EXHIBIT 5(i)
INVESTMENT ADVISORY AGREEMENT
Between
THE FLEX-PARTNERS
INTERNATIONAL EQUITY FUND
and
X. XXXXXX & ASSOCIATES, INC.
This Agreement is made the 8th day of February, 1997, by and between the
INTERNATIONAL EQUITY FUND (the "Fund"), a separate investment series of The
Flex-Partners (the "Trust"), a business trust organized and existing under the
laws of the State of Massachusetts, and X. XXXXXX & ASSOCIATES, INC., a
corporation organized and existing under the laws of the State of Ohio (the
"Adviser").
W I T N E S S E T H :
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended; and
WHEREAS, the Adviser is engaged principally in the business of rendering
investment supervisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust desires to retain the Adviser to render investment and
supervisory services to the Fund in the manner and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereto agree as follows:
I
INVESTMENT RESPONSIBILITY
(1) In providing the services and assuming the obligations set forth
herein, the Adviser may, at its expense, employ one or more subadvisers.
References herein to the Adviser shall include any subadviser employed by the
Adviser. Any agreement between the Adviser and a subadviser shall be subject to
the renewal, termination and amendment provisions of section V hereof.
The Trust hereby retains the Adviser to supervise and assist in the
management of the assets for the Fund and to furnish the Fund with a continuous
program for the investment of the Fund's assets, including:
a. Recommendations as to specific securities to be purchased for or
eliminated from the Fund's portfolio, and
b. Recommendations as to the portion of the Fund's assets that should be
held uninvested.
(2) Notwithstanding the generality of the foregoing, the Adviser may
itself, and at its own expense, contract for such supplementary advisory and
research services as it deems necessary or desirable to fulfill its obligations
under paragraph (1) above, provided that any such contract shall have been
approved by the Trust and its shareholders to the extent, and in the manner,
required by the Investment Company Act of 1940, as amended.
(3) The Adviser shall furnish to the Trust the services of one or more
persons who shall be authorized by the Trust to place orders for the purchase
and sale of securities for the account of the Fund. Acting through a person so
authorized by the Trust, the Adviser shall place such orders for the Fund.
(4) Notwithstanding the generality of paragraph (3) above, and subject to
the provisions of paragraphs (5) and (6) below, the Adviser shall endeavor to
secure for the Fund the best possible price and execution of every purchase and
sale for the account of the Fund. In seeking such best price and execution the
Adviser shall use its own judgment as to the implementation of its own
investment recommendations, including the Adviser's judgment as to the time when
an order should be placed, the number of securities to be bought or sold in any
one trade that is a part of any particular recommendation, and the market in
which an order should be placed.
(5) The Adviser shall use its own judgment in determining the
broker-dealers who shall be employed to execute orders for the purchase or sale
of securities for the Fund, in order to:
a. Secure best price and execution on purchases and sales for the Fund;
and
b. Secure supplemental research and statistical data for use in making
its recommendations to the Fund.
(6) The Adviser shall use its discretion as to when, and in which market,
the Fund's transactions shall be executed, in order to secure for the Fund the
benefits of best price and execution, and supplemental research and statistical
data. The use of such discretion shall be subject to review by the Trustees of
the Trust at any time and form time to time. The Trust, acting by its Trustees,
may withdraw said discretion at any time, and may direct the execution of
portfolio transactions for the Fund in any lawful manner different from that
provided for herein. Until a decision is made to withdraw or limit the
discretion herein granted, the Adviser shall not be liable for any loss suffered
by the Fund through the exercise by the Adviser of that discretion unless the
Adviser shall be guilty of gross negligence or willful misconduct.
II
ADMINISTRATIVE RESPONSIBILITY
During the continuance of this Agreement, Adviser shall provide the Fund
with a continuous program of general administration including:
a. Office space, equipment, supplies and utility services as shall be
required to conduct Fund business;
b. The provision and supervision of all persons performing the executive,
administrative, and clerical functions necessary for the conduct of
the Fund's business except as set forth in g., below;
c. The supervision of accounting, and of records and record-keeping for
the Fund;
d. The preparation and distribution of mandatory reports to Fund
shareholders and regulatory bodies;
e. The supervision of the daily net asset value of the Fund;
f. The preparation and distribution on behalf of the Fund of notices of
shareholders and Trustee meetings, agendas, proxies, and proxy
statements; and
g. Other facilities, services, and activities necessary for the conduct
of the Fund's business, except for services by the Fund's Custodian,
Registrar, Transfer Agent, Accounting Services Agent, Dividend
Disbursing Agent, Auditors, and Legal Counsel.
