INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT, dated as of January 3, 2005 and
between Diversified Investment Advisors, Inc., a Delaware corporation
("Diversified") and Columbus Circle Investors, a Delaware General Partnership
("Subadvisor").
WITNESSETH:
WHEREAS, Diversified is an investment advisor registered under the
Investment Advisers Act of 1940 and has been retained to provide investment
advisory services to the Mid Cap Growth Portfolio, a series of Diversified
Investors' Portfolios ("Portfolio"), a diversified open-end management
investment company registered under the Investment Company Act of 1940 ("1940
Act"); and
WHEREAS, Diversified desires to retain the Subadvisor to furnish it with
portfolio management services in connection with Diversified's investment
advisory activities on behalf of the Portfolio, and the Subadvisor is willing to
furnish such services to Diversified;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Subadvisor. In accordance with and subject to the
Investment Advisory Agreement between the Portfolio and Diversified, attached
hereto as Schedule A (the "Advisory Agreement"), Diversified hereby appoints the
Subadvisor to perform the portfolio management services described herein for the
investment and reinvestment of such amount of the Portfolio's assets as is
determined from time to time by the Portfolio's Board of Trustees ("Assets"),
subject to the control and direction of Diversified and the Portfolio's Board of
Trustees, for the period and on the terms hereinafter set forth. Subadvisor's
responsibility for providing investment advice to the Portfolio is limited to
that discrete portion of the Portfolio represented by the Assets and Subadviser
is prohibited from directly or indirectly consulting with any other subadvisor
for a portion of the Portfolio's assets concerning Portfolio transactions in
securities or other assets.
The Subadvisor shall provide Diversified with such investment advice and
supervision as the latter may from time to time consider necessary for the
proper supervision of the Portfolio's assets. The Subadvisor shall furnish
continuously an investment program and shall determine from time to time what
securities shall be purchased, sold or exchanged and what portion of the assets
of the Portfolio shall be held uninvested, subject always to the provisions of
the 1940 Act and to the Portfolio's then-current Prospectus and Statement of
Additional Information ("SAI"). The Subadvisor will not supervise the investment
of cash.
In particular, the Subadvisor shall: (i) continuously review, supervise
and administer the investment program of the Portfolio; (ii) monitor regularly
the relevant
securities for the Portfolio to determine if adjustments are warranted and, if
so, to make such adjustments on a periodic basis; (iii) determine, in the
Subadvisor's discretion, the securities to be purchased or sold or exchanged in
order to keep the Portfolio in balance with its designated investment strategy;
(iv) determine, in the Subadvisor's discretion, whether to exercise warrants or
other rights with respect to the Portfolio's securities; (v) determine, in the
Subadvisor's discretion, whether the merit of an investment has been
substantially impaired by extraordinary events or financial conditions, thereby
warranting the removal of such securities from the Portfolio; (vi) as promptly
as practicable after the end of each calendar month, furnish a report showing:
(a) all transactions during such month, (b) all assets of the Portfolio on the
last day of such month, rates of return, and (c) such other information relating
to the Portfolio as the Diversified may request; (vii) meet at least four times
per year with Diversified and with such other persons as may be designated on
reasonable notice and at reasonable locations, at the request of Diversified, to
discuss general economic conditions, performance, investment strategy, and other
matters relating to the Portfolio; (viii) provide the Portfolio with records
concerning the Subadvisor's activities which the Portfolio is required to by law
maintain; and (ix) render regular reports to the Portfolio's officers and
Directors concerning the Subadvisor's discharge of the foregoing
responsibilities.
The Subadvisor shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
Portfolio securities for the Portfolio's account with brokers or dealers
selected by it, and to that end the Subadvisor is authorized as the agent of the
Portfolio to give instructions to the custodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
In connection with the selection of such brokers or dealers and the placing of
such orders, the Subadvisor is directed to seek for the Portfolio, in its best
judgment, prompt execution in an effective manner at the most favorable price.
Subject to this requirement of seeking the most favorable price, securities may
be bought from or sold to broker-dealers that charge commissions in excess of
the amount of commission another broker-dealer would have charged as long as the
Subadvisor determines in good faith that such amount of commission is reasonable
in relation to the value of statistical, research and other information or
services provided by such broker-dealer to the Subadvisor or the Portfolio,
subject to any applicable laws, rules and regulations.
2. Allocation of Charges and Expenses. The Subadvisor shall furnish at
its own expense all necessary services, facilities and personnel in connection
with its responsibilities under Section 1 above. It is understood that the
Portfolio will pay all of its own expenses including, without limitation,
compensation and out-of-pocket expenses of Trustees not affiliated with the
Subadvisor or Diversified; governmental fees; interest charges; taxes;
membership dues; fees and expenses of independent auditors, of legal counsel and
of any transfer agent, administrator, distributor, shareholder servicing agents,
registrar or dividend disbursing agent of the Portfolio; expenses of
distributing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing prospectuses, shareholder reports, notices,
proxy statements and reports to governmental officers and commissions and to
shareholders of the Portfolio; expenses
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connected with the execution, recording and settlement of Portfolio security
transactions; insurance premiums; fees and expenses of the custodian for all
services to the Portfolio, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of shares of the Portfolio; expenses of shareholder meetings; expenses of
litigation and other extraordinary or non-recurring events and expenses relating
to the issuance, registration and qualification of shares of the Portfolio.
3. Compensation of the Subadvisor. For the services to be rendered,
Diversified shall pay to the Subadvisor an investment advisory fee computed in
accordance with the terms of Schedule B herewith attached. If the Subadvisor
serves for less than the whole of any period specified, its compensation shall
be prorated.
