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EXHIBIT 5(b)
THE PARKSTONE ADVANTAGE FUND
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 18th day of August, 1993 between THE
PARKSTONE ADVANTAGE FUND, a Massachusetts business trust (the "Trust"), and
FIRST OF AMERICA INVESTMENT CORPORATION, a wholly owned Michigan-chartered
subsidiary of First of America Bank Michigan, N.A. (the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to
provide, or arrange for the provision of, investment advisory services to one
or more investment portfolios of the Trust (the "Funds") and the Investment
Adviser represents that it is willing and possesses legal authority to so
furnish such services; and
WHEREAS, the Investment Adviser is registered under the Investment
Advisers Act of 1940, as amended, and is engaged in the business of rendering
investment advisory services to the Trust and to others and desires to provide
the services described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints the Investment Adviser to
act as investment adviser to the Funds identified on Schedule A hereto for the
period and on the terms set forth in this Agreement. The Investment Adviser
accepts such appointment and agrees to furnish the services herein set forth
for the compensation herein provided. Additional investment portfolios may
from time to time be added to those covered by this Agreement by the parties
executing a new Schedule A which shall become effective upon its execution and
shall supersede any Schedule A having an earlier date.
2. DELIVERY OF DOCUMENTS. The Trust has furnished the Investment
Adviser with copies properly certified or authenticated of each of the
following:
(a) the Trust's Declaration of Trust, as executed on May 18,
1993 and as filed with the Secretary of State of the Commonwealth of
Massachusetts on May 19, 1993, and all amendments thereto or
restatements thereof (such Declaration, as presently in effect and as
it shall from time to time be amended or restated, is herein called
the "Declaration of Trust");
(b) the Trust's Code of Regulations and amendments thereto;
(c) resolutions of the Trust's Board of Trustees authorizing
the appointment of the Investment Adviser and approving this
Agreement;
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(d) the Trust's Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange
Commission ("SEC") on July 6, 1993 and all amendments thereto;
(e) the Trust's Registration Statement on Form N-lA under
the Securities Act of 1933, as amended ("1933 Act") (File No.
33-65690), and under the 1940 Act, as filed with the SEC on July 6,
1993; and
(f) each Fund's most recent Prospectus and Statement of
Additional Information (such Prospectus and Statement of Additional
Information, as presently in effect, and all amendments and
supplements thereto are herein collectively called the "Prospectus").
The Trust will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. MANAGEMENT. Subject to the supervision of the Trust's Board of
Trustees, the Investment Adviser will provide, or arrange for the provision
of, a continuous investment program for each of the Funds, including
investment research and management with respect to all securities and
investments and cash equivalents in said Funds. The Investment Adviser will
determine, or arrange for others to determine, from time to time what
securities and other investments will be purchased, retained or sold by the
Trust with respect to the Funds and will implement, or arrange for others to
implement, such determinations through the placement, in the name of the
Funds, of orders for the execution of portfolio transactions with or through
such brokers or dealers as it may select. The Investment Adviser will provide,
or arrange for the provision of, the services under this Agreement in
accordance with each of the Funds' investment objectives, policies and
restrictions as stated in the Prospectus and resolutions of the Trust's Board
of Trustees.
Subject to the provisions of this Agreement, the Declaration of Trust
and the 1940 Act, the Investment Adviser directly and indirectly may select
and enter into contracts with one or more qualified investment advisers
("Sub-Advisers") to provide to the Trust some or all of the services required
by this Agreement. With respect to any such appointment by the Investment
Adviser of any of the Sub-Advisers, the Investment Adviser will, as
appropriate:
(a) advise the Sub-Advisers with respect to United States
("U.S.") economic conditions and trends;
(b) assist Sub-Advisers with the placement of orders for the
purchase and sale of securities of U.S. issuers;
(c) assist and consult with the Sub-Advisers regarding the
management of the Funds' short-term cash balance positions
denominated in U.S. dollars to preserve liquidity in the Funds'
assets, including the placement of orders for U.S. money market
instruments;
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(d) assist and consult with the Sub-Advisers in connection
with the Funds' continuous investment programs; and
(e) periodically review, evaluate and report to the Trust's
Board of Trustees with respect to the performance of the
Sub-Advisers.
