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EXHIBIT (5)(d)
SUB-INVESTMENT ADVISORY AGREEMENT
This Sub-Investment Advisory Agreement is made as of the 23rd day of
October, 1998, by and between 1st Source Bank, an Indiana banking corporation
(the "Adviser"), and Xxxxxxxx, Ayer & Xxxx, Inc., a Massachusetts corporation
(the "Sub-Adviser").
WHEREAS, the Adviser serves as investment adviser of certain portfolios
of The Coventry Group, a Massachusetts business trust and an open-end management
investment company (the "Trust"), which has filed a registration statement (the
"Registration Statement") under the Investment Company Act of 1940, as amended
(the "1940 Act") and the Securities Act of 1933.
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is 1st Source Monogram Diversified Equity Fund (the
"Fund"); and
WHEREAS, the Adviser desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser
experienced in the management of a portfolio of equity securities to assist the
Adviser in performing services for a portion of the Fund; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and is engaged
in the business of rendering investment advisory services to investment
companies and desires to provide such services to the Trust and the Adviser; and
WHEREAS, the Sub-Adviser is familiar with the investment objectives,
policies and restrictions of the Fund and has reviewed the Investment Advisory
Agreement dated as of October 23, 1998, between the Adviser and the Trust (the
"Adviser Agreement").
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
Section 1. Appointment of the Sub-Adviser. The Adviser hereby appoints
the Sub-Adviser to provide a continuous investment program for that portion of
the Fund designated by the Adviser (the "SAW Portfolio"), subject to such
instructions and supervision as the Adviser may from time to time furnish and
further subject to the control and direction of the Trust's Board of Trustees,
for the period and on the terms hereinafter set forth. The Sub-Adviser hereby
accepts such appointment and agrees during such period to render the services
and to assume the obligations herein set forth for the compensation herein
provided. The Sub-Adviser will provide the services under this Agreement in
accordance with the Fund's and the SAW Portfolio's investment objectives,
policies and restrictions as stated in the Fund's most recent Prospectus and
Statement of Additional Information and as the same may, from time to time, be
supplemented or amended and in resolutions of the Trust's Board of Trustees. The
Adviser
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agrees to furnish the Sub-Adviser from time to time copies of all amendments of
or supplements to such Prospectus and Statement of Additional Information. The
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Adviser, the Fund
or the Trust in any way.
Section 2. Sub-Advisory Services. Subject to such instructions and
supervision as the Adviser may from time to time furnish, the continuous
investment program of the SAW Portfolio provided by the Sub-Adviser shall
include, among other things, investment research and management with respect to
all securities, investments and cash equivalents in the SAW Portfolio. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund for the SAW
Portfolio, the appropriate portion of the SAW Portfolio's assets to be invested
in particular countries or geographic regions, the use of foreign exchange
contracts and other foreign currency matters, and the manner in which voting
rights, rights to consent to corporate action and other rights pertaining to the
SAW Portfolio's investments should be exercised. The Sub-Adviser will implement
such determinations through the placement, in the name of the Fund for the SAW
Portfolio, of orders for the execution of portfolio transactions with it through
such brokers or dealers as it may select.
