(File Nos. 811-8529; 333-41461)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[] Definitive Proxy Statement
[] Definitive Additional Materials
[] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
MEMORIAL FUNDS
(Name of Registrant as Specified in its Charter)
BOARD OF TRUSTEES OF REGISTRANT
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
MEMORIAL FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
[Insert Date]
Dear Shareholder:
The Board of Trustees of Memorial Funds (the "Trust") has called a special
meeting of shareholders of Corporate Bond Fund, Government Bond Fund, Growth
Equity Fund and Value Equity Fund (each a "Fund" and collectively, the "Funds").
The meeting is scheduled to be held on May 25, 2001. The Proxy Statement
contains three proposals. Shareholders of each Fund are being asked to vote on
Proposals 1 and 2. Shareholders of Corporate Bond Fund only are being asked to
vote on Proposal 3. Please take the time to read these materials and cast your
vote, as the proposals to be voted on are important to the Funds and to you as a
shareholder.
SHAREHOLDERS OF ALL FUNDS:
In Proposal 1, the Board of Trustees of the Trust (the "Board") asks you to
approve a new investment advisory agreement (the "MIA Agreement") between the
Trust and Memorial Investment Advisors, Inc. ("MIA").
MIA has served as the adviser for each Fund since January 1, 2001 pursuant
to an interim advisory agreement between the Trust and MIA (the "Interim MIA
Agreement"). MIA became the adviser for the Funds upon the resignation of Forum
Investment Advisors, LLC ("FIA"). The Interim Agreement has substantially the
same terms as the investment advisory agreement between FIA and the Trust. If
the shareholders approve the MIA Agreement, MIA will continue to serve as the
adviser for all of the Funds for an initial term of two years. The MIA Agreement
will have substantially the same terms, including fees, as both the current
investment advisory agreement between the Trust and FIA and the Interim
Agreement.
In Proposal 2, the Board asks you to approve a new policy of each Fund
permitting MIA to hire and terminate subadvisers of a Fund and modify
subadvisory agreements without seeking shareholder approval. This policy will
permit MIA to manage the Funds more efficiently and change subadvisers more
easily, without the expense and delay associated with seeking shareholder
approval for such matters.
SHAREHOLDERS OF CORPORATE BOND FUND ONLY:
In Proposal 3, the Board asks you to approve a new investment subadvisory
agreement for Corporate Bond Fund between the Trust and American General
Investment Management, L.P. ("American General"). American General has served as
the Corporate Bond Fund's subadviser since January 1, 2001, pursuant to an
interim subadvisory agreement between the Trust and American General (the
"American General Interim Agreement"). Prior to January 1, 2001, the Corporate
Bond Fund's subadviser was Conseco Capital Management, Inc. ("Conseco").
If the shareholders approve the new investment subadvisory agreement,
American General will continue to serve as the investment subadviser for
Corporate Bond Fund. The new investment subadvisory agreement will have
substantially the same terms, including fees, as both the investment subadvisory
agreement between the Trust and Conseco and the American General Interim
Agreement.
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THE BOARD RECOMMENDS THAT SHAREHOLDERS OF ALL FUNDS APPROVE PROPOSALS 1
AND 2 AND THAT SHAREHOLDERS OF CORPORATE BOND FUND APPROVE PROPOSAL 3. YOUR VOTE
IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IN ORDER TO AVOID THE
ADDED COST OF FOLLOW-UP SOLICITATIONS AND POSSIBLE ADJOURNMENTS, PLEASE READ THE
PROXY STATEMENT AND CAST YOUR VOTE. IT IS IMPORTANT THAT YOUR VOTE BE RECEIVED
NO LATER THAN MAY 24, 2001. IF YOU HAVE ANY QUESTIONS ABOUT THE PROXY STATEMENT,
PLEASE DO NOT HESITATE TO CALL US AT (888) 263-5593.
We appreciate your participation and prompt response and thank you for
your continued support.
Sincerely,
Christopher W. Hamm
President and Chairman of the Board of the Trustees
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MEMORIAL FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
-------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 2001
-------------------------
To the Shareholders of the Funds:
Notice is hereby given that a special meeting of Shareholders (the
"Meeting") of Corporate Bond Fund, Government Bond Fund, Growth Equity Fund and
Value Equity Fund (collectively the "Funds"), four series of Memorial Funds (the
"Trust"), will be held at the offices of Forum Administrative Services, LLC, Two
Portland Square, Portland, Maine 04101 on May 25, 2001 at 10:00 a.m. (Eastern
time). The purpose of the Meeting is:
1. To approve a new Investment Advisory Agreement between the Trust and
Memorial Investment Advisors, Inc. ("MIA") for all the Funds;
2. To approve a new policy for each Fund permitting MIA to hire and
terminate subadvisers of a Fund and modify subadvisory agreements
without seeking shareholder approval;
3. To approve a new Investment Subadvisory Agreement between the Trust
and American General Investment Management, L.P. for Corporate Bond
Fund; and
4. To transact such other business as may properly come before the
Meeting.
The Trust's Board of Trustees has fixed the close of business on April
16, 2001 as the record date for the determination of shareholders entitled to
notice of and to vote at the Meeting or any adjournment thereof. Please
carefully read the accompanying proxy statement.
