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Exhibit 5(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of July 9, 1987 between THE PARKSTONE GROUP OF FUNDS, a
Massachusetts business trust (herein called the "Group"), and SECURITIES
COUNSEL INCORPORATED, a wholly-owned, Michigan-chartered subsidiary of First of
America Bank - Michigan, N.A. (herein called the "Investment Adviser").
WHEREAS, the Group is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Group desires to retain the Investment Adviser to furnish
investment advisory and administrative services to certain investment
portfolios of the Group (the "Funds") and the Investment 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. The Group hereby appoints the Investment Adviser to act as
investment adviser to the Funds identified on Schedule A hereto for the period
and on the terms set forth in this Agreement. The Investment Adviser accepts
such appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Group has furnished the Investment Adviser
with copies properly certified or authenticated of each of the following:
(a) the Group's Declaration of Trust, as executed on March 25, 1987 and as
filed with the Secretary of State of the Commonwealth of Massachusetts on March
27, 1987, and all amendments thereto or restatements thereof (such Declaration,
as presently in effect and as it shall from time to time be amended or
restated, is herein called the "Declaration of Trust");
(b) the Group's Code of Regulations and amendments thereto;
(c) resolutions of the Group's Board of Trustees authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) the Group's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission on April 8, 1987 and
211 amendments thereto.
(e) the Group's Registration Statement on Form-1A under the Securities Act
of 1933, as amended ("1933 Act"), (File No. 33-13283) and under the 1940 Act as
filed with the Securities and Exchange Commission and all amendments thereto;
and
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(f) the Funds' most recent prospectuses and Statement of Additional
Information (such prospectuses and Statement of Additional Information, as
presently in effect, and all amendments and supplements thereto are herein
collectively called the "Prospectus").
The Group will furnish the Investment Adviser from time to time with copies
of all amendments of or supplements to the foregoing.
3. MANAGEMENT. Subject to the supervision of the Group's Board of Trustees,
the Investment Adviser will provide a continuous investment program for each
Fund, including investment research and management with respect to all
securities and investments and cash equivalents in said Funds. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by the Group with respect to the Funds.
The Investment Adviser will provide the services under this Agreement in
accordance with each Fund's investment objective, policies, and restrictions as
stated in the Prospectus and resolutions of the Group's Board of Trustees. The
Investment Adviser further agrees that it:
(a) will use the same skill and care in providing such services as it uses
in providing services to fiduciary accounts for which it has investment
responsibilities;
(b) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and in addition will conduct its activities
under this Agreement in accordance with any applicable regulations of any
governmental authority pertaining to the investment advisory activities of the
Investment Adviser;
(c) will not make loans to any person to purchase or carry units of
beneficial interest in the Group or make loans to the Group;
(d) will place orders pursuant to its investment determinations for the
Group either directly with the issuer or with any broker or dealer. In placing
orders with brokers and dealers, the Investment Adviser will attempt to obtain
prompt execution of orders in an effective manner at the most favorable price.
Consistent with this obligation, when the execution and price offered by two or
more brokers or dealers are comparable, the Investment Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide the Investment Adviser with research advice and other
services. In no instance will portfolio securities be purchased from or sold to
The Winsbury Com?any, Securities Counsel Incorporated, or any affiliated person
of either the Group, The Winsbury Company, or Securities Counsel Incorporated;
(e) will maintain all books and records with respect to the Group's
securities transactions and will furnish the Group's Board of Trustees such
periodic and special reports as the Board may request;
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(f) will treat confidentially and as proprietary information of the Group
all records and other information relative to the Group and prior, present, or
potential interestholders, and will not use such records and information for
any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Group, which approval shall not be unreasonably withheld and may not be
withheld where the Investment Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Group;
and
(g) will maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the Group,
the Investment Adviser's personnel will not inquire or take into consideration
whether the issuers of securities proposed for purchase or sale for the Group's
account are customers of the Investment Adviser or of its parent or its
subsidiaries or affiliates. In dealing with such customers, the Investment
Adviser and its parent, subsidiaries, and affiliates will not inquire or take
into consideration whether securities of those customers are held by the Group.