4. Covenants and Representations of the Subadvisor. The Subadvisor
agrees that it will not deal with itself, or with the Trustees of the Portfolio
or with Diversified, or the principal underwriter or distributor as principals
in making purchases or sales of securities or other property for the account of
the Portfolio, except as permitted by the 1940 Act, will not take a long or
short position in the shares of the Portfolio except as permitted by the
Portfolio's Articles, and will comply with all other applicable provisions of
the Portfolio's Articles and By-Laws and any current Prospectus of the
Portfolio.
5. Limits on Duties. The Subadvisor shall be responsible only for
managing the assets in good faith and in accordance with the investment
guidelines, and shall have no responsibility whatsoever for, and shall incur no
liability on account of (i) diversification or selection of such investment
guidelines, (ii) advice on, or management of, any other assets for Diversified,
(iii) filing of any tax or information returns or forms, withholding or paying
any taxes, or seeking any exemption or refund, (iv) registration with any
government or agency, or (v) administration of the plans and trusts investing
through the Portfolio, and shall be indemnified by Diversified for any loss in
carrying out the terms and provisions of this Agreement, including reasonable
attorney's fees, indemnification to brokers and commission merchants, fines,
taxes, penalties and interest. Subadvisor, however, shall be liable for any
liability, damages, or expenses of Diversified arising out of the negligence,
malfeasance or violation of applicable law by it or any of its employees in
providing management under this Agreement; and, in such cases, the
indemnification by Diversified, referred to above shall be inapplicable.
The Subadvisor may apply to Diversified at any time for instructions and
may consult counsel for Diversified or its own counsel with respect to any
matter arising in connection with the duties of the Subadvisor. Also, the
Subadvisor shall be protected in acting upon any document which it reasonably
believes to be genuine and to have been signed by the proper person or persons.
6. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written and shall
govern the relations between the parties hereto thereafter, and, unless
terminated earlier as provided below, shall remain in force for two years, on
which date it will terminate unless its continuance
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thereafter is specifically approved at least annually (a) by the vote of a
majority of the Trustees of the Portfolio who are not "interested persons" to
this Agreement or of the Subadvisor or Diversified at a meeting specifically
called for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio. However, if the shareholders of the Portfolio fail
to approve the Agreement as provided herein, the Subadvisor may continue to
serve hereunder in the manner and to the extent permitted by the 1940 Act and
Rules thereunder.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the vote of a majority of the outstanding voting
securities of the Portfolio, or by Diversified. The Subadvisor may terminate the
Agreement only upon giving 90 days' advance written notice to Diversified. This
Agreement shall automatically terminate in the event of its assignment.
Except as otherwise permitted by applicable law, this Agreement may be
amended only if such amendment is approved by the vote of a majority of the
outstanding voting securities of the Portfolio and by vote of a majority of the
Board of Trustees of the Portfolio 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.
The terms "specifically approved at least annually", "vote of a majority
of the outstanding voting securities", "assignment", "affiliated person", and
"interested persons", when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
7. Certain Records. Any records to be maintained and preserved pursuant to
the provisions of Rule 31a-1 and Rule 31a-2 adopted under the 1940 Act which are
prepared or maintained by the Subadvisor on behalf of the Portfolio are the
property of the Portfolio and will be surrendered promptly to the Portfolio on
request.
8. Survival of Compensation Rates. All rights of compensation under this
Agreement that accrue prior to termination shall survive the termination of this
Agreement.
9. Entire Agreement. This Agreement states the entire agreement of the
parties with respect to management of the Portfolio and may not be amended
except in a writing signed by the parties.
10. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
11. Change of Management and Pending Litigation. Subadvisor represents to
Diversified that it will disclose to Diversified as soon as it has knowledge of
any significant change or variation in its management structure or personnel or
any significant change or variation in its management style or investment
philosophy. In addition, Subadvisor
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represents to Diversified that it will similarly disclose to Diversified, as
soon as it has knowledge, the existence of any pending or threatened,
significant legal action being brought against it whether in the form of a
lawsuit or an investigation by any federal or state governmental agency.
Diversified represents to Subadvisor that any information received by
Diversified pursuant to this section will be kept strictly confidential.
12. Use of Name. Subadvisor hereby agrees that Diversified may use the
Subadvisor's name in its marketing or advertising materials. Diversified agrees
to allow the Subadvisor to examine and approve any such materials prior to use.
IN WITNESS WHEREOF, the parties thereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Diversified Investment Advisors, Inc.
By:
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Xxxxxx X. Xxxxx
Senior Vice President & General Counsel
Columbus Circle Investors
By:
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SCHEDULE B
The Subadvisor shall be compensated for its services under this Agreement on the
basis of the below-described annual fee schedule. The fee schedule shall only be
amended by agreement between the parties.
Fee Schedule
.40% of the aggregate net assets of the Portfolio applied to the first
$135 million dollars
.35% of the aggregate net assets of the Portfolio applied to everything
in excess of $135 million dollars
Aggregate net assets are equal to the total market value of the Portfolio. Fees
will be calculated by multiplying the arithmetic average of the beginning and
ending monthly net assets in the Portfolio by the fee schedule and dividing by
twelve. The fee will be paid quarterly.
Subadvisor agrees that if at anytime during the term of this Subadvisory
Agreement, Subadvisor offers another of its clients (other than a client that is
an affiliated person of Subadvisor) a lower fee than that set forth in this
Schedule B for the management of a Mid Cap growth portfolio with the same
investment mandate, then Diversified will also be charged the lower rate.
Diversified will benefit from the lower rate from the first day that it is in
effect for Subadvisor's other client.
