Exhibit (5)(a)
CO-ADVISORY AGREEMENT
This Agreement, dated as of the 7th day of October, 1996,
is entered into by and among NBD Bank ("NBD"), First Chicago Investment
Management Company ("FCIMCO") and The Xxxxxxxx Variable Annuity Fund (the
"Trust"), a Delaware business trust registered as an investment company under
the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Trust desires to appoint NBD and FCIMCO to act as
co-advisers to the Trust's investment portfolios listed on Schedule 1 attached
hereto (each a "Fund" and collectively the "Funds").
WHEREAS, NBD and FCIMCO (each an "Adviser" and collectively the
"Advisers") desire to perform investment advisory services on behalf of the
Trust's Funds;
NOW, THEREFORE, the parties hereto intending to be legally bound,
hereby agree as follows:
1. Appointment. (a) The Trust hereby appoints the Advisers to act as
investment co- advisers for each of the Funds of the Trust for the period and
on the terms set forth in this Agreement. The Advisers accept such appointment
and agree to render the services herein set forth, for the compensation herein
provided. The Advisers may, in their discretion, provide such services through
their own employees or the employees of one or more affiliated companies that
are qualified to act as investment adviser to the Trust under applicable law
and are under the common control of First Chicago NBD Corporation provided (i)
that all persons, when providing services hereunder, are functioning as part
of an organized group of persons, and (ii) that such organized group of
persons is managed at all times by persons who are authorized officers of one
or both of the Advisers.
(b) In the event that the Trust establishes one or more
investment portfolios other than the Funds with respect to which it desires to
retain the Advisers to act as investment co-advisers hereunder, the Trust
shall notify the Advisers in writing. If the Advisers are willing to render
such services they shall notify the Trust in writing whereupon, subject to
such shareholder approval as may be required pursuant to Paragraph 8 hereof,
such portfolio shall become a Fund hereunder and the compensation payable by
such new Fund to the Advisers will be as agreed in writing at the time.
2. Management. Subject to the supervision of the Board of Trustees of
the Trust (the "Board"), the Advisers will provide
a continuous investment program for each of the Funds, including investment
research and management with respect to all securities, investments, cash and
cash equivalents in each Fund. The Advisers will determine from time to time
what securities and other investments will be purchased, retained or sold by
the Trust for each of its Funds. The Advisers will provide the services
rendered by them hereunder in accordance with the investment objective and
policies of each of the Funds as stated in their respective prospectuses
("Prospectuses" or a "Prospectus"), statements of additional information
("SAIs") and all amendments and supplements thereto, Bylaws, Amended and
Restated Declaration of Trust and resolutions adopted from time to time by the
Trust's Board. The Advisers further agree that they:
(a) will conform with all applicable Rules and Regulations
(hereinafter called the "Rules") of the Securities and
Exchange Commission ("SEC"), and will in addition
conduct their activities under this Agreement in
accordance with other applicable laws;
(b) will place all orders for the purchase and sale of
portfolio securities for the account of each Fund with
brokers or dealers selected by the Advisers. In
executing portfolio transactions and selecting brokers
or dealers, the Advisers will use their best efforts to
seek on behalf of the Trust and each Fund thereof the
best overall terms available. In assessing the best
overall terms available for any transaction, the
Advisers shall consider all factors they deem 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. In
evaluating the best overall terms available, and in
selecting the broker or dealer to execute a particular
transaction, the Advisers may also consider the
brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act
of 1934) provided to any Fund and/or other accounts over
which the Advisers or an affiliate of the Advisers
exercises investment discretion. The Advisers are
authorized, subject to the prior approval of such policy
by the Trust's Board, to pay to a broker or dealer who
provides such brokerage and research services a
commission for executing a portfolio transaction for any
Fund which is in excess of the amount of commission
another broker or dealer
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would have charged for effecting that transaction if, but
only if, such is consistent with applicable law and the
Advisers determine 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 that particular transaction or in
terms of the overall responsibilities of the Advisers
to the particular Fund and to the Trust.
