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EXHIBIT 99.B5(d)
FORM OF INVESTMENT ADVISORY AGREEMENT
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FORM OF
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SBSF FUNDS, INC.
D/B/A KEY MUTUAL FUNDS
AND
KEYCORP MUTUAL FUND ADVISERS, INC.
AGREEMENT made as of the day of , 1996, by and
between SBSF Funds, Inc. (d/b/a Key Mutual Funds), a Maryland corporation which
may issue one or more series of shares of common stock (the "Company"), and
KeyCorp Mutual Fund Advisers, Inc., an Ohio corporation (the "Adviser").
WHEREAS, the Company is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Company desires to retain the Adviser to furnish investment
advisory services to the funds listed on Schedule A (each, a "Fund" and
collectively, the "Funds"), and the Adviser represents that it is willing and
possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) General. The Company hereby appoints the Adviser to act as investment
adviser to the Funds for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
(b) Employees of Affiliates. The Adviser may, in its discretion, provide such
services through its own employees or the employees of one or more
affiliated companies that are qualified to act as an investment adviser to
the Company under applicable laws and are under the control of KeyCorp,
the indirect parent of the Adviser; provided that (i) all persons, when
providing services hereunder, are functioning as part of an organized
group of persons, and (ii) such organized group of persons is managed at
all times by authorized officers of the Adviser.
(c) Sub-Advisers. It is understood and agreed that the Adviser may from time
to time employ or associate with such other entities or persons as the
Adviser believes appropriate to assist in the performance of this
Agreement with respect to a particular Fund or Funds (each a
"Sub-Adviser"), and that any such SubAdviser shall have all of the rights
and powers of the Adviser set forth in this Agreement; provided that a
Fund shall not pay any additional compensation for any Sub-Adviser and the
Adviser shall be as fully responsible to the Company for the acts and
omissions of the Sub-Adviser as it is for its own acts and omissions; and
provided further that the retention of any Sub-Adviser shall be approved
in advance by (i) the Board of Directors of the Company and (ii) the
shareholders of the relevant Fund if required under any applicable
provisions of the 1940 Act. The Adviser will review, monitor and report to
the Company's Board of Directors regarding the performance and investment
procedures of any Sub-Adviser. In the event that the services of any
Sub-Adviser are terminated, the Adviser may provide investment advisory
services pursuant to this Agreement to the Fund without a Sub-Adviser and
without further shareholder approval, to the extent consistent with the
1940 Act. A Sub-Adviser may be an affiliate of the Adviser.
2. DELIVERY OF DOCUMENTS. The Company has delivered to the Adviser copies
of each of the following documents along with all amendments thereto through the
date hereof, and will promptly deliver to it all future amendments and
supplements thereto, if any:
(a) the Company's Articles of Incorporation;
(b) the By-Laws of the Company;
(c) resolutions of the Board of Directors of the Company authorizing the
execution and delivery of this Agreement;
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(d) Post-Effective Amendment No. to the Company's Registration Statement
under the Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act, on Form N-1A as filed with the Securities and Exchange
Commission (the "Commission");
(e) Notification of Registration of the Company under the 1940 Act on Form
N-8A as filed with the Commission; and
(f) the currently effective Prospectuses and Statements of Additional
Information of the Funds.
3. INVESTMENT ADVISORY SERVICES.
(a) Management of the Funds. The Adviser hereby undertakes to act as
investment adviser to the Funds. The Adviser shall regularly provide
investment advice to the Funds and continuously supervise the investment
and reinvestment of cash, securities and other property comprising the
assets of the Funds and, in furtherance thereof, shall:
(i) supervise all aspects of the operations of the Company and each
Fund;
(ii) obtain and evaluate pertinent economic, statistical and financial
data, as well as other significant events and developments, which
affect the economy generally, the Funds' investment programs, and
the issuers of securities included in the Funds' portfolios and the
industries in which they engage, or which may relate to securities
or other investments which the Adviser may deem desirable for
inclusion in a Fund's portfolio, and regularly report thereon to
the Company's Board of Directors;
(iii) determine which issuers and securities shall be represented in the
portfolio of each Fund;
(iv) furnish a continuous investment program for each Fund;
(v) in its discretion and without prior consultation with the Company,
buy, sell, lend and otherwise trade any stocks, bonds and other
securities and investment instruments on behalf of each Fund; and
(vi) take, on behalf of each Fund, all actions the Adviser may deem
necessary in order to carry into effect such investment program and
the Adviser's functions as provided above, including the making of
appropriate periodic reports to the Company's Board of Directors.