In fulfilling its responsibilities hereunder, the Investment Adviser
agrees that it will, or, with respect to services provided to the Trust by any
of the Sub-Advisers appointed by the Investment Adviser, that it will require
that each of the Sub-Advisers:
(a) 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;
(b) conform with all applicable Rules and Regulations of the
SEC and in addition will conduct its activities under this Agreement
(or any applicable sub-investment advisory agreement) in accordance
with any applicable regulations of any governmental authority
pertaining to the investment advisory activities of the Investment
Adviser or Sub-Advisers;
(c) not make loans to any person to purchase or carry units
of beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to investment determinations for
the Trust either directly with the issuer or with an underwriter,
market maker or broker or dealer. In placing orders with brokers and
dealers, the Investment Adviser will use its reasonable best efforts
to obtain, or require that each of the Sub-Advisers obtain, prompt
execution of orders in an effective manner at the most favorable
price. Consistent with this obligation, the Investment Adviser and
any of the Sub-Advisers 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 Funds and/or other accounts over which the Investment
Adviser or any of the Sub-Advisers or any of their respective
affiliates exercises investment discretion. Subject to the review of
the Trust's Board of Trustees from time to time with respect to the
extent and continuation of the policy, the Investment Adviser and any
of the Sub-Advisers are authorized to pay a broker or dealer who
provides such brokerage and research services a commission for
effecting a securities transaction for any of the Funds which is in
excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if the Investment Adviser
or Sub-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 either
that particular transaction or the overall responsibilities of the
Investment Adviser or Sub-Advisers with respect to the accounts as to
which it exercises investment discretion. In no instance will
portfolio securities be purchased from or sold to Security Management
Company, Investment
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Adviser or any Sub-Adviser, or any affiliated person of the Trust,
except as may be permitted by the 1940 Act;
(e) maintain all books and records with respect to the
Trust's securities transactions and will furnish the Trust's Board of
Trustees such periodic and special reports as the Board reasonably
may request;
(f) treat confidentially and as proprietary information of
the Trust all records and other information relative to the Trust and
prior, present, or potential interest-holders, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except that, subject to prompt
notification of the Trust, the Investment Adviser and any of the
Sub-Advisers may divulge such information to duly constituted
authorities, or when so requested by the Trust, PROVIDED, HOWEVER,
that nothing contained herein shall prohibit the Investment Adviser
or any of the Sub-Advisers 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 Funds; and
(g) maintain its policy and practice of conducting its
fiduciary functions independently. In making investment
recommendations for the Trust, the Investment Adviser's or
Sub-Adviser's personnel will not inquire or take into consideration
whether the issuers of securities proposed for purchase or sale for
the Trust's account are customers of the Investment Adviser or
Sub-Adviser or of their respective parents, subsidiaries or
affiliates. In dealing with such customers, the Investment Adviser or
Sub-Adviser and their respective parents, subsidiaries, and
affiliates will not inquire or take into consideration whether
securities of those customers are held by the Trust.
4. SERVICES NOT EXCLUSIVE. The services furnished by the Investment
Adviser and any Sub-Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser and any Sub-Adviser shall be free to furnish similar
services to others so long as its services under this Agreement or any
sub-advisory agreement are not impaired thereby. It is understood that the
action taken by the Investment Adviser under this Agreement may differ from
the advice given or the timing or nature of action taken with respect to other
clients of the Investment Adviser, and that a transaction in a specific
security may not be accomplished for all clients of the Investment Adviser at
the same time or at the same price.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all
records, if any, which it maintains for the Trust are the property of the
Trust and further agrees to surrender promptly, and to require each of the
Sub-Advisers to surrender promptly, to the Trust any of such records upon the
Trust's request. The Investment Adviser further agrees to preserve, and to
require each of the Sub-Advisers 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.
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6. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses, including, as applicable, the compensation of
any Sub-Advisers directly appointed by it, incurred by it in connection with
its activities under this Agreement other than the cost of securities
(including brokerage commissions, if any) purchased for the Trust.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, each of the Funds will pay the Investment Adviser
and the Investment Adviser will accept as full compensation therefor a fee set
forth on Schedule A hereto. Each of the Funds' obligations to pay the
above-described fee to the Investment Adviser will begin as of the date of the
initial public sale of shares in that Fund. Except as permitted by applicable
law, the Investment Adviser shall not be compensated on the basis of a share
of capital gains upon or capital appreciation of any of the Funds or any
portion thereof.