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees
that it will:
(a) use the same skill and care in providing such services as it uses
in providing services to other fiduciary accounts for which it
has investment responsibilities;
(b) conform with all applicable Rules and Regulations of the United
States Securities and Exchange Commission ("SEC") and in addition
will conduct its activities under this Agreement in accordance
with any applicable regulations of any government authority
pertaining to the investment advisory activities of the
Sub-Adviser and shall furnish such written reports or other
documents substantiating such compliance as the Adviser
reasonably may from time to time request;
(c) not make loans to any person to purchase or carry shares of
beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to investment determinations for the SAW
Portfolio either directly with the issuer or with an underwriter,
market maker or broker or dealer. In placing orders with brokers
and dealers, the Sub-Adviser will use its reasonable best efforts
to obtain prompt execution of orders in an effective manner at
the most favorable price. Consistent with this obligation, the
Sub-Adviser may, to the extent permitted by law, purchase and
sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (within the meaning of
Section 28(e) of the Securities Exchange Act of 1934) to or for
the benefit of the
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Fund and/or other accounts over which the Sub-Adviser exercises
investment discretion. Subject to the review of the Trust's Board
of Trustees from time to time with respect to the extent and
continuation of the policy, the Sub-Adviser is authorized to pay
a broker or dealer who provides such brokerage and research
services a commission for effecting a securities transaction for
the Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that
transaction if the Sub-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 or
dealer, viewed in terms of either that particular transaction or
the overall responsibilities of the Sub-Adviser with respect to
the accounts as to which it exercises investment discretion. In
placing orders with brokers and dealers, consistent with
applicable laws, rules and regulations, the Sub-Adviser may
consider the sale of shares of the Trust. In no instance will
portfolio securities be purchased from or sold to the Trust,
BISYS Fund Services Limited Partnership, the Adviser, any other
sub-investment adviser for the Trust ("other sub-advisers"), or
the Sub-Adviser or any affiliate of the foregoing except as may
be permitted by the 1940 Act or an exemption therefrom;
(e) maintain all necessary or appropriate books and records with
respect to the SAW Portfolio's securities transactions in
accordance with all applicable laws, rules and regulations,
including but not limited to Section 31 (a) of the 1940 Act and
will furnish the Trust's Board of Trustees such periodic and
special reports as the Board reasonably may request;
(f) treat confidentially and as proprietary information of the
Adviser and the Trust all records and other information relative
to the Adviser and the Trust and prior, present, or potential
shareholders, and will not use such records and information for
any purpose other than performance of its responsibilities and
duties hereunder, except that subject to prompt notification to
the Trust and the Adviser, the Sub-Adviser may divulge such
information to duly constituted authorities, or when so requested
by the Adviser and the Trust, Provided, however, that nothing
contained herein shall prohibit the Sub-Adviser from advertising
or soliciting the public generally with respect to other products
or services, regardless of whether such advertisement or
solicitation may include prior, present or potential shareholders
of the Fund;
(g) maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for
the Trust, the Sub-Adviser's personnel will not inquire or take
into consideration whether the issuers of securities proposed for
purchase or sale for the Trust's account are customers of the
Adviser, other sub-advisers, the Sub-Adviser or of their
respective parents, subsidiaries or affiliates. In dealing with
such customers, the
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Sub-Adviser and its parent, subsidiaries, and affiliates will
not inquire or take into consideration whether securities of
those customers are held by the Trust; and
(h) render, upon request of the Adviser or the Trust's Board of
Trustees, written reports concerning the investment activities of
the SAW Portfolio.
Section 3. Expense. During the term of this Agreement, the Sub-Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the SAW Portfolio.
Section 4. Books and Records. In compliance with the requirements of
Rule 31 a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records,
if any, which it maintains for the SAW Portfolio are the property of the Fund
and further agrees to surrender promptly to the Adviser or the Trust any such
records upon the Adviser's or the Trust's request and that such records shall be
available for inspection by the SEC. The Sub-Adviser further agrees to preserve
for the periods and at the places prescribed by Rule 31 a-2 under the 1940 Act
the records required to be maintained by Rule 31 a-1 under the 1940 Act.
Section 5. Compensation of the Sub-Adviser. In consideration of services
rendered pursuant to this Agreement, the Adviser will pay the Sub-Adviser a fee
at the annual rate of the value of the SAW Portfolio's average daily net assets
set forth in Schedule A hereto, provided, however, that the Sub-Adviser may from
time to time waive some or all of such fees until such time as it notifies the
Trust that it has terminated such waiver. Such fee shall be accrued daily and
paid monthly as soon as practicable after the end of each month. If the
Sub-Adviser shall serve for less than the whole of any month, the foregoing
compensation shall be prorated. For the purpose of determining fees payable to
the Sub-Adviser, the value of the SAW Portfolio's net assets shall be computed
at the times and in the manner specified in the Trust's Registration Statement.
