EXHIBIT 99.5(b)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the day of August, 1993, by and between KEYSTONE
MANAGEMENT, INC., a Nevada corporation (the "Manager"), and KEYSTONE CUSTODIAN
FUNDS, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Manager and the Adviser wish to enter into an Agreement
setting forth the terms on which the Adviser will perform certain services for
the Manager and KEYSTONE AMERICA INTERMEDIATE TERM BOND FUND (the "Fund").
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Manager and the Adviser agree as follows:
1. The Manager hereby employs the Adviser to manage and administer the
operation of the Fund (with the exception of certain managerial and
administrative services to be provided by the Manager), to supervise the
provision of services to the Fund by others, and to manage the investment and
reinvestment of the assets of the Fund in conformity with the Fund's
investment objectives and restrictions as may be set forth from time to time
in the Fund's then current prospectus and statement of additional information,
if any, and other governing documents, all subject to the supervision of the
Manager and Board of Trustees of the Fund, for the period and on the terms set
forth in this Agreement. The Adviser hereby accepts such employment and agrees
during such period, at its own expense, to render the services and to assume
the obligations set forth herein, for the compensation provided herein. The
Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have
no authority to act for or represent the Manager or the Fund in any way or
otherwise be deemed an agent of the Manager or the Fund.
2. The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of the Fund with broker-dealers selected
by the Adviser. In executing portfolio transactions and selecting broker-
dealers, the Adviser will use its best efforts to seek best execution on
behalf of the Fund. In assessing the best execution 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-
dealer, and the reasonableness of the commission, if any (all for the specific
transaction and on a continuing basis). In evaluating the best execution
available, and in selecting the broker-dealer to execute a particular
transaction, the Adviser may also consider the brokerage and research services
(as those terms are used in Section 28(e) of the Securities Exchange Act of
1934 (the "1934 Act") provided to the Fund and/or other accounts over which
the Adviser or an affiliate of the Adviser exercises investment discretion.
The Adviser is authorized to pay a broker-dealer who provides such brokerage
and research services a commission for executing a portfolio transaction for
the Fund which is in excess of the amount of commission another broker-dealer
would have charged for effecting that transaction if, but only if, the Adviser
determines in good faith that such commission was reasonable in relation to
the value of the brokerage and research services provided by such broker-
dealer viewed in terms of that particular transaction or in terms of all of
the accounts over which investment discretion is so exercised.
3. The Adviser, at its own expense, shall furnish to the Fund office space
in the offices of the Adviser or in such other place as may be agreed upon by
the parties and the Fund from time to time, all necessary office facilities,
equipment and personnel in connection with its services hereunder, and shall
arrange, if desired by the Fund, for members of the Adviser's organization to
serve without salaries from the Fund as officers or, as may be agreed from
time to time, as agents of the Fund. The Adviser assumes and shall pay or
reimburse the Manager or the Fund, as the case may be, for: (1) the
compensation (if any) of the Trustees of the Fund who are affiliated with the
Adviser, any of its affiliates, or the Manager, and of all officers of the
Fund as such, and (2) all expenses of the Adviser incurred in connection with
its services hereunder. The Manager represents and warrants that the Fund has
assumed and has agreed to pay all other expenses of the Fund, including,
without limitation: (1) all charges and expenses of any custodian or
depository appointed by the Fund for the safekeeping of its cash, securities
and other property; (2) all charges and expenses for bookkeeping and auditors;
(3) all charges and expenses of any transfer agents and registrars appointed
by the Fund; (4) all fees of all Trustees of the Fund who are not affiliated
with the Adviser, any of its affiliates, or the Manager; (5) all broker's
fees, expenses and commissions and issue and transfer taxes chargeable to the
Fund in connection with transactions involving securities and other property
to which the Fund is a party; (6) all costs and expenses of distribution of
its shares incurred pursuant to a Plan of Distribution adopted under Rule 12b-
1 under the Investment Company Act of 1940 ("1940 Act"); (7) all taxes and
business trust fees payable by the Fund to Federal, state or other
governmental agencies; (8) all costs of certificates representing shares of
the Fund; (9) all fees and expenses involved in registering and maintaining
registrations of the Fund and of its shares with the Securities and Exchange
Commission (the "Commission") and registering or qualifying its shares under
state or other securities laws, including, without limitation, the preparation
and printing of registration statements, prospectuses and statements of
additional information for filing with the Commission and other authorities;
(10) expenses of preparing, printing and mailing prospectuses and statements
of additional information to shareholders of the Fund; (11) all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
notices, reports and proxy materials to shareholders of the Fund; (12) all
charges and expenses of legal counsel for the Fund and for Trustees of the
Fund in connection with legal matters relating to the Fund, including, without
limitation, legal services rendered in connection with the Fund's existence,
business trust and financial structure and relations with its shareholders,
registrations and qualifications of securities under Federal, state and other
laws, issues of securities, expenses which the Fund has herein assumed,
whether customary or not, and extraordinary matters, including, without
limitation, any litigation involving the Fund, its Trustees, officers,
employees or agents; (13) all charges and expenses of filing annual and other
reports with the Commission and other authorities; (14) all charges and
expenses of any manager appointed by the Fund; and (15) all extraordinary
expenses and charges of the Fund; and that in the event that the Adviser
provides any of these services or pays any of these expenses, the Fund will
promptly reimburse the Adviser therefor.
