THE VINTAGE FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of _______________,
1996, between Vintage Advisers, Inc., a Delaware corporation (the "Adviser"),
and Health Financial, Inc., a Kentucky corporation (the "Sub-Adviser").
W I T N E S E T H:
WHEREAS, the Adviser acts as the investment adviser to The Vintage Funds, an
Indiana business trust (the "Trust"), pursuant to an Investment Advisory
Agreement, dated as of June 2, 1995 as amended through the date hereof (the
"Advisory Agreement");
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to render investment
sub-advisory services to the funds of the Trust set forth on the Exhibits to
this Agreement (the "Funds"), and the Sub-Adviser is willing to render such
services.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
Section 1. Appointment and Status of Sub-Adviser. The Adviser hereby
appoints the Sub-Adviser to act as its agent to provide investment advisory
service to each class of shares of beneficial interest of the Trust set forth on
an executed Exhibit to this Agreement (each a "Fund"), for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided. Although the Sub-Adviser shall be an agent of the Adviser, the
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor of the Adviser and the Trust and shall, unless otherwise expressly
provided herein or authorized by the Adviser or the Board of Trustees of the
Trust from time to time, have no authority to act for or represent the Adviser
or the Trust in any way or otherwise be deemed an agent of the Trust.
Section 2. Sub-Adviser's Duties. Subject to the general supervision of
the Trust's Board of Trustees (the "Board") and the Adviser, the Sub-Adviser
shall, employing its discretion, manage the investment operations of each Fund
and the composition of the portfolio of securities and investments (including
cash) belonging to each Fund, including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with the
Fund's investment objective, policies and restrictions as stated in the
Trust's then-current Prospectus and Statement of Additional Information
(together, the "Prospectus") and subject to the following understandings:
ASA027CC-112596-5
(a) The Sub-Adviser shall furnish a continuous investment program for each
Fund and determine from time to time what investments or securities will be
purchased, retained or sold by each Fund and what portion of the assets
belonging to each Fund will be invested or held uninvested as cash;
(b) The Sub-Adviser shall use its best judgment in the performance of its
duties under this Agreement;
(c) The Sub-Adviser, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Trust's Declaration of Trust,
its By-Laws and its Prospectus and with the instructions and directions of the
Trust's Board of Trustees and the Adviser and will conform to and comply with
the requirements of the 1940 Act and all other applicable federal and state laws
and regulations;
(d) The Sub-Adviser shall determine the securities to be purchased or sold
by each Fund and as agent for the Trust will effect portfolio transactions
pursuant to its determinations either directly with the issuer or with any
broker and/or dealer in such securities, subject to Section 3 below;
(e) The Sub-Adviser shall maintain books and records with respect to the
securities transactions of each Fund and shall render to the Adviser and the
Trust's Board of Trustees such periodic and special reports as the Adviser or
the Board may request; and
(f) The Sub-Adviser shall provide the Trust's custodian with such
information relating to the Trust as may be required under the terms of the
then-current custody agreement between the Trust and the custodian.
Section 3. Brokerage. In placing orders with brokers and/or dealers,
the Sub- Adviser is directed at all times to seek best price and execution for
purchases and sales on behalf of each Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Sub-Adviser should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. Subject to such
conditions as may be imposed by the Trust's Board of Trustees, the Sub-Adviser
may pay commissions to brokers and/or dealers that are higher than might be
charged by another qualified broker to obtain brokerage and/or research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) considered by the Sub- Adviser to be
useful or desirable in the performance of the Sub-Adviser's duties hereunder, if
the Sub-Adviser determines in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or Sub-Adviser's overall
responsibilities with respect to the Funds and to accounts over which
Sub-Adviser exercises investment discretion. The Funds and the Sub-Adviser
understands and acknowledge that, although the information may be useful to the
Funds and the Sub-Adviser, it is not possible to place a dollar value on such
information. The Board shall periodically review the commissions paid by the
Funds to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Funds.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution as
described above, the Sub- Adviser may give consideration to sales of shares of
the Funds as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the foregoing and to such conditions as may be imposed by the
Adviser or the Trust's Board of Trustees and the provisions of the 1940 Act,
Exchange Act, and other applicable law, nothing herein shall prohibit the
Sub-Adviser from selecting brokers and/or dealers who are "affiliated persons"
of the Sub-Adviser, the Adviser or the Trust. On occasions when the Sub-Adviser
deems the purchase or sale of a security to be in the best interest of the Trust
as well as other customers, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in the manner it considers to be
the most equitable and consistent with its fiduciary obligations to the Trust
and, if applicable, to such other customers.
