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EX-99.B5(c)
ASSET MANAGEMENT AGREEMENT
BETWEEN
SBSF FUNDS, INC.
D/B/A KEY MUTUAL FUNDS
AND
KEYCORP MUTUAL FUND ADVISERS, INC.
THIS AGREEMENT is made as of the 16th day of December, 1996, by and between
SBSF Funds, Inc. (d/b/a Key Mutual Funds), a Maryland corporation which may
issue one or more series of shares of common stock (the "Company"), and KeyCorp
Mutual Fund Advisers, Inc., an Ohio corporation (the "Adviser").
WHEREAS, the Company is registered as an open-end, series management
investment company with the Securities and Exchange Commission (the
"Commission") under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Company desires to retain the Adviser to furnish asset
management services to the funds listed on Schedule A (each, a "Fund" and,
collectively, the "Funds"), and the Adviser represents that it is willing and
possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is acknowledged, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) General. The Company hereby appoints the Adviser to act as investment
adviser to the Funds 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) Employees of Affiliates. The Adviser may, in its discretion, provide
such services through its own employees or the employees of one or
more affiliated companies that are qualified to act as an investment
adviser to the Company under applicable laws and are under the control
of KeyCorp, the indirect parent of the Adviser; provided that (i) all
persons, when providing services hereunder, are functioning as part of
an organized group of persons, and (ii) such organized group of
persons is managed at all times by authorized officers of the Adviser.
(c) Sub-Advisers. It is understood and agreed that the Adviser may from
time to time employ or associate with such other entities or persons
as the Adviser believes appropriate to assist in the performance of
this Agreement with respect to a particular Fund or Funds (each a
"Sub-Adviser"), and that any such Sub-Adviser shall have all of the
rights and powers of the Adviser set forth in this Agreement; provided
that a Fund shall not pay any additional compensation for any
Sub-Adviser
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and the Adviser shall be as fully responsible to the Company for the
acts and omissions of the Sub-Adviser as it is for its own acts and
omissions; and provided further that the retention of any Sub-Adviser
shall be approved in advance by (i) the Board of Directors of the
Company and (ii) the shareholders of the relevant Fund if required
under any applicable provisions of the 1940 Act. If and to the extent
a Sub-Adviser is retained without approval by the shareholders in
accordance with an exemptive order issued by the Commission, the
Adviser and Sub-Adviser will comply with any conditions imposed on
them by such order. The Adviser will review, monitor and report to the
Company's Board of Directors regarding the performance and investment
procedures of any Sub-Adviser. In the event that the services of any
Sub-Adviser are terminated, the Adviser may provide asset management
services pursuant to this Agreement to the Fund without a Sub-Adviser
and without further shareholder approval, to the extent consistent
with the 1940 Act. A Sub-Adviser may be an affiliate of the Adviser.
2. DELIVERY OF DOCUMENTS. The Company has delivered to the Adviser copies
of each of the following documents along with all amendments thereto through the
date hereof, and will promptly deliver to it all future amendments and
supplements thereto, if any:
(a) the Company's Articles of Incorporation;
(b) the Bylaws of the Company;
(c) resolutions of the Board of Directors of the Company authorizing the
execution and delivery of this Agreement;
(d) the most recent Post-Effective Amendment to the Company's Registration
Statement under the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act, on Form N-1A as filed with the Commission;
(e) Notification of Registration of the Company under the 1940 Act on Form
N-8A as filed with the Commission; and
(f) the currently effective Prospectus and Statement of Additional
Information of the Funds.