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By order of the Board of Trustees,
D. Blaine Riggle
Secretary
Portland, Maine
[INSERT DATE]
YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE. IN
ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU TO
INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY, DATE AND SIGN IT, AND
RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
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MEMORIAL FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Trustees of Memorial
Funds (the "Trust"), a Delaware business trust, on behalf of Corporate Bond
Fund, Government Bond Fund, Growth Equity Fund and Value Equity Fund (each a
"Fund" and collectively, the "Funds"). The Trust is a registered open-end
investment company whose executive offices are located at Two Portland Square,
Portland, Maine 04101. Proxies will be voted at the special meeting of
Shareholders (the "Meeting") of the Funds to be held at the offices of the
Trust's administrator, Forum Administrative Services, LLC ("Forum"), Two
Portland Square, Portland, Maine 04101 on May 25, 2001, at 10:00 a.m. (Eastern
time), and any adjournment thereof for the purposes set forth in the
accompanying Notice of Special Meeting of Shareholders. This Proxy Statement and
the enclosed notice of meeting and proxy card are first being mailed to
shareholders on or about April 27, 2001.
The Trust's Annual Report to shareholders for the period ended December
31, 2000, that includes financial statements for the Funds, has previously been
mailed to shareholders. Shareholders may request a copy of the Annual Report
without charge by calling the Funds' distributor, Forum Fund Services, LLC, Two
Portland Square, Portland, Maine 04101, at 888-263-5593.
The solicitation of proxies will be primarily by mail but may also
include telephone or oral communications by the officers of the Trust or by
regular employees of Forum or their affiliates. Memorial Investment Advisors,
Inc. will bear all of the costs of the Meeting and the preparation, printing and
mailing of this proxy statement and of proxies.
PURPOSE OF MEETING The Meeting is being called:
1. To approve a new Investment Advisory Agreement (the "MIA Agreement")
between the Trust and Memorial Investment Advisors, Inc. ("MIA") for all the
Funds.
2. To approve a new policy for each Fund permitting MIA to hire and
terminate subadvisers for a Fund and modify subadvisory arrangements without
seeking shareholder approval.
3. To approve a new Investment Subadvisory Agreement (the "American General
Agreement") between the Trust and American General Investment Management, L.P.
("American General") for Corporate Bond Fund.
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4. To transact such other business as may properly come before the Meeting.
DESCRIPTION OF VOTING
Approval of each proposal for a Fund requires the affirmative vote of
"a majority of the outstanding voting securities" of that Fund as that term is
defined under the Investment Company Act of 1940 (the "1940 Act"). This means
the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund
present at the Meeting or represented by proxy if the holders of more than 50%
of the outstanding shares are present or represented by proxy at the Meeting or
(b) more than 50% of the outstanding shares of the Fund.
Shareholders of record at the close of business on April 16, 2001, (the
"Record Date"), will be entitled to notice of, and to vote at, the Meeting,
including any adjournment thereof. As of the Record Date there were XXXXXXXXXX
shares outstanding of the Funds. As of the Record Date, all Trustees and
Officers of the Trust, as a group, owned beneficially less than 1% of the
outstanding shares of any or all the Funds. As of the Record Date, the following
shareholders beneficially owned more than 5% of the outstanding shares of each
Fund:
5% SHAREHOLDERS
GROWTH EQUITY FUND
- ----------------------------------------------- ---------------------- -------------------- ---------------------
NAME/ADDRESS SHARES PERCENTAGE OF
SHARES OF THE FUND
- ----------------------------------------------- ---------------------- -------------------- ---------------------
- ----------------------------------------------- ---------------------- -------------------- ---------------------
- ----------------------------------------------- ---------------------- -------------------- ---------------------
5% SHAREHOLDERS
VALUE EQUITY FUND
- ----------------------------------------------- ---------------------- -------------------- ---------------------
NAME/ADDRESS SHARES PERCENTAGE OF
SHARES OF THE FUND
- ----------------------------------------------- ---------------------- -------------------- ---------------------
- ----------------------------------------------- ---------------------- -------------------- ---------------------
- ----------------------------------------------- ---------------------- -------------------- ---------------------
5% SHAREHOLDERS
CORPORATE BOND FUND
- ----------------------------------------------- ---------------------- -------------------- ---------------------
NAME/ADDRESS SHARES PERCENTAGE OF
SHARES OF THE FUND
- ----------------------------------------------- ---------------------- -------------------- ---------------------
- ----------------------------------------------- ---------------------- -------------------- ---------------------
- ----------------------------------------------- ---------------------- -------------------- ---------------------
5% SHAREHOLDERS
GOVERNMENT BOND FUND
- ----------------------------------------------- ---------------------- -------------------- ---------------------
NAME/ADDRESS SHARES PERCENTAGE OF
SHARES OF THE FUND
- ----------------------------------------------- ---------------------- -------------------- ---------------------
- ----------------------------------------------- ---------------------- -------------------- ---------------------
- ----------------------------------------------- ---------------------- -------------------- ---------------------
Each shareholder will be entitled to one vote for each whole share and
a fractional vote for each fractional share held. Shares may be voted in person
or by proxy. Shareholders holding one-third of the outstanding shares of the
Funds at the close of business on the Record Date present in person or by proxy
will constitute a quorum for the transaction of business regarding the Funds at
the Meeting. All properly executed proxies received in time to be voted at the
Meeting will be counted at the Meeting, and any adjournment thereof, in
accordance with the instructions marked thereon or otherwise provided therein.
For purposes of determining the presence of a quorum and counting votes
on the matters presented, shares represented by abstentions and "broker
non-votes" will be counted as present, but not as votes cast at the Meeting.
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Broker non-votes are shares held in street name for which the broker indicates
that instructions have not been received from the beneficial owners and other
persons entitled to vote and for which the broker lacks discretionary voting
authority. Under the 1940 Act, the affirmative vote necessary to approve a
matter under consideration may be determined with reference to a percentage of
votes present at the Meeting. For this reason, abstentions and non-votes have
the effect of votes AGAINST a proposal. In completing proxies, therefore,
shareholders should be aware that checking the box labeled ABSTAIN will result
in the shares covered by the proxy being treated as if they were voted AGAINST a
proposal.
