1
EXHIBIT (5)(h)
2
SUB-INVESTMENT ADVISORY AGREEMENT
This Sub-Investment Advisory Agreement is made as of the 20th day of
August, 1996, by and between 1st Source Bank, an Indiana banking corporation
(the "Adviser"), and Xxxxxx Xxxxxx & Company, a Delaware limited partnership
(the "Sub-Adviser").
WHEREAS, the Adviser serves as investment adviser of certain portfolios
of The Sessions Group, an Ohio business trust and an open-end management
investment company (the "Trust"), which has filed a registration statement (the
"Registration Statement") under the Investment Company Act of 1940, as amended
(the "1940 Act") and the Securities Act of 1933.
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is 1st Source Monogram Diversified Equity Fund (the
"Fund"); and
WHEREAS, the Adviser desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser
experienced in the management of a portfolio of equity securities to assist the
Adviser in performing services for a portion of the Fund; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and is engaged
in the business of rendering investment advisory services to investment
companies and desires to provide such services to the Trust and the Adviser; and
WHEREAS, the Sub-Adviser is familiar with the investment objectives,
policies and restrictions of the Fund and has reviewed the Investment Advisory
Agreement dated as of August 20, 1996, between the Adviser and the Trust (the
"Adviser Agreement").
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
ss.1. APPOINTMENT OF THE SUB-ADVISER. The Adviser hereby appoints the
Sub-Adviser to provide a continuous investment program for that portion of the
Fund designated by the Adviser (the "LSC Portfolio"), subject to such
instructions and supervision as the Adviser may from time to time furnish and
further subject to the control and direction of the Trust's Board of Trustees,
for the period and on the terms hereinafter set forth. The Sub-Adviser hereby
accepts such appointment and agrees during such period to render the services
and to assume the obligations herein set forth for the compensation herein
provided. The Sub-Adviser will provide the services under this Agreement in
accordance with the Fund's and the LSC Portfolio's investment objectives,
policies and restrictions as stated in the Fund's most recent Prospectus and
Statement of Additional Information and as the same may, from time
3
to time, be supplemented or amended and in resolutions of the Trust's Board of
Trustees. The Adviser agrees to furnish the Sub-Adviser from time to time copies
of all amendments of or supplements to such Prospectus and Statement of
Additional Information. The Sub-Adviser shall for all purposes herein be deemed
to be an independent contractor and shall, except as expressly provided or
authorized (whether herein or otherwise), have no authority to act for or
represent the Adviser, the Fund or the Trust in any way.
ss.2. SUB-ADVISORY SERVICES. Subject to such instructions and
supervision as the Adviser may from time to time furnish, the continuous
investment program of the LSC Portfolio provided by the Sub-Adviser shall
include, among other things, investment research and management with respect to
all securities, investments and cash equivalents in the LSC Portfolio. The
Sub-Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund for the LSC
Portfolio, the appropriate portion of the LSC Portfolio's assets to be invested
in particular countries or geographic regions, the use of foreign exchange
contracts and other foreign currency matters, and the manner in which voting
rights, rights to consent to corporate action and other rights pertaining to the
LSC Portfolio's investments should be exercised. The Sub-Adviser will implement
such determinations through the placement, in the name of the Fund for the LSC
Portfolio, of orders for the execution of portfolio transactions with it through
such brokers or dealers as it may select.
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees
that it will:
(a) use the same skill and care in providing such services as
it uses in providing services to other fiduciary accounts
for which it has investment responsibilities;
(b) conform with all applicable Rules and Regulations of the
United States Securities and Exchange Commission ("SEC")
and in addition will conduct its activities under this
Agreement in accordance with any applicable regulations
of any government authority pertaining to the investment
advisory activities of the Sub-Adviser and shall furnish
such written reports or other documents substantiating
such compliance as the Adviser reasonably may from time
to time request;
(c) not make loans to any person to purchase or carry shares
of beneficial interest in the Trust or make loans to the
Trust;
(d) place orders pursuant to investment determinations for
the LSC Portfolio either directly with the issuer or with
2
4
an underwriter, market maker or broker or dealer. In placing
orders with brokers and dealers, the Sub-Adviser will use its
reasonable best efforts to obtain prompt execution of orders
in an effective manner at the most favorable price. Consistent
with this obligation, the Sub-Adviser may, to the extent
permitted by law, purchase and sell portfolio securities to
and from brokers and dealers who provide brokerage and
research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934) to or for the benefit of the
Fund and/or other accounts over which the Sub-Adviser
exercises investment discretion. Subject to the review of the
Trust's Board of Trustees from time to time with respect to
the extent and continuation of the policy, the Sub-Adviser is
authorized to pay a broker or dealer who provides such
brokerage and research services a commission for effecting a
securities transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-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 or dealer, viewed in terms of
either that particular transaction or the overall
responsibilities of the Sub-Adviser with respect to the
accounts as to which it exercises investment discretion. In
placing orders with brokers and dealers, consistent with
applicable laws, rules and regulations, the Sub-Adviser may
