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Exhibit 5C
MONEY MANAGER AGREEMENT
Effective Date: December __, 1996
Termination Date: Two years after Effective
Attn:______________________________
Re: The Growth Stock Portfolio
Ladies and Gentlemen:
The Growth Stock Portfolio (all of the assets of the Growth Stock
Portfolio including those assets not managed by the Money Manager, hereinafter
referred to as the "Portfolio") is an open-end management investment company
registered as an investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), and subject to the rules and regulations
promulgated thereunder.
Sector Capital Management, L.L.C. (the "Manager") acts as the
investment subadviser of the Portfolio pursuant to the terms of an Investment
Advisory Agreement, and is an "investment adviser", as that term is defined in
Section 2(a)(20) of the 1940 Act, to the Portfolio. The Manager is responsible
for the day-to-day management of the Portfolio and for the coordination of
investments of the Portfolio's assets; however, specific portfolio purchases
and sales for the Portfolio, or a portion thereof, are to be made by the
portfolio management organizations recommended and selected by the Manager,
subject to the approval of the Board of Trustees of the Portfolio (the
"Board").
1. APPOINTMENT AS A MONEY MANAGER. The Manager and the Portfolio
hereby appoint and employ, ___________________________ (the "Money Manager") as
a discretionary investment sub-subadviser to the Portfolio for that portion of
the assets of the Portfolio which the Manager determines from time to time to
assign to the Money Manager (those assets being referred to as the "Account").
2. ACCEPTANCE OF APPOINTMENT: STANDARD OF PERFORMANCE. The
Money Manager accepts the appointment as a discretionary investment
sub-subadviser to the Portfolio and agrees to use its best professional
judgment to make and implement investment decisions for the Portfolio with
respect to the investments of the Account in accordance with the provisions of
this Agreement.
3. PORTFOLIO MANAGEMENT SERVICES OF THE MONEY MANAGER. The Money
Manager is hereby employed and authorized to select portfolio securities for
investment by the Portfolio, to determine whether to purchase and sell
securities for the Account, and upon making any purchase or sale decision, to
place orders for the execution of such portfolio transactions in accordance
with paragraphs 5 and 6 hereof and Exhibit A attached hereto and incorporated
by this reference herein (as it may be amended in writing by the parties from
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time to time). In providing portfolio management services to the Account, the
Money Manager shall be subject to such investment restrictions as are set forth
in the 1940 Act and rules thereunder, the supervision and control of the Board,
such specific written instructions as the Board may adopt and communicate to the
Money Manager; the investment objectives, policies and restrictions of the
Portfolio furnished pursuant to paragraph 4; and written instructions from the
Manager. The Money Manager shall maintain on behalf of the Portfolio the records
listed in Exhibit B attached hereto and incorporated by this reference herein
(as it may be amended in writing by the parties from time to time). At the
Portfolio's or the Manager's reasonable request (as communicated by the Board or
the officers of such entities), the Money Manager will consult with the officers
of the Portfolio or the Manager, as the case may be, with respect to any
decision made by it with respect to the investments of the Account. X. Xxxxxx &
Associates, Inc., the investment adviser to the Portfolio, will invest any cash
in the Account.
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Portfolio
shall provide the Money Manager with a written statement of the investment
objectives and policies of the Portfolio and any specific investment
restrictions applicable thereto as established by the Portfolio, including those
set forth in its Prospectus, as amended from time to time. The Portfolio retains
the right, on reasonable prior written notice to the Money Manager, from the
Portfolio or the Manager, to modify any such objectives, policies or
restrictions in any manner at any time. The Money Manager shall have no duty to
investigate, and the Money Manager may also rely upon, any instructions received
from the Portfolio, the Manager, or both, and absent manifest error, such
instructions shall be presumed reasonable.
5. TRANSACTION PROCEDURES. All transactions will be settled by Star
Bank, N.A. (the "Custodian"), or such depository or agents as may be designated
by the Custodian, as custodian for the Portfolio, of all cash and/or securities
due to or from the Account, and the Money Manager shall not have possession or
custody thereof or any responsibility or liability with respect thereto. The
Money Manager shall advise Mutual Funds Service Co. ("MFSC"), the accounting
agent for the Portfolio, and confirm by facsimile all investment orders for the
Portfolio placed by it with broker/dealers at the time and in the manner set
forth in Exhibit A hereto. The Portfolio shall be responsible for all custodial
arrangements and the payment of all custodial charges and fees and, upon the
Money Manager giving proper instructions to MFSC, the Money Manager shall have
no responsibility or liability with respect to custodial arrangements or the
acts, omissions or other conduct of the Custodian.
