EXHIBIT (d)(2)
PORTFOLIO ADVISORY AGREEMENT
Re: AHA Investment Funds, Inc.
Portfolio Advisory Agreement
Gentlemen:
AHA Investment Funds, Inc. (the "Fund") is a Maryland corporation
registered under the Investment Company Act of 1940 as an open-end, diversified
management investment company. The Fund is comprised of a number of separate
investment portfolios (the "Portfolios"), each with different investment
objectives, policies, and restrictions.
CCM Advisors LLC ("CCM Advisors") serves as the Fund's investment
consultant and in that capacity is responsible for, among other things, the
co-ordination of the investment activities of the Portfolios, the recommendation
of investment managers to the Board of Directors of the Fund, and the allocation
of the assets of the Portfolios among the investment managers. The investment
managers, subject to applicable policies, restrictions and procedures make
investment decisions for the Portfolios.
1. APPOINTMENT OF INVESTMENT MANAGER
The Fund, being duly authorized, hereby appoints and retains you (the
"Investment Manager") to act as a discretionary investment manager, on the terms
and conditions set forth herein, for assets of the Portfolios of the fund
designated as specified in Schedule A to this Agreement (each a "Portfolio
Account").
2. ACCEPTANCE OF APPOINTMENT
The Investment Manager accepts its appointment as a discretionary
investment manager and agrees to use its best professional judgement to make
timely investment decisions for the Fund with respect to the designated
Portfolio Accounts in accordance with the terms of this Agreement for the
compensation herein provided.
3. SERVICES OF INVESTMENT MANAGER
Subject to the supervision of the Board of Directors of the Fund, the
Investment Manager is hereby authorized to purchase, hold and sell assets of the
designated Portfolio Accounts and, upon making any purchase or sale decision, to
place orders for the execution of such transaction in accordance with paragraphs
5 and 6 hereof and as instructed from time to time by the Custodian of the Fund.
In providing such services, the Investment Manager shall continuously manage
such Portfolio Accounts in a manner consistent with the investment objectives,
policies and restrictions of the Portfolios, as described in the materials
furnished to the Investment Manager pursuant to paragraph 4 below, and in
instructions from the Fund and CCM Advisors. The Investment Manager shall manage
and maintain each Portfolio Account for purposes of applicable policies and
restrictions as if such Portfolio Account were 100% of the assets of the
Portfolio. In addition, the Investment Manager shall furnish to or place at the
disposal of the Fund or CCM Advisors such of the information, evaluations,
analyses and opinions formulated or obtained by the Investment Manager in the
discharge of its duties as the Fund or CCM
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Advisors may, from time to time, reasonably request. At the Fund's or CCM
Advisors' reasonable request, the Investment Manager will consult with the Fund
or CCM Advisors with respect to any decision made by it with respect to
investments of the designated Portfolio Accounts.
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The Fund shall provide the Investment Manager with a statement of the
investment objectives, policies and restrictions of the Portfolios and with such
additional procedures and restrictions applicable thereto as established by the
Fund, including such requirements as may be necessary to maintain qualification
under Sub-Chapter M of the Internal Revenue Code. The Fund retains the right to
modify any of its objectives, policies, procedures and restrictions upon written
notice to the Investment Manager.
5. TRANSACTION PROCEDURES
All transactions will be consummated by payment to or delivery by the
Custodian of the Fund (the "Custodian"), or such depositories, or agents, as may
be designated by the Custodian, as custodian for the Fund, of all cash and/or
securities due to or from each designated Portfolio Account, and the Investment
Manager shall not have possession or custody thereof. The Investment Manager
shall confirm in writing all investment orders for the Portfolio Account placed
by it with brokers and dealers in such form and manner as instructed from time
to time by the Custodian of the Fund. CCM Advisors or another designated agent
of the Fund shall issue to the Custodian such instructions as may be appropriate
in connection with the settlement of any transaction initiated by the Investment
Manager. The Fund shall be responsible for all custodial arrangements and the
payment of all custodial charges and fees, and the Investment Manager shall have
no responsibility or liability with respect to custodial arrangements or the
acts, omissions or other conduct of the Custodian.