III
ALLOCATION OF EXPENSES
The Adviser shall pay the Fund's pro rata share of the cost and expenses of
the following services, facilities and activities: necessary office space,
equipment, supplies, utility services and all other ordinary office expenses;
the salaries and other compensation of the Trust's trustees, officers and
employees who are affiliated persons of the Adviser; and fees for supplementary
advisory and research services performed for the Adviser. The Fund shall pay all
other expenses incurred in the organization and operation of the Fund and the
continuous offering of the Fund's shares, including, but not limited to, the
following:
a. The Fund's pro rata share of the fees and expenses of counsel in
connection with the organization of the Fund.
b. The regular fees or special charges of any Custodian, Transfer Agent,
Registrar, Accounting Services Agent or Dividend Disbursing Agent
allocable to the Fund.
c. The Fund's pro rata share of the compensation or fees of the Trust's
auditors and legal counsel, and compensation and costs relating to
legal or administrative proceedings or to litigation.
d. Income, franchise, stock transfer and other taxes attributable to the
Fund.
e. Initial or renewal fees payable to governmental agencies in connection
with the filing of reports, notices, registration statements, and
other material required to be filed in connection with the Fund's
business.
f. The Fund's pro rata share of any insurance or bond premiums.
g. The Fund's pro rata share of association dues or assessments.
h. Brokerage fees or commissions on all Fund portfolio transactions.
i. The Fund's pro rata share of interest on borrowed funds or otherwise.
j. Any extraordinary expenses attributable directly to the Fund.
IV
COMPENSATION
The Fund shall pay the Adviser a fee, based on the value of the net assets
of the Fund determined in accordance with the Trust's Declaration of Trust, and
computed as follows:
(a) The annual advisory fee (the "Fee") shall be equal to the sum of 1.00%
of the Fund's average daily net assets.
(b) The Fee due the Adviser as set forth above will be accrued daily and
shall be paid to the Adviser in pro rata monthly installments due and
payable on the first business day of each calendar month.
V
DURATION AND TERMINATION
(1) The term of this Agreement shall begin on the date first written above
and, unless sooner terminated as hereinafter provided, this Agreement shall
remain in effect for a period of two years. Thereafter this Agreement shall
continue in effect from year to year, subject to the termination provisions and
all other terms and conditions hereof; if: (a) such continuation shall be
specifically approved at least annually by vote of the holders of a majority of
the outstanding voting securities of the Fund or by the vote, cast in person at
a meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party; and (b) the Adviser shall not have notified the Fund,
in writing, at least 60 days prior to the expiration of any term, that it does
not desire such continuation. The Adviser shall furnish to the Trust, promptly
upon its request, such information as may reasonably be necessary to evaluate
the terms of this Agreement or any extension, renewal or amendment hereof.
(2) This Agreement may not be amended, transferred, sold or in any manner
hypothecated or pledged, without the affirmative vote of a majority of the
outstanding voting securities of the Fund, and this Agreement shall
automatically and immediately terminate in the event of its assignment.
(3) This Agreement may be terminated by either party hereto, without the
payment of any penalty, upon 60 days' notice in writing to the other party,
provided, that in the case of termination by the Trust such action shall have
been authorized by resolution of the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Fund.
VI
MISCELLANEOUS
(1) The Adviser shall not deal with the Fund as broker or dealer but the
Adviser may enter orders for the purchase or sale of the Fund's securities
through a company or companies that are under common control with the Adviser,
provided such company acts as broker and charges a commission that does not
exceed the usual and customary broker's commission if the sale is effected on a
securities exchange, or, 1 per centum of the purchase or sale price of such
securities if the sale is otherwise effected. In connection with the purchase or
sale of portfolio securities for the account of the Fund, neither the Adviser
nor any officer or director of the Adviser shall act as a principal.
