EXHIBIT 99.B5(a)(iii)
ADVISORY CONTRACT
LIFE & ANNUITY TRUST
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
April 30, 1998
▇▇▇▇▇ Fargo Bank, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") on
behalf of the Funds listed in Appendix A (each a "Fund") and ▇▇▇▇▇ Fargo Bank,
N.A. (the "Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of four investment portfolios, but which may from time to
time consist of a greater or lesser number of investment portfolios (the
"Funds"). The Trust proposes to engage in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objective and restrictions specified in the Trust's currently
effective prospectus and the currently effective statement of additional
information incorporated by reference therein relating to the Fund and the Trust
(such prospectus and such statement of additional information being collectively
referred to as the "Prospectus") included in the Trust's Registration Statement,
as amended from time to time (the "Registration Statement"), filed by the Trust
under the Investment Company Act of 1940 (the "Act") and the Securities Act of
1933. Copies of the documents referred to in the preceding sentence have been
furnished to the Adviser. Any amendments to those documents shall be furnished
to the Adviser promptly.
2. The Trust is engaging the Adviser to manage the investing and
reinvesting of the assets of the Fund and to provide the advisory services
specified elsewhere in this contract, subject to the overall supervision of the
Board of Trustees of the Trust. Pursuant to an administration agreement between
the Trust and ▇▇▇▇▇▇▇▇ Inc. (the "Administrator") on behalf of the Fund, the
Trust has engaged the Administrator to provide the administrative services
specified therein.
3. (a) The Adviser shall make investments for the account of the Fund in
accordance with the Adviser's best judgment and consistent with the investment
objective and restrictions set forth in the Trust's Prospectus, the Act and the
provisions of the Internal Revenue Code relating to regulated investment
companies and variable annuity contracts, subject to policy decisions adopted by
the Trust's Board of Trustees. The Adviser shall advise the Trust's officers
and Board of Trustees, at such times as the Trust's Board of Trustees may
specify, of investments
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made for the Fund and shall, when requested by the Trust's officers or Board of
Trustees, supply the reasons for making particular investments.
(b) The Adviser shall provide to the Trust investment guidance and
policy direction in connection with its daily management of the Fund's
portfolio, including oral and written research, analysis, advice, statistical
and economic data and information and judgments, and shall furnish to the
Trust's Board of Trustees periodic reports on the investment strategy and
performance of the Fund and such additional reports and information as the
Trust's Board of Trustees and officers shall reasonably request.
(c) The Adviser shall pay the costs of printing and distributing all
materials relating to the Fund prepared by it, or prepared at its request, other
than such costs relating to proxy statements, prospectuses, reports for holders
of beneficial interests ("Interests") of the Fund ("Holders") and other
materials distributed to existing or prospective Holders on behalf of the Fund.
(d) The Adviser shall, at its expense, employ or associate with itself
such persons as the Adviser believes appropriate to assist it in performing its
obligations under this contract.
4. The Trust understands that the Adviser, in rendering its services to
the Funds hereunder, may engage a sub-adviser to provide certain sub-advisory
services pursuant to a separate sub-advisory contract. The Adviser will not
seek to amend any sub-advisory contract to materially alter the obligations of
the parties unless the Adviser gives the Trust at least 60 days' prior written
notice thereof.
5. Except as provided in each of the Trust's advisory contracts and
administration agreements, the Trust shall bear all costs of its operations,
including the compensation of its trustees who are not affiliated with the
Adviser, the Administrator or any of their affiliates; advisory and
administration fees; governmental fees; interest charges; taxes; fees and
expenses of its independent accountants, legal counsel, transfer agent and
dividend disbursing agent; expenses of redeeming Interests; expenses of
preparing and printing Interest certificates, prospectuses (except the expense
of printing and mailing prospectuses used for promotional purposes), Holders'
reports, notices, proxy statements and reports to regulatory agencies; travel
expenses of trustees, officers and employees; office supplies; insurance
premiums and certain expenses relating to insurance coverage; trade association
membership dues; brokerage and other expenses connected with the execution of
portfolio securities transactions; fees and expenses of any custodian, including
those for keeping books and accounts and calculating the net asset value per
Interest of the Fund; expenses of Holders' meetings; expenses relating to the
issuance, registration and qualification of Interests of the Fund; pricing
services, if any; organizational expenses; and any extraordinary expenses.
Expenses attributable to one or more, but not all, of the Funds are charged
against the assets of the relevant Funds. General expenses of the Funds are
allocated among the Funds in a manner proportionate to the net assets of each
Fund, on a transactional basis or on such other basis as the Board of Trustees
deems equitable.
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6. The Adviser shall give the Trust the benefit of the Adviser's best
judgment and efforts in rendering services under this contract. As an
inducement to the Adviser's undertaking to render these services, the Trust
agrees that the Adviser shall not be liable under this contract for any mistake
in judgment or in any other event whatsoever except for lack of good faith,
provided that nothing in this contract shall be deemed to protect or purport to
protect the Adviser against any liability to the Trust or its Holders to which
the Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of the Adviser's duties under this
contract or by reason of reckless disregard of its obligations and duties
hereunder.