6. ALLOCATION OF BROKERAGE
The Investment Manager shall have full authority and discretion to
allocate the execution of transactions effected by it in accordance with
paragraphs 2 and 3 to brokers and dealers, with which the Fund maintains
accounts, for execution on various markets, subject to paragraph 9 below. In
doing so, the Investment Manager's primary responsibility shall be to obtain the
best execution for the Fund, but this responsibility shall not be deemed to
obligate the Investment Manager to solicit competitive bids for each
transaction, and the Investment Manager shall have no obligation to seek the
lowest available commission cost to the Fund, as long as the Investment Manager
determines that the broker or dealer is able to obtain the best execution
(including therewith, the best available price under the particular
circumstances) on a particular transaction and that the commission cost is
reasonable in relation to the total quality and reliability of the brokerage and
research services made available (i) to the Fund or CCM Advisors for the benefit
of the Fund or (ii) to the Investment Manager for the benefit of its clients,
notwithstanding that the Fund may not be the direct or exclusive beneficiary of
any such service or that another broker may be willing to charge the Fund a
lower commission on the particular transaction. Upon notification by the Fund,
the Investment Manager agrees to comply with such other and
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additional brokerage policies adopted by the Fund and consistent with applicable
laws and regulations.
The Fund shall retain the right to request that transactions giving
rise to brokerage commissions in an amount to be agreed upon by the Fund and the
Investment Manager shall be executed by brokers and dealers which provide
research or consultation services to the Fund, or as to which an on-going
relationship will be of value to the Fund, so long as the Investment Manager
determines that the broker or dealer is able to obtain the best execution on a
particular transaction and that the Fund determines that the commission cost is
reasonable in relation to the total quality and reliability of the brokerage and
research services made available to the Fund, notwithstanding that another
broker may be willing to charge the Fund a lower commission on the particular
transaction.
7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE INVESTMENT MANAGER
The Investment Manager represents, warrants and agrees that:
(a) It has delivered to the Fund (and the Fund represents it has
received) a true and complete copy of its current disclosure statement, as
required by Rule 204-3 of the Investment Advisers Act (Part II of the Investment
Manager's Form ADV or its brochure).
(b) It has provided on Schedule C to this Agreement a true and
complete list of all companies whicH are "affiliated persons", as such term
is defined in Section 2(a)(3) of the Investment Company Act, of the
Investment Manager; all officers and directors of the Investment Manager; and
all individuals and companies which "control" or are controlled by or under
common control with the Investment Manager, as such term is defined in
Section 2(a)(9) of said Act.
(c) It is registered as an "investment adviser" under the Investment
Advisers Act of 1940 or is a bank as defined in Section 202(a)(2) of said
Act; and that neither it nor any "affiliated person" of it, as defined by
Section 2(a)(3) of the Investment Company Act, is subject to any
disqualification which would make the Investment Manager unable to serve as
an investment adviser to a registered investment company under Section 9 of
the Investment Company Act.
(d) It will deliver to the Fund: true and complete copies of all
documents supplementing or amending its disclosure statement described in
paragraph 7(a) above promptly upon the filing thereof; prompt notice of all
additions, deletions and changes in the list of persons and companies identified
in Schedule B; and appropriate advance notice of any event which would render
the representations and warranties contained in paragraph 7(c) above no longer
true, correct and accurate.
8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE FUND
The Fund represents, warrants and agrees that:
(a) It will deliver to the Investment Manager a true and complete copy
of the Fund's current Prospectus and Statement and of such other documents or
instruments governing the
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investments and investment policies and practices of the designated Portfolio
Accounts, and promptly will deliver to the Investment Manager true and complete
copies of all documents and instruments supplementing, amending, or otherwise
becoming such documents.
