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EXHIBIT (5)(f)
1/9/95
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of February 23 , 1995 between Meridian Investment
Company ("Adviser") and Xxxxxx & Xxxxxx Associates, Inc. (the "Sub-Adviser").
WHEREAS, Conestoga Family of Funds (the "Company") is registered as an
open-end diversified, management investment company under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment advisory services to the Company's International Equity Fund (the
"Fund") and the Sub-Adviser represents that it is willing and possesses legal
authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Advisor hereby appoints the Sub-Advisor to
act as Sub-adviser to the Fund for the period and on the terms set forth in
this Agreement. The Sub-Adviser accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Adviser has furnished the
Sub-Adviser with copies properly certified or authenticated of each of the
following:
(a) the Company's Agreement and Declaration of Trust, as
executed on August 1, 1989 and as filed with the Secretary of State of the
Commonwealth of Massachusetts on August 2, 1989, and all amendments thereto or
restatements thereof;
(b) the Company's Code of Regulations and any amendments
thereto;
(c) resolutions of the Company's Board of Trustees
authorizing the appointment of the Sub-Adviser, approving this Agreement, and
establishing the investment objective, policies and restrictions of the Fund;
(d) the Company's Notification of Registration on Form
N-8A under the 1940 Act as filed with the Securities and Exchange Commission on
August 9, 1989 and any amendments thereto;
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(e) the amendments to the Company's Registration
Statement on Form N-1A under the Securities Act of 1933, as amended ("1933
Act"), (File No. 33-30431) and under the 1940 Act relating to the Fund as filed
with the Securities and Exchange Commission and all amendments thereto; and
(f) the Fund's most recent prospectuses and Statement of
Additional Information (such prospectuses and Statement of Additional
Information, as presently in effect, and all amendments and supplements thereto
are herein collectively called the "Prospectus").
The Adviser will furnish the Sub-Adviser from time to time with copies
of all amendments of or supplements to the foregoing.
3. DUTIES OF SUB-ADVISER. Subject to the supervision of the
Company's Board of Trustees, the Sub-Adviser will assist the Adviser in
providing a continuous investment program for the Fund, including investment
research and management with respect to all securities and investments and cash
equivalents of the Fund. The Sub-Adviser will provide the services under this
Agreement in accordance with the Fund's investment objective, policies, and
restrictions as stated in the Prospectus and resolutions of the Company's Board
of Trustees.
Without limiting the generality of the foregoing, Sub-Adviser further
agrees that it will:
(a) prepare, subject to the Adviser's approval, lists of
foreign countries for investment by the Fund and determine from time to time
what securities and other investments will be purchased, retained or sold for
the Fund, including, with the assistance of the Adviser, the Fund's investments
in futures and forward currency contracts;
(b) manage in consultation with the Adviser the Fund's
temporary investments in securities;
(c) manage the Fund's overall cash position, and
determine from time to time what portion of the Fund's assets will be held in
different currencies;
(d) provide the Adviser with foreign broker research, a
quarterly review of international economic and investment developments, and
occasional analyses on international investment issues;
(e) attend regular business and investment-related
meetings with the Company's Board of Trustees and the Adviser if requested to
do so by the Company and/or the Adviser; and
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(f) maintain books and records with respect to the
securities transactions for the Fund, furnish to the Adviser and the Company's
Board of Trustees such periodic and special reports as they may request with
respect to the Fund, and provide in advance to the Adviser all reports to the
Company's Board of Trustees for examination and review within a reasonable time
prior to the Company's Board meetings.
4. COVENANTS BY SUB-ADVISER. Sub-Adviser agrees with respect to
the services provided to the Fund that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to other accounts for which it has
investment responsibilities, and will conform with all applicable Rules and
Regulations of the Securities and Exchange Commission ("SEC Regulations") and
in addition will conduct its activities under this Agreement in accordance with
any applicable regulations of any governmental authority pertaining to the
investment advisory activities of the Sub-Adviser;
(b) will telecopy trade information to the Adviser on the
first business day following the day of the trade and cause broker
confirmations to be sent directly to the Adviser; and
(c) will treat confidentially and as proprietary
information of the Company all records and other information relative to the
Fund 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 after prior notification to and
approval in writing by the Company, which approval may not be withheld where
Sub-Adviser would be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company).
5. SERVICES NOT EXCLUSIVE.
(a) The services furnished by Sub-Adviser hereunder are
deemed not to be exclusive, and nothing in this Agreement shall (i) prevent
Sub-Adviser or any affiliated person (as defined in the 0000 Xxx) of
Sub-Adviser from acting as investment adviser or manager for any other person
or persons, including other management investment companies with investment
objectives and policies the same as or similar to those of the Fund or (ii)
limit or restrict Sub-Adviser or any such affiliated person from buying,
selling or trading any securities or other investments (including any
securities or other investments which the Fund is eligible to buy) for its or
their own accounts or for the accounts of others for whom it or they may be
acting; provided, however, that Sub-Adviser agrees that it will not undertake
any
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activities which, in its reasonable judgment, will adversely affect the
performance of its obligations to the Fund under this Agreement.
(b) Nothing contained herein, however, shall prohibit
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
Company.
6. PORTFOLIO TRANSACTIONS. Investment decisions for the Fund
shall be made by Sub-Adviser independently from those for any other investment
companies and accounts advised or managed by Sub-Adviser. The Fund and such
investment companies and accounts may, however, invest in the same securities.