3. ASSET MANAGEMENT SERVICES.
(a) Management of the Funds. The Adviser hereby undertakes to act as
investment adviser to the Funds. The Adviser shall regularly provide
investment advice to the Funds and continuously supervise the
investment and reinvestment of cash, securities and other property
comprising the assets of the Funds and, in furtherance thereof, shall:
(i) supervise all aspects of the operations of the Company and each
Fund;
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(ii) obtain and evaluate pertinent economic, statistical and financial
data, as well as other significant events and developments, which
affect the economy generally, the Funds' investment programs, and
the open-end investment companies ("mutual funds") the securities
of which are included in the Funds' portfolios and the industries
in which such mutual funds invest, or which may relate to
securities or other investments which the Adviser may deem
desirable for inclusion in a Fund's portfolio, and regularly
report thereon to the Company's Board of Directors;
(iii) furnish a continuous investment program for each Fund;
(iv) determine, subject to the conditions imposed on the Funds by the
Commission exemptive order relating to the Funds' authority to
invest all of their assets in shares of other mutual funds, and
in accordance with the Prospectus, which mutual funds that are
part of the same group of investment companies as the Funds
("Proprietary Funds") and which mutual funds that are not part of
the same group of investment companies as the Funds ("Other
Portfolios") ("Proprietary Funds" and "Other Portfolios,"
collectively referred to as "Underlying Portfolios") the shares
of which, as well as other securities, shall be purchased or sold
by each Fund;
(v) invest the assets of each Fund in shares of Underlying Portfolios
according to the percentage ranges for each investment category
applicable to each Fund as set forth in the Prospectus (and as
may be modified from time to time by the Company's Board of
Directors);
(vi) in its discretion and without prior consultation with the
Company, purchase and redeem shares of Underlying Portfolios, and
buy, sell, lend and otherwise trade in other securities and
investment instruments on behalf of each Fund in accordance with
its Prospectus;
(vii) continually monitor the allocation, among the percentage ranges
for each investment category as set forth in the Prospectus, of
each Fund's investments in Underlying Portfolios as well as
rebalance and reallocate such allocations across the Underlying
Portfolios as market conditions warrant;
(viii) to the extent deemed necessary or appropriate by the Adviser,
in its sole discretion, recommend to the Company's Board of
Directors, that the percentage ranges for investment categories
governing a Fund's investments in either Proprietary Portfolios
or Underlying Portfolios be modified; and
(ix) take, on behalf of each Fund, all actions the Adviser may deem
necessary in order to carry into effect the investment program
and the Adviser's functions
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as provided above, including the making of appropriate periodic
reports to the Company's Board of Directors.
(b) Covenants. The Adviser shall carry out its asset management and
supervisory responsibilities in a manner consistent with the
investment objectives, policies, and restrictions provided in: (i)
each Fund's Prospectus and Statement of Additional Information as
revised and in effect from time to time; (ii) the Company's Articles
of Incorporation, Bylaws or other governing instruments, as amended
from time to time; (iii) the 1940 Act and rules in force thereunder;
(iv) other applicable laws and exemptive orders of the Commission; and
(v) such other investment policies, procedures and/or limitations as
may be adopted by the Company with respect to a Fund and provided to
the Adviser in writing. The Adviser agrees to use reasonable efforts
to manage each Fund so that it will qualify, and continue to qualify,
as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended, and regulations issued thereunder
(the "Code"), except as may be authorized to the contrary by the
Board. The management of the Funds by the Adviser shall at all times
be subject to the review of the Company's Board of Directors.
(c) Books and Records. Pursuant to applicable law, the Adviser shall keep
each Fund's books and records required to be maintained by, or on
behalf of, the Funds with respect to advisory services rendered
hereunder. The Adviser agrees that all records which it maintains for
a Fund are the property of the Fund and it will promptly surrender any
of such records to the Fund upon the Fund's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 of
the Commission under the 1940 Act any such records of the Fund
required to be preserved by Rule 31a-1 of the Commission under the
1940 Act.
(d) Reports, Evaluations and Other Services. The Adviser shall furnish
reports, evaluations, information or analyses to the Company with
respect to the Funds and in connection with the Adviser's services
hereunder as the Company's Board of Directors may request from time to
time or as the Adviser may otherwise deem to be desirable. The Adviser
shall make recommendations to the Company's Board of Directors with
respect to Company policies, and shall carry out such policies as are
adopted by the Board of Directors. The Adviser shall, subject to
review by the Board of Directors, furnish such other services as the
Adviser shall from time to time determine to be necessary or useful to
perform its obligations under this Agreement.
(e) Purchase and Sale of Securities. The Adviser, at its own expense,
shall place all orders for the purchase and sale of portfolio
securities for each Fund with brokers or dealers selected by the
Adviser, which may include brokers or dealers affiliated with the
Adviser to the extent permitted by the 1940 Act and the Company's
policies and procedures applicable to the Funds. The Adviser shall use
its best efforts to seek to execute portfolio transactions at prices
which, under the circumstances, result in
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total costs or proceeds being the most favorable to the Funds. In
assessing the best overall terms available for any transaction, the
Adviser shall consider all factors 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,
research services provided to the Adviser, and the reasonableness of
the commission, xxxx-up or xxxx-down, if any, both for the specific
transaction and on a continuing basis. In no event shall the Adviser
be under any duty to obtain the lowest commission or the best net
price for any Fund on any particular transaction, nor is the Adviser
under any duty to execute any order in a fashion either preferential
to any Fund relative to other accounts managed by the Adviser or
otherwise materially adverse to such other accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may
be selected who also provide brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of
1934) to the Adviser, the Funds and/or the other accounts over which
the Adviser exercises investment discretion. The Adviser is authorized
to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for a Fund
which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the
Adviser determines in good faith that the total commission is
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
Adviser with respect to accounts over which it exercises investment
discretion. The Board of Directors of the Company shall be entitled to
request and receive such information as it deems relevant to permit it
to monitor or evaluate the reasonableness of any such excess
commissions paid by the Funds.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Fund, the Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to,
aggregate the securities to be sold or purchased with those of other
Funds or its other clients if, in the Adviser's reasonable judgment,
such aggregation (i) will result in an overall economic benefit to the
Fund, taking into consideration the advantageous selling or purchase
price, brokerage commission and other expenses, and trading
requirements, and (ii) is not inconsistent with the policies set forth
in the Company's registration statement and the Fund's Prospectus and
Statement of Additional Information. In such event, the Adviser will
allocate the securities so purchased or sold, and the expenses
incurred in the transaction, in a manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Fund
and such other clients.