IF YOU DO NOT SPECIFY A CHOICE ON THE PROXY, PROPERLY EXECUTED PROXIES
THAT ARE RETURNED IN TIME TO BE VOTED AT THE MEETING WILL BE VOTED FOR THE
APPROVAL OF EACH PROPOSAL DESCRIBED IN THIS PROXY STATEMENT. If a quorum is not
present at the Meeting, or if a quorum is present at the Meeting, but sufficient
votes to approve a proposal are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies with respect to a proposal. In determining whether to adjourn the
Meeting, the following factors may be considered: the nature of a proposal, the
percentage of votes cast, the percentage of negative votes cast, the nature of
any further solicitation and the information to be provided to shareholders with
respect to the reasons for the solicitation. Any adjournment will require the
affirmative vote of a majority of shares represented in person or by proxy at
the Meeting. In that case, the persons named as proxies will vote all proxies
that they are entitled to vote FOR such an adjournment; provided, however, any
proxies required to be voted against a proposal will be voted AGAINST such
adjournment. A shareholder vote may be taken prior to adjournment if sufficient
votes have been received and it is otherwise appropriate.
Any shareholder may revoke his or her proxy at any time prior to
exercise thereof by giving written notice of revocation or by executing and
delivering a later dated proxy to Forum Shareholder Services, LLC, the Trust's
transfer agent, at Two Portland Square, Portland, Maine, 04101, or by personally
casting a vote at the Meeting.
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PROPOSAL ONE
APPROVAL OR DISAPPROVAL OF
A NEW INVESTMENT ADVISORY AGREEMENT
(NOTE: SHAREHOLDERS OF ALL FUNDS VOTE ON PROPOSAL 1)
Shareholders of the Funds are being asked to approve the MIA Agreement
so that MIA may serve as each Fund's investment adviser. Forum Investment
Advisors, LLC ("FIA"), which is located at Two Portland Square, Portland, Maine
04101, served as investment adviser to the Funds pursuant to an Investment
Advisory Agreement dated March 13, 1998, between the Trust and FIA (the "FIA
Agreement"). The FIA Agreement was unanimously approved by the Trust's Board of
Trustees at a meeting held on March 9, 1998 and by the written consent dated
March 10, 1998 of the initial shareholder of the Funds in lieu of a
shareholders' meeting. It was last renewed at the Trust's annual Board meeting
on February 29, 2000.
FIA served as each Fund's investment adviser until December 31, 2000.
On January 1, 2001, MIA replaced FIA as each Fund's investment adviser under an
interim advisory agreement (the "Interim MIA Agreement") that is substantially
similar to the FIA Agreement. Fund shareholders are now being asked to approve
the MIA Agreement for MIA to remain as each Fund's adviser. The MIA Agreement
was unanimously approved by the Trust's Board at a meeting held on November 6,
2000. FIA, as part of its business plan, is leaving the business of serving as
investment adviser for mutual funds. Accordingly, the Trustees determined that
it was in the best interests of the Funds not to renew the FIA Agreement and to
retain MIA as each Fund's adviser.
If each Fund's shareholders approve the MIA Agreement, MIA will remain
the investment adviser to each Fund. The form of the MIA Agreement is attached
as Exhibit A. The MIA Agreement is identical in all material respects to the FIA
Agreement and the Interim MIA Agreement.
If the MIA Agreement is approved by each Fund's shareholders, it will
remain in effect, unless earlier terminated, for an initial term expiring two
years from the date of effectiveness and will continue in effect thereafter for
successive twelve-month periods, provided that each such continuance is
specifically approved at least annually (i) by the Board or by the vote of a
majority of the outstanding voting securities of each Fund, and, in either case
(ii) by a majority of the Trustees who are not parties to the MIA Agreement or
interested persons of any such party (other than as Trustees of the Trust). If
the shareholders of the Funds approve the MIA Agreement, MIA will continue to
serve as the investment adviser for the Funds. The selection of MIA will permit
the Funds to employ an investment strategy under which MIA will serve as a
"manager of managers" for the Funds. MIA will supervise the investments made by
each Fund's investment subadviser and will determine the allocation of Fund
assets among the various subadvisers for a Fund. At the Board of Trustees
meeting on November 6, 2000, MIA discussed its experience in investment
management and qualifications for the management of the Funds. MIA explained how
the investment experience of its personnel would be used to help meet the
investment objectives and needs of the investors in the Funds. The Board of
Trustees and MIA believe that MIA will provide the Funds the same high level of
services provided by FIA. If the shareholders of a Fund do not approve the MIA
Agreement, MIA will no longer
9
serve as the adviser for that Fund and the Board of Trustees will consider other
options that may be available.