6. ALLOCATION OF BROKERAGE. The Money Manager shall have the
authority and discretion to select broker/dealers to execute portfolio
transactions initiated by the Money Manager, and for the selection of the
markets on which the transactions will be executed.
A. In doing so, the Money Manager's primary objective shall be
to select a broker/dealer that can be expected to obtain the best
execution for the Portfolio. However, this responsibility shall not be
deemed to obligate the Money Manager to solicit competitive bids for
each transaction; and the Money Manager shall have no obligation to
seek the lowest available commission cost to the Portfolio, so long as
the Money Manager believes in good faith, based upon its knowledge of
the capabilities of the broker/dealer selected, that the commission
cost is reasonable in relation to the total quality and reliability of
the brokerage and research services made available by the broker/dealer
to the Money Manager viewed in terms of either that particular
transaction or of the Money Manager's overall responsibilities with
respect to its clients, including the Portfolio, as to which the Money
Manager exercises investment discretion, notwithstanding that the
Portfolio may not be the direct or exclusive beneficiary of any such
services or that
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another broker/dealer may be willing to charge the Portfolio a lower
commission on the particular transaction.
B. The Portfolio shall retain the right to request that
transactions involving the Account that give rise to brokerage
commissions in an annual amount of up to [25% or 50%] of the Money
Manager's executed brokerage commissions for the Portfolio be executed
through one or more broker-dealers selected by the Portfolio, which
broker-dealers will allocate a portion of such commissions, in an
amount mutually satisfactory to the Portfolio and the broker-dealer
selected, to pay the direct expenses of the Portfolio or its feeder
funds. The Money Manager may reject any request for directed brokerage
that does not appear to it to be reasonable or for which it reasonably
believes that best execution will not be obtained. The Money Manager
shall not be liable for failure to comply with such directed brokerage
threshold if it rejects any such request for directed brokerage in
accordance with the immediately preceding sentence or if the Portfolio
fails to make sufficient requests to enable the Money Manager to meet
such threshold. The Manager and the Portfolio acknowledge that, with
respect to those transactions for which the Portfolio has requested
that the transaction be executed through one or more broker-dealers
selected by the Portfolio, such direction may result in the Portfolio
paying higher commissions than otherwise might be obtainable or
receiving less favorable net prices and execution of some transactions,
or both, and may result in the Money Manager's inability to aggregate
trades for the Portfolio with those of the Money Manager's other
clients in order to obtain volume discounts.
C. The Portfolio agrees that it will provide the Money
Manager with a list of broker/dealers which are "affiliated persons"
of the Portfolio's other money managers. Upon receipt of such list,
the Money Manager agrees that it will not execute any portfolio
transactions with a broker/dealer which is an "affiliated person" (as
defined in the 0000 Xxx) of the Portfolio or of any money manager for
the Portfolio without the prior written approval of the Portfolio.
7. PROXIES. Unless the Manager gives written instructions to the contrary, the
Money Manager shall vote all proxies solicited by or with respect to the
issuers of securities in which assets of the Account may be invested. The Money
Manager shall use its best good faith judgment to vote such proxies in a manner
which best serves the interests of the Portfolio's investors.
8. REPORTS TO THE MONEY MANAGER. The Portfolio and the Manager shall furnish or
otherwise make available to the Money Manager such information relating to the
business affairs of the Portfolio, including periodic reports concerning the
Portfolio, as the Money Manager at any time, or from time to time, may
reasonably request in order to discharge its obligations hereunder.
9. FEES FOR SERVICES. The compensation of the Money Manager for its
services under this Agreement shall be calculated and paid monthly at an annual
rate of .25% of the Account's average daily net assets.