4. REPRESENTATIONS AND WARRANTIES.
(a) The Adviser hereby represents and warrants to the Company as follows:
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(i) The Adviser is duly organized and is in good standing under the
laws of the State of Ohio and is fully authorized to enter into
this Agreement and carry out its duties and obligations
hereunder.
(ii) The Adviser is registered as an investment adviser with the
Commission under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and is registered or licensed as an
investment adviser under the laws of all jurisdictions in which
its activities require it to be so registered or licensed. The
Adviser shall maintain such registration or license in effect at
all times during the term of this Agreement.
(iii) The Adviser at all times shall provide its best judgment and
effort to the Company in carrying out its obligations hereunder.
(b) The Company hereby represents and warrants to the Adviser as follows:
(i) The Company has been duly organized as a corporation under the
laws of the State of Maryland and is authorized to enter into
this Agreement and carry out its terms.
(ii) The Company is registered as an investment company with the
Commission under the 1940 Act and shares of each Fund are
registered for offer and sale to the public under the 1933 Act
and all applicable state securities laws where currently sold.
Such registrations will be kept in effect during the term of this
Agreement.
5. COMPENSATION. As compensation for the services which the Adviser is to
provide or cause to be provided pursuant to Paragraph 3, each Fund shall pay to
the Adviser out of Fund assets an annual fee, computed and accrued daily and
paid in arrears on the first business day of every month, at the rate set forth
opposite each Fund's name on Schedule A, which shall be a percentage of the
average daily net asset value of the Fund (computed in the manner set forth in
the Fund's most recent Prospectus and Statement of Additional Information)
determined as of the close of business on each business day throughout the
month. At the request of the Adviser, some or all of such fee shall be paid
directly to a Sub-Adviser. The fee for any partial month under this Agreement
shall be calculated on a proportionate basis. In the event that the total
expenses of a Fund exceed the limits on investment company expenses imposed by
any statute or any regulatory authority of any jurisdiction in which shares of
such Fund are qualified for offer and sale, the Adviser will bear the amount of
such excess, except: (i) the Adviser shall not be required to bear such excess
to an extent greater than the compensation due to the Adviser for the period for
which such expense limitation is required to be calculated unless such statute
or regulatory authority shall so require, and (ii) the Adviser shall not be
required to bear the expenses of the Fund to an extent which would result in the
Fund's or Company's inability to qualify as a regulated investment company under
the provisions of Subchapter M of the Code.
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6. INTERESTED PERSONS. It is understood that, to the extent consistent with
applicable laws, the Directors, officers and shareholders of the Company are or
may be or become interested in the Adviser as directors, officers or otherwise
and that directors, officers and shareholders of the Adviser are or may be or
become similarly interested in the Company.
7. EXPENSES. As between the Adviser and the Funds, the Funds will pay for
all their expenses other than those expressly stated to be payable by the
Adviser hereunder, which expenses payable by the Funds shall include, without
limitation: (i) interest and taxes; (ii) brokerage commissions and other costs
in connection with the purchase or sale of securities and other investment
instruments, which the parties acknowledge might be higher than other brokers
would charge when a Fund utilizes a broker which provides brokerage and research
services to the Adviser as contemplated under Paragraph 3 above; (iii) fees and
expenses of the Company's Directors that are not employees of the Adviser; (iv)
legal and audit expenses; (v) administrator, shareholder servicing agent,
custodian, pricing and bookkeeping, registrar and transfer agent fees and
expenses; (vi) fees and expenses related to the registration and qualification
of the Funds' shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders, unless otherwise required; (viii) all other expenses incidental to
holding meetings of shareholders, including proxy solicitations therefor, unless
otherwise required; (ix) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (x) expenses of
printing and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; (xi) insurance premiums for
fidelity bonds and other coverage to the extent approved by the Company's Board
of Directors; (xii) association membership dues authorized by the Company's
Board of Directors; and (xiii) such non-recurring or extraordinary expenses as
may arise, including those relating to actions, suits or proceedings to which
the Company is a party (or to which the Funds' assets are subject) and any legal
obligation which the Company may have to indemnify the Company's Directors and
officers with respect thereto.
