EXHIBIT 5B
INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT, dated as of ____________, 1997, by and
between Diversified Investment Advisors, Inc., a Delaware corporation
("Diversified") and Xxxxxxxx Capital Management, a division of Xxxxxxxx, Inc.,
and a registered investment advisor under the Investment Advisors Act of 1940
("Subadvisor').
WITNESSETH:
WHEREAS, Diversified has been organized to operate as an investment
advisor registered under the Investment Advisers Act of 1940 and has been
retained to provide investment advisory services to the Xxxxxxxx _____________
Fund ("Fund"), a series of The Diversified Investors Funds Group, a diversified
open-end management investment company registered under the Investment Company
Act of 1940 ("1940 Act");
WHEREAS, Diversified desires to retain the Subadvisor to furnish it with
Fund investment advisory services in connection with Diversified's investment
advisory activities on behalf of the Fund, and the Subadvisor is willing to
furnish such services to Diversified;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Subadvisor. In accordance with and subject to the
Investment Advisory Agreement between the Fund and Diversified, attached hereto
as Schedule A (the "Advisory Agreement"), Diversified hereby appoints the
Subadvisor to perform the Fund investment advisory services described herein
for the investment and reinvestment of the Fund's assets, subject to the
control and direction of Diversified and The Diversified Investors Funds
Group's Board of Trustees, for the period and on the terms hereinafter set
forth.
The Subadvisor shall provide Diversified with such investment advice and
supervision as the latter may from time to time consider necessary for the
proper supervision of the Fund's assets. The Subadvisor shall furnish
continuously an investment program and shall determine from time to time what
securities shall be purchased, sold or exchanged and what portion of the assets
of the Fund shall be held uninvested, subject always to the provisions of the
1940 Act and to the Fund's then-current Prospectus and Statement of Additional
Information ("SAI").
In particular, the Subadvisor shall, without limiting the foregoing: (i)
continuously review, supervise and implement the investment program of the
Fund; (ii) monitor regularly the relevant securities for the Fund to determine
if adjustments are warranted and, if so, to make such adjustments; (iii)
determine, in the Subadvisor's discretion, the securities to be purchased or
sold or exchanged in order to keep the Fund in balance with its designated
investment strategy; (iv) determine, in the Subadvisor's discretion, whether to
exercise warrants or other rights with respect to the Fund's securities; (v)
determine, in the Subadvisor's discretion, whether the merit of an investment
has been substantially impaired by extraordinary events or financial
conditions, thereby warranting the removal of such securities from the Fund;
(vi) as promptly as practicable after the end of each calendar month, furnish a
report showing: (a) all transactions during such month, (b) all assets of the
Fund on the last day of such month, rates of return, and (c) such other
information relating to the Fund as Diversified may reasonably request; (vii)
meet at least four times per year with Diversified and with such other persons
as may be designated on reasonable notice and at reasonable locations, at the
request of Diversified, to discuss general economic conditions, performance,
investment strategy, and other matters relating to the Fund; (viii) provide the
Fund with records concerning the Subadvisor's activities which the Fund is
required to by law maintain; and (ix) render regular reports to the Fund's
officers and Directors concerning the Subadvisor's discharge of the foregoing
responsibilities.
The Subadvisor shall also make recommendations to Diversified as to the
manner in which voting rights, rights to consent to corporate action and any
other rights pertaining to the Fund's securities shall be exercised.
Should the Board of Trustees at any time make any definite determination
as to investment policy with respect to the Fund and notify the Subadvisor
thereof in writing, the Subadvisor shall be bound by such determination for the
period, if any, specified in such notice or until similarly notified that such
policy has been revoked.
