INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 5th day of November, 1997, and amended this 1st
day of February, 1998, by and between OCC ACCUMULATION TRUST (formerly called
Quest for Value Accumulation Trust and before that, Quest for Value Asset
Builder Trust), a Massachusetts business trust (the "Fund") and OPCAP
ADVISORS (formerly called Quest for Value Advisors), a Delaware general
partnership (the "Manager").
WHEREAS, the Fund is an open-end, diversified, management investment
company, organized in "series" form and comprised of eight separate
investment portfolios (the "Portfolios" or the "Series") and is registered
with the Securities and Exchange Commission (the "Commission") pursuant to
the Investment Company Act of 1940 (the "1940 Act");
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the Fund and the Manager agree as follows:
1. GENERAL PROVISIONS
The Fund hereby employs the Manager and the Manager hereby undertakes to
act as the investment adviser of the Fund in connection with and for the
benefit of each Portfolio, including any Portfolio hereafter created, and to
perform for the Fund and for each of the Portfolios such other duties and
functions in connection with each Portfolio for the period and on such terms
as set forth in this Agreement. The Manager shall, in all matters, give to
the Fund and its Board of Trustees (the "Trustees") the benefit of its best
judgment, effort, advice and recommendations and shall at all times conform
to, and use its best efforts to enable the Fund to conform to:
(a) the provisions of the 1940 Act and any rules or regulations
thereunder;
(b) any other applicable provisions of state or federal law;
(c) the provisions of the Declaration of Trust and By-Laws of the
Fund as amended from time to time;
(d) the policies and determinations of the Trustees;
(e) the investment objectives and policies and investment
restrictions of each Portfolio as reflected in the registration
statement of the Fund under the 1940 Act or as such objectives,
policies and restrictions may from time to time be amended; and
(f) the prospectus, if any, of the Fund in effect from time to time.
The appropriate officers and employees of the Manager shall be available upon
reasonable notice for consultation with any of the Trustees or officers with
respect to any matters dealing with the Fund's business affairs, including
the valuation of any securities held by the Fund for the benefit of any
Portfolio that are either not registered for public sale or not being traded
on any securities market.
2. INVESTMENT MANAGEMENT
(a) The Manager shall, subject to the direction and control by the
Trustees, separately with respect to each Portfolio: (i) regularly
provide investment advice and recommendations to the Fund with
respect to it's investments, investment policies, and the purchase
and sale of securities and commodities; (ii) supervise continuously
and determine the securities and commodities to be purchased or
sold by the Fund and the portion, if any, of the Fund's assets to
be held uninvested; and (iii) arrange, subject to the provisions of
Section 6 hereof, for the purchase and sale of securities,
commodities and other investments by the Fund.
(b) The Manager may obtain investment information, research or
assistance from any other person, firm or corporation to
supplement, update or otherwise improve its investment management
services, including entering into sub-advisory agreements with
other affiliated or unaffiliated registered investment advisers in
order to obtain specialized services; provided, however, that the
Fund shall not be required to pay any compensation other than as
provided by the terms of this Agreement and subject to the
provisions of Section 5 hereof.
(c) So long as the Manager shall have acted with due care and in
good faith, the Manager shall not be liable to the Fund or its
shareholders for any error in judgment, mistake of law, or any
other act or omission in the course of or connected with, rendering
services hereunder, including without limitation, any losses which
may be sustained by the Fund or its shareholders as a result of the
purchase, holding, redemption, or sale of any security by the Fund
irrespective of whether the determinations of the Manager relative
thereto shall have been based, in whole or in part, upon the
investigation, research or recommendation of any other individual,
firm or corporation believed by the Manager to be reliable.
Nothing herein contained shall, however, be construed to protect
the Manager against any liability to the Fund or its shareholders
arising out of the Manager's willful misfeasance, bad faith, or
gross negligence in the performance of its duties or reckless
disregard of its obligations and duties under this Agreement.
(d) Nothing in this Agreement shall prevent the Manager, any
parent, subsidiary or affiliate, or any director or officer
thereof, from acting as investment adviser for any other person,
firm, or corporation, and shall not in any way limit or restrict
the Manager or any of its directors, officers, stockholders or
employees from buying, selling or trading any securities or
commodities for its or their own account or for the account of
others for whom it or they may be acting, if such activities will
not adversely affect or otherwise impair the performance by the
Manager of its duties and obligations under this Agreement.