(b) Prior to commencement of the Fund's operations, it will deliver to
the Investment Manager a list of all public companies and broker-dealers which
are "affiliated persons" of the Fund (including also "affiliated persons" of
such persons) and promptly will deliver to the Investment Manager any revisions
to said list of which the Fund is aware.
(c) The organization of the Fund and the conduct of the business of the
Fund and the Portfolio Account as contemplated by this Agreement, comply, and
shall at all times comply, with the requirements imposed upon the Fund by
applicable law.
(d) The Investment Manager has been duly appointed by the Board of
Directors of the Company.
9. AFFILIATED TRANSACTIONS
The Investment Manager agrees, as part of its specific duty to invest
and manage the assets of the designated Portfolio Accounts, that:
(a) It will not cause the Fund or any Portfolio to engage in a
principal transaction or any joint arrangement or transaction with any other
Portfolio or with any individual or company known by it to be an "affiliated
person" of the Fund or to be an "affiliated person" of such a person, except
transactions with affiliated accounts in such manner as may be permitted under
procedures adopted by the Fund pursuant to Rule 17a-7 under the Investment
Company Act; however, this shall not preclude fair and reasonable allocations of
executions among client accounts of the Investment Manager (including the
Portfolios).
(b) It will not cause the Fund to purchase securities in any
underwriting where, to the knowledge of the Investment Manager, an underwriter
of such securities is an "affiliated person" of the Fund or an "affiliated
person" of such person; except in compliance with such procedures as may be
adopted by the Fund pursuant to Rule l Of-3 under the Investment Company Act.
(c) It will not place for execution any agency brokerage transaction of
the Fund with any broker (including the Investment Manager) that, to the
knowledge of the Investment Manager, is an "affiliated person" of the Fund or an
"affiliated person" of such person, except in compliance with such procedures as
may be adopted by the Fund pursuant to Rule 17e-1 under the Investment Company
Act.
10. REPORTS TO INVESTMENT MANAGER
The Fund will, from time to time, furnish or otherwise make available
to the Investment Manager such periodic reports, concerning the status of the
designated Portfolio Accounts as the Investment Manager may reasonably require
in order to discharge its duties and obligations hereunder.
11. REPORTS TO THE FUND AND RECORDS
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The Investment Manager agrees that:
(a) Upon the request of the Fund, it will provide such documents,
financial information, reports and other information as may reasonably be
necessary to permit the Fund's Board of Directors to make an informed decision
as to whether to continue this Agreement in accordance with paragraph 18 hereof,
and to monitor the services provided hereunder.
(b) It will maintain the records and information required to be
maintained by paragraphs (b)(5), (b)(6), (b)(10) and (b)(11), and (f) of Rule
31a-1 under the Investment Company Act respecting its activities with respect to
the Portfolio Account, and such other records with respect thereto relating to
the services the Investment Manager provides under this Agreement as may be
required in the future by applicable SEC rules, and shall retain such records
and information for such times and in such manner as required by applicable
rules, including Rule 31a-2 under said Act. The Investment Manager agrees that
such records and information are the property of the Fund and shall be made
available to the Fund or its designee upon the Fund's request.
12. CODE OF CONDUCT
The Investment Manager shall adopt a written Code of conduct complying
with the requirements of Rule 17j-1 under the Investment Company Act, will
provide the Fund with a copy of such code together with a representation of its
due adoption, and will make such reports to the Fund as required by said rule.
13. PROXIES
The Fund will vote all proxies solicited by or with respect to the
issuers of securities in which its assets are invested, but the Investment
Manager shall upon request provide the Fund or CCM Advisors with its
recommendations as to such voting.
14. EXPENSES
The Investment Manager shall retain such personnel, maintain such
facilities and obtain such information as may be necessary to provide services
hereunder and shall bear all costs associated therewith except as otherwise
provided by this Agreement.