DISCUSSION OF THE MIA AGREEMENT AND THE FIA AGREEMENT
Under the terms of the MIA Agreement, MIA has responsibility for the
investment and reinvestment of the assets of the Funds. MIA is authorized to
place orders for the purchase and sale of the Funds' investments directly with
brokers and dealers selected by it in its discretion. Commissions paid to
brokers or dealers may be determined by research and trading services provided
along with the best execution available for the client. Commissions may also be
used to pay for third-party research services through "soft dollar"
arrangements. Such services may include research on proxy issues, economic and
business cycle research and industry/company specific reports. MIA will furnish
at its own expense all services, facilities and personnel necessary in
connection with managing the Funds' investments and effecting portfolio
transactions for the Funds. MIA will also furnish to the Board of Trustees,
which has overall responsibility for the business and affairs of the Trust,
periodic reports on the investment performance of the Funds. At its own expense,
MIA may carry out any of its obligations under each Agreement by employing,
subject to the direction and control of the Board of Trustees, one or more
investment subadvisers. Each subadviser's employment must be evidenced by a
separate written agreement approved by the Board and, if required, by the
shareholders of the applicable Fund. MIA will be responsible for communicating
performance targets and evaluations to the subadvisers, supervising each
subadviser's compliance with the Fund's investment objectives and policies, as
well as authorizing the subadviser to engage in certain investment techniques
for the Funds. Additionally MIA will recommend to the Board whether the
agreements with subadvisers should be renewed, modified or terminated. MIA also
may from time to time recommend that the Fund replace one or more or appoint
additional subadvisers, depending on MIA's assessment of what combination of
subadvisers it believes will optimize each Fund's chances of achieving its
investment objective. In the event that a subadviser ceased to provide
investment advisory services for a Fund, the investment adviser would recommend
to the Board a similarly qualified person to replace the subadviser, but would
not manage the Fund's portfolio.
The terms of the MIA Agreement are substantially identical to those of
the FIA Agreement, except that the MIA Agreement will permit MIA to employ an
investment strategy under which MIA will serve as a "manager of managers." Under
this strategy, MIA would supervise the investments made by each Fund's
subadviser and will determine the allocation of Fund assets among the various
subadvisers for a Fund.
The MIA Agreement and the FIA Agreement each provide that the
investment adviser shall not be liable for any mistake of judgment or in any
event whatsoever, except for lack of good faith, provided that the agreements do
not protect the investment adviser against any liability to the Trust to which
the investment adviser would otherwise be subject due to willful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under the agreements.
The MIA Agreement and the FIA Agreement are each terminable with
respect to a Fund without the payment of a penalty by the Board of Trustees, by
a vote of a majority of the voting securities (as defined by the
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1940 Act) of the applicable Fund on 60 days' written notice to the investment
adviser, or by the investment adviser on 60 days' written notice to the Trust,
and will terminate immediately upon its assignment.
The terms of the MIA Agreement and the FIA Agreement each obligate MIA
and FIA, respectively, to manage the Funds in accordance with applicable laws
and regulations. The provision of investment advisory services by MIA or FIA to
the Funds is not exclusive under the terms of the Agreements. MIA and FIA are
free to and do render investment advisory services to others. See "Information
About MIA" below.
ADVISORY FEES
Under the FIA Agreement, FIA received an advisory fee at an annual rate
of 0.05% of the average daily net assets of Value Equity Fund and Growth Equity
Fund and 0.03% of the average daily net assets of the Corporate Bond Fund and
Government Bond Fund. For the fiscal year ended December 31, 2000, the Funds
paid FIA $86,037.74 in advisory fees under the FIA Agreement. Out of this fee,
FIA paid Capital Resource Advisors ("CRA", formerly, Wellesley Group, Inc.), the
investment consultant to the Funds, a fee equal to 0.02% of the average daily
net assets of each Fund, or $48,781.93. Including this payment to CRA, FIA
retained $37,255.81. Under the Interim MIA Agreement, American General receives
from the Funds an advisory fee at the annual rate of 0.05% of the average daily
net assets of Value Equity Fund and Growth Equity Fund and 0.03% of the average
daily net assets of the Corporate Bond Fund and Government Bond Fund. Out of
this fee, MIA pays to CRA a fee equal to 0.XX% of the average daily net assets
of each Fund. Under the MIA Agreement, MIA would receive from each Fund an
advisory fee at the same annual rate of 0.05% of the average daily net assets of
Value Equity Fund and Growth Equity Fund and 0.03% of the average daily net
assets of the Corporate Bond Fund and Government Bond Fund. Out of this fee, MIA
will pay to CRA a fee equal to 0.XX% of the average daily net assets of each
Fund.
INFORMATION ABOUT MIA
MIA, located at 5847 San Felipe, Suite 875, Houston, Texas 77057-3011,
is a Delaware corporation that was incorporated on September 28, 1998. It is
registered as an investment adviser under the Investment Advisers Act of 1940.
MIA does not serve as investment adviser for any other registered investment
companies. Its principals are Christopher W. Hamm (President and Chief Executive
Officer), James Leo Sullivan (Vice President and Chief Investment Officer) and
Larry Oran Knowles (Vice President and Chief Financial Officer). Mr. Hamm
attended Texas Tech University in Lubbock, Texas. Prior to establishing MIA, Mr.
Hamm was an Executive Director from 1996 to 1998 for CIBC Oppenheimer in
Houston, Texas and a Vice President from 1993 to 1996 for Paine Webber in
Houston, Texas. Mr. Sullivan received his B.A. and M.B.A from the University of
Texas in Austin, Texas. Prior to joining MIA, Mr. Sullivan was an Executive
Director from 1996 to 1998 for CIBC Oppenheimer in Houston, Texas and from 1995
to 1996 was an Investment Executive for Paine Webber in Houston, Texas and the
President of Sullivan Money Management in Houston, Texas. Prior to joining MIA,
Mr. Knowles owned from 1992 to 1998 his own financial consulting business, Larry
O. Knowles Financial Services, in Houston,
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Texas. Mr. Hamm, who owns 100% of MIA, is also Chairman of the Board of Trustees
and President of the Trust. During the Funds' most recently completed fiscal
year, none of the other Trustees engaged in a purchase or sale of the securities
of MIA or any of its subsidiaries.