If any occasion should arise in which the Sub-Adviser gives any advice to
clients of Sub-Adviser concerning the shares of any Fund, Sub-Adviser will act
solely as investment counsel for such client and not in any way on behalf of the
Fund. Sub-Adviser's services to the Funds pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that Sub-Adviser may render
investment advice, management and other services to others, including other
registered investment companies.
Section 4. Books and Records. The Sub-Adviser shall keep the Trust's
books and records required to be maintained by it pursuant to Section 2(e) of
this Agreement. The Sub-Adviser agrees that all records which it maintains for
the Trust are the property of the Trust and it will promptly surrender any of
such records to the Trust upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by the Sub-Adviser with
respect to the Trust by Rule 31a-1 under the 1940 Act.
Section 5. Expenses of the Sub-Adviser. During the term of this
Agreement, the Sub-Adviser will pay all expenses (including without limitation
the compensation of all trustees or officers of the Trust who are "interested
persons" of the Sub-Adviser, as defined in the 0000 Xxx) incurred by it in
connection with its activities under this Agreement other than the cost of
securities and investments purchased for each Fund (including taxes and
brokerage commissions, if any).
Section 6. Compensation of the Sub-Adviser. For the services provided
and the expenses borne pursuant to this Agreement, the Adviser will pay to the
Sub-Adviser as full compensation therefor a fee with respect to each Fund at an
annual rate as set forth on the Exhibit executed with respect to such Fund and
attached hereto. This fee for each month will be paid to the Sub-Adviser during
the succeeding month. For purposes of determining the fee payable hereunder,
the net asset value of each Fund shall be calculated in the manner specified in
the Trust's Prospectus .
Section 7. Use of Name. The Trust, Adviser and Sub-Adviser acknowledge
that all rights to the name "First Lexington" belong to Sub-Adviser, and that
the Trust is being granted a limited license to use such words in its Fund name
or in any class name. Inthe event Sub-Adviser ceases to be a Sub-Adviser, the
Trust's right to the use of the name "First Lexington" shall automatically cease
on the ninetieth day following the termination of this Agreement. The right to
the name may also be withdrawn by Sub-Adviser during the term of this Agreement
upon ninety (90) days' written notice by Sub-Adviser to the Trust. Nothing
contained herein shall impair or diminish in any respect, Sub-Adviser's right to
use the name "First Lexington" in the name of, or in connection with, any other
business enterprises with which Sub-Adviser is or may become associated. There
is no charge to the Trust for the right to use these names.
Section 8. Liability of the Sub-Adviser. Neither Sub-Adviser nor its
shareholders, officers, directors, employees, agents, control persons or
affiliates of any thereof, shall be liable for any error of judgment or mistake
of law or for any loss suffered by any Fund in connection with the matters to
which this Agreement relates except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services (in which case any
award of damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 0000 Xxx) or a loss resulting from willful misfeasance,
bad faith or gross negligence on its part 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 a director, officer, employee, shareholder or
agent of Sub-Adviser, who may be or become an officer, director, trustee,
employee or agent of the Trust, shall be deemed, when rendering services to the
Trust or acting on any business of the Trust (other than services or business in
connection with Sub-Adviser's duties hereunder), to be rendering such services
to or acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of Sub-Adviser, or one under Sub-Adviser's control or
direction, even though paid by Sub-Adviser.