15. FEES FOR ADVISORY SERVICES
For the services to be rendered under this Agreement, the Investment
Manager shall be entitled to receive compensation calculated and paid in
accordance with attached Schedule C, which is incorporated herein.
16. LIMITATION ON LIABILITY
The Investment Manager shall not be liable for any action taken,
omitted or suffered to be taken by it in its reasonable judgment, in good faith
and believed by it to be authorized or within the discretion or rights or powers
conferred upon it hereunder, or in accordance with specific directions from the
Fund; provided that the Investment Manager shall not be relieved from any
liability arising from its own willful misconduct, bad faith, gross negligence,
or reckless
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disregard of its duties under this Agreement, or arising from its breach of any
of its duties or obligations under this Agreement.
17. OTHER INVESTMENT ACTIVITIES OF INVESTMENT MANAGER
The Fund acknowledges that the Investment Manager or one or more of its
affiliates may have investment responsibilities or may render investment advice
to, or perform other investment advisory services for, other individuals and
entities. The Fund agrees that the Investment Manager or its affiliates may give
advice or exercise investment responsibility and take such other action with
respect to other individuals or entities which may differ from advice given or
the timing or nature of action taken with respect to the Portfolio Account,
provided that the Investment Manager acts in good faith, and provided, further,
that it is the Investment Manager's policy to allocate, within its reasonable
discretion, investment opportunities to the Portfolio Account over a period of
time on a fair and equitable basis relative to its other advisory clients,
taking into account the investment objectives and policies of the Portfolio
Account and any specific investment restrictions applicable thereto. The Fund
acknowledges that one or more of the other accounts managed by the Investment
Manager may at any time hold or engage in transactions in investments in which
the designated Portfolio Accounts may have an interest, including transactions
in which such Portfolio Accounts are involved. The Investment Manager shall have
no obligation to acquire for such Portfolio Accounts a position in any
investment which any other account managed by the Investment Manager may
acquire, and the Fund shall have no first refusal, coinvestment, or other rights
in respect of any such investment.
18. DURATION AND TERMINATION
This Agreement shall become effective on ______________. Unless
terminated as herein provided, this Agreement shall remain in effect until
__________ and shall continue in effect for successive periods of one year
thereafter provided such continuance is approved at least annually by the
Board of Directors of the Fund as required by the Act. This Agreement may be
terminated by either party hereto, without the payment of any penalty,
immediately upon written notice to the other in the event of a breach of any
provision hereof by the party so notified, or otherwise upon thirty days'
written notice to the other party; provided, however, that this Agreement
shall immediately terminate in the event of its "assignment" as defined in
Section 2(a)(4) of the Investment Company Act (to the extent required by the
Act and the rules thereunder) unless otherwise permitted by an exemptive
order or rule of the SEC. The Investment Manager shall notify the Fund in
writing sufficiently in advance of any proposed change of control or any
proposed transaction which would constitute an "assignment," in order to
enable the Fund to consider and to take the steps as it may determine to be
necessary to enter into a new agreement with the Investment Manager or
implement alternative arrangements. Termination of this Agreement shall not
affect the obligations or rights of the parties under paragraphs 15 or 16
hereof.
19. AMENDMENT
This Agreement may be amended at any time upon a written agreement
between the parties provided that any amendment, other than an amendment to
Schedule B or Schedule D,
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shall be required to be approved by the Board of Directors of the Fund in the
manner required by the Investment Company Act.
20. APPLICABLE LAW
This Agreement shall be construed in accordance with the laws of the
State of Illinois and the applicable provisions of the Investment Company Act.
To the extent the applicable law of the State of Illinois, or any of the
provisions herein, conflict with the applicable provisions of said Act, the
latter shall control.