consider the sale of shares of the Trust. In no instance will
portfolio securities be purchased from or sold to the Trust,
BISYS Fund Services Limited Partnership, the Adviser, any
other sub-investment adviser for the Trust ("other
sub-advisers"), or the Sub-Adviser or any affiliate of the
foregoing except as may be permitted by the 1940 Act or an
exemption therefrom;
(e) maintain all necessary or appropriate books and records with
respect to the LSC Portfolio's securities transactions in
accordance with all applicable laws, rules and regulations,
including but not limited to Section 31(a) of the 1940 Act and
will furnish the Trust's Board of Trustees such periodic and
special reports as the Board reasonably may request;
(f) treat confidentially and as proprietary information of
the Adviser and the Trust all records and other
information relative to the Adviser and the Trust and
prior, present, or potential shareholders, and will not
use such records and information for any purpose other
than performance of its responsibilities and duties
hereunder, except that subject to prompt notification to
the Trust and the Adviser, the Sub-Adviser may divulge
3
5
such information to duly constituted authorities, or when so requested
by the Adviser and the Trust, PROVIDED, HOWEVER, that nothing
contained herein shall prohibit the Sub-Adviser from advertising or
soliciting the public generally with respect to other products or
services, regardless of whether such advertisement or solicitation may
include prior, present or potential shareholders of the Fund;
(g) maintain its policy and practice of conducting its fiduciary functions
independently. In making investment recommendations for the Trust, the
Sub-Adviser's personnel will not inquire or take into consideration
whether the issuers of securities proposed for purchase or sale for
the Trust's account are customers of the Adviser, other sub-advisers,
the Sub-Adviser or of their respective parents, subsidiaries or
affiliates. In dealing with such customers, the Sub-Adviser and its
parent, subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held by the
Trust; and
(h) render, upon request of the Adviser or the Trust's Board of Trustees,
written reports concerning the investment activities of the LSC
Portfolio.
ss.3. EXPENSES. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the LSC Portfolio.
ss.4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records, if any,
which it maintains for the LSC Portfolio are the property of the Fund and
further agrees to surrender promptly to the Adviser or the Trust any such
records upon the Adviser's or the Trust's request and that such records shall be
available for inspection by the SEC. The Sub-Adviser further agrees to preserve
for the periods and at the places prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act.
ss.5. COMPENSATION OF THE SUB-ADVISER. In consideration of services
rendered pursuant to this Agreement, the Adviser will pay the Sub-Adviser a fee
at the annual rate of the value of the LSC Portfolio's average daily net assets
set forth in Schedule A hereto; provided, however, that the Sub-Adviser may from
time to time waive some or all of such fees until such time as it notifies the
Trust that it has terminated such waiver. Such fee shall be accrued daily and
paid monthly as soon as practicable after the end of each month. If the
Sub-Adviser shall serve for less than the
4
6
whole of any month, the foregoing compensation shall be prorated. For the
purpose of determining fees payable to the Sub-Adviser, the value of the LSC
Portfolio's net assets shall be computed at the times and in the manner
specified in the Trust's Registration Statement. If the Adviser is required to
reduce its fee or to reimburse the Trust because the expenses of the Fund exceed
applicable state securities regulations or are in excess of any voluntary
expense limitations set forth in the Trust's current Registration Statement, the
Sub-Adviser's fee hereunder shall be reduced by an amount equal to such excess
expense multiplied by the ratio that the Sub-Adviser's fee hereunder bears to
the sum of the fees paid to and retained by the Adviser and paid to BISYS Fund
Services Limited Partnership (under the Trust's Administration Agreement with
BISYS Fund Services Limited Partnership with respect to the Fund) by the Trust
with respect to the LSC Portfolio. Notwithstanding anything contained herein to
the contrary, the Sub-Adviser shall not be compensated on the basis of a share
of capital gains or upon capital appreciation of the LSC Portfolio or any
portion thereof except as may be authorized by applicable law.
ss.6. SERVICES NOT EXCLUSIVE. The services of the Sub-Adviser hereunder
are not to be deemed exclusive, and the Sub-Adviser shall be free to render
similar services to others and to engage in other activities, so long as the
services rendered hereunder are not impaired. It is understood that the action
taken by the SubAdviser under this Agreement may differ from the advice given or
the timing or nature of action taken with respect to other clients of the
Sub-Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Sub-Adviser at the same time or at the same
price.
ss.7. USE OF NAMES. The Adviser shall not use the name of the
Sub-Adviser in any prospectus, sales literature or other material relating to
the Trust in any manner not approved prior thereto by the Sub-Adviser; provided,
however, that the Sub-Adviser shall approve all uses of its name which merely
refer in accurate terms to its appointment hereunder or which are required by
the SEC or a state securities commission; and, provided further, that in no
event shall such approval be unreasonably withheld. The Sub-Adviser shall not
use the name of the Trust, the Fund or the Adviser in any material relating to
the Sub-Adviser in any manner not approved prior thereto by the Adviser;
provided, however, that the Adviser shall approve all uses of its and the
Fund's or the Trust's name which merely refer in accurate terms to the
appointment of the Sub-Adviser hereunder or which are required by the SEC or a
state securities commission; and, provided further, that in no event shall such
approval be unreasonably withheld.