8. NON-EXCLUSIVE SERVICES; LIMITATION OF ADVISER'S LIABILITY. The services
of the Adviser to the Funds are not to be deemed exclusive and the Adviser may
render similar services to others and engage in other activities. The Adviser
and its affiliates may enter into other agreements with the Funds and the
Company for providing additional services to the Funds and the Company which are
not covered by this Agreement, and to receive additional compensation for such
services. In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Adviser, or a breach of fiduciary duty with respect to receipt of compensation,
neither the Adviser nor any of its directors, officers, shareholders, agents, or
employees shall be liable or responsible to the Company, the Funds or to any
shareholder of the Funds for any error of judgment or mistake of law or for any
act or omission in the course of, or connected with, rendering services
hereunder or for any loss suffered by a Fund in connection with the performance
of this Agreement.
9. EFFECTIVE DATE; MODIFICATIONS; TERMINATION. This Agreement shall become
effective on the date first set forth above, provided that it shall have been
approved by a majority of the outstanding voting securities of each Fund, in
accordance with the requirements of the 1940 Act, or such later date as may be
agreed by the parties following such shareholder approval.
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(a) This Agreement shall continue in force until the second anniversary of
its effective date. Thereafter, this Agreement shall continue in
effect as to each Fund for successive annual periods, provided such
continuance is specifically approved at least annually (i) by a vote
of the majority of the Directors 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 (ii) by a vote
of the Board of Directors of the Company or a majority of the
outstanding voting securities of the Fund.
(b) To the extent permitted by law, the modification of any of the
non-material terms of this Agreement may be approved by a vote of a
majority of those Directors of the Company who are not interested
persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval.
(c) Notwithstanding the foregoing provisions of this Paragraph 9, either
party hereto may terminate this Agreement at any time on sixty (60)
days' prior written notice to the other, without payment of any
penalty. Such a termination by the Company may be effected severally
as to any particular Fund, and shall be effected as to any Fund by
vote of the Company's Board of Directors or by vote of a majority of
the outstanding voting securities of the Fund. This Agreement shall
terminate automatically in the event of its assignment.
10. CERTAIN DEFINITIONS. The terms "vote of a majority of the outstanding
voting securities," "assignment," "control," and "interested persons," when used
herein, shall have the respective meanings specified in the 1940 Act, as now in
effect or as hereafter amended, and subject to such applicable rules,
interpretations and orders as may be issued by the Commission.
11. INDEPENDENT CONTRACTOR. The Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Board of Directors of the Company from time
to time, have no authority to act for or represent a Fund in any way or
otherwise be deemed an agent of a Fund.
12. STRUCTURE OF AGREEMENT. The Company is entering into this Agreement on
behalf of the underlying Funds listed on Schedule A attached hereto severally
and not jointly. The responsibilities and benefits set forth in this Agreement
shall refer to each Fund severally and not jointly. No Fund shall have any
responsibility for any obligation of any other Fund arising out of this
Agreement. Without otherwise limiting the generality of the foregoing:
(a) any breach of any term of this Agreement regarding the Company with
respect to any one Fund shall not create a right or obligation with
respect to any other Fund;
(b) under no circumstances shall the Adviser have the right to set off
claims relating to a Fund by applying property of any other Fund; and
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(c) the business and contractual relationships created by this Agreement,
consideration for entering into this Agreement, and the consequences
of such relationship and consideration relate solely to the Company
and the particular Fund to which such relationship and consideration
applies.
This Agreement is intended to govern only the relationships between the
Adviser, on the one hand, and the Company and the Funds, on the other hand, and
(except as specifically provided above in this paragraph 12) is not intended to
and shall not govern (i) the relationship between the Company and any Fund or
(ii) the relationships among the respective Funds.
13. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the
Commission thereunder.
14. SEVERABILITY. 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 and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, and their respective
seals to be hereunto affixed, all as of the date written above.
KEYCORP MUTUAL FUND
ADVISERS, INC.
By: /S/ W. Xxxxxxxxxxx Xxxxxxx
---------------------------------
Name: W. Xxxxxxxxxxx Xxxxxxx
Title: Chairman
SBSF FUNDS, INC.
d/b/a KEY MUTUAL FUNDS
By: /S/ Xxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President and Assistant
Secretary
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SCHEDULE A
NAME OF FUND FEE*
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1. KeyChoice Growth Fund 0.20%
2. KeyChoice Moderate Growth Fund 0.20%
3. KeyChoice Income and Growth Fund 0.20%
* As a percentage of average daily net assets. Note, however, that the
Adviser shall have the right, but not the obligation, to voluntarily waive
any portion of the advisory fee from time to time.
