EXHIBIT (5)(a)(ii)
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement made as of February 15, 1994, and revised
as of August 12, 1998, between THE INFINITY MUTUAL FUNDS, INC., a Maryland
corporation having its principal office and place of business at 0000 Xxxxxxx
Xxxx, Xxxxxxxx, Xxxx 00000-0000 (herein called the "Fund"), and FIRST AMERICAN
NATIONAL BANK, a national banking association having its principal office and
place of business at First American Center, 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxx 00000-0000 (herein called the "Adviser").
WHEREAS, the Fund is an open-end, management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund intends to employ BISYS Fund Services Limited
Partnership (the "Administrator") to act as the Fund's administrator; and
WHEREAS, the Fund desires to retain the Adviser to provide investment
advisory services and other services to the Fund's portfolios set forth on
Schedule 1 attached hereto, as such may be revised from time to time (each, a
"Series"; the provisions herein shall apply severally to each Series), and the
Adviser is willing to furnish such services upon the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) The Fund hereby appoints the Adviser to act as investment adviser to
each Series for the period and on the terms set forth in this Agreement. The
Adviser accepts such appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
(b) In the event that the Fund establishes one or more portfolios, other
than those set forth on Schedule 1 hereto, and with respect to which the Fund
desires the Adviser to act as investment adviser hereunder, the Fund shall
notify the Adviser in writing. If the Adviser is willing to render such services
under this Agreement it shall notify the Fund in writing whereupon such
portfolio shall become a Series hereunder and shall be subject to the provisions
of this Agreement to the same extent as the Series currently named in Schedule
1, except to the extent that said provisions (including those relating to the
compensation payable to the Adviser) are modified with respect to such Series in
writing by the Fund and the Adviser.
2. DELIVERY OF DOCUMENTS.
The Fund has furnished the Adviser with copies properly certified or
authenticated of each of the following:
(a) The Fund's Articles of Incorporation and any amendments and
supplements thereto (as presently in effect and as from time to time
amended or supplemented, herein called the "Charter");
(b) The Fund's By-laws and any amendments thereto;
(c) Resolutions of the Fund's Board of Directors authorizing the
appointment of the Adviser and approving this Agreement;
(d) The Fund's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended (the "1933 Act"), and under the 1940 Act most
recently filed with the Securities and Exchange Commission (the
"Commission");
(e) The Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Commission; and
(f) The Fund's current Prospectuses and Statements of Additional
Information of the Series (as presently in effect and as from time to time
amended and supplemented, herein called individually the "Prospectus" and
collectively the "Prospectuses").
The Fund promptly will furnish the Adviser with copies of all amendments of or
supplements to the foregoing, if any.
3. SERVICES OF ADVISER.
Subject to the supervision of the Fund's Board of Directors, the Adviser
will provide a continuous investment program for each Series, including
investment research and day-to-day management with respect to such Series'
assets. The Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Series. The Adviser will
provide the services rendered by it under this Agreement in accordance with the
investment criteria and policies established from time to time for a Series by
the Fund, such Series' investment objective, policies and restrictions as stated
in its Prospectus and resolutions of the Fund's Board of Directors. The Fund
wishes to be informed of important developments materially affecting a Series'
portfolio and the Adviser agrees to furnish to the Fund from time to time such
information as the Adviser may believe appropriate for this purpose. The Adviser
shall be permitted to employ one or more sub-investment advisers (each a
"Sub-Adviser") to provide the day-to-day management of the investments of the
Series.