7. In consideration of the services to be rendered by the Adviser under
this contract, the Trust shall pay the Adviser a monthly fee on the first
business day of each month, at an annual rate, listed in Appendix B, of the
average daily value (as determined on each day that such value is determined for
the Fund at the time set forth in the Prospectus for determining net asset value
per Interest) of the Fund's net assets during the preceding month. If the fee
payable to the Adviser pursuant to this paragraph 7 begins to accrue before the
end of any month or if this contract terminates before the end of any month, the
fee for the period from the effective date to the end of that month or from the
beginning of that month to the termination date, respectively, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. For purposes of calculating each such
monthly fee, the value of the Fund's net assets shall be computed in the manner
specified in the Prospectus and the Trust's Declaration of Trust for the
computation of the value of the Fund's net assets in connection with the
determination of the net asset value of Fund Interests.
8. If in any fiscal year the total expenses of the Fund incurred by, or
allocated to, the Fund excluding taxes, interest, brokerage commissions and
other portfolio transaction expenses, other expenditures that are capitalized in
accordance with generally accepted accounting principles and extraordinary
expenses of the Fund, but including the fees provided for in paragraph 7 and
those provided for pursuant to the Fund's Administration Agreement ("includible
expenses"), exceed the most restrictive expense limitation applicable to the
Fund imposed by state securities laws or regulations thereunder, as these
limitations may be raised or lowered from time to time, the Adviser shall waive
or reimburse that portion of the excess derived by multiplying the excess by a
fraction, the numerator of which shall be the percentage at which the excess
portion attributable to the fee payable pursuant to this agreement is calculated
under paragraph 7 hereof, and the denominator of which shall be the sum of such
percentage plus the percentage at which the excess portion attributable to the
fee payable pursuant to the Fund's Administration Agreement is calculated (the
"Applicable Ratio"), but only to the extent of the fee hereunder for the fiscal
year. If the fees payable under this agreement and/or the Fund's Administration
Agreement contributing to such excess portion are calculated at more than one
percentage rate, the Applicable Ratio shall be calculated separately on the
basis of, and applied separately to, the portions of the fees calculated at the
different rates. At the end of each month of the Trust's fiscal year, the Trust
shall review the includible expenses accrued during that fiscal year to the end
of the period and shall estimate the contemplated includible expenses for the
balance of that fiscal year. If as a result of that review and estimation it
appears likely that the includible expenses will exceed the limitations referred
to in this paragraph 8 for a fiscal year with respect to the Fund, the monthly
fee set forth in paragraph 7 payable to the
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Adviser for such month shall be reduced, subject to a later adjustment, by an
amount equal to the Applicable Ratio times the pro rata portion (prorated on the
basis of the remaining months of the fiscal year, including the month just
ended) of the amount by which the includible expenses for the fiscal year are
expected to exceed the limitations provided for in this paragraph 8. For
purposes of computing the excess, if any, over the most restrictive applicable
expense limitation, the value of the Fund's net assets shall be computed in the
manner specified in the last sentence of paragraph 7, and any reimbursements
required to be made by the Adviser shall be made once a year promptly after the
end of the Trust's fiscal year.
9. This contract shall become effective on its execution date and shall
thereafter continue in effect, provided that this contract shall continue in
effect for a period of more than two years from the date hereof only so long as
the continuance is specifically approved at least annually (a) by the vote of a
majority of the Fund's outstanding voting securities (as defined in the Act) or
by the Trust's Board of Trustees and (b) by the vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this contract or "interested persons" (as defined in the Act) of
any such party. This contract may be terminated at any time by the Trust,
without the payment of any penalty, by a vote of a majority of the Fund's
outstanding voting securities (as defined in the Act) or by a vote of a majority
of the Trust's entire Board of Trustees on 60 days' written notice to the
Adviser or by the Adviser, at any time after the second anniversary of the
effective date of this contract, on 60 days' written notice to the Trust. This
contract shall terminate automatically in the event of its assignment (as
defined in the Act).
10. Except to the extent necessary to perform the Adviser's obligations
under this contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
11. This agreement has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust.
The obligations of this agreement shall only be binding upon the assets and
property of the relevant Fund, as provided for in the Trust's Agreement and
Declaration of Trust, and shall not be binding upon any trustee, officer or
shareholder of the Trust or Fund individually.
12. The Trust shall own and control all records generated on behalf of
the Trust as a result of services provided under this contract. In addition,
the Trust shall have the right to inspect, audit, and/or copy all records
pertaining to the performance of services under this contract.
13. This contract shall be governed by and construed in accordance with
the laws of the State of California.
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If the foregoing correctly sets forth the agreement between the Trust and
the Adviser, please so indicate by signing and returning to the Trust the
enclosed copy hereof.
Very truly yours,
LIFE & ANNUITY TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Title: Secretary
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ACCEPTED as of the date
set forth above:
▇▇▇▇▇ FARGO BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Vice President
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By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Senior Vice President
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APPENDIX A
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Equity Value Fund
Strategic Growth Fund
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APPENDIX B
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INVESTMENT ADVISORY FEE SCHEDULE
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Fund Advisory Fee Rate
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(as annualized %
of average net assets)
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Equity Value Fund 0.60%
Strategic Growth Fund 0.60%
Approved : January 29, 1998
Approved as amended: July 30, 1998
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