FORM OF
GOLF ASSOCIATED FUND
SUBADVISORY AGREEMENT
This Subadvisory Agreement is made as of ______________, 1998, between
Golf Investment Management, Inc., a Florida corporation (the "Adviser"), and
Wallington Asset Management Inc., an Indiana corporation (the "Subadviser").
WHEREAS, the Adviser has by separate contract agreed to serve as the
investment adviser to the Golf Associated Fund ("Fund"), a Massachusetts
business trust registered under the Investment Company Act of 1940, as amended
("1940 Act"), as an open-end diversified management investment company
consisting of one or more investment series of shares, each having its own
assets and investment policies;
WHEREAS, the Adviser's contract with the Fund allows it to delegate
certain investment advisory services to other parties; and
WHEREAS, the Adviser desires to retain the Subadviser to perform
certain sub-investment advisory services for the Fund, and the Subadviser is
willing to perform such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE FUND.
(a) INVESTMENT PROGRAM. Subject to the control and supervision
of the Board of Trustees of the Fund (the "Board") and the Adviser, the
Subadviser shall, at its expense, continuously furnish to the Fund an
investment program for such portion, if any, of Trust assets that is
allocated to it by the Adviser from time to time. With respect to such
assets, the Subadviser will make investment decisions and will place
all orders for the purchase and sale of portfolio securities. In the
performance of its duties, the Subadviser will act in the best
interests of the Fund and will comply with (i) applicable laws and
regulations, including, but not limited to, the 1940 Act, (ii) the
terms of this Agreement, (iii) the stated investment objective,
policies and restrictions of the Fund, as stated in the then-current
Registration Statement of the Fund, and (iv) such other guidelines as
the Board or Adviser may establish. The Adviser shall be responsible
for providing the Subadviser with the Fund's Declaration of Trust, as
filed with the Secretary of State of Massachusetts on June 11, 1998,
and all amendments thereto or restatements thereof, the Fund's By-Laws
and amendments thereto, resolutions of the Board authorizing the
appointment of Subadviser and approving this Agreement and current
copies of the materials specified in Subsections (a)(iii) and (iv) of
this Section 1. At such times as may be reasonably requested by the
Board or the Adviser, the Subadviser will provide them with economic
and investment analysis and reports, and make available to the Board
any economical, statistical, or investment services normally available
to similar investment company clients of the Subadviser.
(b) AVAILABILITY OF PERSONNEL. The Subadviser, at its expense,
will make available to the Board and the Adviser at reasonable times
its portfolio manager(s) and other appropriate personnel in order to
review investment policies of the Fund and to consult with the Board
and the Adviser regarding the investment affairs of the Fund, including
economic, statistical and investment matters relevant to the
Subadviser's duties hereunder, and will provide periodic reports to the
Adviser relating to the portfolio strategies it employs.
(c) SALARIES AND FACILITIES. The Subadviser, at its expense,
will pay for all salaries of personnel and facilities required for it
to execute its duties under this Agreement.
(d) COMPLIANCE REPORTS. The Subadviser, at its expense, will
provide the Adviser with such compliance reports relating to its duties
under this Agreement as may be agreed upon by such parties from time to
time.
(e) VALUATION. The Subadviser, at its expense, will provide
the Fund's custodian with market price information relating to the
assets of the Fund at such times as the parties hereto may agree upon
from time to time.
(f) EXECUTING PORTFOLIO TRANSACTIONS. The Subadviser will
place all orders pursuant to its investment determinations for the Fund
either directly with the issuer or through broker-dealers selected by
Subadviser. In the selection of broker-dealers and the placement of
orders for the purchase and sale of portfolio investments for the Fund,
the Subadviser shall use its best efforts to obtain for the Fund the
most favorable price and execution available, except to the extent it
may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to
obtain the most favorable price and execution available, the
Subadviser, bearing in mind the Fund's best interests at all times,
shall consider all factors it deems relevant, including by way of
illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission and dealer's
spread or ▇▇▇▇-up, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial
stability of the broker-dealer involved, the general execution and
operational facilities of the broker-dealer and the quality of service
rendered by the broker-dealer in other transactions. Subject to such
policies as the Board may determine, the Subadviser shall not be deemed
to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the Fund
to pay a broker-dealer that provides brokerage and research services to
the Subadviser an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction if the
Subadviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or the Subadviser's overall responsibilities
with respect to the Fund and to other clients of the Subadviser as to
which the Subadviser exercises investment discretion. In no instance
will portfolio securities of the Fund be purchased from or sold to the
Subadviser or any affiliated person of the Subadviser. The Fund agrees
that any entity or person associated with the Adviser or the Subadviser
that is a member of a national securities exchange is authorized to
effect any transaction on such exchange for the account of the Fund
that is permitted by Section 11(a) of the Securities Exchange Act of
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1934, as amended, and the Fund consents to the retention of
compensation for such transactions.
