INVESTMENT ADVISORY AGREEMENT
between
SBSF FUNDS, INC.
d/b/a Key Mutual Funds
and
KEYCORP MUTUAL FUND ADVISERS, INC.
AGREEMENT made as of the 1st day of
July, 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 Sub-Adviser 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;
(d) Post-Effective Amendment No. 23
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
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.
(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 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 Companys 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 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. d/b/a KEY MUTUAL FUNDS
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
KEYCORP MUTUAL FUND ADVISERS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
Title: President
Schedule A
Name of Fund
Fee*
1.Key Stock Index Fund
0.10%
2.Key International Index Fund
0.50%
____________________
* 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.
