THE VINTAGE FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of
January 24, 1997, between Vintage Advisers, Inc., a Delaware
corporation (the "Adviser"), and Health Financial, Inc., a
Kentucky corporation (the "Sub-Adviser").
W I T N E S E T H:
WHEREAS, the Adviser acts as the investment adviser to The
Vintage Funds, an Indiana business trust (the "Trust"), pursuant
to an Investment Advisory Agreement, dated as of June 2, 1995 as
amended through the date hereof (the "Advisory Agreement");
WHEREAS, the Trust is an open-end management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to
render investment sub-advisory services to the funds of the Trust
set forth on the Exhibits to this Agreement (the "Funds"), and
the Sub-Adviser is willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter set forth, the parties hereto agree as
follows:
Section 1. Appointment and Status of Sub-Adviser. The
Adviser hereby appoints the Sub-Adviser to act as its agent to
provide investment advisory service to each class of shares of
beneficial interest of the Trust set forth on an executed Exhibit
to this Agreement (each a "Fund"), for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such
appointment and agrees to render the services herein set forth,
for the compensation herein provided. Although the Sub-Adviser
shall be an agent of the Adviser, the Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor of the
Adviser and the Trust and shall, unless otherwise expressly
provided herein or authorized by the Adviser or the Board of
Trustees of the Trust from time to time, have no authority to act
for or represent the Adviser or the Trust in any way or
otherwise be deemed an agent of the Trust.
Section 2. Sub-Adviser's Duties. Subject to the general
supervision of the Trust's Board of Trustees (the "Board") and
the Adviser, the Sub-Adviser shall, employing its discretion,
manage the investment operations of each Fund and the composition
of the portfolio of securities and investments (including cash)
belonging to each Fund, including the purchase, retention and
disposition thereof and the execution of agreements relating
thereto, in accordance with the Fund's investment objective,
policies and restrictions as stated in the Trust's then-current
Prospectus and Statement of Additional Information (together, the
"Prospectus") and subject to the following understandings:
(a) The Sub-Adviser shall furnish a continuous investment
program for each Fund and determine from time to time what
investments or securities will be purchased, retained or sold by
each Fund and what portion of the assets belonging to each Fund
will be invested or held uninvested as cash;
(b) The Sub-Adviser shall use its best judgment in the
performance of its duties under this Agreement;
(c) The Sub-Adviser, in the performance of its duties and
obligations under this Agreement, shall act in conformity with
the Trust's Declaration of Trust, its By-Laws and its Prospectus
and with the instructions and directions of the Trust's Board of
Trustees and the Adviser and will conform to and comply with the
requirements of the 1940 Act and all other applicable federal and
state laws and regulations;
(d) The Sub-Adviser shall determine the securities to be
purchased or sold by each Fund and as agent for the Trust will
effect portfolio transactions pursuant to its determinations
either directly with the issuer or with any broker and/or dealer
in such securities, subject to Section 3 below;
(e) The Sub-Adviser shall maintain books and records with
respect to the securities transactions of each Fund and shall
render to the Adviser and the Trust's Board of Trustees such
periodic and special reports as the Adviser or the Board may
request; and
(f) The Sub-Adviser shall provide the Trust's custodian with
such information relating to the Trust as may be required under
the terms of the then-current custody agreement between the Trust
and the custodian.
Section 3. Brokerage. In placing orders with brokers
and/or dealers, the Sub- Adviser is directed at all times to seek
best price and execution for purchases and sales on behalf of
each Fund, taking into account such factors as price (including
the applicable brokerage commission or dealer spread),
the execution capability, financial responsibility and
responsiveness of the broker or dealer and the brokerage and
research services provided by the broker or dealer. Sub-Adviser
should generally seek favorable prices and commission rates that
are reasonable in relation to the benefits received. Subject to
such conditions as may be imposed by the Trust's Board of
Trustees, the Sub-Adviser may pay commissions to brokers and/or
dealers that are higher than might be charged by another
qualified broker to obtain brokerage and/or research services (as
those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) considered
by the Sub- Adviser to be useful or desirable in the performance
of the Sub-Adviser's duties hereunder, if the Sub-Adviser
determines in good faith that the amount of the commission
is reasonable in relation to the value of the brokerage and
research services provided by the executing broker or dealer.