ss.8. LIABILITY OF THE SUB-ADVISER. Absent willful misfeasance, bad
faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or loss resulting from breach of
fiduciary duty with respect to the
5
7
receipt of compensation for services, the Sub-Adviser shall not be liable for
any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security.
ss.9. LIMITATION OF TRUST'S LIABILITY. The Sub-Adviser acknowledges
that it has received notice of and accepts the limitations upon the Trust's and
the Fund's liability set forth in its Declaration of Trust and under Ohio law.
The Sub-Adviser agrees that any of the Trust's obligations shall be limited to
the assets of the Fund and that the Sub-Adviser shall not seek satisfaction of
any such obligation from the shareholders of the Trust nor from any Trustee,
officer, employee or agent of the Trust.
The Sessions Group is a business trust organized under Chapter 1746,
Ohio Revised Code and under a Declaration of Trust, to which reference is hereby
made and a copy of which is on file at the office of the Secretary of State of
Ohio as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "The Sessions Group" entered into in the
name or on behalf thereof by any of the Trustees, officers, employees or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, officers, employees, agents or shareholders of the Trust
personally, but bind only the assets of the Trust, as set forth in Section
1746.13(A), Ohio Revised Code, and all persons dealing with any of the Funds of
the Trust must look solely to the assets of the Trust belonging to such Fund for
the enforcement of any claims against the Trust.
ss.10. DURATION, RENEWAL, TERMINATION AND AMENDMENT. This Agreement
will become effective as of the date first written above, provided that it shall
have been approved by vote of a majority of the outstanding voting securities of
the Fund, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect until August 20,
1998.
Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Fund for successive periods of one year each ending on
August 20th of each year, provided such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not parties to this Agreement or interested persons of
any party to this Agreement, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the vote of a majority of the Trust's
Board of Trustees or by the vote of a majority of all votes attributable to the
outstanding Shares of the Fund. This Agreement may be terminated as to the Fund
at any time, without payment of any penalty, by the Trust's Board of Trustees,
by the Adviser, or by a vote of the majority of the outstanding voting
securities of the Fund upon, 60 days' prior written notice to the Sub-Adviser,
or by the Sub-Adviser upon 60
6
8
days' prior written notice to the Adviser and the Trust's Board of Trustees, or
upon such shorter notice as may be mutually agreed upon. This Agreement shall
terminate automatically and immediately upon termination of the Adviser
Agreement. This Agreement shall terminate automatically and immediately in the
event of its assignment. No assignment of this Agreement shall be made by the
Sub-Adviser without the consent of the Adviser and the Board of Trustees of the
Trust. The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meaning set forth for such terms in the 1940 Act.
This Agreement may be amended at any time by the Adviser and the Sub-Adviser,
subject to approval by the Trust's Board of Trustees and, if required by the
1940 Act and applicable SEC rules and regulations, a vote of a majority of the
Fund's outstanding voting securities.
ss.11. CONFIDENTIAL RELATIONSHIP. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties except as required by law or by this
Agreement.
ss.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
this Agreement shall not be affected thereby.
ss.13. MISCELLANEOUS. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of Ohio. The captions in this Agreement are included for convenience only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed in several counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
1ST SOURCE BANK
By /s/ Xxxx X. Xxxxx
------------------------------------------
Title Vice Pres. & Sr. Investment Officer
---------------------------------------
XXXXXX XXXXXX & COMPANY
By XXXXXX XXXXXX & COMPANY INCORPORATED,
------------------------------------------
General Partner
By /s/ Xxxxx X. Xxxxxx, Mg. Partner
------------------------------------------
(name) (title)
7
9
Dated: August 20, 1996
SCHEDULE A
To the Sub-Investment Advisory Agreement
between 1st Source Bank and
Xxxxxx Xxxxxx & Company
Name of Fund COMPENSATION* DATE
------------ ------------- ----
1st Source Monogram Annual Rate of .65% of the August 20, 1996
Diversified Equity Fund average daily net assets of
the LSC Portfolio up to $5,000,000
and .50% of the average daily net
assets of the LSC Portfolio in
excess of $5,000,000.
1ST SOURCE BANK
By /s/ Xxxx X. Xxxxx
------------------------------------------
Title Vice Pres. & Sr. Investment Officer
---------------------------------------
XXXXXX XXXXXX & COMPANY
By XXXXXX XXXXXX & COMPANY INCORPORATED,
------------------------------------------
General Partner
By /s/ Xxxxx X. Xxxxxx, Mg. Partner
------------------------------------------
(name) (title)
*All fees are computed daily and paid monthly.
8