In no instance will portfolio securities be purchased
from or sold to the Advisers or the Trust's principal
underwriter for the Funds or an affiliated person of
either, acting as principal or as broker, except as
permitted by law. In executing portfolio transactions
for any Fund, the Advisers, to the extent permitted by
applicable laws and regulations, may but shall not be
obligated to, aggregate the securities to be sold or
purchased with those of other Funds and their other
clients where such aggregation is not inconsistent with
applicable law and the policies set forth in the Funds'
registration statement. In such event, the Advisers will
allocate the securities so purchased or sold, and the
expenses incurred in the transaction, in the manner they
consider to be the most equitable and consistent with
their fiduciary obligations to the Funds and such other
clients;
(c) will maintain a policy and practice of conducting their
investment advisory operations independently of their
commercial banking operations. When the Advisers make
investment recommendations for a Fund, their investment
advisory personnel will not inquire or take into
consideration whether the issuer of securities proposed
for purchase or sale for the Fund's account are
customers of their commercial departments. In dealing
with commercial customers, the Advisers' commercial
departments will not inquire or take into consideration
whether securities or those customers are held by the
Funds;
(d) will maintain all books and records with respect to the
securities transactions of the Funds; and furnish the
Trust's Board such periodic and special reports as the
Board may request;
(e) will treat confidentially and as proprietary information
of the Trust all records and other
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information relative to the Trust and prior or present
shareholders of the Funds or those persons or entities
who respond to inquiries of the Trust's principal
underwriter concerning investment in the Funds and will
not use such records and information for any purpose
other than performance of their responsibilities and
duties hereunder, except after prior notification to
and approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be
withheld where the Advisers may 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
Trust. Nothing contained herein or in any other
agreement executed with the Trust, however, shall
prohibit NBD, FCIMCO and any of their affiliates from
advertising to or soliciting the public generally with
respect to other products or services, including, but
not limited to, any advertising or marketing via radio,
television, newspapers, magazines or direct mail
solicitation, regardless of whether such advertisement
or solicitation may coincidentally include prior or
present Fund shareholders or those persons or entities
who have responded to inquiries of the Trust's
principal underwriter.
3. Services Not Exclusive. The services rendered by the Advisers
hereunder are not to be deemed exclusive, and the Advisers shall be free to
render similar services to others so long as their services under this
Agreement are not impaired thereby.
4. Expenses. During the term of this Agreement, the Advisers will pay
all expenses incurred by them in connection with their activities under this
Agreement other than the cost of securities purchased for the Funds (including
brokerage commissions, if any).
In addition, if the expenses borne by any Fund in any fiscal year
exceed the applicable expense limitations imposed by the securities
regulations of any state in which the shares are registered or qualified for
sale to the public, the Advisers jointly and severally agree to reimburse such
Fund for a portion of any excess expense in an amount equal to the portion
that the advisory fees otherwise payable by the Fund to the Advisers bear to
the total amount of investment advisory and administration fees otherwise
payable by the Fund. The expense reimbursement obligation of the Advisers is
limited to the amount of their fees hereunder for such fiscal year; provided,
however, that notwithstanding the foregoing, the Advisers shall reimburse such
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Fund for a portion of any such excess expenses in an amount equal to the
proportion that the fees otherwise payable to the Advisers bear to the total
investment advisory and administration fees otherwise payable by the Fund
regardless of the amount of such fees payable to the Advisers during such
fiscal year to the extent that the securities regulations of any state in
which the Trust's shares are registered or qualified for sale so require. Such
expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
5. Compensation. For the services provided and the expense assumed
pursuant to this Agreement, the Trust will pay the Advisers and the Advisers
will accept as full compensation therefor the fees set forth on Schedule 2
hereof.