The Subadvisor shall take, on behalf of the Fund, all actions which it
deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of Fund
securities for the Fund's account with brokers or dealers selected by it, and
to that end the Subadvisor is authorized as the agent of the Fund to give
instructions to the custodian of the Fund as to deliveries of securities and
payments of cash for the account of the Fund. Subject to the primary objective
of obtaining the best available prices and execution, the Subadvisor may place
orders for the purchase and sale of Fund securities with such broker/dealers
who provide statistical, factual and financial information and services to the
Fund, to the Subadvisor, or to any other fund or account for which the
Subadvisor provides investment advisory services and may place such orders with
broker/dealers who sell shares of the Fund or who sell shares of any other fund
for which the Subadvisor provides investment advisory services. Broker/dealers
who sell shares of the funds of which Xxxxxxxx Capital Management is investment
advisor shall only receive orders for the purchase or sale of Fund securities
to the extent that the placing of such orders is in compliance with the Rules
of the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
Notwithstanding the provisions of the previous paragraph and subject to
such policies and procedures as may be adopted by The Diversified Investors
Funds Group's Board of Trustees and the officers of the Fund, the Subadvisor
may pay a member of an exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission
another member of an exchange, broker or dealer would have charged for
effecting that transaction, in such instances where the Subadvisor has
determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member, broker or dealer, viewed in terms of either that particular transaction
or the Subadvisor's overall responsibilities with respect to the Fund and to
other funds and separate accounts for which the Subadvisor exercises investment
discretion.
2. Allocation of Charges and Expenses. The Subadvisor shall furnish at its
own expense all necessary services, facilities and personnel in connection with
its responsibilities under Section 1 above. It is understood that the Fund will
pay all of its own expenses and liabilities including, without limitation,
compensation and out-of-pocket expenses of Trustees not affiliated with the
Subadvisor or Diversified; governmental fees; interest charges; taxes;
membership dues; fees and expenses of independent auditors, of legal counsel
and of any transfer agent, administrator, distributor, shareholder servicing
agents, registrar or dividend disbursing agent of the Fund; expenses of
distributing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing prospectuses, shareholder reports, notices,
proxy statements and reports to governmental officers and commissions and to
shareholders of the Fund; expenses connected with the execution, recording and
settlement of Fund security transactions; insurance premiums; fees and expenses
of the custodian for all services to the Fund, including safekeeping of funds
and securities and maintaining required books and accounts; expenses of
calculating the net asset value of shares of the Fund; expenses of shareholder
meetings; expenses of litigation and other extraordinary or non-recurring
events and expenses relating to the issuance, registration and qualification of
shares of the Fund.
3. Compensation of the Subadvisor. For the services to be rendered,
Diversified shall pay to the Subadvisor an investment advisory fee computed in
accordance with the terms of Schedule B herewith attached. If the Subadvisor
serves for less than the whole of any period specified, its compensation shall
be prorated.
4. Covenants and Representations of the Subadvisor. The Subadvisor agrees
that it will not deal with itself, or with the Trustees of The Diversified
Investors Funds Group or with Diversified, or the principal underwriter or
distributor as principals in making purchases or sales of securities or other
property for the account of the Fund, except as permitted by the 1940 Act, will
not take a long or short position in the shares of the Fund except as permitted
by the Articles, and will comply with all other provisions of the Articles and
By-Laws and any current Prospectus of the Fund relative to the Subadvisor,
Advisor and its Trustees and officers.
5. Limits on Duties. The Subadvisor shall be responsible only for managing
the assets in good faith and in accordance with the investment objectives,
fundamental policies and restrictions, and shall have no responsibility
whatsoever for, and shall incur no liability on account of (i) diversification,
selection or establishment of such investment objectives, fundamental policies
and restrictions (ii) advice on, or management of, any other assets for
Diversified or the Fund, (iii) filing of any tax or information returns or
forms, withholding or paying any taxes, or seeking any exemption or refund,
(iv) registration with any government or agency, or (v) administration of the
plans and trusts investing through the Fund, or (vi) overall Fund compliance
with the requirements of the 1940 Act, which requirements are outside of the
Subadvisor's control, and Subchapter M of the Internal Revenue Code of 1986, as
amended, and shall be indemnified and held harmless by Diversified for any loss
in carrying out the terms and provisions of this Agreement, including
reasonable attorney's fees, indemnification to the Fund, or any shareholder
thereof and, brokers and commission merchants, fines, taxes, penalties and
interest. Subadvisor, however, shall be liable for any liability, damages, or
expenses of Diversified arising out of the negligence, malfeasance or violation
of applicable law by any of its employees in providing management under this
Agreement; and, in such cases, the indemnification by Diversified, referred to
above, shall be inapplicable.
