Ch. 805                                       LAWS OF MARYLAND

(C)  IN THE SOLICITATION OF ADVISORY CLIENTS, IT IS UNLAWFUL
FOR ANY PERSON KNOWINGLY TO MAKE ANY UNTRUE STATEMENT OF A
MATERIAL FACT, OR OMIT TO STATE A MATERIAL FACT NECESSARY IN
ORDER TO MAKE THE STATEMENTS MADE, IN LIGHT OF THE CIRCUMSTANCES
UNDER WHICH THEY ARE MADE, NOT MISLEADING.

(D)  (1) THE COMMISSIONER BY RULE OR ORDER MAY REQUIRE THAT
CERTAIN INFORMATION BE FURNISHED OR DISSEMINATED AS APPROPRIATE
IN THE PUBLIC INTEREST OR FOR THE PROTECTION OF INVESTORS AND
ADVISORY CLIENTS.

(2) TO THE EXTENT DETERMINED BY THE COMMISSIONER IN
HIS DISCRETION, INFORMATION FURNISHED TO CLIENTS OR PROSPECTIVE
CLIENTS OF AN INVESTMENT - ADVISER PURSUANT TO THE INVESTMENT
ADVISERS ACT OF 1940 AND THE RULES THEREUNDER MAY BE USED IN
WHOLE OR PARTIAL SATISFACTION OF THIS REQUIREMENT.

[(b)] (E) (1) EXCEPT AS PERMITTED BY RULE OR ORDER OF THE
COMMISSIONER, [It] IT is unlawful for any investment [advisor]
ADVISER to enter into, extend, or renew any investment advisory
contract, unless it provides in writing that:

(i) The investment adviser shall not be
compensated on the basis of a share of capital gains on or
capital appreciation of the funds or any portion of the funds of
the client;

(ii) An assignment of the contract may not be
made by the investment adviser without the consent of the other
party to the contract; and

(iii) The investment adviser, if a partnership,
shall notify the other party to the contract of any change in the
membership of the partnership within a reasonable time after the
change.

(2)  Paragraph (1) (i) of this subsection does not
prohibit an investment advisory contract which provides for
compensation based on the total value of a fund averaged over a
definite period or as of definite dates or taken as of a definite
date.

(3)   "Assignment", as used in paragraph (1) (ii) of
this subsection, includes any direct or indirect transfer or
hypothecation of an investment advisory contract by the assignor
or of controlling block of the assignor's outstanding voting
securities by a security holder of the assignor, but, if the
investment [advisor] ADVISER is a partnership, an assignment of
an investment advisory contract is not considered to result from
the death or withdrawal of a minority of the members of the
investment adviser having only a minority interest in the
business of the investment adviser, or from the admission to the
investment adviser of one or more members who, after admission,

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