If the Adviser is required to reduce its fee or to reimburse the Trust because
the expenses of the Fund exceed applicable state securities regulations or are
in excess of any voluntary expense limitations set forth in the Trust's current
Registration Statement, the Sub-Adviser's fee hereunder shall be reduced by an
amount equal to such excess expense multiplied by the ratio that the
Sub-Adviser's fee hereunder bears to the sum of the fees paid to and retained by
the Adviser and paid to BISYS Fund Services Limited Partnership (under the
Trust's Administration Agreement with BISYS Fund Services Limited Partnership
with respect to the Fund) by the Trust with respect to the SAW Portfolio.
Notwithstanding anything contained herein to the contrary, the Sub-Adviser shall
not be compensated on the basis of a share of capital gains or upon capital
appreciation of the SAW Portfolio or any portion thereof except as may be
authorized by applicable law.
Section 6. Services Not Exclusive. The services of the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired. It is understood that the
action taken by the Sub-Adviser under this Agreement may differ from the
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advice given or the timing or nature of action taken with respect to other
clients of the Sub-Adviser, and that a transaction in a specific security may
not be accomplished for all clients of the Sub-Adviser at the same time or at
the same price. The Sub-Adviser, in turn, understands that nothing in this
agreement will in any way limit or restrict Adviser or any of its officers,
directors or employees from buying or selling or trading in any securities
(including securities purchased or sold by the Sub-Adviser on behalf of the
Fund) for its or their own accounts or the accounts of other clients of the
Adviser, consistently with applicable law and fiduciary duties, except that no
such transactions will be made based on information derived or received directly
or indirectly from Sub-Adviser hereunder until the expiration of ten (10)
business days after: (i) the date such information has been so derived or
received, or (ii) in the case of information derived or received over several
days, the last date on which such information has been so derived or received.
The Adviser agrees that the Sub-Adviser shall have no responsibility or
liability whatsoever for any such use of such information.
Section 7. Use of Names. The Adviser shall not use the name of the
Sub-Adviser in any prospectus, sales literature or other material relating to
the Trust in any manner not approved prior thereto by the Sub-Adviser; provided,
however, that the Sub-Adviser shall approve all uses of its name which merely
refer in accurate terms to its appointment hereunder or which are required by
the SEC or a state securities commission; and, provided further, that in no
event shall such approval be unreasonably withheld. The Sub-Adviser shall not
use the name of the Trust, the Fund or the Adviser in any material relating to
the Sub-Adviser in any manner not approved prior thereto by the Adviser;
provided, however, that the Adviser shall approve all uses of its and the Fund's
or the Trust's name which merely refer in accurate terms to the appointment of
the Sub-Adviser hereunder or which are required by the SEC or a state securities
commission, and, provided further, that in no event shall such approval be
unreasonably withheld.
Section 8. Liability of the Sub-Adviser. Absent willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or loss resulting from breach of
fiduciary duty with respect to the receipt of compensation for services, the
Sub-Adviser shall not be liable for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security. The Sub-Adviser
shall have no responsibility for any other series of the Trust or any portion of
the assets of the Fund other than the SAW Portfolio, or for the acts or
omissions of the Adviser, any other sub-adviser of the Trust or the Fund, The
Fund's custodian, administrator or distributor or any broker or dealer effecting
transactions on behalf of the Fund. In particular, the Sub-Adviser shall have no
responsibility or liability for the Fund's being in violation of any applicable
law or regulation or investment policy or restriction applicable to the Fund's
portfolio as a whole or for the Fund's failing to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), if the securities and other holdings of the SAW Portfolio
are such that the SAW Portfolio would not be in such violation or fail to so
qualify if the SAW Portfolio were deemed a separate series of the Trust or a
separate "regulated investment company" under the Code.