(b) Covenants. The Adviser shall carry out its investment advisory and
supervisory responsibilities in a manner consistent with the investment
objectives, policies, and restrictions provided in: (i) each Fund's
Prospectus and Statement of Additional Information as revised and in
effect from time to time; (ii) the Company's Articles of Incorporation,
By-Laws or other governing instruments, as amended from time to time;
(iii) the 1940 Act and rules in force thereunder; (iv) other applicable
laws; and (v) such other investment policies, procedures and/or
limitations as may be adopted by the Company with respect to a Fund and
provided to the Adviser in writing. The Adviser agrees to use reasonable
efforts to manage each Fund so that it will qualify, and continue to
qualify, as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended, and regulations issued
thereunder (the "Code"), except as may be authorized to the contrary by
the Board. The management of the Funds by the Adviser shall at all times
be subject to the review of the Company's Board of Directors.
(c) Books and Records. Pursuant to applicable law, the Adviser shall keep
each Fund's books and records required to be maintained by, or on behalf
of, the Funds with respect to advisory services rendered hereunder. The
Adviser agrees that all records which it maintains for a Fund are the
property of the Fund and it will promptly surrender any of such records to
the Fund upon the Fund's request. The Adviser further agrees to preserve
for the periods prescribed by Rule 31a-2 of the Commission under the 1940
Act any such records of the Fund required to be preserved by Rule 31a-1 of
the Commission under the 1940 Act.
(d) Reports, Evaluations and Other Services. The Adviser shall furnish
reports, evaluations, information or analyses to the Company with respect
to the Funds and in connection with the Adviser's services hereunder as
the Company's Board of Directors may request from time to time or as the
Adviser may otherwise deem to be desirable. The Adviser shall make
recommendations to the Company's Board of Directors with respect to
Company policies, and shall carry out such policies as are adopted by the
Board of Directors. The Adviser
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shall, subject to review by the Board of Directors, furnish such other
services as the Adviser shall from time to time determine to be necessary
or useful to perform its obligations under this Agreement.
(e) Purchase and Sale of Securities. The Adviser, at its own expense, shall
place all orders for the purchase and sale of portfolio securities for
each Fund with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser to the extent
permitted by the 1940 Act and the Company's policies and procedures
applicable to the Funds. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which, under the circumstances,
result in total costs or proceeds being the most favorable to the Funds.
In assessing the best overall terms 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 or dealer,
research services provided to the Adviser, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In no event shall the Adviser be under any duty to obtain the
lowest commission or the best net price for any Fund on any particular
transaction, nor is the Adviser under any duty to execute any order in a
fashion either preferential to any Fund relative to other accounts managed
by the Adviser or otherwise materially adverse to such other accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) to
the Adviser, the Funds and/or the other accounts over which the Adviser
exercises investment discretion. The Adviser is authorized to pay a
broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for a Fund which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in good
faith that the total commission is 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 Adviser with respect to accounts over which it
exercises investment discretion. The Board of Directors of the Company
shall be entitled to request and receive such information as it deems
relevant to permit it to monitor or evaluate the reasonableness of any
such excess commissions paid by the Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate
the securities to be sold or purchased with those of other Funds or its
other clients if, in the Adviser's reasonable judgment, such aggregation
(i) will result in an overall economic benefit to the Fund, taking into
consideration the advantageous selling or purchase price, brokerage
commission and other expenses, and trading requirements, and (ii) is not
inconsistent with the policies set forth in the Company's registration
statement and the Fund's Prospectus and Statement of Additional
Information. In such event, the Adviser will allocate the securities so
purchased or sold, and the expenses incurred in the transaction, in an
equitable manner, it considers to be the most equitable and consistent
with its fiduciary obligations to the Fund and such other clients.