2
3. OTHER DUTIES OF THE MANAGER
The Manager shall, at its own expense, provide and supervise the
activities of all administrative and clerical personnel and shall be required
to provide effective corporate administration for the Fund, including (1)
coordination of the functions of accountants, counsel and other parties
performing services for the Fund, (2) the preparation and filing of such
reports related to the Fund or to any Portfolio as shall be required by
federal securities laws and various state "blue sky" laws, (3) composition of
periodic reports with respect to its operations for shareholders of the Fund
and (4) composition of proxy materials for meetings of the Fund's
shareholders.
4. ALLOCATION OF EXPENSES
The Manager will bear all costs and expenses of its employees and
overhead incurred by it in connection with its duties hereunder except as
noted in Section 5 below. All other expenses (other than those to be paid by
the Fund's distributor under a distribution agreement), shall be paid by the
Fund, including, but not limited to:
(a) interest expense, taxes and governmental fees;
(b) brokerage commissions and other expenses incurred in acquiring
or disposing of the Fund's securities and commodities holdings;
(c) insurance premiums for fidelity and other coverage requisite to
the Fund's operations;
(d) fees of the Trustees other than those who are interested
persons of the Fund and out-of-pocket travel expenses for all
Trustees and other expenses incurred by the Fund in connection with
Trustees' meetings;
(e) outside legal, accounting and audit expenses;
(f) custodian, dividend disbursing, and transfer agent fees and
expenses;
(g) expenses in connection with the issuance, offering, sale or
underwriting of securities issued by the Fund, including
preparation of stock certificates;
(h) fees and expenses, other than as hereinabove provided, incident
to the registration or qualification of the Fund's shares for sale
with the Commission and in various states and foreign jurisdictions;
(i) expenses of printing and mailing reports and notices and proxy
material to the Fund's shareholders;
(j) all other expenses incidental to holding meetings of the Fund's
shareholders;
(k) expenses of organizing the Fund; and
3
(l) such extraordinary non-recurring expenses as may arise,
including litigation affecting the Fund and the legal obligation
the Fund may have to indemnify its officers and Trustees with
respect thereto.
Notwithstanding the foregoing, the Manager shall pay all salaries and
fees of each of the Fund's officers and Trustees who are interested persons
of the Manager.
5. COMPENSATION OF THE MANAGER
(a) The Fund agrees to pay the Manager, and the Manager agrees to
accept as full compensation for the performance of all its
functions and duties to be performed hereunder, a fee based on the
total net assets of each Portfolio at the end of each business day.
Determination of net asset value of each Portfolio will be made in
accordance with the policies disclosed in the Fund's registration
statement under the 1940 Act. The fee is payable at the close of
business on the last day of each calendar month and shall be made
on the first business day following such last calendar day. The
payment due on such day shall be computed by (1) adding together
the results of multiplying (i) the total net assets of each
Portfolio on each day of the month by (ii) the applicable daily
fraction of the annual advisory fee percentage rate for such
Portfolio as set forth on Schedule A hereto and then (2) adding
together the total monthly amounts computed for each Portfolio.
(b) In the event the operating expenses (net of any expense
offsets) of the Fund, including any amounts payable to the Manager
pursuant to subsection (a) hereof, but excluding the amount of any
interest, taxes, brokerage commissions, distribution fees, and
extraordinary expenses (including but not limited to legal claims
and liabilities and litigation costs and any indemnification
related thereto) paid or payable by the Fund for any fiscal year
ending on a date during which this Agreement is in effect, exceed
the most restrictive state law provisions in effect in states where
the Fund is qualified to be sold, the Manager will pay or refund to
the Fund any such excess amount. In addition, the Manager shall
waive any amounts payable to the Manager pursuant to subsection (a)
hereof, and reimburse the Fund such that total operating expenses
(net of any expense offsets) of each of the Portfolios of the Fund
except the Global Equity Portfolio do not exceed 1.00% of their
respective average daily net assets and such that total operating
expenses (net of any expense offsets) of the Global Equity
Portfolio do not exceed 1.25% of its average daily net assets.
Whenever the expenses of a Portfolio exceed a pro rata portion of
the expense limitations stated above, the monthly amount payable to
the Manager will be reduced or postponed in the amount of such
excess.
6. PORTFOLIO TRANSACTIONS AND BROKERAGE
(a) The Manager is authorized, in arranging the purchase and sale
of the Fund's portfolio securities, to employ or deal with such
members of securities exchanges and brokers or dealers, including
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. ("CIBC Oppenheimer") ("broker/dealer"), as
may, in the Manager's best judgment based on all relevant factors,
implement the policy of
4
the Fund to obtain, at reasonable expense, the "best execution"
(prompt and reliable execution of the Fund's securities
transactions at the most favorable security prices obtainable of
the Fund's securities transactions) as well as to obtain,
consistent with the provisions of subparagraph (c) of this Section
6, the benefit of such investment information or research as will
be of significant assistance to the Manager in the performance of
its functions and duties under this Agreement.
(b) The Manager shall select broker/dealers to effect the Fund's
securities transactions on the basis of its estimate of the ability
of such broker/dealers to obtain best execution of particular and
related securities transactions. The ability of a broker/dealer to
obtain best execution of particular securities transaction(s) will
be judged by the Manager on the basis of all relevant factors and
considerations, including, insofar as feasible, the execution
capabilities required by the transactions; the ability and
willingness of the broker/dealer to facilitate the Fund's
securities transactions by participating therein for its own
account; the importance to the Fund of speed, efficiency or
confidentiality; the broker/dealer's apparent familiarity with
sources from or to whom particular securities might be purchased or
sold; and any other matters relevant to the selection of a
broker/dealer for particular and related transactions of the Fund.
(c) The Manager shall have discretion, in the interests of the
Fund, to allocate brokerage on the Fund's securities transactions
to broker/dealers qualified to provide best execution of such
transactions who provide brokerage and/or research services (as
such services are defined in Section 28(e)(3) of the Securities
Exchange Act of 1934 (the "1934 Act")) for the Fund and/or other
accounts for which the Manager exercises investment discretion (as
that term is defined in Section 3(a)(35) of the ▇▇▇▇ ▇▇▇) and to
cause the Fund to pay such broker/dealers (other than CIBC
Oppenheimer) a commission for effecting a securities transaction
for the Fund that is in excess of the amount of commission another
broker/dealer adequately qualified to effect such transaction would
have charged for effecting that transaction, if the Manager
determines, in good faith, that such commission is reasonable in
relation to the value of the brokerage and/or research services
provided by such broker/dealer, viewed in terms of either that
particular transaction or the Manager's overall responsibilities
with respect to the accounts as to which it exercises investment
discretion. In reaching such determination, the Manager will not
be required to place or attempt to place a specific dollar value on
the brokerage and/or research services provided by such
broker/dealer. In demonstrating that such determinations were made
in good faith, the Manager shall be prepared to show that all
commissions were allocated to such broker/dealers for purposes
contemplated by this Agreement and that the total commissions paid
by the Fund over a representative period selected by the Trustees
were reasonable in relation to the benefits received by the Fund.
Such research information may be in written form or through direct
contact with individuals, and may include information on particular
companies and industries as well as market, economic or
institutional activity areas.
5
(d) The Manager shall have no duty or obligation to seek advance
competitive bidding for the most favorable commission rate
applicable to any particular securities transactions or to select
any broker/dealer on the basis of its purported or "posted"
commission rate, although it will, to the best of its ability,
endeavor to be aware of the current level of the charges of
eligible broker/dealers and to minimize the expense incurred by the
Fund for effecting its securities transactions to the extent
consistent with the interests and policies of the Fund as
established by the determinations of the Trustees and the
provisions of this Section 6.
(e) The Fund recognizes and intends that, subject to the foregoing
provisions of this Section 6, CIBC Oppenheimer will act as its
regular broker so long as it is lawful for it so to act and that
CIBC Oppenheimer may be a major recipient of brokerage commissions
paid by the Fund. CIBC Oppenheimer may effect securities
transactions for the Fund only if (1) the commissions, fees or
other remuneration received or to be received by it are reasonable
and fair compared to the commissions, fees or other remuneration
received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold
on a securities exchange during a comparable period of time and (2)
to the extent required, the Trustees, including a majority of those
Trustees who are not interested persons, have adopted procedures
pursuant to Rule 17e-1 under the 1940 Act for determining the
permissible level of such commissions.
(f) Sales of shares of the Fund and/or shares of the other
investment companies managed by the Manager or distributed by the
Fund's distributor may, subject to applicable rules covering the
distributor's activities in this area, also be considered as a
factor in the direction of securities transactions to dealers, but
only in conformity with the price, execution and other
considerations and practices discussed above. Those other
investment companies may also give similar consideration relating
to the sale of the Fund's shares. The Fund will not purchase any
securities from or sell any securities to CIBC Oppenheimer acting
as principal for its own account.