The services of the Adviser to the Fund and the Manager hereunder are not
to be deemed exclusive, and the Adviser shall be free to render similar
services to others.
4. As compensation for the Adviser's services to the Fund during the
period of this Agreement, the Manager will pay to the Adviser a fee at the
annual rate of 85% of the management fee paid by the Fund to the Manager.
A pro rata portion of the fee shall be payable in arrears at the end of
each day or calendar month as the Adviser may from time to time specify to the
Manager. If and when this Agreement terminates, any compensation payable
hereunder for the period ending with the date of such termination shall be
payable upon such termination. Amounts payable hereunder shall be promptly
paid when due.
5. The Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund or the Manager in connection with the
performance of this Agreement, except a loss resulting from the Adviser's
willful misfeasance, bad faith, gross negligence or from reckless disregard by
it of its obligations and duties under this Agreement. Any person, even though
also an officer, Director, partner, employee, or agent of the Adviser, who may
be or become an officer, Trustee, Director, employee or agent of the Fund or
the Manager, shall be deemed, when rendering services to the Fund or the
Manager or acting on any business of the Fund or the Manager, (other than
services or business in connection with the Adviser's duties hereunder), to be
rendering such services to or acting solely for the Fund or the Manager, as
the case may be, and not as an officer, Director, partner, employee, or agent
or one under the control or direction of the Adviser even though paid by it.
The Manager agrees to indemnify and hold the Adviser harmless from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the Securities Act of 1933, the 1934
Act, the 1940 Act, and any state and foreign securities and blue sky laws, as
amended from time to time) and expenses, including (without limitation)
attorneys' fees and disbursements, arising directly or indirectly from any
action or thing which the Adviser takes or does or omits to take or do
hereunder; provided that the Adviser shall not be indemnified against any
liability to the Fund or to its shareholders (or any expenses incident to such
liability) arising out of a breach of fiduciary duty with respect to the
receipt of compensation for services, willful misfeasance, bad faith, or gross
negligence on the part of the Adviser in the performance of its duties, or
from reckless disregard by it of its obligations and duties under this
Agreement.
6. The Manager represents and warrants that the Fund has agreed to cause
its books and accounts to be audited at least once each year by a reputable
independent public accountant or organization of public accountants who shall
render a report to the Fund.
7. Subject to and in accordance with the Declaration of Trust of the Fund,
the Certificate of Incorporation of the Adviser and Articles of Incorporation
of the Manager, respectively, it is understood that Trustees, Directors,
officers, agents and shareholders of the Fund or the Manager are or may be
interested in the Adviser (or any successor thereof) as Directors and officers
of the Adviser or its affiliates, as stockholders of Keystone Group, Inc. or
otherwise; that Directors, officers and agents of the Adviser and its
affiliates or stockholders of Keystone Group, Inc. are or may be interested in
the Fund or the Manager as Trustees, Directors, officers, shareholders or
otherwise; that the Adviser (or any such successor) is or may be interested in
the Fund or the Manager as shareholder or otherwise; and that the effect of
any such adverse interests shall be governed by said Declaration of Trust of
the Fund, Certificate of Incorporation of the Adviser, and Articles of
Incorporation of the Manager.
8. This Agreement shall continue in effect after July 1, 1994 only so long
as (1) such continuance is specifically approved at least annually by the
Board of Trustees of the Fund or by a vote of a majority of the outstanding
voting securities of the Fund, and (2) such renewal has been approved by the
vote of a majority of Trustees of the Fund who are not interested persons, as
that term is defined in the 1940 Act, of the Adviser, the Manager or of the
Fund, cast in person at a meeting called for the purpose of voting on such
approval.
9. On sixty days' written notice to the Adviser, this Agreement may be
terminated at any time without the payment of any penalty by the Manager, by
the Board of Trustees of the Fund or by vote of the holders of a majority of
the outstanding voting securities of the Fund; and on sixty days' written
notice to the Manager and the Fund, this Agreement may be terminated at any
time without the payment of any penalty by the Adviser. This Agreement shall
automatically terminate upon its assignment (as that term is defined in the
1940 Act). Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postage prepaid, to the other party at the
main office of such party.
10. This Agreement may be amended at any time by an instrument in writing
executed by both parties hereto or their respective successors, provided that
with regard to amendments of substance such execution shall have been first
approved by the vote of the holders of a majority of the outstanding voting
securities of the Fund and by the vote of a majority of Trustees of the Fund
who are not interested persons (as that term is defined in the 0000 Xxx) of
the Adviser, the Manager, or of any predecessor of either, or of the Fund,
cast in person at a meeting called for the purpose of voting on such approval.
A "majority of the outstanding voting securities of the Fund" shall have, for
all purposes of this Agreement, the meaning provided therefor in the 1940 Act.
11. Any compensation payable to the Adviser hereunder for any period other
than a full year shall be proportionately adjusted.
12. The provisions of this Agreement shall be governed, construed and
enforced in accordance with the laws of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the day and year first above written.
KEYSTONE MANAGEMENT, INC.
By: /s/
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KEYSTONE CUSTODIAN FUNDS, INC.
By: /s/
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