4. SERVICES NOT EXCLUSIVE. The investment management services furnished by
the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others so long
as its services under this Agreement are not impaired thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Group are the property of the Group and further agrees to
surrender promptly to the Group any of such records upon the Group's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
6. EXPENSES. During the term of this Agreement, the Investment 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 Group.
7. COMPENSATION. For the services provided and the expenses assumed pursuant
to this Agreement, each of the Funds will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee computed
daily and paid monthly at the applicable annual rate set forth on Schedule A
hereto. Each Fund's obligation to pay the above-described fee to the
Investment Adviser will begin as of the date of the initial public sale of
shares in that Fund.
If in any fiscal year the aggregate expenses of any of the Funds (as defined
under the securities regulations of any state having jurisdiction over the
Group) exceed the expense limitations of any such state, the Investment Adviser
will reimburse the Fund for a portion of such excess expenses equal to such
excess times the ratio of the fees otherwise payable by the
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Fund to the Investment Advise hereunder to the aggregate fees otherwise payable
by the Fund to the Investment Adviser hereunder and to The Winsbury Company
under the Administration Agreement between The Winsbury Company and the Group.
The obligation of the Investment Adviser to reimburse the Funds hereunder is
limited in any fiscal year to the amount of its fee hereunder for such fiscal
year, provided, however, that notwithstanding the foregoing, the Investment
Adviser shall reimburse the Funds for such proportion of such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state having jurisdiction over
the Group so require. Such expense reimbursement, if any, will be estimated
daily and reconciled and paid on a monthly basis.
8. LIMITATION OF LIABILITY. The Investment Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Funds
in connection with the performance of this Agreement, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under
this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective as to a
particular Fund 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
such Fund, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect until December
31, 1988.
Thereafter, if not terminated, this Agreement shall continue in effect as to
a particular Fund for successive periods of twelve months each ending on
December 31 of each year, provided such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Group'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
Group's Board of Trustees or by the vote of a majority of all votes
attributable to the outstanding Shares of such Fund. Notwithstanding the
foregoing, this Agreement may be terminated as to a particular Fund at any time
on sixty days' written notice, without the payment of any penalty, by the Group
(by vote of the Group's Board of Trustees or by vote of a majority of the
outstanding voting securities of such Fund) or by the Investment Adviser. This
Agreement will immediately terminate in the event of its assignment. (As used
in this Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning of such terms
in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
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11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. 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. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the Commonwealth of Massachusetts.
The names "The Parkstone Group of Funds" and "Trustees of The Parkstone Group
of Funds" refer respectively to the Trust created and the Trustees, as trustees
but not individually or personally, acting from time to time under a
Declaration of Trust dated as of March 25, 1987 to which reference is hereby
made and a copy of which is on file at the office of the Secretary 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
Parkstone Group of Funds" entered into in the name or on behalf thereof 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, interestholders
or representatives of the Trust personally, but bind only the assets of the
Trust, and all persons dealing with any Fund of the Trust must look solely to
the assets of the Trust belonging to such Fund for the enforcement of any
claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE PARKSTONE GROUP OF FUNDS
Seal By: /s/ G. XXXXXX XXXXXXXXX
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Title: President
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SECURITIES COUNSEL INCORPORATED
Seal By: /s/ XXXXXXX XXXXXXX
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Title: President
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SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN THE PARKSTONE GROUP OF FUNDS AND
SECURITIES COUNSEL INCORPORATED
DATED JULY 9, 1987
Name of Fund Compensation*
The Parkstone U.S. Government Annual rate of forty
Obligations Fund one-hundredths of one percent
(.40%) of the U.S. Government
Obligations Fund's average
daily net assets.
The Parkstone Prime Annual rate of forty
Obligations Fund one-hundredths of one percent
(.40%) of the Prime
Obligations Fund's average
daily net assets.
The Parkstone Tax-Free Fund Annual rate of forty
one-hundredths of ore percent
(.40%) of the Tax-Free Fund's
average daily net assets.
THE PARKSTONE GROUP OF FUNDS
By: /s/ G. XXXXXX XXXXXXXXX
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Title: President
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Date: July 9, 1987
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SECURITIES COUNSEL INCORPORATED
By: /s/ XXXXXXX XXXXXXX
-----------------------------
Title: President
--------------------------
Date: July 9, 1987
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* All fees are computed daily and paid monthly.
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