If in any fiscal year the aggregate expenses of any of the Funds (as
defined under the securities regulations of any state having jurisdiction over
the Trust) exceed the expense limitations of any such state, the Investment
Adviser will reimburse the Fund for a portion of such excess expenses equal to
such excess times the ratio of the fees otherwise payable by the Fund to the
Investment Adviser hereunder to the aggregate fees otherwise payable by the
Fund to the Investment Adviser hereunder and to Security Management Company
under the Administration Agreement between Security Management Company and the
Trust. The obligation of the Investment Adviser to reimburse the Funds
hereunder is limited in any fiscal year to the amount of its fee hereunder for
such fiscal year, PROVIDED, HOWEVER, that notwithstanding the foregoing, the
Investment Adviser shall reimburse the Funds for such proportion of such
excess expenses regardless of the amount of fees paid to it during such fiscal
year to the extent that the securities regulations of any state having
jurisdiction over the Trust so require. Such expense reimbursement, if any,
will be estimated daily and reconciled and paid on a monthly basis.
8. LIMITATION OF LIABILITY. The Investment Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Funds 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, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective as
to a particular Fund as of the date first written above (or, if a particular
Fund is not in existence on that date, on the date a registration statement
relative to that Fund becomes effective with the SEC), provided that it shall
have been approved by a vote of a majority of the outstanding voting
securities of such Fund, in accordance with the requirements under the 1940
Act, and, unless sooner terminated as provided herein, shall continue in
effect until June 30, 1995.
Thereafter, if not terminated, this Agreement shall continue in
effect as to a particular Fund for successive periods of approximately twelve
months each ending on December 31 of
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each year, PROVIDED such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Trust's Board
of Trustees who are not parties to this Agreement or interested persons of any
party 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 Trust's
Board of Trustees or by the vote of a majority of all votes attributable to
the outstanding Shares of such Fund. Notwithstanding the foregoing, this
Agreement may be terminated as to a particular Fund at any time on sixty days'
written notice, without the payment of any penalty, by the Trust (by vote of
the Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of such Fund) or by the Investment Adviser. This Agreement
will immediately terminate in the event of its assignment. No assignment of
this Agreement shall be made by the Investment Adviser without the consent of
the Board of Trustees of the Trust. (As used in this Agreement, the terms
"majority of the outstanding voting securities, "interested persons" and
"assignment" shall have the same meaning of such terms in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought.
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 the law of the State of Ohio.
The names "The Parkstone Advantage Fund" and "Trustees of The
Parkstone Advantage Fund" refer respectively to the Trust created and the
Trustees, as trustees but not individually or personally, acting from time to
time under the Declaration of Trust and to which reference is hereby made and
a copy of which is on file at the office of the Secretary of the Commonwealth
of Massachusetts and elsewhere as required by law, and to any and all
amendments thereto as filed or hereafter filed. The obligations of "The
Parkstone Group of Funds" 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,
interest-holders or representatives of the Trust personally, but bind only the
assets of the Trust, and all persons dealing with any Fund of the Trust must
look solely to the assets of the Trust belonging to such Fund for the
enforcement of any claims against the Trust.
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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. (Seal)
THE PARKSTONE ADVANTAGE FUND
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Its: President
FIRST OF AMERICA INVESTMENT
CORPORATION
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Its: President
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Dated: August 18, 1993
SCHEDULE A
to the Investment Advisory Agreement
between The Parkstone Advantage Fund
and First of America Investment Corporation
Name of Fund Compensation Date
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International Annual Rate of 1.25% of the first $50
Discovery Fund Million of the average daily net assets of
such Fund, 1.20% of the average daily net
assets between $50 Million and $100
Million, 1.15% of the average daily net
assets between $100 Million and $400
Million, and 1.05% of the average daily
net assets over $400 Million.
THE PARKSTONE ADVANTAGE FUND
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Its: President
FIRST OF AMERICA INVESTMENT
CORPORATION
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Its: President
