INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made as of the 1st day of October, 1999 by and between
Valenzuela Capital Partners LLC (the "Investment Adviser") and Valenzuela
Capital Trust (the "Fund").
WHEREAS, the Fund is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended
(the "Act"), and is currently authorized to issue separate series of shares
and the Trustees of the Fund are authorized to reclassify and issue any
unissued shares to any number of additional classes or series (portfolios)
each having its own investment objective, policies and restrictions, all as
more fully described in the prospectus and the statement of additional
information constituting parts of the Fund's Registration Statement on Form
N-1A filed the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, and the Act (the "Registration
Statement," a copy of which is enclosed and any amendments thereof will
from time to time be furnished); and
WHEREAS, the Fund proposes to engage in the business of investing and
reinvesting the assets of each of its portfolios in securities ("the
portfolio assets") of the type and in accordance with the limitations
specified in the Fund's Trust Instrument and Registration Statement,
and any representations made in its prospectus and statement of
additional information, all in such manner and to such extent as
may from time to time be authorized by the Trustees; and
WHEREAS, the Trustees of the Fund wish to employ Valenzuela Capital
Partners LLC to manage the investment and reinvestment of the portfolio
assets as above specified and, without limiting the generality of the
foregoing, to provide management and other services specified below and
acknowledges that it has received at least 48 hours prior to entering
into this agreement a copy of Form ADV-Part II as filed by Valenzuela
Capital Partners LLC with the Commission.
NOW, THEREFORE, the parties agree as follows:
1. The Fund hereby appoints Valenzuela Capital Partners LLC as Investment
Adviser for the Fund to supervise and direct the investments of and
for the Fund and as the Fund's agent and attorney-in-fact with full
discretionary and exclusive power and authority to establish, maintain
and trade in brokerage accounts for and in the name of the Fund and its
objectives to buy, sell and trade in all stocks, bonds and other assets
of the Fund.
2. Unless advised by the Trustees of the Fund of an objection, the Investment
Adviser may direct that a portion of the brokerage commissions that may be
generated by the Fund be applied to payment for brokerage and research
services. Brokerage and research services furnished by brokers may include,
but are not limited to, written information and analyses concerning
specific securities, companies or sectors; market, financial and economic
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studies and forecasts as well as discussions with research personnel;
financial publications; and statistic and pricing services utilized in
the investment management process. Brokerage and research services obtained
by the use of commissions arising from the Fund's portfolio transactions
may be used by the Investment Adviser in its other investment activities.
In selecting brokers and negotiating commission rates, the Investment
Adviser will take into account the financial stability and reputation of
brokerage firms and the brokerage, execution and research services provided
by such brokers. The benefits which the Fund may receive from such services
may not be in direct proportion to the commissions generated by the Fund.
The Fund acknowledges that since commission rates are generally negotiable,
selecting brokers on the basis of considerations which are not limited to
applicable commission rates may result in higher transaction costs that
would otherwise by obtainable.
3. The Investment Adviser, when in its sole discretion deems it to be in the
best interest of the Fund, will bunch orders for the Fund with orders for the
same security for other accounts managed by the Investment Adviser or its
affiliates. In such instances, the Fund will be charged the average price
per unit for the security in such transactions. Complete records of such
transactions will be maintained by the Investment Adviser and will be made
available to the Fund upon request.
4. The Investment Adviser shall report to the Board of Trustees at each
meeting thereof all changes in the portfolio assets since the prior report,
and will also keep the Trustees in touch with important developments
affecting the portfolio assets and on the Investment Adviser's own initiative
will furnish the Trustees from time to time with such information as the
Investment Adviser may believe appropriate for this purpose, whether
concerning the individual issuers whose securities are included in the
portfolio assets, the industries in which they engage, or the conditions
prevailing in the economy generally. The Investment Adviser will also
furnish the Trustees with such statistical and analytical information with
respect to the portfolio assets as the Investment Adviser may believe
appropriate or as the Trustees reasonably may request. In making such
purchases and sales of the portfolio assets, the Investment Adviser will bear
in mind the policies set from time to time by the Board of Trustees as
well as the limitations imposed by the Fund's Trust Instrument and in the
Fund's Registration Statement, in each case as amended from time to time, the
limitations in the Act and of the Internal Revenue Code of 1986, as amended,
in respect of regulated investment companies and the investment objectives,
policies and practices, including restrictions applicable to each of the
Fund's portfolios.
5. The Investment Adviser shall not be liable for any mistake of judgment or
in any event whatsoever, except for lack of good faith, provided that
nothing herein shall be deemed to protect, or purport to protect, the
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Investment Adviser against any liability to the Fund or to its security
holders to which the Investment Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of the Investment Adviser's
reckless disregard of its obligations and duties hereunder. It is understood
that the Investment Adviser performs various investment advisory and
managerial services for others, and the Fund agrees that the Investment
Adviser may give advice and take action in the performance of its duties
with respect to others which may differ from advice given or action taken
with respect to the Fund. Nothing contained herein shall in any way
constitute a waiver or limitation of any rights which the Fund's shareholders
may have under common law, or any federal or state securities laws.