The determination may be viewed in terms of either a particular
transaction or Sub-Adviser's overall responsibilities with
respect to the Funds and to accounts over which Sub-Adviser
exercises investment discretion. The Funds and the
Sub-Adviser understands and acknowledge that, although the
information may be useful to the Funds and the Sub-Adviser, it is
not possible to place a dollar value on such information. The
Board shall periodically review the commissions paid by the
Funds to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to
the Funds.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking
best qualitative execution as described above, the Sub- Adviser
may give consideration to sales of shares of the Funds as a
factor in the selection of brokers and dealers to execute
Fund portfolio transactions.
Subject to the foregoing and to such conditions as may be
imposed by the Adviser or the Trust's Board of Trustees and the
provisions of the 1940 Act, Exchange Act, and other applicable
law, nothing herein shall prohibit the Sub-Adviser from selecting
brokers and/or dealers who are "affiliated persons" of the
Sub-Adviser, the Adviser or the Trust. On occasions when
the Sub-Adviser deems the purchase or sale of a security to be in
the best interest of the Trust as well as other customers, the
Sub-Adviser may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased in order to obtain the best
execution and lower brokerage commissions, if any. In such
event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made
by the Sub-Adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the
Trust and, if applicable, to such other customers.
If any occasion should arise in which the Sub-Adviser gives
any advice to clients of Sub-Adviser concerning the shares of any
Fund, Sub-Adviser will act solely as investment counsel for such
client and not in any way on behalf of the Fund. Sub-Adviser's
services to the Funds pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that Sub-Adviser may
render investment advice, management and other services to
others, including other registered investment companies.
Section 4. Books and Records. The Sub-Adviser shall keep
the Trust's books and records required to be maintained by it
pursuant to Section 2(e) of this Agreement. The Sub-Adviser
agrees that all records which it maintains for the Trust are the
property of the Trust and it will promptly surrender any of such
records to the Trust upon the Trust's request. The Sub-Adviser
further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act any such records as are required to be
maintained by the Sub-Adviser with respect to the Trust by Rule
31a-1 under the 1940 Act.
Section 5. Expenses of the Sub-Adviser. During the term
of this Agreement, the Sub-Adviser will pay all expenses
(including without limitation the compensation of all trustees or
officers of the Trust who are "interested persons" of the
Sub-Adviser, as defined in the 0000 Xxx) incurred by it
in connection with its activities under this Agreement other than
the cost of securities and investments purchased for each Fund
(including taxes and brokerage commissions, if any).
Section 6. Compensation of the Sub-Adviser. For the
services provided and the expenses borne pursuant to this
Agreement, the Adviser will pay to the Sub-Adviser as full
compensation therefor a fee with respect to each Fund at
an annual rate as set forth on the Exhibit executed with respect
to such Fund and attached hereto. This fee for each month will
be paid to the Sub-Adviser during the succeeding month. For
purposes of determining the fee payable hereunder, the net asset
value of each Fund shall be calculated in the manner specified
in the Trust's Prospectus .
Section 7. Use of Name. The Trust, Adviser and
Sub-Adviser acknowledge that all rights to the name "First
Lexington" belong to Sub-Adviser, and that the Trust is being
granted a limited license to use such words in its Fund name or
in any class name. In the event Sub-Adviser ceases to be a
Sub-Adviser, the Trust's right to the use of the name "First
Lexington" shall automatically cease on the ninetieth day
following the termination of this Agreement. The right to the
name may also be withdrawn by Sub-Adviser during the term of
this Agreement upon ninety (90) days' written notice by
Sub-Adviser to the Trust. Nothing contained herein shall impair
or diminish in any respect, Sub-Adviser's right to use the name
"First Lexington" in the name of, or in connection with, any
other business enterprises with which Sub-Adviser is or may
become associated. There is no charge to the Trust for the right
to use these names.
Section 8. Liability of the Sub-Adviser. Neither
Sub-Adviser nor its shareholders, officers, directors, employees,
agents, control persons or affiliates of any thereof, shall be
liable for any error of judgment or mistake of law or for any
loss suffered by any Fund in connection with the matters to which
this Agreement relates except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for
services (in which case any award of damages shall be limited to
the period and the amount set forth in Section 36(b)(3) of the
0000 Xxx) or a loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties
or from reckless disregard by it of its obligations and duties
under this Agreement.
Any person, even though also a director, officer, employee,
shareholder or agent of Sub-Adviser, who may be or become an
officer, director, trustee, employee or agent of the Trust, shall
be deemed, when rendering services to the Trust or acting on any
business of the Trust (other than services or business
in connection with Sub-Adviser's duties hereunder), to be
rendering such services to or acting solely for the Trust and not
as a director, officer, employee, shareholder or agent of
Sub-Adviser, or one under Sub-Adviser's control or direction,
even though paid by Sub-Adviser.