4. OTHER COVENANTS.
The Adviser agrees that it will:
(a) comply with all applicable rules and regulations of the Securities
and Exchange Commission in performing its duties as investment adviser for
the Series and, in addition, will conduct its activities under this
Agreement in accordance with other applicable federal and state law;
(b) review and analyze on a periodic basis each Series' portfolio
holdings and transactions;
(c) provide, or cause to be provided, to the Board of Directors of the
Fund such reports, statistical data and economic information as may be
reasonably requested in connection with the Adviser's services hereunder;
(d) use the same skill and care in providing such services as it uses in
providing services to fiduciary accounts for which it has investment
responsibilities;
(e) place orders pursuant to its investment determinations for the
Series either directly with the issuer or with any broker or dealer. In
executing portfolio transactions and selecting brokers or dealers, the
Adviser will use its best efforts to seek on behalf of the Series the best
overall terms available. In assessing the best overall terms available for
any transaction, the Adviser shall consider all factors that it 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. In evaluating the
best overall terms available, and in selecting the broker-dealer to execute
a particular transaction, the Adviser also may consider the brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the Series and other accounts
over which the Adviser or an affiliate of the Adviser exercises investment
discretion. The Adviser is authorized, subject to the prior approval of
the Fund's Board of Directors, to pay to a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for any of the Series which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the 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 as viewed in terms of
that particular transaction or in terms of the overall responsibilities of
the Adviser to the Series. In addition, the Adviser is authorized to take
into account the sale of the Fund's Shares in allocating purchase and sale
orders for portfolio securities to brokers or dealers (including brokers
and dealers that are affiliated with the Adviser or the Fund's principal
underwriter), provided the Adviser believes that the quality of the
execution and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will portfolio securities
be purchased from or sold to the Adviser, the Fund's principal underwriter
or any affiliated person of either the Fund, the Adviser, or the principal
underwriter, acting as principal in the transaction, except to the extent
permitted by the Securities and Exchange Commission and other applicable
federal and state laws and regulations;
(f) maintain historical tax lots for each portfolio security held by the
Series;
(g) transmit trades to the Fund's custodian for proper settlement; and
(h) prepare a quarterly broker security transaction summary and monthly
security transaction listing for each Series.
5. SERVICES NOT EXCLUSIVE.
The services furnished by the Adviser hereunder are deemed not to be
exclusive, and the Adviser shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby. To the
extent that the purchase or sale of securities or other investments of the same
issuer may be deemed by the Adviser to be suitable for two or more Series,
investment companies or accounts managed by the Adviser, the available
securities or investments will be allocated in a manner believed by the Adviser
to be equitable to each of them. It is recognized and acknowledged by the Fund
that in some cases this procedure may adversely affect the price paid or
received by a Series or the size of the position obtained for or disposed of by
a Series.
6. BOOKS AND RECORDS.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Adviser hereby agrees that all records which it maintains for the Series are
the property of the Fund and further agrees to surrender promptly to the Fund
any of such records upon the Fund's request. The 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.
7. EXPENSES.
Except as otherwise stated in this section 7, the Adviser shall pay all
expenses incurred by it in performing its services and duties as investment
adviser and shall pay all fees of each Sub-Adviser in connection with such
Sub-Adviser's duties in respect of the Fund. All other expenses incurred in the
operation of the Fund will be borne by the Fund, except to the extent
specifically assumed by others. The expenses to be borne by the Fund include,
without limitation, the following: organizational costs, taxes, interest,
brokerage fees and commissions, if any, fees of Directors who are not officers,
directors, employees or holders of 5% or more of the outstanding voting
securities of the Adviser, any Sub-Adviser or the Administrator, or any of their
affiliates, Commission fees, state Blue Sky qualification fees, advisory and
administration fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, auditing
and legal expenses, costs of maintaining corporate existence, costs of
independent pricing services, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
calculating the net asset value of the Series' shares, costs of shareholders'
reports and corporate meetings, costs of preparing and printing certain
prospectuses and statements of additional information, and any extraordinary
expenses.
8. COMPENSATION.
In consideration of services rendered pursuant to this Agreement, the
Fund will pay the Adviser on the first business day of each month the fee at the
annual rate set forth opposite the Series' name on Schedule 1 attached hereto,
based upon the value of the Series' average daily net assets for the previous
month. Such fee as is attributable to a Series shall be a separate charge to
such Series and shall be the several (and not joint or joint and several)
obligation of the Series. Fees hereunder shall be payable with respect to a
Series commencing on the date of the initial public sale of such Series' shares.
