1
EXHIBIT (5)(h)
2
NORTH AMERICAN FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made this_______day of_____________, 199__, between NASL
Financial Services, Inc., a Massachusetts corporation ("NASL Financial" or
the "Adviser"), and Founders Asset Management, Inc., a ________ Corporation
(the "Subadviser"). In consideration of the mutual covenants contained
herein, the parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the
"Trust") and the terms of this Agreement, to manage the investment and
reinvestment of the assets of the Portfolios specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Subadviser from time
to time (the "Portfolios"). The Subadviser will be an independent contractor
and will have no authority to act for or represent the Trust or Adviser in any
way except as expressly authorized in this Agreement or another writing by the
Trust and Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees
of the Trust, the Subadviser will manage the investments and
determine the composition of the assets of the Portfolios in
accordance with the Portfolios' registration statement, as
amended. In fulfilling its obligations to manage the
investments and reinvestments of the assets of the Portfolios,
the Subadviser will:
i. obtain and evaluate pertinent economic, statistical,
financial and other information affecting the individual
companies or industries the securities of which are included
in the Portfolios or are under consideration for inclusion in
the Portfolios;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and
related investment policies for each such Portfolio as
described in the Trust's registration statement, as amended;
iii. take whatever steps are necessary to implement these
investment programs by the purchase and sale of
securities including the placing of orders for such
purchases and sales;
iv. regularly report to the Trustees of the Trust with
respect to the implementation of these investment
programs; and
v. provide recommendations, in accordance with procedures and
methods established by the Trustees of the Trust, of the fair
value of securities held by the Portfolios for which market
quotations are not readily available for purposes of enabling
the Trust's Custodian to calculate net asset value.
b. The Subadviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel
required for it to execute its duties faithfully, and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Portfolios (excluding determination of net asset value
and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: The Subadviser will
place all orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Portfolios in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as
amended. The Subadviser may pay a broker-dealer which provides
research and brokerage services a higher spread or commission for a
particular transaction than otherwise might have been charged by
another broker-dealer, if the Subadviser determines that the higher
spread or commission is
1
3
reasonable in relation to the value of the brokerage and
research services that such broker-dealer provides, viewed in terms
of either the particular transaction or the Subadviser's overall
responsibilities with respect to accounts managed by the
Subadviser. The Subadviser may use for the benefit of the
Subadviser's other clients, or make available to companies affiliated
with the Subadviser or to its directors for the benefit of its
clients, any such brokerage and research services that the Subadviser
obtains from brokers or dealers.
d. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of
a registered investment company pursuant to the Investment Company Act
of 1940 (the "Investment Company Act") and Investment Advisers Act of
1940 (the "Investment Advisers Act") and the rules thereunder.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio
the compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its partners or employees shall be
liable to the Adviser or Trust for any loss suffered by the Adviser or Trust
resulting from any error of judgment made in the good faith exercise of the
Subadviser's investment discretion in connection with selecting Portfolio
investments except for losses resulting from willful misfeasance, bad faith
or gross negligence of, or from reckless disregard of, the duties of the
Subadviser or any of its partners or employees; and neither the Subadviser
nor any of its partners or employees shall be liable to the Adviser or Trust
for any loss suffered by the Adviser or Trust resulting from any other
matters to which this Agreement relates (i.e., those other matters specified
in Sections 2 and 8 of this Agreement), except for losses resulting from
willful mis feasance, bad faith, or negligence in the performance of, or from
disregard of, the duties of the Subadviser or any of its partners or employees.
5. SUPPLEMENTAL AND OTHER ARRANGEMENTS
The Subadviser may enter into arrangements with other persons
affiliated with the Subadviser to better enable it to fulfill its obligations
under this Agreement for the provision of certain personnel and facilities
to the Subadviser.
The services of the Subadviser to the Trust are not to be deemed to
be exclusive, the Subadviser and any person controlled by or under common
control with the Subadviser being free to render investment advisory and
other services to any other person or entity.
6. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as trustees, officers,
partners or otherwise; that directors, officers, agents and partners of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Certificate of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement
any information, reports or other material which any such body by reason of
this Agreement may request or require pursuant to applicable laws and
regulations.
