1
Exhibit 24(b)(5)(a)
THE KENT FUNDS
--------------
FIRST AMENDMENT TO
INVESTMENT ADVISORY AGREEMENT
This FIRST AMENDMENT dated as of May 2, 1991 to AGREEMENT ("Agreement")
made October 12, 1990 by and between THE KENT FUNDS, a Massachusetts business
trust ("Fund"), and OLD KENT BANK AND TRUST COMPANY ("Adviser").
WHEREAS, the Fund and the Adviser have previously entered into an Agreement
setting forth the terms on which the Adviser will perform certain services for
the Fund's Money Market Fund ("Portfolio I"), Michigan Municipal Money Market
Fund, formerly known as Tax Free Money Market Fund, ("Portfolio II"), U.S.
Government Securities Money Market Fund ("Portfolio III") and each Portfolio of
the Fund subsequently established; and
WHEREAS, the Fund and the Adviser wish to amend such Agreement to set forth
the terms on which the Adviser will perform certain services for each additional
Portfolio of the Fund subsequently established.
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Fund and the Adviser amend the Agreement in full as
follows:
1. (a) The Fund hereby employs the Adviser to manage the investment and
reinvestment of the assets of the Portfolios of the Fund in conformity with each
Portfolio's investment objectives, fundamental policies and restrictions as set
forth from time to time in the Fund's then current prospectus and statement of
additional information thereto and other governing documents, subject to the
supervision and control of the Board of Trustees of the Fund, for the period and
on the terms set forth in this Agreement. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations set forth herein for the compensation provided herein. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, unless otherwise expressly provided or authorized, have no authority
to act for or represent the Fund in any way or otherwise be deemed an agent of
the Fund.
(b) In the event the Fund establishes one or more Portfolios, in addition
to Portfolios I, II and III, for which it wishes the Adviser to perform services
hereunder, it shall notify the Adviser in writing. If the Adviser is willing to
render such services, it shall notify the Fund in writing and such Portfolio
shall become a Portfolio hereunder, and the compensation payable to the Adviser
by the new Portfolio will be as agreed to in writing at the time and as set
forth on Schedule A attached hereto and made a part hereof.
-1-
2
2. The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of each Portfolio with broker-dealers
selected by the Adviser. In executing portfolio transactions and selecting
broker-dealers, the Adviser will use its best efforts to seek best execution on
behalf of each Portfolio. In assessing the best execution available for any
transaction, the Adviser shall consider all factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker-dealer and the
reasonableness of the commission, if any (for the specific transaction and on a
continuing basis). In evaluating the best execution available, and in selecting
the broker-dealer to execute a particular transaction, the Adviser may also
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934 ("1934 Act")) provided to
each Portfolio and or other accounts over which the Adviser or an affiliate of
the Adviser exercises investment discretion. The Adviser is authorized to pay a
broker-dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for a Portfolio which is in excess of the
amount of commission another broker-dealer would have charged for affecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer viewed in terms of that particular
transaction or in terms of all of the accounts over which investment discretion
is so exercised.
3. The Adviser assumes and shall pay for all expenses of the Adviser
incurred in the management of the investment and reinvestment of the assets of
each Portfolio of the Fund. The Fund assumes and shall pay all other costs and
expenses of the Fund and its Portfolios, including, without limitation: (1) all
charges and expenses of a manager; (2) all charges and expenses of any custodian
or depository appointed by the Fund for the safekeeping of its cash, securities
and other property; (3) all charges and expenses for bookkeeping and auditors;
(4) all charges and expenses of any transfer agents and registrars appointed by
the Fund; (5) all fees of all Trustees of the Fund; (6) the cost of all
securities and other property purchased by the Fund and all brokers' fees,
expenses and commissions, issue and transfer taxes and other expenses chargeable
to the Fund in connection with transactions involving securities and other
property to which the Fund is a party; (7) all taxes and corporate fees payable
by the Fund to federal, state or other governmental agencies; (8) all fees and
expenses involved in registering and maintaining registrations of the Fund and
of its shares with the Securities and Exchange Commission ("Commission") and
registering or qualifying its shares under state or other securities laws,
including the preparation and printing of prospectuses for filing with the
Commission and other authorities; (9) the
-2-
3
costs of sales literature and advertising, including expenses of preparing,
printing and mailing prospectuses and reports to shareholders of the Fund; (10)
all expenses of shareholders' and Trustees' meetings and of preparing, printing
and mailing notices, reports and proxy materials to shareholders of the Fund;
(11) all charges and expenses of legal counsel for the Fund, its officers and
Trustees in connection with legal matters relating to the Fund, including,
without limitation, legal services rendered in connection with the Fund's
existence, trust and financial structure and relations with its shareholders,
registrations and qualifications of securities under federal, state and other
laws, issues of securities, expenses which the Fund has herein assumed and
extraordinary matters; (12) all charges and expenses of filing annual and other
reports with the Commission; and (13) all extraordinary expenses and charges of
the Fund. In the event that the Adviser provides any of these services or pays
any of these expenses, the Fund will promptly reimburse the Adviser therefor on
a cost basis. No agreement is made hereby with respect to the provision of any
other of such services by the Adviser or any of its affiliates, or payment
therefor.