EVALUATION BY THE BOARD OF TRUSTEES
On November 6, 2000, the Board of Trustees met and discussed the
proposed transaction and its possible effect on the Trust, the Funds and their
shareholders and evaluated the MIA Agreement. Based upon its review, the Board
of Trustees concluded that the MIA Agreement is reasonable, fair and in the best
interests of the Funds and their shareholders.
In approving the MIA Agreement, the Board considered, among other
things, the capacities and resources of MIA to provide advisory services to the
Funds, the terms of the MIA Agreement, the fees to be charged under the MIA
Agreement and the ability of MIA to monitor the performance of the Fund's
subadvisers. The Board took into account the fact that FIA had determined that
FIA would no longer serve as the adviser for the Funds. The Board evaluated the
ability of MIA to employ an investment strategy under which MIA would serve as a
"manager of managers" for the Funds. Representatives of MIA gave a presentation
to the Board in which they discussed the experience and qualifications of MIA
investment professionals and the ability of those professionals to allocate
assets among the various subadvisers for the Funds and supervise the investments
made for the Funds by the subadvisers. The Board also considered MIA's responses
to a questionnaire regarding MIA's advisory business that was included with the
Board's materials. Accordingly, after consideration of the above factors, and
such other factors and information it deemed relevant, the Board of Trustees
unanimously approved the MIA Agreement and voted to recommend its approval by
the Funds' shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL ONE.
PROPOSAL TWO
APPROVAL OF A PROPOSAL FOR MIA TO HIRE AND TERMINATE
SUBADVISERS AND MODIFY SUBADVISORY AGREEMENTS WITHOUT SHAREHOLDER APPROVAL
(NOTE: SHAREHOLDERS OF ALL FUNDS VOTE ON PROPOSAL 2)
The Funds are proposing to permit MIA to enter into, terminate, or
modify subadvisory agreements on behalf of each Fund without obtaining the prior
approval of a majority of the outstanding voting securities of the Fund, as is
otherwise required under Section 15 of the 1940 Act.
Section 15 of the 1940 Act requires that the shareholders of a fund
approve the fund's subadvisory agreements and any material amendments thereto.
The Trust and MIA have submitted an application to the Securities and Exchange
Commission for an order (the "SEC Order") exempting the Trust, on behalf of each
of the Funds, and MIA from certain provisions of the 1940 Act to permit MIA to
hire new subadvisers, terminate
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subadvisers, and modify subadvisory agreements without the prior approval of
shareholders. By eliminating the requirement to obtain shareholder approval for
these matters, MIA would have greater flexibility in managing subadvisers, and
shareholders would save the considerable expenses involved when a Fund seeks
shareholder approval, such as soliciting proxies and holding a shareholder
meeting. To obtain the SEC Order, MIA and the Trust would agree to the following
conditions:
(1) Before a Fund may rely on the SEC Order the Fund's ability to hire and
terminate subadvisers and modify subadvisory agreements without prior
shareholder approval must be approved by a majority of the Fund's
outstanding voting securities, as defined in the 1940 Act.
(2) The Fund must disclose in its prospectus the existence, substance, and
effect of the SEC order.
(3) Within ninety (90) days of the hiring of any new subadviser,
shareholders will be furnished all information about a new subadviser
that would be contained in a proxy statement, except that only
aggregate advisory fees need be disclosed.
(4) MIA will not enter into a subadvisory agreement with any subadviser
that is an "affiliated person" (as defined in the 1940 Act) of MIA or
the Trust (other than by reason of serving as a subadviser to one or
more Funds (an "Affiliated Subadviser") without such agreement,
including the compensation to be paid thereunder, being approved by
the shareholders of the applicable Fund.
(5) At all times, a majority of the Trust's Board will consist of Trustees
who are not "interested persons" of the Trust or MIA, (as defined in
the 1940 Act) ("Independent Trustees") and the nomination of new or
additional Independent Trustees will be placed with the discretion of
the then existing Independent Trustees.
(6) When a subadviser change is proposed for a Fund with an Affiliated
Subadviser, the Trust's Board, including a majority of the Independent
Trustees, will make a separate finding, reflected in the Trust's Board
minutes, that the change is in the best interests of the Fund and its
shareholders and does not involve a conflict of interest from which
the Adviser or the subadviser derives an inappropriate advantage.
(7) Independent counsel knowledgeable about the 1940 Act and the duties of
Independent Trustees will be engaged to represent the Trust's
Independent Trustees.
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(8) MIA will provide the Trust's Board no less frequently than quarterly
with information about MIA's profitability for each Fund. The
information will reflect the impact on profitability of the hiring or
termination of subadvisers during the quarter.
(9) Whenever a subadviser to a particular Fund is hired or terminated, MIA
will provide the Trust's Board with information showing the expected
impact on MIA's profitability.
(10) MIA will provide general management services to the Trust and the
Funds, including overall supervisory responsibility for the general
management and investment of each Fund's securities portfolio, and,
subject to review and approval by the Trust's Board, will: (a) set
each Fund's overall investment strategies; (b) evaluate, select and
recommend subadvisers to manage all or a part of a Fund's assets; (c)
allocate and, when appropriate, reallocate a Fund's assets among
multiple subadvisers; (d) monitor and evaluate the performance of
subadvisers; and (e) implement procedures reasonably designed to
ensure that the subadvisers comply with the relevant Fund's investment
objectives, policies, and restrictions.