21. CONFIDENTIALITY
Subject to the right of the Investment Manager and the Fund to comply
with applicable law, including any demand of any regulatory or taxing authority
having jurisdiction over it, the parties hereto shall treat as confidential all
information pertaining to the Fund, the Portfolio Accounts, the rate and amount
of fees paid hereunder and the actions of the Investment Manager and the Fund in
respect of the foregoing.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement.
AHA INVESTMENT FUNDS, INC.
By:
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Date:
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ATTEST:
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(Investment Manager)
By:
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Date:
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ATTEST:
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SCHEDULES:
A. Assets to be managed by Investment Manager
B. Affiliated persons of Investment Manager
C. Fees of Investment Manager
D. Authorized Personnel
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SCHEDULE A
The Investment Manager is hereby designated to manage a portion of
the assets of the Fund's ___________ Portfolio (the "Portfolio"), subject to
the terms and conditions of the Agreement. It shall initially be responsible
for the management of that portion of the Portfolio's assets which is
allocated to the Investment Manager by CCM Advisors (the "Portfolio
Account"). It is agreed by the parties that, from time to time, CCM Advisors
may modify this allocation by increasing or decreasing the percentage of the
Portfolio's assets allocated to the Portfolio Account. Such modifications may
be implemented in such manner designated by CCM Advisors, including: (1) the
transfer of assets of the Portfolio into or from the Portfolio Account and
(2) the sale of assets of the Portfolio Account. All such initial allocations
and modifications thereto as contemplated by this Schedule A shall become
effective upon written notice to the Investment Manager from CCM Advisors.
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SCHEDULE B
I. The following companies are " affiliated persons" of the Investment Manager
as defined by Section 2(a)(3) of the Act:
COMPANY NAME NATURE OF AFFILIATION
------------ ---------------------
See Disclosure Statement delivered to the Fund pursuant to Section 7(a) of
the Agreement.
II. The following persons are the officers and directors of the Investment
Manager:
NAME CAPACITY
---- --------
See attached list of Officers and Directors.
III. The following individuals and companies control, or are controlled by, or
under common control with, the Investment Manager:
NAME DESCRIPTION OF RELATIONSHIP
---- ---------------------------
See Disclosure Statement delivered to the Fund pursuant to Section 7(a) of
the Agreement.
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Attachment to Schedule B.II
as of _________________, 2001
DIRECTORS OF
------------------------------------------
OFFICERS OF
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SCHEDULE C
As compensation for the services it provides under this Agreement, the
Investment Manager shall be entitled to compensation payable quarterly in
arrears, calculated at the annual rate of ________ (_____%) of the average
daily net assets of the Portfolio Account during the calendar quarter. Fees
are payable thirty days after the end of each calendar quarter.
CCM Advisors hereby agrees to pay, and the Investment Manager agrees to accept
from CCM Advisors, the fees due to the Investment Manager on behalf of the Fund
under this Agreement. The Investment Manager shall have recourse solely against
CCM Advisors for the payment of all fees due hereunder, until it receives
written notification of the termination of CCM Advisors' agreement with the Fund
to pay such fees; however, no partner of CCM Advisors shall have any personal
liability hereunder and no party hereto may resort to the personal assets of
such partners for payment or performance of any obligation hereunder to the
extent such assets exceed a partner's holdings in CCM Advisors. In the event of
such notification of termination, the Fund agrees to pay all fees accruable
after the termination date specified in the notification (whether or not then
payable) and the Investment Manager shall have recourse solely against the Fund
for the payment of such fees.
Agreed and Accepted:
CCM ADVISORS LLC
By:
-----------------------------------
Date:
-----------------------------------
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(Investment Manager)
By:
-----------------------------------
Date:
-----------------------------------
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SCHEDULE D
The following persons are authorized to execute transactions for the Portfolio
Account(s) of the AHA Investment Funds, Inc. for which the above-named
Investment Manager acts as investment manager.
Name (Typed) Title Signature
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