Section 9. Duration and Termination. The term of this
Agreement shall begin on the date of this Agreement for each Fund
that has executed an Exhibit hereto on the date of this Agreement
and shall continue in effect with respect to each such Fund (and
any subsequent Funds added pursuant to an Exhibit executed during
the initial two-year term of this Agreement) for a period of two
years from the date of its execution. This Agreement shall
continue in effect from year to year thereafter, subject to
termination as hereinafter provided, if such continuance is
approved at least annually by (a) a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of such Fund or
by vote of the Trust's Board of Trustees, cast in person at a
meeting called for the purpose of voting on such approval, and
(b) by vote of a majority of the Trustees of the Trust who are
not parties to this Agreement or "interested persons" (as
defined in the 0000 Xxx) of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such
approval. If a Fund is added pursuant to an Exhibit executed
after the date of this Agreement as described above, this
Agreement shall become effective with respect to that Fund upon
execution of the applicable Exhibit and shall continue in effect
until the next annual continuance of this Agreement and from
year to year thereafter, subject to approval as described above.
This Agreement may be terminated by the Adviser or the Trust
with respect to any Fund at any time, without the payment of any
penalty, by the Adviser with the consent of the Trust's Board of
Trustees, by the Trust's Board of Trustees, or by vote of a
majority of the outstanding voting securities (as defined in the
0000 Xxx) of such Fund, in any such case on 30 days' written
notice to the Sub-Adviser, or by the Sub-Adviser at any time,
without the payment of any penalty, on 90 days' written notice
to the Adviser. This Agreement will automatically and
immediately terminate in the event of its assignment (as defined
in the 1940 Act).
Section 10. Amendment. This Agreement may be amended
by mutual consent of the Adviser, the Sub-Adviser and the Trust,
but the consent of the Trust must be approved (a) by vote of a
majority of those Trustees of the Trustee who are not parties to
this Agreement or "interested persons" (as defined in the 0000
Xxx) of any such party, cast in person at a meeting called for
the purpose of voting on such amendment, and (b) if required
under then current interpretations of the 1940 Act by the
Securities and Exchange Commission, by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of
each Fund affected by such amendment.
Section 11. Notices. Notices of any kind to be given in
writing and shall be duly given if mailed or delivered to the
Sub-Adviser at Health Financial, Inc., 0000 Xxxxx Xxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxx 00000, Attention: President, and to the
Adviser at Vintage Advisers, Inc., 000 X. Xxxxxxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000, or at such other address or to such
other individual as shall be specified by the party to be given
notice.
Section 12. Governing Law. (a) This Agreement shall be
governed by and construed in accordance with the laws of the
State of Indiana, without regard to the conflicts of laws
principles thereof, and (b) any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the 1940 Act, shall
be resolved by reference to such term or provision of the 1940
Act and to interpretation thereof, if any, by the United States
courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and
Exchange Commission issued pursuant to said 1940 Act. In
addition, where the effect of a requirement of the Act, reflected
in any provision of this Agreement is revised by rule, regulation
or order of the Securities and Exchange Commission,
such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
Section 13. Severability. In the event any provision of
this Agreement is determined to be void or unenforceable, such
determination shall not affect the remainder of this Agreement,
which shall continue to be in force.
Section 14. Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
Section 15. Binding Effect. Each of the undersigned
expressly warrants and represents that he has the full power and
authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party
indicated to the foregoing terms.
Section 16. Captions. The captions in this Agreement are
included for convenience of reference only and in no way define
or delimit any of the provisions hereto for otherwise affect
their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below on
the date and year first above written.
VINTAGE ADVISERS, INC. HEALTH FINANCIAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Chairman, C.E.O. Title: President
EXHIBIT A
to
Investment Sub-Advisory Agreement
The First Lexington Balanced Fund
For all services rendered by the Sub-Adviser hereunder with
respect to the above- named Funds, the Adviser shall pay to the
Sub-Adviser, and the Sub-Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual fee
with respect to each Fund equal to the percentage of the average
daily net assets of the Fund set forth opposite its name below:
Name of Fund Fee Percentage
The First Lexington Balanced 0.40% of net assets up to $250 million;
Fund 0.35% of the next $250 million of net assets;
0.30% of net assets in excess of $500 million
IN WITNESS WHEREOF, the parties hereto have caused this
Exhibit to be executed by their officers designated below as of
the date set forth below.
VINTAGE ADVISERS, INC. HEALTH FINANCIAL, INC.
By /s/ Xxxxxxx X. Xxxxxxx By /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Chairman, C.E.O. Title: President