(g) EXPENSES. The Subadviser shall not be obligated to pay any
expenses of or for the Fund not expressly assumed by the Subadviser
pursuant to this Agreement.
2. BOOKS AND RECORDS. Pursuant to Rule 31a-3 under the 1940 Act, the
Subadviser agrees that: (a) all records it maintains for the Fund are the
property of the Fund; (b) it will surrender promptly to the Fund or the Adviser
any such records upon the Fund's or Adviser's request; (c) it will maintain for
the Fund the records that the Fund is required to maintain pursuant to Rule
31a-1 insofar as such records relate to the Fund's investment affairs; and (d)
it will preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records it maintains for the Fund.
3. OTHER AGREEMENTS. The Adviser understands that Subadviser now acts,
or may in the future act, as an investment adviser to fiduciary and other
managed accounts, and as investment adviser or subadviser to other investment
companies. Adviser has no objection to Subadviser acting in such capacities,
provided that whenever the Fund and one or more other investment advisory
clients of Subadviser have available funds for investment, investments suitable
and appropriate for each will be allocated in a manner believed by Subadviser to
be equitable to each, but Subadviser cannot assure, and assumes no
responsibility for equality among all accounts and customers. Subadviser shall
be permitted to bunch or aggregate orders for the Fund with orders for other
funds and accounts in a manner deemed equitable to all. Adviser recognizes that
in some cases this procedure may adversely affect the size of the position or
price that the Fund may obtain in a particular security. In addition, Adviser
understands that the persons employed by Subadviser to assist in Subadviser's
duties under this Agreement will not devote their full time to such service and
nothing contained in this Agreement will be deemed to limit or restrict the
right of Subadviser or any of its affiliates to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
By reason of the Subadviser's investment advisory activities and the
investment banking and other activities of its affiliates, the Subadviser may
acquire confidential information or be restricted from initiating transactions
in certain securities. The Adviser acknowledges and agrees that the Subadviser
will not be free to divulge to the Adviser, or to act upon, any such
confidential information with respect to the Subadviser's performance of this
Agreement and that, due to such a restriction, the Subadviser may not initiate a
transaction the Subadviser otherwise might have initiated.
4. COMPENSATION. The Adviser will pay to the Subadviser as compensation
for the Subadviser's services rendered pursuant to this Agreement a subadvisory
fee equal to 0.40% of the Fund's average daily net assets under management
without regard to any reduction in the fees paid to the Adviser as a result of
any statutory or regulatory limitation on investment company expenses. Such fees
shall be paid by the Adviser (and not by the Fund). Such fees shall be payable
for each month within 15 business days after the end of such month. If the
Subadviser shall serve for less than the whole of a month, the compensation as
specified shall be prorated.
5. AMENDMENT OF AGREEMENT. This Agreement shall not be materially
amended unless such amendment is approved by the affirmative vote of a majority
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of the outstanding shares of the Fund, and by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
members of the Board who are not interested persons of the Fund, the Adviser or
the Subadviser (the "Independent Trustees"). The Subadviser agrees to notify the
Adviser of any anticipated change in control of the Subadviser as soon as such
change is anticipated and, in any event, prior to such change.