4. REPRESENTATIONS AND WARRANTIES.
(a) The Adviser hereby represents and warrants to the Company as follows:
(i) The Adviser is duly organized and is in good standing under the
laws of the State of Ohio and is fully authorized to enter into
this Agreement and carry out its duties and obligations hereunder.
(ii) The Adviser is registered as an investment adviser with the
Commission under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and is registered or licensed as an
investment adviser under the laws of all jurisdictions in which its
activities require it to be so registered or licensed. The Adviser
shall maintain such registration or license in effect at all times
during the term of this Agreement.
(iii) The Adviser at all times shall provide its best judgment and
effort to the Company in carrying out its obligations hereunder.
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(b) The Company hereby represents and warrants to the Adviser as follows:
(i) The Company has been duly organized as a corporation under the laws
of the State of Maryland and is authorized to enter into this
Agreement and carry out its terms.
(ii) The Company is registered as an investment company with the
Commission under the 1940 Act and shares of the each Fund are
registered for offer and sale to the public under the 1933 Act and
all applicable state securities laws where currently sold. Such
registrations will be kept in effect during the term of this
Agreement.
5. COMPENSATION. As compensation for the services which the Adviser is to
provide or cause to be provided pursuant to Paragraph 3, each Fund shall pay to
the Adviser out of Fund assets an annual fee, computed and accrued daily and
paid in arrears on the first business day of every month, at the rate set forth
opposite each Fund's name on Schedule A, which shall be a percentage of the
average daily net asset value of the Fund (computed in the manner set forth in
the Fund's most recent Prospectus and Statement of Additional Information)
determined as of the close of business on each business day throughout the
month. At the request of the Adviser, some or all of such fee shall be paid
directly to a Sub-Adviser. The fee for any partial month under this Agreement
shall be calculated on a proportionate basis. In the event that the total
expenses of a Fund exceed the limits on investment company expenses imposed by
any statute or any regulatory authority of any jurisdiction in which shares of
such Fund are qualified for offer and sale, the Adviser will bear the amount of
such excess, except: (i) the Adviser shall not be required to bear such excess
to an extent greater than the compensation due to the Adviser for the period for
which such expense limitation is required to be calculated unless such statute
or regulatory authority shall so require, and (ii) the Adviser shall not be
required to bear the expenses of the Fund to an extent which would result in the
Fund's or Company's inability to qualify as a regulated investment company under
the provisions of Subchapter M of the Code.
6. INTERESTED PERSONS. It is understood that, to the extent consistent with
applicable laws, the Directors, officers and shareholders of the Company are or
may be or become interested in the Adviser as directors, officers or otherwise
and that directors, officers and shareholders of the Adviser are or may be or
become similarly interested in the Company.
7. EXPENSES. As between the Adviser and the Funds, the Funds will pay for all
their expenses other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Funds shall include, without
limitation, (i) interest and taxes; (ii) brokerage commissions and other costs
in connection with the purchase or sale of securities and other investment
instruments, which the parties acknowledge might be higher than other brokers
would charge when a Fund utilizes a broker which provides brokerage and research
services to the Adviser as contemplated under Paragraph 3 above; (iii) fees and
expenses of the Company's Directors that are not employees of the Adviser; (iv)
legal and audit expenses; (v) administrator, custodian, pricing and bookkeeping,
registrar and transfer agent fees and expenses; (vi) fees and expenses related
to the registration and qualification of the Funds' shares for distribution
under state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to shareholders, unless otherwise
required; (viii) all other expenses incidental to holding meetings of
shareholders, including proxy solicitations therefor, unless otherwise required;
(ix) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (x) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; (xi) insurance premiums for fidelity
bonds and other coverage to the extent approved by the Company's Board of
Directors; (xii) association membership dues authorized by the Company's Board
of Directors; and (xiii) such non-recurring or extraordinary expenses as may
arise, including those relating to actions, suits or proceedings to which the
Company is a party (or to which the Funds' assets are subject) and any legal
obligation which the Company may have to indemnify the Company's Directors and
officers with respect thereto.