(g) When orders to purchase or sell the same security on identical
terms are placed by more than one of the funds and/or other
advisory accounts managed by the Manager or its affiliates, the
transactions are generally executed as received, although a fund or
advisory account that does not direct trades to a specific broker
("free trades") usually will have its order executed first.
Purchases are combined where possible for the purpose of
negotiating brokerage commissions, which in some cases might have a
detrimental effect on the price or volume of the security in a
particular transaction as far as the Fund is concerned. Orders
placed by accounts that direct trades to a specific broker will
generally be executed after the free trades. All orders placed on
behalf of the Fund are considered free trades. However, having an
order placed first in the market does not necessarily guarantee the
most favorable price.
6
7. DURATION
This Agreement will become effective as of the date hereof. This
Agreement will continue in effect for two years from the date hereof and
thereafter (unless sooner terminated in accordance with this agreement) for
successive periods of twelve months so long as each continuance shall be
specifically approved at least annually with respect to each Portfolio by (1)
the vote of a majority of those Trustees who are not parties to this
Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (2) a majority
of the Trustees or of a majority of the outstanding voting securities of the
respective Portfolios of the Fund.
8. TERMINATION
This Agreement may be terminated (i) by the Manager at any time, without
payment of any penalty upon giving the Fund ninety (90) days' written notice
(which notice may be waived by the Fund); or (ii) by the Fund at any time,
without payment of any penalty upon sixty (60) days' written notice to the
Manager (which notice may be waived by the Manager), provided that such
termination by the Fund shall be directed or approved by the vote of the
majority of all of the Trustees or by the vote of a majority of the
outstanding voting securities of the Portfolios of the Fund with respect to
which notice of termination has been given to the Manager.
9. AMENDMENT OR ASSIGNMENT
This Agreement may be amended with respect to a Portfolio only if such
amendment is specifically approved by (i) the vote of the outstanding voting
securities of such Portfolio and (ii) a majority of the Trustees, including a
majority of those Trustees who are not parties to this Agreement or
interested persons of such party, cast in person at a meeting called for the
purpose of voting on such approval, provided that this Agreement may be
amended to add a new Portfolio or delete an existing Portfolio without a vote
of the shareholders of any other Portfolio covered by this Agreement. This
Agreement shall automatically and immediately terminate in the event of its
assignment, as that term is defined in the 1940 Act and the rules thereunder.
10. GOVERNING LAW
This Agreement shall be interpreted in accordance with the laws of the
State of New York and the applicable provisions of the 1940 Act, other
securities laws and rules thereunder. To the extent that the applicable laws
of the State of New York, other securities laws or any of the provisions
herein, conflict with the applicable provisions of the 1940 Act, the latter
shall control.
11. SEVERABILITY
If any provisions of this Agreement shall be held or made unenforceable
by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
7
12. DEFINITIONS
As used in this Agreement, the terms "interested person" and "vote of a
majority of the outstanding securities" shall have the respective meanings
set forth in Sections 2(a)(19) and 2(a)(42) of the 1940 Act.
13. NO LIABILITY OF SHAREHOLDERS
This Agreement is executed by the Trustees of the Fund, not
individually, but rather in their capacity as Trustees under the Declaration
of Trust made May 12, 1994. None of the Shareholders, Trustees, officers,
employees, or agents of the Fund shall be personally bound or liable under
this Agreement, nor shall resort be had to their private property for the
satisfaction of any obligation or claim hereunder but only to the property of
the Fund and, if the obligation or claim relates to the property held by the
Fund for the benefit of one or more but fewer than all Portfolios, then only
to the property held for the benefit of the affected Portfolio.
14. NOTICE OF CHANGE IN PARTNERSHIP OF MANAGER
The Manager agrees to notify the Fund within a reasonable period of time
regarding a material change in the membership of the Manager.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
OCC ACCUMULATION TRUST
Attest:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ Jr.
--------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Title: Secretary
OPCAP ADVISORS
Attest:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: Secretary
8
SCHEDULE A
to
Investment Advisory Agreement
between
OCC Accumulation Trust and OpCap Advisors
ANNUAL FEE AS A
PERCENTAGE OF DAILY
NAME OF SERIES NET ASSETS
-------------- -------------------
Equity Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Mid Cap Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Small Cap Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Managed Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
Global Equity Portfolio 0.80% on first $400 million
0.75% on next $400 million
0.70% thereafter
U.S. Government Income Portfolio .60%
Bond Portfolio .50%
Money Market Portfolio .40%
9