When a purchase or sale of the same security is made at substantially the same
time on behalf of the Fund and/or another investment company or account, the
transaction will be averaged as to price, and available investments allocated
as to amount, in a manner which Sub-Adviser believes to be equitable to the
Fund and such other investment company or account. In some instances, this
investment procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or sold by the Fund. To the extent
permitted by law, Sub-Adviser may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other investment
companies or accounts in order to obtain best execution.
Sub-Adviser shall place orders for the purchase and sale of
portfolio securities and will solicit broker-dealers to execute transactions in
accordance with the Fund's policies and restrictions regarding brokerage
allocations. Sub-Adviser shall place orders pursuant to its investment
determination for the Fund either directly with the issuer or with any broker
or dealer selected by Sub-Adviser. In executing portfolio transactions and
selecting brokers or dealers, Sub-Adviser shall use its reasonable best efforts
to seek the most favorable execution of orders, after taking into account all
factors Sub-Adviser 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 or dealer, and the reasonableness of the commission,
if any, both for the specific transaction and on a continuing basis.
Consistent with this obligation, 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 Sub-Adviser or any of its affiliates exercises
investment discretion. Sub-Adviser is authorized to pay to a broker or dealer
who provides such brokerage and research services a commission for executing a
portfolio transaction for the Fund which is in excess of the
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amount of commission another broker or dealer would have charged for effecting
that transaction if 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 Sub-Adviser's overall responsibilities to the Fund and to the
Company. In no instance will portfolio securities be purchased from or sold to
Sub-Adviser, or the Fund's principal underwriter, or any affiliated person
thereof except as permitted by SEC Regulations.
7. BOOKS AND RECORDS. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, Sub-Adviser acknowledges that all records which
it maintains for the Company are the property of the Company and agrees to
surrender promptly to the Company any of such records upon the Company's
request, provided, that Sub-Adviser may retain copies thereof at its own
expense. Sub-Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
8. EXPENSES. During the term of this Agreement, Sub-Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Fund.
9. COMPENSATION. For the services provided by the Sub-Adviser
pursuant to this Agreement, the Adviser will pay to the Sub-Adviser a fee,
payable monthly, at the annual rates of seventy-five one-hundredths of one
percent (0.75%) of the average of the first $100,000,000 of the daily net
assets of the Fund, seventy one-hundredths of one percent (0.70%) of the
average of the next $100,000,000 of such assets, sixty-five one-hundredths of
one percent (0.65%) of the average of the next $100,000,000 of such assets, and
sixty one-hundredths of one percent (0.60%) of the average of such assets in
excess of $300,000,000. If this Agreement shall become effective subsequent to
the first day of a month, or shall terminate before the last day of a month,
the Sub-Adviser's compensation for such fraction of the month shall be
determined by applying the foregoing percentages to the average daily net asset
value of the Fund during such fraction of a month and in the proportion that
such fraction of a month bears to the entire month.
10. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund or the Adviser in connection with the performance of this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or a loss resulting from willful
misfeasance,
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bad faith or gross negligence on the part of the Sub-Adviser in the performance
of its duties or from reckless disregard by it of its obligations and duties
under this Agreement.
The Sub-Adviser agrees to indemnify the Adviser with respect to any
loss, liability, judgment, cost or penalty which the Fund or the Adviser may
directly or indirectly suffer or incur in any way arising out of or in
connection with any material breach of this Agreement by the Sub-Adviser. The
Adviser agrees to indemnify the Sub-Adviser with respect to any loss,
liability, judgment, cost or penalty which the Sub-Adviser may directly or
indirectly suffer or incur in any way arising out of the performance of its
duties under this Agreement as provided in the following paragraph.
The Sub-Adviser shall give the Adviser the benefit of its best
judgment and effort in rendering services hereunder, but the Sub-Adviser shall
not be liable for any act or omission or for any loss sustained by the Adviser
in connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties, under this Agreement. The Sub-Adviser shall be
entitled to full indemnification from the Adviser for any loss, liability,
judgment, cost or penalty arising from (a) any act by any person or entity
(including the Adviser) for which the Sub-Adviser was not involved directly in
either the act itself or the decision making process leading up to such act,
(b) any act by the Sub-Adviser taken upon the written instructions of the
Adviser or (c) the performance of the Sub-Adviser's duties under this
Agreement; provided, however, the Sub-Adviser shall not be entitled to
indemnity under clause (c) of this sentence for any loss, liability, judgment,
cost or penalty resulting from willful misfeasance, bad faith or negligence in
the performance of its duties, or by reason of its reckless disregard of its
obligations and duties, under this Agreement.
11. DURATION AND TERMINATION. This Agreement will become
effective as to the Fund 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 for
two years after such effective date. Thereafter, if not terminated, this
Agreement shall continue in effect for successive yearly periods, provided that
such continuance is specifically approved at least annually (a) by the vote of
a majority of those members of the Company's Board of Trustees who are not
parties 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 Company's
Board of Trustees or by the vote of a majority of the
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outstanding voting securities of the Fund. Notwithstanding the foregoing, this
Agreement may be terminated at any time on 60 days' written notice, without the
payment of any penalty, by the Company (by vote of the Company's Board of
Trustees or by vote of a majority of the outstanding voting securities of the
Fund), by the Adviser, or by the Sub-Adviser. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the meaning given to such terms by the 1940 Act.)
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, discharge
or termination is sought. No amendment of this Agreement shall be effective
with respect to the Fund until approved by the vote of a majority of the
outstanding voting securities of the Fund.
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. 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. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers designated below as of the day
and year first above written.
MERIDIAN INVESTMENT COMPANY
By:s/ Xxxxxx X. Xxxxx XX
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Title: President
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XXXXXX & XXXXXX ASSOCIATES, INC.
By:s/ Xxxxx X. Xxxxxx
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Title: Chairman
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