(2) Except as expressly prohibited in this Agreement, nothing herein shall
in any way limit or restrict the Adviser, or any officers, shareholders or
employees of Adviser, from buying selling or trading in any security for its or
their own account. Neither the Adviser nor any Officer or Director thereof shall
take a short position in any interests of the Fund or otherwise purchase such
interests for any purpose other than that of investment. However, the Adviser
may act as underwriter or distributor provided it does so pursuant to a written
contract approved in the manner specified in the Investment Company Act of 1940,
as amended.
(3) The Adviser may act as investment adviser to, and provide management
services for, other investment companies, and may engage in businesses that are
unrelated to investment companies, without limitation, provided the performance
of such services and the transaction of such businesses does not impair the
Adviser's performance of this Agreement.
(4) The Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates (including, but not limited to, loss sustained by reason
of the adoption or implementation of any investment policy or the purchase, sale
or retention of any security), except for loss resulting from willful
misfeasance, bad faith or gross negligence of the Adviser in the performance of
its duties or from reckless disregard by the Adviser of its obligations and
duties under this Agreement.
(5) 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 Investment Company Act of 1940, as amended, shall be resolved by
reference to such term or provision of the Act and to interpretations 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 validly issued pursuant to said Act. Specifically, the
terms "vote by a majority of the outstanding voting securities", "annually",
"interested person", "assignment", and "affiliated person", as used herein,
shall have the meanings assigned to them by the Investment Company Act of 1940,
as amended. In addition, where the effect of a requirement of the Investment
Company Act of 1940, as amended, reflected in any provision of this contract is
relaxed by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or of general application, such provision shall
be deemed to incorporate the effect of such rule, regulation or order.
(6) The Trust will provide the Adviser with all information concerning the
investment policies and restrictions of the Fund as the Adviser may from time to
time request or which the Trust deems necessary. In the event of any change in
the investment policies or restrictions of the Fund, the Trust will promptly
provide Adviser with all information concerning such change including, but not
limited to, copies of all documents filed by the Trust with the Securities and
Exchange Commission.
(7) The Trustees, officers, employees and agents of the Trust shall not be
personally bound by or liable hereunder, nor shall resort be had to their
private property for the satisfaction of any obligation or claim hereunder.
(8) Except to the extent the provisions of this Agreement are governed by
federal law, they shall be governed by the law of Ohio, without reference to its
choice of law rules.
(9) This Agreement represents the entire agreement between the parties
hereto.
(10) This Agreement may be executed in two or more counterparts, each of
which shall be considered an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first above written.
THE FLEX-PARTNERS
INTERNATIONAL EQUITY FUND
Attest: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------ --------------------------
Secretary Vice President
X. XXXXXX & ASSOCIATES, INC.
Attest: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxx
------------------------ ---------------------------
Secretary Vice President and General Counsel
EXHIBIT 5(ii)
INVESTMENT SUBADVISORY AGREEMENT
This Investment Subadvisory Agreement is made the ____th day of
_____________, 1997 by and between X. Xxxxxx & Associates, Inc., an Ohio
corporation (the "Adviser"), and Commercial Union Investment Management,
Limited, a United Kingdom corporation (the "Subadviser").
RECITALS
A. The Flex-Partners, a business trust organized and existing under the
laws of the State of Massachusetts, is an open-end management investment company
(the "Trust"), one of whose series is designated the International Equity Fund
(the "Fund").
B. The Trust is registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act").
C. The Adviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended.
D. The Adviser has been retained by the Fund to provide investment advisory
services to the Fund.