The Adviser agrees to accept such fee from the Fund as full compensation for the
services provided and expenses assumed by it pursuant to this Agreement, and
acknowledges that it shall not be entitled to any further compensation from the
Fund in respect of the same.
Net asset value shall be computed on such days and at such time or times
as described in the Prospectus. Upon the commencement or any termination of this
Agreement after the first day or before the end of any month, as the case may
be, 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, in the case
of any termination, shall be payable upon the date of termination of this
Agreement.
For the purpose of determining fees payable to the Adviser, the value of
each Series' net assets shall be computed in the manner specified in the Charter
for the computation of the value of the Series' net assets.
Notwithstanding anything to the contrary herein, if in any fiscal year
the aggregate expenses of a Series, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including investment advisory and
administration fees, exceed the expense limitation of any such state having
jurisdiction over such Series, the Fund may deduct from the fees to be paid
hereunder, or the Adviser will bear, to the extent required by state law, that
portion of such excess which bears the same relation to the total of such excess
as the Adviser's fee hereunder bears to the total fee otherwise payable for the
fiscal year by the Series pursuant to this Agreement and the Fund's
Administration Agreement. Such deduction or payment, if any, will be estimated
daily, and reconciled and effected or paid, as the case may be, on a monthly
basis.
9. LIMITATION OF LIABILITY.
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, except that the Adviser shall be liable to the Fund for
any loss resulting from willful misfeasance, bad faith or gross negligence on
its part in the performance of the Adviser's duties or from its reckless
disregard of its obligations and duties under this Agreement. Any person, even
though also an officer, director, partner, employee or agent of the Adviser, who
may be or become an officer, Director, employee or agent of the Fund, shall be
deemed, when rendering services to the Fund or to a Series, or acting on any
business of the Fund or of a Series (other than services or business in
connection with the Adviser's duties as investment adviser hereunder) to be
rendering such services to or acting solely for the Fund or such Series and not
as an officer, director, partner, employee or agent or one under the control or
direction of the Adviser even though paid by the Adviser.
10. TERM.
As to each Series, this Agreement shall continue until the date set
forth opposite such Series' name on Schedule 1 attached hereto (the "Reapproval
Date"), and thereafter shall continue automatically for successive annual
periods ending on the day of each year set forth opposite the Series' name on
Schedule 1 attached hereto (the "Reapproval Day"), provided such continuance is
specifically approved as to a Series at least annually by (a) the Fund's Board
of Directors or (b) vote of a majority (as defined in the 0000 Xxx) of such
Series' outstanding voting securities, provided that in either event its
continuance also is approved by a majority of the Fund's Directors who are not
"interested persons" (as defined in the 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. As to each Series, this Agreement may be terminated without
penalty, on 60 days' written notice to the Adviser (which notice may be waived
in writing by the Adviser), by the Fund's Board of Directors or by vote of the
holders of a majority of such Series' shares or may be terminated without
penalty, upon not less than 90 days' written notice to the Fund (which notice
may be waived in writing by the Fund), by the Adviser. This Agreement also will
terminate automatically, as to the relevant Series, in the event of its
assignment (as defined in the 1940 Act).
11. USE OF NAME.
The parties hereto agree that (i) in the event of the termination of
this Agreement, the Adviser shall have the right to require the Fund, within 30
days of such termination, to delete from the Series and its name, the word "ISG"
and (ii) the Adviser or any affiliate of the Adviser shall have the right to
grant to other investment companies that it may sponsor or advise the use of the
word "ISG" in the name of such investment company.
12. MISCELLANEOUS.
(a) AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated, except by an instrument in writing signed by the
party against whom an enforcement of the change, waiver, discharge or
termination is sought.