6. DURATION AND TERMINATION OF THE AGREEMENT. This Agreement shall
become effective upon its execution; provided, however, that this Agreement
shall not become effective unless it has first been approved (a) by a vote of
the Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by an affirmative vote of a majority of the
outstanding voting shares of the Fund. This Agreement shall remain in full force
and effect continuously thereafter, except as follows:
(a) By vote of a majority of the (i) Independent Trustees, or
(ii) outstanding voting shares of the Fund, the Fund may at any time
terminate this Agreement, without the payment of any penalty, by
providing not more than 60 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Adviser and the Subadviser.
(b) This Agreement will terminate automatically, without the
payment of any penalty, unless within two years after its initial
effectiveness and at least annually thereafter, the continuance of the
Agreement is specifically approved by (i) the Board or the shareholders
of the Fund by the affirmative vote of a majority of the outstanding
shares of the Fund, and (ii) a majority of the Independent Trustees, by
vote cast in person at a meeting called for the purpose of voting on
such approval. If the continuance of this Agreement is submitted to the
shareholders of the Fund for their approval and such shareholders fail
to approve such continuance as provided herein, the Subadviser may
continue to serve hereunder in a manner consistent with the 1940 Act
and the rules and regulations thereunder.
(c) The Adviser may at any time terminate this Agreement,
without the payment of any penalty, by not less than 60 days' written
notice delivered or mailed by registered mail, postage prepaid, to the
Subadviser, and the Subadviser may at any time, without the payment of
any penalty, terminate this Agreement by not less than 90 days' written
notice delivered or mailed by registered mail, postage prepaid, to the
Adviser.
(d) This Agreement automatically and immediately shall
terminate, without the payment of any penalty, in the event of its
assignment or if the Investment Advisory Agreement between the Adviser
and the Fund shall terminate for any reason.
(e) Any notice of termination served on the Subadviser by the
Adviser shall be without prejudice to the obligation of the Subadviser
to complete transactions already initiated or acted upon with respect
to the Fund. Upon termination without reasonable notice by the Adviser,
the Subadviser will be paid certain previously agreed upon expenses the
Subadviser necessarily incurs in terminating the Agreement.
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Upon termination of this Agreement, the duties of the Adviser delegated
to the Subadviser under this Agreement automatically shall revert to the
Adviser.
7. NOTIFICATION OF THE ADVISER. The Subadviser promptly shall notify
the Adviser in writing of the occurrence of any of the following events:
(a) the Subadviser shall fail to be registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended, and under the laws of any jurisdiction in which the Subadviser
is required to be registered as an investment adviser in order to
perform its obligations under this Agreement;
(b) the Subadviser shall have been served or otherwise have
notice of any action, suit, proceeding, inquiry or investigation, at
law or in equity, before or by any court, public board or body,
involving the affairs of the Fund; or
(c) any other occurrence that might affect the ability of the
Subadviser to provide the services provided for under this Agreement.
8. DEFINITIONS. For the purposes of this Agreement, the terms "vote of
a majority of the outstanding shares," "affiliated person," "control,"
"interested person" and "assignment" shall have their respective meanings as
defined in the 1940 Act and the rules and regulations thereunder subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission under said Act; and references to annual approvals by the Board shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
9. LIABILITY OF THE SUBADVISER. In the absence of its bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder, the
Subadviser shall not be subject to any liability to the Adviser, the Fund or
their directors, Trustees, officers or shareholders, for any act or omission in
the course of, or connected with, rendering services hereunder. However, the
Subadviser shall indemnify and hold harmless such parties from any and all
claims, losses, expenses, obligations and liabilities (including reasonable
attorneys fees) which arise or result from the Subadviser's bad faith,
negligence or disregard of its duties hereunder.
10. LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any obligations of the Fund
under this Agreement are not binding upon the Trustees or the Shareholders
individually but are binding only upon the assets and property of the Fund.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Florida, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of Florida conflict with the applicable provisions
of the 1940 Act, the latter shall control.
12. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
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this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.
13. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is made less restrictive by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, Golf Investment Management, Inc. and Wallington
Asset Management Inc. have each caused this instrument to be signed in duplicate
on its behalf by its duly authorized representative, all as of the day and year
first above written.
Attest: GOLF INVESTMENT MANAGEMENT, INC.
By:________________________ By: _______________________________
Attest: WALLINGTON ASSET MANAGEMENT INC.
By:________________________ By:________________________________
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