E. The Adviser desires to retain the Subadviser to furnish it with
portfolio management services in connection with the Adviser's investment
advisory activities on behalf of the Fund, and the Subadviser is willing to
furnish such services to the Adviser, in the manner and on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants of the parties herein, the parties agree as follows:
I
INVESTMENT RESPONSIBILITY
In accordance with and subject to the Investment Advisory Agreement between
the Fund and the Adviser, attached hereto as Exhibit A (the "Advisory
Agreement"), the Adviser hereby appoints the Subadviser to perform the portfolio
management services described herein for the investment and reinvestment of the
Fund's assets, subject to the control and direction of the Adviser and the
Trust's Board of Trustees, for the period and on the terms hereinafter set
forth. The Subadviser shall provide the Adviser with such investment advice and
supervision as the latter may from time to time consider necessary or
appropriate for the proper supervision of the Fund's investment assets. The
Subadviser 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 Fund shall be held uninvested, subject always to
the restrictions of the Trust's Declaration of Trust and By-Laws, as each may be
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
to the provisions of the 1940 Act and to the Fund's then-current prospectus and
statement of additional information. The Adviser shall provide the Subadviser
with all information concerning the investment policies and restrictions of the
Fund as the Subadviser may from time to time request or which the Trust deems
necessary. In the event of any change in the investment policies or restrictions
of the Fund, the Adviser will promptly provide Subadviser with all information
concerning such change including, but not limited to, copies of all documents
regarding the Fund filed by the Trust with the Securities and Exchange
Commission. In particular, the Subadviser shall (i) continuously review,
supervise and administer the investment program of the Fund; (ii) shall monitor
regularly the relevant securities for the Fund (all such designated securities
to be as defined from time to time in the Fund's current prospectus and
statement of additional information) to determine if adjustments are warranted
and, if so, to make such adjustments on a periodic basis; (iii) shall determine,
in the Subadviser's discretion, the securities to be purchased or sold or
exchanged in order to keep the Fund in balance with its designated investment
strategy; (iv) shall determine, in the Subadviser's discretion, whether to
exercise warrants or other rights with respect to the Fund's securities; (v)
shall determine, in the Subadviser'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 Fund;
(vi) shall provide the Fund with records concerning the Subadviser's activities
which the Fund is required to maintain by law; and (vii) shall render regular
reports to the Trust's officers and Trustees concerning the Subadviser's
discharge of the foregoing responsibilities. The Subadviser shall also make
recommendations as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Fund's securities shall
be exercised. The Subadviser shall take, on behalf of the Fund, 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 Fund's account with brokers or dealers selected
by it, and to that end the Subadviser is authorized as the agent of the Fund to
give instructions to the custodian of the Fund as to deliveries of securities
and payments of cash for the account of the Fund. In connection with the
selection of such brokers or dealers and the placing of such orders, the
Subadviser is directed to seek for the Fund, 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 who have furnished statistical, research and other
information or services to the Subadviser or the Fund, subject to any applicable
laws, rules and regulations.
II
ALLOCATION OF EXPENSES
The Subadviser shall furnish at its own expense all necessary services,
facilities and personnel in connection with its responsibilities under Section I
above. It is understood that the Fund will pay all of its own expenses
including, without limitation, its share of compensation and out-of-pocket
expenses of Trustees of the Trust not "affiliated" with the Subadviser or the
Adviser; governmental fees; interest charges; taxes; membership dues in the
Investment Company Institute allocable to the Fund; fees and expenses of
independent auditors and legal counsel; expenses of preparing reports to
governmental officers and commissions; expenses connected with the execution,
recording and settlement of portfolio security transactions; insurance premiums;
fees and expenses of the custodian for all services to the Fund, including
safekeeping of funds and securities and maintaining required books and accounts;
expenses of litigation and other extraordinary or non-recurring events and
expenses relating to the issuance, registration and qualification of interests
of the Fund.
III
COMPENSATION
For the services to be rendered by the Subadviser hereunder, the Adviser
shall pay to the Subadviser an annual investment subadvisory fee, computed and
paid monthly, in an amount equal to 100% of the investment advisory fees
received by the Adviser under the Advisory Agreement with regard to the first
$10 million of average net assets of the Fund, 30% of such advisory fees
received by the Adviser with regard to the next $10 million of average net
assets of the Fund and 65% of such advisory fees received by the Adviser with
regard to average net assets of the Fund greater than $20 million.
IV
COVENANTS OF THE SUBADVISER
The Subadviser agrees that it will not deal with itself, or with the
Board of Trustees of the Trust or the Adviser in making purchases or sales of
securities or other property for the account of the Fund, and except as
permitted by the 1940 Act, will not take a long or short position in the
interests of the Fund except as permitted by the Declaration, and will comply
with all other provisions of the Declaration and By-Laws and the then-current
prospectus and statement of additional information of the Fund relative to the
Subadviser, Adviser and the Trust's Trustees and officers. The Adviser will
provide the Subadviser with the names of all related parties of the Board of
Trustees of the Trust or the Adviser with whom the Subadviser may not deal. In
the event of any change in these related parties, the Adviser will promptly
notify the Subadviser.