(b) CONSTRUCTION. 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. Subject to the provisions of Section 10 hereof,
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 New
York law; PROVIDED, HOWEVER, that nothing herein shall be construed in a
manner inconsistent with the 1940 Act or any rule or regulation of the
Commission thereunder.
(c) NOTICE. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Fund shall be effective upon
actual receipt by the Fund, or on the fourth day after the postmark if such
notice or other instrument is mailed via first class postage prepaid, at
its office at the address first above written, or at such other place as
the Fund may from time to time designate in writing. Any notice or other
instrument in writing, authorized or required by this Agreement to be given
to the Adviser shall be effective upon actual receipt by the Adviser, or on
the fourth day after the postmark if such notice or other instrument is
mailed via first class postage prepaid, at its office at the address first
above written, or at such other place as the Adviser may from time to time
designate in writing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
THE INFINITY MUTUAL FUNDS, INC.
By:___________________________
Xxxxxxx X. Xxxxxxx,
President and Chairman
of the Board
Attest:____________________
FIRST AMERICAN NATIONAL BANK
By:__________________________
Attest:_______________________
SCHEDULE 1
ANNUAL FEE AS
A PERCENTAGE OF
AVERAGE DAILY REAPPROVAL REAPPROVAL
NAME OF SERIES NET ASSETS DATE DAY
-------------- --------------- ---------- ----------
ISG Aggressive Growth Portfolio .20 of 1% December 31, 1999 December 31
ISG Capital Growth Portfolio .65 of 1% December 31, 1998 December 31
ISG Core Income Portfolio .50 of 1% December 31, 1998 December 31
ISG Current Income Portfolio .20 of 1% December 31, 1999 December 31
ISG Dividend Growth Portfolio .65 of 1% December 31, 1998 December 31
ISG Equity Value Portfolio .75 of 1% December 31, 1999 December 31
ISG Government Income Portfolio .60 of 1% December 31, 1999 December 31
ISG Government Money Market Portfolio .25 of 1% December 31, 1999 December 31
ISG Growth Portfolio .20 of 1% December 31, 1999 December 31
ISG Growth and Income Portfolio .20 of 1% December 31, 1999 December 31
ISG International Equity Portfolio* 1.00% December 31, 1999 December 31
ISG Large Cap Equity Portfolio .75 of 1% December 31, 1999 December 31
-------------------
* The Adviser has retained Lazard Asset Management as the Series' sub-investment adviser.
ANNUAL FEE AS
A PERCENTAGE OF
AVERAGE DAILY REAPPROVAL REAPPROVAL
NAME OF SERIES NET ASSETS DATE DAY
-------------- --------------- ---------- ----------
ISG Limited Duration Income Portfolio .50 of 1% December 31, 1998 December 31
ISG Limited Duration Tennessee Tax Free Portfolio .50 of 1% December 31, 1998 December 31
ISG Limited Duration U.S. Government Portfolio .50 of 1% December 31, 1998 December 31
ISG Mid Cap Portfolio** 1.00% December 31, 1999 December 31
ISG Moderate Growth and Income Portfolio .20 of 1% December 31, 1999 December 31
ISG Municipal Income Portfolio .60 of 1% December 31, 1999 December 31
ISG Prime Money Market Portfolio .25 of 1% December 31, 1998 December 31
ISG Small Cap Opportunity Portfolio*** .95 of 1% December 31, 1999 December 31
ISG Tax Free Money Market Portfolio .35 of 1% December 31, 1999 December 31
ISG Tennessee Tax Exempt Bond Portfolio .50 of 1% December 31, 1998 December 31
ISG U.S. Treasury Money Market Portfolio .25 of 1% December 31, 1998 December 31
------------
** The Adviser has retained Xxxxxxx Xxxxxxxx Management, LLC as the Series' sub-investment adviser.
*** The Adviser has retained Xxxxxx Asset Management, Inc. as the Series' sub-investment adviser.