(11) No trustee or officer of the Trust or MIA will own directly or
indirectly (other than through a pooled investment vehicle that is not
controlled by any such Trustee or officer) any interest in a
subadviser except for: (a) ownership of interests in MIA or any entity
that controls, is controlled by, or is under common control with MIA;
or (b) ownership of less than 1% of the outstanding securities of any
class of equity or debt of a publicly-traded company that is either a
subadviser or an entity that controls, is controlled by, or is under
common control with a subadviser.
(12) Each Fund will disclose in its registration statement the (i)
aggregate fees paid to MIA and any Affiliated Subadvisers; (ii)
aggregate fees paid to subadvisers other than Affiliated Subadvisers.
EVALUATION BY THE BOARD OF TRUSTEES
On March 9, 1998, the Board of Trustees met and discussed the proposal
and based upon its review, the Board of Trustees concluded that it is
reasonable, fair and in the best interests of the Funds and their shareholders
that MIA have the ability to hire and terminate subadvisers and modify
subadvisory agreements without shareholder approval.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL TWO.
14
PROPOSAL THREE
APPROVAL OR DISAPPROVAL OF
A NEW INVESTMENT SUBADVISORY AGREEMENT
(NOTE: ONLY SHAREHOLDERS OF CORPORATE BOND FUND VOTE ON PROPOSAL 3)
Shareholders of Corporate Bond Fund (the "Fund") are being asked to
approve the New Investment Subadvisory Agreement (the "American General
Agreement") between the Trust and American General Investment Management, L.P.
("American General") so that American General may continue to serve as the
Fund's investment subadviser. Conseco Capital Management, Inc. ("Conseco"),
which is located at 11825 N. Pennsylvania Street, Carmel, Indiana 46032, served
as investment subadviser to the Fund pursuant to an Investment Subadvisory
Agreement dated March 13, 1998 among the Trust, Forum Investment Advisors, LLC
and Conseco (the "Conseco Agreement"). The Conseco Agreement was unanimously
approved by the Trust's Board at a meeting held on March 9, 1998 and by the
written consent dated March 10, 1998 of the initial shareholder of the Fund in
lieu of a shareholders' meeting. It was last renewed at the Trust's annual Board
meeting on February 29, 2000.
Conseco served as the Fund's subadviser until December 31, 2000. On
January 1, 2001, American General replaced Conseco as the Fund's subadviser
under an interim subadvisory agreement (the "Interim American General
Agreement") that is substantially similar to the Conseco Agreement. Fund
shareholders are now being asked to approve the American General Agreement for
American General to continue to serve as the Fund's subadviser. The American
General Agreement was unanimously approved by the Trust's Board at a meeting
held on November 6, 2000. The Trustees determined that it was in the best
interests of the Fund not to renew the Conseco Agreement and to retain American
General as the Fund's subadviser because of the unexpectedly high turnover rate
of senior investment personnel at Conseco and poor recent performance.
If the Fund's shareholders approve the American General Agreement,
American General will continue to serve as the investment subadviser to the
Fund. The form of an investment subadvisory agreement is attached as Exhibit B.
The American General Agreement is identical in all material respects to the
Conseco Agreement, including the subadvisory fees to be charged to the Fund. The
Board recommends that shareholders of the Fund approve the American General
Agreement.
If the American General Agreement is approved by the Fund's
shareholders, it will remain in effect, unless earlier terminated, for an
initial term expiring two years from the date of effectiveness and will continue
in effect thereafter for successive twelve-month periods, provided that each
such continuance is specifically approved at least annually (i) by the Board or
by the vote of a majority of the outstanding voting securities of the Fund, and,
in either case (ii) by a majority of the Trustees who are not parties to the
American General Agreement or interested persons of any such party (other than
as Trustees of the Trust).
DISCUSSION OF THE AMERICAN GENERAL AGREEMENT AND THE CONSECO AGREEMENT
Under the terms of the American General Agreement, American General
will manage the investment and reinvestment of the assets of the Fund. American
General will be responsible for placing orders for the purchase
15
and sale of the Fund's investments directly with brokers and dealers selected by
it in its discretion. Commissions paid to brokers or dealers will be determined
by research and trading services provided along with the best execution
available for the client. Commissions will be also used to pay for third-party
research services through "soft dollar" arrangements. Such services may include
research on proxy issues, economic and business cycle research and
industry/company specific reports. American General will furnish at its own
expense all services, facilities and personnel necessary in connection with
managing the Fund's investments and effecting portfolio transactions for the
Fund. American General will also furnish to the Board, which has overall
responsibility for the business and affairs of the Trust, periodic reports on
the investment performance of the Fund. The terms of the American General
Agreement are substantially identical to those of the Conseco Agreement.
As provided in the Trust Instrument of the Trust, a subadviser's
employment must be evidenced by a separate written agreement approved by the
Board and, if required, by the shareholders of the applicable Fund. Under its
agreement with the Trust, the investment adviser is responsible for
communicating performance targets and evaluations to a subadviser, supervising a
subadviser's compliance with the Fund's investment objectives and policies, as
well as authorizing a subadviser to engage in certain investment techniques for
the Fund. In addition, the investment adviser recommends to the Board whether an
agreement with a subadviser should be renewed, modified or terminated. The
investment adviser also may from time to time recommend that the Trust replace
one or more or appoint additional subadvisers, depending on the investment
adviser's assessment of what combination of subadvisers it believes will
optimize the Fund's chances of achieving its investment objective. In the event
that a subadviser ceased to provide investment advisory services for the Fund,
the investment adviser would recommend to the Board a similarly qualified person
to replace the subadviser, but would not manage the Fund's portfolio.
