writing to bear such expenses. To the extent the
services for which the Fund is obligated to pay are performed by the Advisor,
the Advisor shall be entitled to recover from the Fund to the extent of the
Advisor's actual costs for providing such services. In determining the Advisor's
actual costs, the Advisor may take into account an allocated portion of the
salaries and overhead of personnel performing such services.
7. INVESTMENT ADVISORY AND MANAGEMENT FEE.
(a) The Fund shall pay to the Advisor, and the Advisor agrees to accept, as
full compensation for all investment management and advisory services furnished
or provided to such Fund pursuant to this Agreement, an annual management fee at
the rate set forth in Schedule A to this Agreement.
(b) The management fee shall be accrued daily by the Fund and paid to the
Advisor on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Advisor shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(d) The fee payable to the Advisor under this Agreement will be reduced to
the extent of any receivable owed by the Advisor to the Fund and as required
under any expense limitation agreement applicable to a Fund.
(e) The Advisor voluntarily may reduce any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement and may agree to
make payments to limit the expenses which are the responsibility of a 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 the Advisor hereunder or to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis.
(f) Any such voluntary reductions made by the Advisor in its fees or
payment of expenses which are the Fund's obligation are subject to reimbursement
by the Fund to the Advisor, if so requested by the Advisor, in subsequent fiscal
years if the aggregate amount actually paid by the Fund toward the operating
expenses for such fiscal year (taking into account the reduction and/or
reimbursement) does not exceed the applicable limitation on Fund expenses under
an expense limitation agreement. Pursuant to such expense limitation agreement,
the Advisor may recoup reductions or reimbursements made in any fiscal year of
the Fund over the following three fiscal years. Any such reimbursement is also
contingent upon Board of Trustees review and approval at time the reimbursement
is made. Such reimbursement may not be paid prior to the Fund's payment of
current ordinary operating expenses.
(g) The Advisor may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Advisor
hereunder.
8. NO SHORTING; NO BORROWING. The Advisor agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Fund. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of the Advisor or any trust, pension, profit sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Advisor
agrees that neither it nor any of its officers or employees shall "borrow" from
the Fund, as such term is defined in the Investment Company Act or pledge or use
the Fund's assets in connection with any borrowing not directly for the Fund's
benefit.
9. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Agreement and Declaration of Trust, By-Laws, or
any applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of the conduct of
the affairs of the Trust and Fund. In this connection, the Advisor acknowledges
that the Trustees retain ultimate plenary authority over the Fund and may take
any and all actions necessary and reasonable to protect the interests of
shareholders.
10. REPORTS AND ACCESS. The Advisor agrees to supply such information to
the Fund's administrator and to permit such compliance inspections by the Fund's
administrator as shall be reasonably necessary to permit the administrator to
satisfy its obligations and respond to the reasonable requests of the Trustees.
11. ADVISOR'S LIABILITIES AND INDEMNIFICATION.
(a) The Advisor shall have responsibility for the accuracy and completeness
(and liability for the lack thereof) of the statements in the Fund's offering
materials (including the prospectus, the statement of additional information,
advertising and sales materials), to the extent such information is supplied by
the Advisor. The Advisor shall have no responsibility with respect to
information supplied by the administrator or the Trust or another third party
for inclusion therein.
(b) The Advisor shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any investment made by
the Advisor in violation of a stated investment policy or restriction of the
Fund.
(c) In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties hereunder on the part of the
Advisor, the Advisor shall not be subject to liability to the Trust or the Fund
or to any shareholder of the Fund 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 by the Fund.
(d) Each party to this Agreement shall indemnify and hold harmless the
other party and the shareholders, directors, officers and employees of the other
party (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or nonperformance of any obligations or duties under this
Agreement provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of obligations and duties hereunder or by reason
of reckless disregard of obligations and duties under this Agreement.
(e) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or officer of the Advisor, from liability in
violation of Sections 17(h) and (i) of the Investment Company Act.
12. NON-EXCLUSIVITY; TRADING FOR ADVISOR'S OWN ACCOUNT. The Trust's
employment of the Advisor is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Advisor may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from buying, selling or trading any securities for its or their own accounts or
the accounts of others for whom it or they may be acting, provided, however,
that the Advisor expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that the Advisor will adhere to a code of ethics
governing employee trading and trading for proprietary accounts that conforms to
the requirements of the Investment Company Act and the Advisers Act and has been
approved by the Trust's Board of Trustees.
13. TERM.
(a) This Agreement shall become effective at the time the Fund commences
operations pursuant to an effective amendment to the Trust's Registration
Statement under the Securities Act of 1933 and shall remain in effect for a
period of two (2) years, unless sooner terminated as hereinafter provided. This
Agreement shall continue in effect thereafter for additional periods not
exceeding one (l) year so long as such continuation is approved for the Fund at
least annually by (i) the Board of Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of each Fund and (ii) the vote of
a majority of the Trustees of the Trust who are not parties to this Agreement
nor interested persons thereof, cast in person at a meeting called for the
purpose of voting on such approval. The terms "majority of the outstanding
voting securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
(b) The Fund may use the name The Technical Chart Fund or any name derived
from or using the name The Technical Chart Fund only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect.
Within sixty (60) days from such time as this Agreement shall no longer be in
effect, the Fund shall cease to use such a name or any other name connected with
the Advisor.
14. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Trust on behalf of the Fund at
any time without payment of any penalty, by the Board of Trustees of the Trust
or by vote of a majority of the outstanding voting securities of a Fund, upon
sixty (60) days' written notice to the Advisor, and by the Advisor upon sixty
(60) days' written notice to the Fund. In the event of a termination, the
Advisor shall cooperate in the orderly transfer of the Fund's affairs and, at
the request of the Board of Trustees, transfer any and all books and records of
the Fund maintained by the Advisor on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
15. AMENDMENT. Except to the extent permitted by the Investment Company Act
or the rules or regulations thereunder or pursuant to exemptive relief granted
by the Securities and Exchange Commission ("SEC"), this Agreement may be amended
by the parties only if such amendment, if material, is specifically approved by
the vote of a majority of the outstanding voting securities of the Fund and by
the vote of a majority of the Trust's Board of Trustees, including a majority of
the Trustees of the Trust who are not interested persons, cast in person at a
meeting called for the purpose of voting on such approval. The required
shareholder approval shall be effective with respect to the Fund if a majority
of the outstanding voting securities of the Fund vote to approve the amendment,
notwithstanding that the amendment may not have been approved by a majority of
the outstanding voting securities of any other series of the Trust affected by
the amendment or all the series of the Trust. The terms "majority of the
outstanding voting securities" and "interested persons" shall have the meanings
as set forth in the Investment Company Act.
16. NOTICE. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed and
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
17. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
18. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
19. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Advisers Act and any rules
and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
PROFESSIONALLY MANAGED PORTFOLIOS
on behalf of The Technical Chart Fund
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇ MANAGEMENT, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Managing Member
SCHEDULE A
Series or Fund of Professionally Managed Portfolios Annual Fee Rate
The Technical Chart Fund 1.50% of average daily net assets