V
LIMITATION OF LIABILITY OF THE SUBADVISER
The Subadviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates (including, but not limited to, loss sustained by reason
of the adoption or implementation of any investment policy or the purchase, sale
or retention of any security, in accordance with the then current prospectus and
statement of additional information of the Fund). As used in this Section V, the
term "Subadviser" shall include Directors, officers and employees of the
Subadviser as well as that corporation itself.
VI
ACTIVITIES OF THE SUBADVISER
The services of the Subadviser to the Adviser are not to be deemed to be
exclusive, the Subadviser being free to render investment advisory and/or other
services to others. It is understood that Trustees, officers and employees of
the Trust and holders of interests of the Fund are or may be or may become
interested in the Subadviser, as Directors, officers, employees, shareholders or
otherwise and that Directors, officers and employees of the Subadviser are or
may become similarly interested in the Trust.
VII
DURATION AND TERMINATION
A. 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, except as otherwise provided below, shall remain in effect for a period of
two years.
B. This Agreement may be terminated immediately by the Adviser, by the
Trustees of the Trust or by the "vote of a majority of the outstanding voting
securities" of the Fund upon the occurrence of any of the following events:
(1) the continuance of this Agreement after such two-year term is not
"specifically approved at least annually" (a) by the vote of a
majority of the Trustees who are not "interested persons" of the
Fund or of the Subadviser or the Adviser at a meeting
specifically called for the purpose of voting on such approval,
and (b) by the Board of Trustees of the Trust or by "vote of a
majority of the outstanding voting securities" of the Fund.
However, if the shareholders of the Fund fail to approve this
Agreement as provided herein, the Subadviser may continue to
serve hereunder in the manner and to the extent permitted by the
1940 Act and rules thereunder;
(2) a material breach of this Agreement by the Subadviser;
(3) the falsity in any material respect of any warranty,
representation or statement made by or on behalf of the
Subadviser in connection with this Agreement;
(4) there is an "assignment" of this Agreement;
(5) the Subadviser fails to achieve and maintain the performance
standard to be mutually agreed upon and specified in writing by
the Adviser and the Subadviser as specified in Section VIII
hereof; or
(6) the Advisory Agreement is terminated or not renewed.
C. This Agreement may be terminated at any time by the Adviser, by the
Trustees of the Trust or by the "vote of a majority of the outstanding voting
securities" of the Fund, upon at least 60 days written notice to the Subadviser.
D. This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Fund and by
vote of a majority of the Board of Trustees of the Trust 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.
E. 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 thereunder.
F. This Agreement may be terminated at any time by the Subadviser, without
the payment of any penalty, upon at least 60 days written notice to the Adviser.
G. This Agreement may be terminated immediately by the Subadviser upon the
occurrence of any of the following:
(i) a material breach of this agreement by the Adviser; or
(ii) the falsity in any material respect of any warranty,
representation or statement made by or on behalf of the Adviser
in connection with this Agreement.
VIII
PERFORMANCE
The Adviser and the Subadviser shall negotiate in good faith and use their
best efforts to agree on a performance standard against which the Subadviser's
investment performance shall be measured. The performance standard to be agreed
upon by the Adviser and the Subadviser shall be specified in writing and shall
be attached hereto and incorporated by reference herein as Exhibit B.
IX
MISCELLANEOUS
Any records required 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 Subadviser on behalf of the Fund are the property
of the Fund and will be surrendered promptly to the Fund on request.
The holders of the record interests, Trustees, officers, employees and
agents of the Trust shall not be personally bound by or liable hereunder, nor
shall resort be had to their private property for the satisfaction of any
obligation or claim hereunder.
Except to the extent the provisions of this Agreement are governed by
federal law, they shall be governed by the law of Ohio without reference to its
choice of law rules.
This Agreement represents the entire agreement between the parties hereto
with respect to the subject matter hereof.
This Agreement may be executed in two or more counterparts, each of which
shall be considered an original.
If there are any conflicts between the provisions of this Agreement and the
provisions of the 1940 Act or the regulations promulgated thereunder, the
provisions of the 1940 Act and such regulations shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first above written.
X. XXXXXX & ASSOCIATES, INC.
By:_____________________________
Its:____________________________
COMMERCIAL UNION INVESTMENT
MANAGEMENT, LIMITED
By:______________________________
Its:_____________________________