The services of the Adviser to the Fund's Portfolios hereunder are not to
be deemed exclusive, and the Adviser shall be free to render similar services to
others.
4. As compensation for the Adviser's services during the period of this
Agreement for Portfolios I, II, III, and for each Portfolio subsequently
established, the Fund will pay to the Adviser for each Portfolio a fee at the
annual rate as set forth on Schedule A attached hereto and made a part hereof
and as computed in the manner provided in the Fund's then current prospectus and
statement of additional information thereto as of the close of business on each
business day.
A pro rata portion of the fee shall be payable in arrears at the end of
each calendar month. If this Agreement terminates other than at the end of a
fiscal year of the Fund, any compensation payable hereunder for the period
ending with the date of such termination shall be payable upon such termination.
Amounts payable hereunder shall be paid promptly when due.
5. The Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the performance of
this Agreement, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Adviser in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though also an
-3-
4
officer, Director, partner, employee or agent of the Adviser, who may be or
become an officer, Trustee, employee or agent of the Fund, shall be deemed, when
rendering services to the Fund or acting on any business of the Fund (other than
services or business in connection with the Adviser's duties hereunder), to be
rendering such services to or acting solely for the Fund and not as an officer,
Director, partner, employee or agent or one under the control or direction of
the Adviser even though paid by it. The Fund agrees to indemnify and hold the
Adviser harmless from all taxes charges, expenses, assessments, claims and
liabilities (including, without limitation, liabilities arising under the
Securities Act of 1933, the 1934 Act, the Investment Company Act of 1940 (1940
Act), and any state and foreign securities and blue sky laws, as amended from
time to time) and expenses, including (without limitation) attorneys' fees and
disbursements, arising directly or indirectly from any action or thing which the
Adviser takes or does or omits to take or do hereunder provided that the Adviser
shall not be indemnified against any liability to the Fund or to its
shareholders (or any expenses incident to such liability) arising out of a
breach of fiduciary duty with respect to the receipt of compensation for
services, willful misfeasance, bad faith or negligence on the part of the
Adviser in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
6. This Agreement shall continue in effect for each Portfolio for a period
more than two years from the date of its execution only so long as (1) such
continuance is specifically approved at least annually by the Board of Trustees
of the Fund or by a vote of a majority of the outstanding voting securities of
such Portfolio, and (2) such renewal has been approved by the vote of a majority
of Trustees of the Fund who are not interested persons, as that term is defined
in the 1940 Act, of the Adviser, a manager of the Fund or the Fund, cast in
person at a meeting called for the purpose of voting on such approval.
7. On sixty days' written notice to the Adviser, this Agreement may be
terminated at any time with respect to a Portfolio, without the payment of any
penalty, by the Board of Trustees of the Fund or by vote of the holders of a
majority of the outstanding voting securities of such Portfolio; and on sixty
days' written notice to the Fund this Agreement may be terminated at any time
with respect to a Portfolio, without the payment of any penalty, by the Adviser.
This Agreement shall automatically terminate upon its assignment (as that term
is defined in the 1940 Act). Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postage prepaid, to the other party
at the main office of such party.
-4-
5
8. This Agreement may be amended at any time by an instrument in writing
executed by both parties hereto or their respective successors, provided that
such execution by the Fund shall have been first approved by vote of the holders
of a majority of the outstanding voting securities of the affected Portfolio of
the Fund and by the vote of a majority of Trustees of the Fund who are not
interested persons (as that term is defined in the 0000 Xxx) of the Adviser, or
any predecessor of the Adviser, a manager of the Fund or the Fund, cast in
person at a meeting called for the purpose of voting on such approval. A
"majority of the outstanding voting securities of the Fund" shall have, for all
purposes of this Agreement, the meaning provided therefor in the 1940 Act.
9. Any compensation payable to the Adviser hereunder for any period other
than a full year shall be proportionately adjusted.
10. The Fund is a Massachusetts business trust established under a
Declaration of Trust as it may be amended from time to time. The obligations of
the Fund are not personally binding upon, nor shall recourse be had against the
private property of any of the Trustees, shareholders, officers, employees or
agents of the Fund, but the property of the Fund only shall be bound.
11. The provisions of this Agreement shall be governed, construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
OLD KENT BANK AND TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Sr. Vice President
THE KENT FUNDS
By: /s/ Xxxx X. Hidden
--------------------------------
Xxxx X. Hidden
President
-5-