10. OTHER INVESTMENT ACTIVITIES OF THE MONEY MANAGER. The Portfolio
acknowledges that the Money Manager, or one or more of its affiliates, may have
investment responsibilities or render investment advice to, or perform other
investment advisory services for, other individuals or entities (the
"Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, The
Portfolio agrees that the Money Manager and its affiliates may give advice,
exercise investment responsibility and take other action with respect to the
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Account, provided that the Money
Manager acts in good faith, and provided further that it is the Money Manager's
policy to allocate, within its reasonable discretion, investment opportunities
to the Account over a period of time on a fair and equitable basis relative to
the Affiliated Accounts, taking into account the
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investment objectives and policies of the Portfolio and any specific investment
restrictions applicable thereto. The Portfolio acknowledges that one or more
of the Affiliated Accounts may at any time hold, acquire, increase, decrease,
dispose of or otherwise deal with positions in investments in which the Account
may have an interest from time to time, whether in transactions which may
involve the Account or otherwise. The Money Manager shall have no obligation to
acquire for the Account a position in any investment which any Affiliated
Account may acquire, and the Portfolio shall have no first refusal,
co-investment or other rights in respect of any such investment, either for the
Account or otherwise.
11. LIMITATION OF LIABILITY. The Money Manager shall not be liable for, and
shall be indemnified by the Portfolio for any action taken, omitted or suffered
to be taken by it in its reasonable judgment, in good faith and believed by it
to be authorized or within the discretion or rights or powers conferred upon it
by this Agreement, or in accordance with (or in the absence of) specific
directions or instructions from the Portfolio or the Manager; provided,
however, that such acts or omissions shall not have resulted from the Money
Manager's willful misfeasance, bad faith or gross negligence, violation of
applicable law, or reckless disregard of its duty or of its obligations
hereunder. The rights and obligations that are provided for in this Paragraph
11 shall survive the cancellation, expiration or termination of this Agreement.
12. CONFIDENTIALITY. Subject to the right of the Money Manager and the
Portfolio to comply with applicable law, including any demand or request of any
regulatory or taxing authority having jurisdiction over it, the parties hereto
shall treat as confidential all information pertaining to the Portfolio and the
actions of the Money Manager, the Manager and the Portfolio in respect
thereof, other than any such information which is or hereafter becomes
ascertainable from public or published information. The rights and obligations
that are provided for in this Paragraph 12 shall survive the cancellation,
expiration or termination of this Agreement.
13. USE OF THE MONEY MANAGER'S NAME. The Portfolio and the Manager agree to
furnish the Money Manager at its principal office prior to use thereof copies
of all prospectuses, proxy statements, reports to stockholders, sales
literature, or other material prepared for distribution to stockholders of the
feeder funds of the Portfolio or the public that refer in any way to the Money
Manager, and not to use such material if the Money Manager reasonably objects
in writing within five business days (or such other time as may be mutually
agreed) after receipt thereof. In the event of termination of this Agreement,
the Portfolio and the Manager will continue to furnish to the Money Manager
copies of any of the above mentioned materials that refer in any way to the
Money Manager, and will not use such material if the Money Manager reasonably
objects in writing within five business days (or such other time as may be
mutually agreed) after receipt thereof.
14. ASSIGNMENT. No assignment, as that term is defined in Section 2(a)(4) of
the 1940 Act, of this Agreement shall be made by the Money Manager, and this
Agreement shall terminate automatically in the event that it is assigned. The
Money Manager shall notify the Manager and the Portfolio in writing
sufficiently in advance of any proposed change of control, as defined in
Section 2(a)(9) of the 1940 Act, to enable the Manager and the Portfolio to
consider whether an assignment as that term is defined in section 2(a)(4) of
the 1940 Act, will occur, and to take the steps necessary to enter into a new
money manager agreement with the Money Manager or other investment adviser.
15. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PORTFOLIO. The Portfolio
represents, warrants and agrees that:
A. The Money Manager has been duly appointed by the
Board to provide investment advisory services to the Account as
contemplated hereby.
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B. The Portfolio will deliver to the Money Manager a true and
complete copy of its current prospectus as effective from time to
time, such other documents or instruments governing the investments of
the Portfolio, and such other information as is necessary for the
Money Manager to carry out its obligations under this Agreement.