Section 9. Duration and Termination. The term of this Agreement
shall begin on the date of this Agreement for each Fund that has executed an
Exhibit hereto on the date of this Agreement and shall continue in effect with
respect to each such Fund (and any subsequent Funds added pursuant to an Exhibit
executed during the initial two-year term of this Agreement) for a period of two
years from the date of its execution. This Agreement shall continue in effect
from year to year thereafter, subject to termination as hereinafter provided, if
such continuance is approved at least annually by (a) a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of such Fund or by
vote of the Trust's Board of Trustees, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval. If
a Fund is added pursuant to an Exhibit executed after the date of this Agreement
as described above, this Agreement shall become effective with respect to that
Fund upon execution of the applicable Exhibit and shall continue in effect until
the next annual continuance of this Agreement and from year to year thereafter,
subject to approval as described above. This Agreement may be terminated by the
Adviser or the Trust with respect to any Fund at any time, without the payment
of any penalty, by the Adviser with the consent of the Trust's Board of
Trustees, by the Trust's Board of Trustees, or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of such Fund, in any
such case on 30 days' written notice to the Sub-Adviser, or by the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written notice to
the Adviser. This Agreement will automatically and immediately terminate in the
event of its assignment (as defined in the 1940 Act).
Section 10. Amendment. This Agreement may be amended by mutual
consent of the Adviser, the Sub-Adviser and the Trust, but the consent of the
Trust must be approved (a) by vote of a majority of those Trustees of the
Trustee who are not parties to this Agreement or "interested persons" (as
defined in the 0000 Xxx) of any such party, cast in person at a meeting called
for the purpose of voting on such amendment, and (b) if required under then
current interpretations of the 1940 Act by the Securities and Exchange
Commission, by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of each Fund affected by such amendment.
Section 11. Notices. Notices of any kind to be given in writing and
shall be duly given if mailed or delivered to the Sub-Adviser at Health
Financial, Inc., 0000 Xxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
President, and to the Adviser at Vintage Advisers, Inc., 000 X. Xxxxxxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, XX 00000, or at such other address or to such other
individual as shall be specified by the party to be given notice.
Section 12. Governing Law. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana, without regard to
the conflicts of laws principles thereof, and (b) any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act, shall be resolved by reference
to such term or provision of the 1940 Act and to interpretation thereof, if any,
by the United States courts or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is revised
by rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
Section 13. Severability. In the event any provision of this Agreement
is determined to be void or unenforceable, such determination shall not affect
the remainder of this Agreement, which shall continue to be in force.
Section 14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 15. Binding Effect. Each of the undersigned expressly
warrants and represents that he has the full power and authority to sign this
Agreement on behalf of the party indicated, and that his signature will operate
to bind the party indicated to the foregoing terms.
Section 16. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereto for otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date and year first above
written.
VINTAGE ADVISERS, INC. FIRST LEXINGTON BALANCED FUND, INC.
By By
Name: Name:
Title: Title:
EXHIBIT A
to
Investment Sub-Advisory Agreement
The First Lexington Balanced Fund
For all services rendered by the Sub-Adviser hereunder with respect to the
above- named Funds, the Adviser shall pay to the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all services rendered
hereunder, an annual fee with respect to each Fund equal to the percentage of
the average daily net assets of the Fund set forth opposite its name below:
Name of Fund Fee Percentage
The First Lexington Balanced 0.40% of net assets up to $250 million;
Fund 0.35% of the next $250 million of net
assets;
0.30% of net assets in excess of $500
million
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed by their officers designated below as of the date set forth below.
VINTAGE ADVISERS, INC. FIRST LEXINGTON BALANCED FUND, INC.
By By
Name: Name:
Title: Title:
