EXHIBIT 5(b)
FORM OF INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT, dated as of __________, 19___, by and
between Diversified Investment Advisors, Inc., a Delaware corporation
("Diversified") and ____________ ("Subadvisor").
WITNESSETH:
WHEREAS, Diversified has been organized to operate as an investment
advisor registered under the Investment Advisers Act of 1940 and has been
retained to provide investment advisory services to the __________ Portfolio, a
series of Diversified Investors Portfolios ("Portfolio"); and
WHEREAS, Diversified desires to retain the Subadvisor to furnish it with
portfolio management services in connection with Diversified's investment
advisory activities on behalf of the Portfolio, and the Subadvisor is willing
to furnish such services to Diversified;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Subadvisor. In accordance with and subject to the
Investment Advisory Agreement between the Portfolio and Diversified, attached
hereto as Schedule A (the "Advisory Agreement"), Diversified hereby appoints
the Subadvisor to perform the portfolio management services described herein
for the investment and reinvestment of that portion of the Portfolio's assets
(the "Assets") allocated to the Subadvisor by Diversified, subject to the
control and direction of Diversified and the Portfolio's Board of Trustees, for
the period and on the terms hereinafter set forth.
The Subadvisor shall provide Diversified with such investment advice and
supervision as the latter may from time to time consider necessary for the
proper supervision of the Assets. The Subadvisor shall furnish continuously an
investment program and shall determine from time to time what securities shall
be purchased, sold or exchanged and what portion of the Assets shall be held
uninvested, subject always to the provisions of the Investment Company Act of
1940, as amended ("1940 Act"), and to the Portfolio's then-current Prospectus
and Statement of Additional Information ("SAI").
In particular, the Subadvisor shall: (i) continuously review, supervise
and administer the investment program of the Portfolio; (ii) monitor regularly
the relevant securities for the Portfolio to determine if adjustments are
warranted and, if so, to make such adjustments on a periodic basis; (iii)
determine, in the Subadvisor's discretion, the securities to be purchased or
sold or exchanged in order to keep the Portfolio in balance with its designated
investment strategy; (iv) determine, in the Subadvisor's discretion, whether to
exercise warrants or other rights with respect to the Portfolio's securities;
(v) determine, in the Subadvisor's discretion, whether the merit of an
investment has been substantially impaired by extraordinary events or financial
conditions, thereby warranting the removal of such securities from the
Portfolio; (vi) as promptly as practicable after the end of each calendar
month, furnish a report showing: (a) all transactions during such month, (b)
all Assets on the last day of such month, rates of return, and (c) such other
information relating to the Portfolio as Diversified may request; (vii) meet at
least four times per year with Diversified and with such other persons as may
be designated on reasonable notice and at reasonable locations, at the request
of Diversified, to discuss general economic conditions, performance, investment
strategy, and other matters relating to the Portfolio; (viii) provide the
Portfolio with records concerning the Subadvisor's activities which the
Portfolio is required to by law maintain; and (ix) render regular reports to
the Portfolio's officers and Directors concerning the Subadvisor's discharge of
the foregoing responsibilities.
The Subadvisor shall also make recommendations as to the manner in which
voting rights, rights to consent to corporate action and any other rights
pertaining to the Portfolio's securities shall be exercised. Should the Board
of Trustees of the Portfolio at any time, however, make any definite
determination as to investment policy and notify the Subadvisor thereof in
writing, the Subadvisor shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination has been revoked.
The Subadvisor shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
Portfolio securities for the Portfolio's account with brokers or dealers
selected by it, and to that end the Subadvisor is authorized as the agent of
the Portfolio to give instructions to the custodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
In connection with the selection of such brokers or dealers and the placing of
such orders, the Subadvisor is directed to seek for the Portfolio, in its best
judgment, prompt execution in an effective manner at the most favorable price.
Subject to this requirement of seeking the most favorable price, securities may
be bought from or sold to broker-dealers who have furnished statistical,
research and other information or services to the Subadvisor or the Portfolio,
subject to any applicable laws, rules and regulations.
2. Allocation of Charges and Expenses. The Subadvisor shall furnish at
its own expense all necessary services, facilities and personnel in connection
with its responsibilities under Section 1 above. It is understood that the
Portfolio will pay all of its own expenses including, without limitation,
compensation and out-of-pocket expenses of Trustees not affiliated with the
Subadvisor or Diversified; governmental fees; interest charges: taxes;
membership dues; fees and expenses of independent auditors, of legal counsel
and of any transfer agent, administrator, distributor, shareholder servicing
agents, registrar or dividend disbursing agent of the Portfolio; expenses of
distributing and redeeming shares and servicing shareholder accounts; expenses
of preparing, printing and mailing prospectuses, shareholder reports, notices,
proxy statements and reports to governmental officers and commissions and to
shareholders of the Portfolio; expenses connected with the execution, recording
and settlement of Portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Portfolio, including
safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of shares of the
Portfolio; expenses of shareholder meetings; expenses of litigation and other
extraordinary or non-recurring events and expenses relating to the issuance,
registration and qualification of shares of the Portfolio.
3. Compensation of the Subadvisor. For the services to be rendered,
Diversified shall pay to the Subadvisor an investment advisory fee computed in
accordance with the terms of Schedule B herewith attached. If the Subadvisor
serves for less than the whole of any period specified, its compensation shall
be prorated.
4. Covenants and Representations of the Subadvisor. The Subadvisor agrees
that it will not deal with itself, or with the Trustees of the Portfolio or
with Diversified, or with the Portfolio's principal underwriter or distributor
as principals in making purchases or sales of securities or other property for
the account of the Portfolio, except as permitted by the 1940 Act, will not
take a long or short position in the shares of the Portfolio except as
permitted by the Portfolio's Articles, and will comply with all other
provisions of the Portfolio's Articles and By-Laws and any current Prospectus
of the Portfolio relative to the Subadvisor, Advisor and its Trustees and
officers.
5. Limits on Duties. The Subadvisor shall be responsible only for
managing the Assets in good faith and in accordance with the investment
guidelines, and shall have no responsibility whatsoever for, and shall incur no
liability on account of (i) selection of such investment guidelines, (ii)
advice on, or management of, any other assets for Diversified, (iii) filing of
any tax or information returns or forms, withholding or paying any taxes, or
seeking any exemption or refund, (iv) registration with any government or
agency, or (v) administration of the plans and trusts investing through this
Agreement, and shall be indemnified by Diversified for any loss in carrying out
the terms and provisions of this Agreement, including reasonable attorney's
fees, indemnification to brokers and commission merchants, fines, taxes,
penalties and interest. Subadvisor, however, shall be liable for any liability,
damages, or expenses of Diversified arising out of the negligence, malfeasance
or violation of applicable law by it or any of its employees in providing
management under this Agreement; and, in such cases, the indemnification by
Diversified, referred to above shall be inapplicable.
The Subadvisor may apply to Diversified at any time for instructions and
may consult counsel for Diversified or its own counsel with respect to any
matter arising in connection with the duties of the Subadvisor. Also, the
Subadvisor shall be protected in acting upon any document which it reasonably
believes to be genuine and to have been signed by the proper person or persons.
6. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written and shall
govern the relations between the parties hereto thereafter, and, unless
terminated earlier as provided below, shall remain in force for two years, on
which date it will terminate unless its continuance thereafter is specifically
approved at least annually (a) by the vote of a majority of the Trustees of the
Portfolio who are not "interested persons" with respect to this Agreement or of
the Subadvisor or Diversified, at a meeting specifically called for the purpose
of voting on such approval, and (b) by the Board of Trustees of the Portfolio
or by vote of a majority of the outstanding voting securities of the Portfolio.
However, if the shareholders of the Portfolio fail to approve the Agreement as
provided herein, the Subadvisor may continue to serve hereunder in the manner
and to the extent permitted by the Investment Company Act of 1940 and Rules
thereunder.
This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the vote of a majority of the outstanding voting
securities of the Portfolio, or by Diversified. The Subadvisor may terminate
the Agreement only upon giving 90 days' advance written notice to Diversified.
This Agreement shall automatically terminate in the event of its assignment.
This Agreement may be amended only if such amendment is approved by the
vote of a majority of the outstanding voting securities of the Portfolio and by
vote of a majority or the Board of Trustees of the Portfolio 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.
The terms "specifically approved at least annually", "vote of a majority
of the outstanding voting securities", "assignment", "affiliated person", and
"interested persons", when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
7. Certain Records. Any records to be maintained and preserved pursuant
to the provisions of Rule 31a-1 and Rule 31a-2 adopted under the Investment
Company Act which are prepared or maintained by the Subadvisor on behalf of the
Portfolio are the property of the Portfolio and will be surrendered promptly to
the Portfolio on request.
8. Survival of Compensation Rights. All rights of compensation under this
Agreement shall survive the termination of this Agreement.
9. Entire Agreement. This Agreement states the entire agreement of the
parties with respect to management of the Portfolio and may not be amended
except in a writing signed by the parties.
10. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
11. Change of Management and Pending Litigation. Subadvisor represents to
Diversified that it will disclose to Diversified as soon as it has knowledge of
any significant change or variation in its management structure or personnel or
any significant change or variation in its management style or investment
philosophy. In addition, Subadvisor represents to Diversified that it will
similarly disclose to Diversified, as soon as it has knowledge, the existence
of any pending or threatened, significant legal action being brought against it
whether in the form of a lawsuit or an investigation by any federal or state
governmental agency.
Diversified represents to Subadvisor that any information received by
Diversified pursuant to this section will be kept strictly confidential, except
as Diversified may deem reasonably necessary to comply with applicable legal
requirements and requests of regulatory authorities.
12. Use of Name. Subadvisor hereby agrees that Diversified may use the
Subadvisor's name in its marketing or advertising materials. Diversified agrees
to allow the Subadvisor to examine and approve any such materials prior to use.
IN WITNESS WHEREOF, the parties thereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Diversified Investment Advisors, Inc.
By:____________________________
[Subadvisor]
By:____________________________
SCHEDULE A
See Form of Investment Advisory Agreement included as Exhibit 5(a) to this
Registration Statement.
SCHEDULE B
The Subadvisor shall be compensated for its service under this Agreement on the
basis of the below-described annual fee schedule. The fee schedule shall only
be amended by agreement between the parties.
FEE SCHEDULE
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Net assets are equal to the market value of the Subadvisor's portion of the
Portfolio. Fees will be calculated by multiplying the arithmetic average of the
beginning and ending monthly net assets by the fee schedule and dividing by
twelve. The fee will be paid quarterly.