C. The organization of the Portfolio and the conduct of the
business of the Portfolio as contemplated by this Agreement,
materially complies, and shall at all times materially comply, with
the requirements imposed upon the Portfolio by applicable law.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF MANAGER. The Manager
represents, warrants and agrees that:
A. The Manager acts as an "investment adviser", as that
term is defined in Section 2(a)(20) of the 1940 Act, to the Portfolio
pursuant to an Investment Subadvisory Agreement with the Portfolio.
B. The appointment of the Money Manager by the Manager
to provide the investment services as contemplated hereby has been
approved by the Board.
C. The Manager is registered as an "investment adviser"
under the Investment Advisers Act of 1940, as amended (the "Advisers
Act").
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF MONEY MANAGER. The
Money Manager represents, warrants and agrees that:
A. The Money Manager is registered as an "investment adviser"
under the Advisers Act; or it is a "bank" as defined in Section
202(a)(2) of the Advisers Act or an "insurance company" as defined in
Section 202(a)(12) of the Advisers Act and is exempt from registration
thereunder.
B. The Money Manager will maintain, keep current and
preserve on behalf of the Portfolio the records identified in Exhibit
B in the manner required by such Exhibit. The Money Manager agrees
that such records (other than those required by No. 4 of Exhibit B)
are the property of the Portfolio and will be surrendered to the
Portfolio promptly upon request.
C. The Money Manager will adopt or has adopted a written code
of ethics complying with the requirements of Rule 17j-1 under the 1940
Act, will provide to the Portfolio a copy of the code of ethics and
evidence of its adoption, and will make such reports to the Portfolio
as required by Rule 17j-1 under the 1940 Act. The Money Manager has
policies and procedures believed by it to be sufficient to enable the
Money Manager to detect and prevent the misuse of material, nonpublic
information by the Money Manager or any person associated with the
Money Manager, in compliance with the Xxxxxxx Xxxxxxx and Securities
Fraud Enforcement Act of 1988 and any other applicable federal and
state securities laws.
D. The Money Manager will notify the Portfolio of any changes
in the membership of its partnership or in the case of a corporation
in the ownership of more than five percent of its voting securities,
within a reasonable time after such change.
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18. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement among the Money Manager, the Manager and the Portfolio, which
amendment, other than amendments to Exhibits A and B, must be approved by the
Board in the manner required by the 1940 Act.
19. EFFECTIVE DATE. This Agreement shall become effective for the Portfolio on
the effective date set forth on page 1 of this Agreement, and shall continue in
effect until the termination date set forth on page 1 of this Agreement.
Thereafter, the Agreement shall continue in effect for successive annual
periods only so long as its continuance has been specifically approved at least
annually (a) by a vote of a majority of the Board or (b) by a vote of a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of
the Portfolio, and in either case by a majority of the Trustees who are not
parties to this Agreement or interested persons of any parties to this
Agreement (other than as Trustees of the Portfolio) cast in person at a meeting
called for purposes of voting on the Agreement.
20. TERMINATION. This Agreement may be terminated, without the payment of any
penalty, by the Board, the Manager, the Money Manager or by the vote of a
majority of the outstanding voting securities (as that term is defined in the
0000 Xxx) of the Portfolio, upon 30 days prior written notice to the other
parties hereto. Any such termination shall not affect the status, obligations or
liabilities of any party hereto to any of the other parties that accrued prior
to such termination.
21. APPLICABLE LAW. To the extent that state law shall not have been preempted
by the provisions of any laws of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Ohio, without reference to its choice of law principles.
TITLE
BY:
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NAME
DATE:
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TITLE
BY:
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NAME
DATE:
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Accepted and agreed to:
BY:
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Authorized Signatory
DATE:
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EXHIBITS: A. Operational Procedures.
B. Recordkeeping Requirements.
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EXHIBIT A
OPERATIONAL PROCEDURES
The Money Manager (the "MM") shall abide by certain rules and
procedures in order to minimize operational problems. The MM will be required
to have various records and files (as required by regulatory agencies) at its
offices. The MM will have to maintain a certain flow of information to Mutual
Funds Service Co. ("MFSC") and Star Bank, N.A. ("Star"), the accounting agent
and the custodian bank, respectively, for the Portfolio.