8. NON-EXCLUSIVE SERVICES; LIMITATION OF ADVISER'S LIABILITY. The services of
the Adviser to the Funds are not to be deemed exclusive and the Adviser may
render similar services to others and engage in other activities. The Adviser
and its affiliates may enter into other agreements with the Funds and the
Company for providing additional services to the Funds and the Company which are
not covered by this Agreement, and to receive additional compensation for such
services. In the absence of willful misfeasance, bad faith, gross negligence or
reckless
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disregard of obligations or duties hereunder on the part of the Adviser, or a
breach of fiduciary duty with respect to receipt of compensation, neither the
Adviser nor any of its directors, officers, shareholders, agents, or employees
shall be liable or responsible to the Company, the Funds or to any shareholder
of the Funds for any error of judgment or mistake of law or for any act or
omission in the course of, or connected with, rendering services hereunder or
for any loss suffered by a Fund in connection with the performance of this
Agreement.
9. EFFECTIVE DATE; MODIFICATIONS; TERMINATION. This Agreement shall become
effective on the date first set forth above, provided that it shall have been
approved by a majority of the outstanding voting securities of each Fund, in
accordance with the requirements of the 1940 Act, or such later date as may be
agreed by the parties following such shareholder approval.
(a) This Agreement shall continue in force until the second anniversary of its
effective date. Thereafter, this Agreement shall continue in effect as to
each Fund for successive annual periods, provided such continuance is
specifically approved at least annually (i) by a vote of the majority of
the Directors 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 and (ii) by a vote of the Board of Directors of
the Company or a majority of the outstanding voting securities of the
Fund.
(b) The modification of any of the non-material terms of this Agreement may be
approved by a vote of a majority of those Directors of the Company who are
not interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval.
(c) Notwithstanding the foregoing provisions of this Paragraph 9, either party
hereto may terminate this Agreement at any time on sixty (60) days' prior
written notice to the other, without payment of any penalty. Such a
termination by the Company may be effected severally as to any particular
Fund, and shall be effected as to any Fund by vote of the Company's Board
of Directors or by vote of a majority of the outstanding voting securities
of the Fund. This Agreement shall terminate automatically in the event of
its assignment.
10. CERTAIN DEFINITIONS. The terms "vote of a majority of the outstanding
voting securities," "assignment," "control," and "interested persons," when used
herein, shall have the respective meanings specified in the 1940 Act, as now in
effect or as hereafter amended, and subject to such applicable rules,
interpretations and orders as may be issued by the Commission.
11. INDEPENDENT CONTRACTOR. The Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Directors of the Company from time
to time, have no authority to act for or represent a Fund in any way or
otherwise be deemed an agent of a Fund.
12. STRUCTURE OF AGREEMENT. The Company is entering into this Agreement on
behalf of the underlying Funds listed on Schedule A attached hereto severally
and not jointly. The responsibilities and benefits set forth in this Agreement
shall refer to each Fund severally and not jointly. No Fund shall have any
responsibility for any obligation of any other Fund arising out of this
Agreement. Without otherwise limiting the generality of the foregoing:
(a) any breach of any term of this Agreement regarding the Company with
respect to any one Fund shall not create a right or obligation with
respect to any other Fund;
(b) under no circumstances shall the Adviser have the right to set off claims
relating to a Fund by applying property of any other Fund; and
(c) the business and contractual relationships created by this Agreement,
consideration for entering into this Agreement, and the consequences of
such relationship and consideration relate solely to the Company and the
particular Fund to which such relationship and consideration applies.
This Agreement is intended to govern only the relationships between the
Adviser, on the one hand, and the Company and the Funds, on the other hand, and
(except as specifically provided above in this paragraph 12) is not
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intended to and shall not govern (i) the relationship between the Company and
any Fund or (ii) the relationships among the respective Funds.
13. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of Ohio, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the
Commission thereunder.
14. 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 and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, and their respective seals
to be hereunto affixed, all as of the date written above.
SBSF FUNDS, INC. KEYCORP MUTUAL FUND ADVISERS, INC.
d/b/a KEY MUTUAL FUNDS
By: By:
--------------------------------------------- ---------------------------------------------
Name: Name:
Title: Title:
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SCHEDULE A
NAME OF FUND FEE*
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1. Key Stock Index Fund 0.10%
2. Key International Index Fund 0.50%
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* As a percentage of average daily net assets. Note, however, that the Adviser
shall have the right, but not the obligation, to voluntarily waive any
portion of the advisory fee from time to time.