6. Sub-Adviser. It is understood that, subject to the prior approval
of the Board of the Trust, the Advisers may employ a sub-adviser(s) to assist
them in the performance of this Agreement, and it is agreed that the Advisers
shall be as fully responsible to the Trust for the acts and omissions of the
sub-adviser(s) as they are for their own acts and omissions. Any compensation
to be paid to such sub-adviser will be paid by the Advisers and the activities
of such subadviser will be subject to the provisions of this Agreement. The
Advisers will use their best effort to cause the sub-adviser(s) to comply with
all of the Advisers' policies, including without limitation, their codes of
ethics and their policies relating to personal trading, brokerage and
securities allocation, soft and hard dollars and compliance.
7. Limitation of Liability of the Advisers. The Advisers shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust 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 or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Advisers in the
performance of their duties or from reckless disregard by their obligations
and duties under this Agreement. The Advisers agree that their liability,
including the liability of any sub-adviser, under this Agreement as set forth
herein, shall be joint and several. Any person, even though also an officer,
Board member, partner, director, employee or agent of an Adviser, who may be
or become an officer, Board member, partner, 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 the
Advisers' duties as co-advisers hereunder) to be rendering such services to or
acting solely for the Trust and not as an officer, Board member, partner,
director, employee or agent or one under the control or direction of the
Advisers even though paid by either of them.
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8. Duration and Termination. This Agreement shall become effective as
to each Fund upon the date first above written. Unless sooner terminated as
provided herein, it shall continue with respect to each Fund until June 30,
1998. Thereafter, if not terminated, this Agreement shall continue with
respect to a Fund for successive annual periods, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of the Board 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, and (b) by the Board of the Trust or
by vote of a majority of the outstanding voting securities of such Fund;
provided, however, that this Agreement may be terminated with respect to a
Fund, without the payment of any penalty, by the Board of the Trust or by vote
of a majority of the outstanding voting securities of such Fund on sixty (60)
days' written notice, or by the Advisers, on ninety (90) days' written notice
to the Trust. 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 person" and "assignment" shall have the same
meaning as such terms have in the 1940 Act.)
9. Amendment of this Agreement. No provisions in this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party or parties against which enforcement of the change,
discharge or termination is sought, and no amendment to this Agreement
affecting a Fund shall be effective until approved by vote of the holders of a
majority of the outstanding voting securities of such Fund.
10. Names. The obligations of the Fund entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders or representatives of the Trust personally, but bind
only the Trust property, and all persons dealing with any series of shares in
the Trust must look solely to the Trust property belonging to such series for
the enforcement of any claims against the Trust.
11. 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 Michigan law.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE XXXXXXXX VARIABLE ANNUITY FUND
By: ______________________
NBD BANK
By: ______________________
FIRST CHICAGO INVESTMENT MANAGEMENT
COMPANY
By: _______________________
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SCHEDULE 1
LIST OF PORTFOLIOS
MANAGED ASSETS BALANCED FUND
GROWTH AND VALUE FUND
MID CAP OPPORTUNITY FUND
GROWTH FUND
MONEY MARKET FUND
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SCHEDULE 2
As compensation for their services hereunder, the Trust will pay an
advisory fee, computed daily and payable monthly, at the following annual
rates for the respective Funds:
Fund Fee Rate
---- --------
Money Market Fund .30% of the
first $1.0 billion, .275% of
the next $1 billion and .25%
of each such Fund's average
daily net assets in excess
of $2 billion
Managed Assets Balanced Fund .65% of the average net assets of the Fund
Growth Fund .60% of the average net assets of the Fund
Mid Cap Opportunity Fund
Growth and Value Fund
Net asset value shall be computed in accordance with the Funds'
Prospectuses and resolutions of the Trust's Board of Trustees. The fee for the
period from the day of the month this Agreement is entered into until the end
of that month shall be pro-rated according to the proportion which such period
bears to the full monthly period. Upon any termination of this Agreement
before the end of any month, the fee for such part of a month shall be
pro-rated according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. Such fee as is attributable to each Fund shall be a separate charge
to such Fund and shall be the several (and not joint or joint and several)
obligation of each such Fund.
In addition, the Advisers will receive as compensation under
this Agreement 4/10ths of the gross income earned by each Fund on each loan of
its securities (including capital gains and loss, if any).
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