Section 9. Limitation of Trust's Liability. The Sub-Adviser acknowledges
that it has received notice of and accepts the limitations upon the Trust's and
the Fund's liability set forth in its Declaration of Trust and under Ohio law.
The Sub-Adviser agrees that any of the Trust's obligations shall be limited to
the assets of the Fund and that the Sub-Adviser shall not seek satisfaction of
any such obligation from the shareholders of the Trust nor from any Trustee,
officer, employee or agent of the Trust.
The names "The Coventry Group" and "Trustees of the Coventry Group"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Agreement and
Declaration of Trust dated as of January 8, 1992 to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
the Commonwealth of Massachusetts and elsewhere as required by law, and to any
and all amendments thereto so filed or hereafter filed. The obligations of "The
Coventry Group" entered into in the name or on behalf thereof, or in the name or
on behalf of any series or class of shares of the Trust, by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, shareholders or representatives of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with any series or class of shares of the Trust must look solely to the assets
of the Trust belonging to such series or class for the enforcement of any claims
against the Trust.
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Section 10. Duration Renewal Termination and Amendment. This Agreement
will become effective as of the date first written above, provided that it shall
have been approved by vote of a majority of the outstanding voting securities of
the Fund, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect until October 23,
2000.
Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Fund for successive periods of one year each, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Trust's Board of Trustees who are not parties
to this Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the vote of a majority of the Trust's Board of Trustees or by the vote of a
majority of all votes attributable to the outstanding Shares of the Fund. This
Agreement may be terminated as to the Fund at any time, without payment of any
penalty, by the Trust's Board of Trustees, by the Adviser, or by a vote of the
majority of the outstanding voting securities of the Fund upon, 60 days' prior
written notice to the Sub-Adviser, or by the Sub-Adviser upon 60 days' prior
written notice to the Adviser and the Trust's Board of Trustees, or upon such
shorter notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Adviser Agreement. This
Agreement shall terminate automatically and immediately in the event of its
assignment. No assignment of this Agreement shall be made by the Sub-Adviser
without the consent of the Adviser and the Board of Trustees of the Trust. The
terms "assignment" and "vote of a majority of the outstanding voting securities"
shall have the meaning set forth for such terms in the 1940 Act. This Agreement
may be amended at any time by the Adviser and the Sub-Adviser, subject to
approval by the Trust's Board of Trustees and, if required by the 1940 Act and
applicable SEC rules and regulations, a vote of a majority of the Fund's
outstanding voting securities.
Section 11. Confidential Relationship. Any information and advice
furnished by either party to this Agreement to the other shall be treated as
confidential and shall not be disclosed to third parties except as required by
law or by this Agreement.
Section 12. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this agreement shall not be affected thereby.
Section 13. Miscellaneous. This Agreement constitutes the full and
complete agreement of the parties hereto with respect to the subject matter
hereof each party agrees to perform such further actions and execute such
further documents as are necessary to effectuate the purposes hereof This
Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Indiana. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed in
several counterparts, all of which together shall for all purposes constitute
one Agreement, binding on all parties.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
1ST SOURCE BANK
By:
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Name:
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Title:
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XXXXXXXX, XXXX & XXXX, INC.
By:
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Name:
----------------------------
Title:
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Dated: October 23, 1998
SCHEDULE A
To the Sub-Investment Advisory Agreement
between 1st Source Bank and
Xxxxxxxx, Ayer & Wood, Inc.
Name of Fund Compensation* Date
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1st Source Monogram Annual Rate of 0.45% of the October 23, 1998
Diversified Equity Fund average daily net assets of
the SAW Portfolio
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*All fees are computed daily and paid monthly.
1ST SOURCE BANK
By:
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Name:
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Title:
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XXXXXXXX, XXXX & XXXX, INC.
By:
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Name:
----------------------------
Title:
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