The MM will be required to furnish MFSC with daily information as to
executed trades. MFSC should receive this data no later than 4:30 PM Eastern
Standard Time on the day of the trade. MM shall verify that such information
has been received by MFSC. MFSC shall reasonably cooperate to confirm that it
has received such information. The necessary information should be transmitted
via facsimile machine to MFSC in the form of a daily trade authorization form
signed by an authorized individual. A list of authorized persons with specimen
signatures must be sent to MFSC. The authorization will contain information on
which MFSC and Star can rely to either accept delivery or deliver out of the
account securities as per each trade by the MM. A preprinted form will be
supplied to the MM by the Portfolio. Upon receipt of brokers' confirmations,
the MM or MFSC will be required to notify the other party if any differences
exist. MFSC will affirm trades through DTC. The reporting of trades by the MM
to MFSC must include the following:
o Whether Purchase or Sale
o Security name
o CUSIP Number
o Ticker Symbol
o Number of shares or principal amount
o Price per share or bond
o Accrued interest
o Commission dollars per trade, or if a net trade
o Executing broker
o Trade date
o Settlement date
o If security is not eligible for DTC (Purchase only), Proper Settlement
Instructions
MFSC will provide the necessary information to Star.
When opening accounts with brokers for the Portfolio, the
account should be a delivery versus payment account. No margin accounts are to
be maintained. The broker should be advised to use Star's ID system number (NO.
_____________________), with interested party ID confirmations to NO. 71394, to
facilitate the receipt of information by Star and MFSC. If this procedure is
followed, DK problems will be held down to a minimum and additional costs of
security trades will not become an important factor in doing business.
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EXHIBIT B
RECORDS TO BE MAINTAINED BY MONEY MANAGER
1. A record of each brokerage order, and all other portfolio purchases and
sales orders by the Money Manager or on behalf of the Portfolio for, or in
connection with, the purchase or sale of securities, whether executed or
unexecuted. Such records shall include:
A. The name of the broker,
B. The terms and conditions of the order, and of any
modification or cancellation thereof,
C. The time of entry or cancellation,
D. The price at which executed,
E. The time of receipt of report of execution, and
F. The name of the person who placed the order on behalf of
the Portfolio (Rule 31a-1(b)(5) and (6) of the 1940 Act).
2. A record for each fiscal quarter, completed within ten (10) days after the
end of the quarter, showing specifically the basis or bases upon which the
allocation of orders for the purchase and sale of portfolio securities to
brokers or dealers was made, and the division of brokerage commissions or other
compensation on such purchase and sale orders. The record:
A. Shall include the consideration given to:
(i) the sale of shares of a feeder fund of the
Portfolio
(ii) the supplying of services or benefits by
brokers or dealers to:
(a) The Portfolio,
(b) The Manager,
(c) Yourself (the Money Manager), and
(d) Any person other than the foregoing
(iii) Any other considerations other than the
technical qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits
made available.
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C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or other
compensation.
D. The identities of the persons responsible for making
the determination of such allocation and such division of brokerage commissions
or other compensation (Rule 31a-1(b)(9) of the 1940 Act) . *
3. A record in the form of an appropriate memorandum identifying the person or
persons, committees, or groups authorizing the purchase or sale of portfolio
securities. Where an authorization is made by a committee or group, a record
shall be kept of the names of its members who participate in the authorization.
There shall be retained as part of this record any memorandum, recommendation,
or instruction supporting or authorizing the purchase or sale of portfolio
securities (Rule 31a-1(b)(10) of the 0000 Xxx) and such other information as is
appropriate to support the authorization. **
4. Such accounts, books and other documents as are required to be maintained by
registered investment advisers by rule adopted under Section 204 of the
Advisers Act, to the extent such records are necessary or appropriate to record
the Money Manager's transactions made with respect to the Portfolio.
(Rule 31a-1(f) of the 1940 Act).
5. All accounts, books, records, or other documents that are required to be
maintained pursuant to the 1940 Act, the Advisers Act, or any rule or
regulation thereunder, need only be retained by the Money Manager as required
under such laws, rule or regulations. Any other account, book , record or other
document that is required to be maintained by the Money Manager pursuant to
this Exhibit B need only be maintained for six years after the date of its
creation.
* Maintained as property of the Portfolio pursuant to Rule 31a-3(a) of
the 1940 Act.
** Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms
(including their recommendations, i.e., buy, sell, hold), and any internal
reports or portfolio manager reviews.
Page 2 of Exhibit B