The American General Agreement provides that American General shall not
be liable for any mistake of judgment or in any event whatsoever, except for
lack of good faith, provided that the Agreement does not protect American
General against any liability to the Trust to which American General would
otherwise be subject due to willful misfeasance, bad faith or gross negligence
in the performance of its duties or by reason of reckless disregard of its
obligations and duties under the Agreement.
The American General Agreement is terminable without penalty by the
Board, by a vote of a majority of the voting securities of the Fund (as defined
by the 1940 Act) or the investment adviser on 60 days' written notice to
American General, or by American General on 60 days' written notice to the
Trust, and will automatically terminate in the event of its assignment.
The terms of the American General Agreement obligate American General
to manage the Fund in accordance with applicable laws and regulations. The
provision of investment advisory services by American General to the Fund is not
exclusive under the terms of the American General Agreement. American General is
free to and does render investment advisory services to others. See "Information
About American General" below.
16
SUBADVISORY FEES
Under the Conseco Agreement, Conseco received a subadvisory fee at an
annual rate of 0.20% of the average daily net assets of the Fund. For the fiscal
year ended December 31, 2000, the Fund paid Conseco $223,783.41 in subadvisory
fees under the Conseco Agreement. In addition, Conseco waived $25,562.07.
Excluding the waivers, the subadvisory fee for the Fund was $249,354.48. Under
the Interim American General Agreement, American General receives from the Fund
a subadvisory fee at the annual rate of 0.20% of the average daily net assets of
the Fund. Under the American General Agreement, American General would receive
from the Fund a subadvisory fee at the same annual rate of 0.20% of the average
daily net assets of the Fund. American General has agreed to waive a portion of
its subadvisory fees for the fiscal year ending December 31, 2001 so that its
net fee will not be greater than 0.13%.
INFORMATION ABOUT AMERICAN GENERAL
American General's general partner is America General Investment Management
Corporation, 2929 Allen Parkway, Houston, Texas 77019 ("AGIMC"). AGIMC is an
indirect wholly-owned subsidiary of American General Corporation ("AGC"), 2929
Allen Parkway, Houston, Texas 77019. The Principal Executive Officer and
President of American General is Richard W. Scott. He is located at 2929 Allen
Parkway, Houston, Texas 77019. Mr. Scott received his B.A. and J.D. from Duke
University in Durham, North Carolina. Mr. Scott is the Vice Chairman of American
General, the Vice President and Chief Investment Officer of VALIC, d/b/a
American General Advisers and the Vice Chairman, Group Executive of Investment
Management for AGC. Prior to February 1998, Mr. Scott was the Vice Chairman,
General Counsel and Chief Investment Officer of Western National Corp. in
Houston, Texas. Prior thereto, Mr. Scott was a partner with Vinson & Elkins,
L.L.P. Previously, Mr. Scott was President, Principal Executive Officer and
Trustee of A.G. Series Trust. This position terminated on December 23, 1999 when
the Trust was merged into another American General mutual fund. During the
Trust's last fiscal year prior to the merger, none of the Trustees engaged in a
purchase or sale of the securities of American General or any of its parents or
subsidiaries in an amount exceeding 1% of the relevant class of securities.
American General is the investment subadviser to the NAF VPS2 North
American - AG Core Bond Fund ("NAF VPS2 Fund"), which has an investment
objective similar to that of the Fund. As of March 31, 2001, the assets of the
NAF VPS2 Fund are approximately $27.4 million. American General Advisers, the
investment adviser to the NAF VPS2 Fund, receives an annual advisory fee equal
to 0.50% of the fund's average daily net assets, a portion of which is paid by
American General Advisers to American General in its capacity as subadviser.
During the fiscal year ended August 31, 2000, American General received
subadvisory fees totaling $13,058 for its services to the NAF VPS2 Fund.
17
EVALUATION BY THE BOARD OF TRUSTEES
On November 6, 2000, the Board met and discussed the Proposal and its
possible effect on the Trust, the Fund and their shareholders and evaluated the
American General Agreement. Prior to this meeting, the Board had been reviewing
and analyzing on a quarterly basis Conseco's performance as compared with other
investment managers of similar style. The Board's review showed that Conseco had
consistently failed to perform favorably in comparison with these other similar
managers. Based upon Conseco's under-performance and its recent employee
turnover, the Board decided that it was in the best interests of the
shareholders of the Fund to change subadvisers. The Board decided on American
General based upon a number of factors including its strong past performance and
the qualifications and background of its portfolio managers.
In addition, and as aforementioned, the subadvisory fees to be paid to
American General will be the same as those paid to Conseco. The Board concluded
that the American General Agreement is reasonable, fair and in the best
interests of the Fund and its shareholders. Accordingly, after consideration of
the above factors, and such other factors and information it deemed relevant,
the Board unanimously approved the American General Agreement and voted to
recommend its approval to the Fund's shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL THREE.
OTHER BUSINESS
Management knows of no other business to be presented at the Meeting.
If any additional matters should be properly presented, it is intended that the
enclosed proxy will be voted in accordance with the judgment of the persons
named in the proxy.
DISTRIBUTOR AND ADMINISTRATOR
Forum Fund Services, LLC, Two Portland Square, Portland, Maine 04101 is
the Distributor for each Fund. Forum Administrative Services, LLC, Two Portland
Square, Portland, Maine 04101 is the administrator for each Fund.
AFFILIATED BROKERAGE
Neither MIA nor the Subadvisers for the Funds effect brokerage
transactions through affiliates of MIA, the Subadvisers or the Funds (or
affiliates of such persons).
SUBMISSION OF SHAREHOLDER PROPOSALS.