6. This Agreement shall become effective on the date hereof and shall remain in
effect for two years and continue in effect thereafter with respect to a
portfolio only so long as its continuance with respect to that portfolio
is specifically approved at least annually by the Board of Trustees or
by a vote of a majority of the outstanding voting securities (as defined
in the Act) of such portfolio, and, in either case, by a vote, cast in
person at a meeting called for the purpose of voting on such approval,
of a majority of the Fund's Trustees who are not parties to this Agreement
or interested persons, as defined in the Act, of any party to this Agreement
(other than as Trustees of the Fund), and provided further, however, that
if the continuation of this Agreement is not approved as to a portfolio,
the Investment Adviser may continue to render to the Fund the services
described herein in the manner and to the extent permitted by the Act
and the rules and regulations thereunder. Upon the effectiveness of
this Agreement, it shall supersede all previous agreements between
the parties covering the subject matter hereof. This Agreement may be
terminated with respect to any portfolio at any time, without the payment
of any penalty, by vote of a majority of the outstanding voting securities
(as defined in the Act) of such portfolio, or by a vote of the Board of
Trustees on 60 days' written notice to the Investment Adviser, or by the
Investment Adviser with respect to any portfolio on 60 days' written notice
to us.
7. This Agreement shall not be amended as to any portfolio unless such
amendment is approved by vote, cast in person at a meeting called for
the purpose of voting on such approval, of a majority of the Fund's Trustees
who are not parties to this Agreement or interested persons, as defined in
the Act, of any party to this Agreement (other than as Trustees of the Fund),
and, if required by law, by vote of a majority of the outstanding voting
securities (as defined in the Act) of such portfolio. Shareholders of a
portfolio not affected by any such amendment shall have no right to
participate in any such vote.
8. As to any particular portfolio, this Agreement may not be assigned by the
Investment Adviser and, as to such portfolio, this Agreement shall terminate
automatically in the event of any assignment by the Investment Adviser. The
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term "assignment" as used in this paragraph shall have the meaning ascribed
thereto by the Act and any regulations or interpretations of the Commission
thereunder.
9. If the Investment Adviser ceases to act as investment adviser to the Fund,
or, in any event, if the Investment Adviser so requests in writing, the Trust
agrees to take all necessary action to change its name to a name not including
the terms "Valenzuela" or Val Cap". The Investment Adviser may from time
to time make available without charge to the Fund for its use of such marks
or symbols owned by the Investment Adviser, including marks or symbols
containing the terms "Valenzuela" or Val Cap" or any variation thereof, as the
Investment Adviser may consider appropriate. Any such marks or symbols so
made available will remain the Investment Adviser's property and it shall
have the right, upon notice in writing, to require the Fund to cease the use
of such mark or symbol at any time.
10. The compensation of the Investment Adviser for its services rendered
hereunder shall be calculated by the Investment Adviser and paid monthly
by the Fund in accordance with the schedule of fees attached hereto
as Exhibit A.
11. Unless otherwise agreed to in writing by the parties, the Fund shall be
responsible and hereby assume the obligation for payment of all of its
expenses, including: (a) payment to the Investment Adviser of the fee
provided for in Exhibit A; (b) custody, transfer and dividend disbursing
expenses; (c) fees of trustees who are not affiliated persons; (d) legal
and auditing expenses; (e) clerical, accounting and other office costs;
(f) the cost of personnel providing services to the Fund; (g) costs of
printing the Fund's prospectuses and shareholder reports; (h) cost of
maintenance of the Fund's corporate existence; (i) interest charges,
taxes, brokerage fees and commissions; (j) costs of stationery and supplies;
(k) expenses and fees related to registration and filing with the
Commission and with state regulatory authorities; and (l) such promotional,
shareholder servicing and other expenses as may be contemplated by one
or more effective plans pursuant to Rule 12b-1 under the Act or one or
more effective non-Rule 12b-1 shareholder servicing plans, in each case
provided, however, that the Fund's payment of such promotional, shareholder
servicing and other expenses shall be in the amounts, and in accordance
with the procedures, set forth in such plan or plans.
12. Except to the extent necessary to perform the Investment Adviser's
obligations hereunder, nothing herein shall be deemed to limit or restrict
the right of the Investment Adviser or its members, officers or employees to
engage in any other business or to devote time and attention to the management
of other aspects of any other business, whether of a similar or dissimilar
nature, or to render services of any kind to any other individual or entity.
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13. The validity of the Agreement and the rights and liabilities of the parties
hereunder shall be determined in accordance with the laws of the State of
New York without regard to its conflict of laws provisions, provided, however,
that nothing herein shall be construed as being inconsistent with the Act.
14. The Investment Adviser shall promptly notify the Fund of any change
in the manager or managing member of the Investment Adviser.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
VALENZUELA CAPTIAL TRUST
By: /s/ Dennis J. Bertrum
VALENZUELA CAPITAL PARTNERS LLC
By: /s/Hendrik J. Laverge
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EXHIBIT A
TO
INVESTMENT ADVISORY AGREEMENT
BETWEEN
VALENZUELA CAPITAL TRUST
AND
VALENZUELA CAPITAL PARTNERS LLC
FEE SCHEDULE
Valenzuela Capital Trust (the "Fund") shall pay Valenzuela Capital
Partners LLC (the "Investment Adviser") an annual investment advisory
fee equal to (x) 0.75%, less any applicable fee waivers, of the average
daily net assets of each portfolio of the Fund on the first $100 million
of assets of each portfolio, and (y) 0.70%, less any applicable fee
waivers, of the average daily net assets of each portfolio of the Fund
on all amounts over the first $100 million of assets of each portfolio.
The investment advisory fee will be paid monthly. The Investment Adviser's
compensation for the period from the date hereof through the last day of
the month of the effective date hereof will be prorated based on the
proportion that such period bears to the full month. In the event of
any termination of this Agreement, the Investment Adviser's compensation
will be calculated on the basis of a period ending on the last day on
which this Agreement is in effect, subject to proration based on the
number of days elapsed in the current period as a percentage of the total
number of days in such period.