The Subadvisor may apply to Diversified at any time for instructions and
may consult counsel for Diversified or its own counsel with respect to any
matter arising in connection with the duties of the Subadvisor. Also, the
Subadvisor shall be protected in acting upon advice of Diversified and/or
Diversified's counsel and upon any document which Subadvisor reasonably
believes to be genuine and to have been signed by the proper person or persons.
6. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written and shall
govern the relations between the parties hereto thereafter, and, unless
terminated earlier as provided below, shall remain in force for two years, on
which date it will terminate unless its continuance thereafter is specifically
approved at least annually (a) by the vote of a majority of the Trustees of The
Diversified Investors Funds Group who are not "interested persons" to this
Agreement or of the Subadvisor or Diversified at an in person meeting
specifically called for the purpose of voting on such approval, and (b) by the
Board of Trustees of the Funds Group or by vote of a majority of the
outstanding voting securities of the Fund. However, if the shareholders of the
Fund fail to approve the Agreement as provided herein, the Subadvisor may
continue to serve hereunder in the manner and to the extent permitted by the
Investment Company Act of 1940 and Rules thereunder.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees, or by the vote of a majority of the outstanding voting
securities of the Fund, or by Diversified. The Subadvisor may terminate the
Agreement only upon giving 90 days' advance written notice to Diversified. This
Agreement shall automatically terminate in the event of its assignment.
This Agreement may be amended only if such amendment is approved by the
vote of a majority of the outstanding voting securities of the Fund and by vote
of a majority of the Board of Trustees of The Diversified Investors Funds Group
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
The terms "specifically approved at least annually", "vote of a majority
of the outstanding voting securities", "assignment", "affiliated person", and
"interested persons", when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
7. Certain Records. Any records to be maintained and preserved pursuant to
the provisions of Rule 31a-1 and Rule 31a-2 adopted under the 1940 Act which
are prepared or maintained by the Subadvisor on behalf of the Fund are the
property of the Fund and will be surrendered promptly to the Fund on request.
8. Survival of Compensation Rates. All rights to compensation under this
Agreement shall survive the termination of this Agreement.
9. Entire Agreement. This Agreement states the entire agreement of the
parties with respect to investment advisory services to be provided to the Fund
by the Subadvisor and may not be amended except in a writing signed by the
parties hereto and approved in accordance with Section 7 hereof.
10. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
11. Change of Management and Pending Litigation. Subadvisor represents to
Diversified that it will disclose to Diversified promptly after it has
knowledge of any significant change or variation in its management structure or
personnel or any significant change or variation in its management style or
investment philosophy. In addition, Subadvisor represents to Diversified that
it will similarly disclose to Diversified, promptly after it has knowledge, the
existence of any pending legal action being brought against it whether in the
form of a lawsuit or a non-routine investigation by any federal or state
governmental agency.
Diversified represents to Subadvisor that any information received by
Diversified pursuant to this section will be kept strictly confidential and
will not be disclosed any third party.
12. Use of Name. Subadvisor hereby agrees that Diversified may use the
Subadvisor's name in its marketing or advertising materials. Diversified agrees
to allow the Subadvisor to examine and approve any such materials prior to use.
IN WITNESS WHEREOF, the parties thereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Diversified Investment Advisors, Inc.
By:______________________________________
Xxxxxxxx Capital Management
By:______________________________________