2
4
8. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio
on the later of its execution, the effective date of the registration statement
of the Portfolio and the date of the meeting of the shareholders of the
Portfolio, at which meeting this Agreement is approved by the vote of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Portfolio. The Agreement will continue in effect for a
period more than two years from the date of its execution only so long as such
continuance is specifically approved at least annually either by the Trustees
of the Trust or by a majority of the outstanding voting securities of each of
the Portfolios, provided that in either event such continuance shall also be
approved by the vote of a majority of the Trustees of the Trust who are not
interested persons (as defined in the Investment Company Act) of any party to
this Agreement cast in person at a meeting called for the purpose of voting on
such approval. The required shareholder approval of the Agreement or of any
continuance of the Agreement shall be effective with respect to any Portfolio
if a majority of the outstanding voting securities of the series (as defined in
Rule 18f-2(h) under the Investment Company Act) of shares of that Portfolio
votes to approve the Agreement or its continuance, notwithstanding that the
Agreement or its continuance may not have been approved by a majority of the
outstanding voting securities of (a) any other Portfolio affected by the
Agreement or (b) all the portfolios of the Trust.
If the shareholders of any Portfolio fail to approve the Agreement or
any continuance of the Agreement, the Subadviser will continue to act as
investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of any contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Portfolio by
the vote of a majority of the outstanding voting securities of such Portfolio,
on sixty days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' written notice to the Trust and the other
party. This agreement will automatically terminate, without the payment of any
penalty, in the event of its assignment (as defined in the Investment Company
Act) or in the event the Advisory Agreement between the Adviser and the Trust
terminates for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under
the Investment Advisers Act or under the laws of any jurisdiction in
which the Subadviser is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Subadviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, public board or body, involving the affairs of
the Trust; and
c. the managing general partner or controlling partner of the Subadviser
or the portfolio manager of any Portfolio changes.
10. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment
is specifically approved by the vote of a majority of the outstanding voting
securities of each of the Portfolios affected by the amendment and by the vote
of a majority of the Trustees of the Trust 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. The required shareholder approval shall be
effective with respect to any Portfolio if a majority of the outstanding
voting securities of that Portfolio vote to approve the amendment,
notwithstanding that the amendment may not have been approved by a majority of
the outstanding voting securities of (a) any other Portfolio affected by the
amendment or (b) all the portfolios of the Trust.
3
5
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
13. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
14. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
15. GOVERNING LAW
The provisions of this Agreement shall be construed and in terpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the
laws of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
16. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust dated
February 18, 1994, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of The Commonwealth
of Massachusetts, provides that the name "North American Funds" refers to the
Trustees under the Declaration collectively as Trustees, but not as
individuals or personally; and no Trustee, shareholder, officer, employee or
agent of the Trust shall be held to any personal liability, nor shall resort
be had to their private property, for the satisfaction of any obligation or
claim, in connection with the affairs of the Trust or any portfolio thereof,
but only the assets belonging to the Trust, or to the particular portfolio with
which the obligee or claimant dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their duly authorized officers as of the date first
mentioned above.
[SEAL] NASL Financial Services, Inc.
by: _______________________
Xxxxxxx X. Xxxxxxxx
President
[SEAL] Founders Asset Management, Inc.
by: ________________________
4
6
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
portfolio of the Trust. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement, the fee computed
separately for each such Portfolio at an annual rate as follows (the
"Subadviser Percentage Fee"):
International Small Cap Fund: ___% of the first
$50,000,000, .___% between $50,000,000 and $200,000,000,
.___% between $200,000,000 and $500,000,000 and .___% on the
excess over $500,000,000 of the average daily value of the
net assets of the Portfolio;
Growth Equity Fund: .___% of the first $50,000,000, .___%
between $50,000,000 and $200,000,000, .___% between
$200,000,000 and $500,000,000 and .___% on the excess over
$500,000,000 of the average daily value of the net assets of
the Portfolio;
The Subadviser Percentage Fee for each Portfolio shall be accrued for
each calendar day this Agreement is in force and the sum of the daily fee
accruals shall be paid monthly to the Subadviser. The daily fee accruals will
be computed by multiplying the fraction of one over the number of calendar days
in the year by the applicable annual rate described in the preceding
paragraph, and multiplying this product by the net assets of the Portfolio as
determined in accordance with the Trust's prospectus and statement of
additional information as of the close of business on the previous business day
on which the Trust was open for business.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
5