It is anticipated that, following the Meeting, the Funds will not hold
any meetings of shareholders except as
18
required by Federal or Delaware state law. Shareholders wishing to submit
proposals for inclusion in a proxy statement for a subsequent shareholder
meeting should send proposals to the Secretary of the Trust, D. Blaine Riggle,
in care of Forum Administrative Services, LLC, Two Portland Square, Portland,
Maine 04101.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY
By Order of the Board of Trustees,
D. Blaine Riggle
Secretary
19
EXHIBIT A
FORM OF
MEMORIAL FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 1st day of January, 2001, by and between
Memorial Funds, a Delaware business trust with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), and
Memorial Investment Advisors, Inc., a Delaware corporation, with its principal
office and place of business at 5847 San Felipe, Suite 875, Houston, TX 77057
("Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust listed in Appendix A hereto (each, a
"Fund" and collectively, the "Funds"), and the Adviser is willing to provide
those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Adviser hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby employs Adviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of the assets in
each Fund and, without limiting the generality of the foregoing, to provide
other services as specified herein. The Adviser accepts this employment and
agrees to render its services for the compensation set forth herein.
(b) In connection therewith, the Trust has delivered to the Adviser
copies of: (i) the Trust's Trust Instrument (as amended from time to time,
"Organic Documents"); (ii) the Trust's Registration Statement and all amendments
thereto filed with the U.S. Securities and Exchange Commission ("SEC") pursuant
to the Securities Act of 1933, as amended (the "Securities Act"), or the 1940
Act (the "Registration Statement"); (iii) the Trust's current Prospectuses and
Statements of Additional Information of each Fund (collectively, as currently in
effect and as amended or supplemented, the "Prospectus"); (iv) each plan of
distribution or similar document adopted by the Trust under Rule 12b-1 under the
1940 Act ("Plan") and each current shareholder service plan or similar document
adopted by the Trust ("Service Plan"); and (v) all procedures adopted by the
Trust with respect to the Funds (e.g., repurchase agreement procedures), and
shall promptly furnish the Adviser with all amendments of or supplements to the
foregoing. The Trust shall deliver to the Adviser: (x) a certified copy of the
resolution of the Board of Trustees of the Trust (the "Board") appointing the
Adviser and authorizing the execution and delivery of this Agreement; (y) a copy
of all proxy statements and related materials relating to the Funds; and (z) any
other documents, materials or information that the Adviser shall reasonably
request to enable it to perform its duties pursuant to this Agreement.
(c) The Adviser has delivered to the Trust (i) a copy of its Form ADV
as most recently filed with the SEC and (ii) a copy of its code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act (the "Code").
The Adviser shall promptly furnish the Trust with all amendments of or
supplements to the foregoing at least annually.
SECTION 2. DUTIES OF THE TRUST
In order for the Adviser to perform the services required by this
Agreement, the Trust (i) shall cause all service providers to the Trust to
furnish information to the Adviser, and assist the Adviser as may be required
20
and (ii) shall ensure that the Adviser has reasonable access to all records and
documents maintained by the Trust or any service provider to the Trust.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser shall make all decisions with respect to the allocation
of a Fund's investments in various securities or other assets, in investment
styles and, if applicable, in other investment companies or pooled vehicles in
which a Fund may invest. The Adviser will make decisions with respect to all
purchases and sales of securities and other investment assets in each Fund. To
carry out such decisions, the Adviser is hereby authorized, as agent and
attorney-in-fact for the Trust, for the account of, at the risk of and in the
name of the Trust, to place orders and issue instructions with respect to those
transactions of the Funds. In all purchases, sales and other transactions in
securities and other investments for the Funds, the Adviser is authorized to
exercise full discretion and act for the Trust in the same manner and with the
same force and effect as the Trust might or could do with respect to such
purchases, sales or other transactions, as well as with respect to all other
things necessary or incidental to the furtherance or conduct of such purchases,
sales or other transactions.
Consistent with Section 28(e) of the Securities and Exchange Act of
1934, as amended, the Adviser may allocate brokerage on behalf of the Funds to
broker-dealers who provide research services. The Adviser may aggregate sales
and purchase orders of the assets of the Funds with similar orders being made
simultaneously for other accounts advised by the Adviser or its affiliates.
Whenever the Adviser simultaneously places orders to purchase or sell the same
asset on behalf of a Fund and one or more other accounts advised by the Adviser,
the orders will be allocated as to price and amount among all such accounts in a
manner believed to be equitable over time to each account.
(b) The Adviser will report to the Board at each meeting thereof as
requested by the Board all material changes in each Fund since the prior report,
and will also keep the Board informed of important developments affecting the
Trust, the Funds and the Adviser, and on its own initiative, will furnish the
Board from time to time with such information as the Adviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Funds' holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Funds maintain investments, or otherwise. The Adviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Funds as the Adviser may believe appropriate or as the
Board reasonably may request. In making purchases and sales of securities and
other investment assets for the Funds, the Adviser will bear in mind the
policies set from time to time by the Board as well as the limitations imposed
by the Organic Documents and Registration Statement, the limitations in the 1940
Act, the Securities Act, the Internal Revenue Code of 1986, as amended, and
other applicable laws and the investment objectives, policies and restrictions
of the Funds.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(d) The Adviser will report to the Board all material matters related
to the Adviser. On an annual basis, the Adviser shall report on its compliance
with its Code to the Board and upon the written request of the Trust, the
Adviser shall permit the Trust, or its representatives to examine the reports
required to be made to the Adviser under the Code. The Adviser will notify the
Trust of any change of control of the Adviser and any changes in the key
personnel who are either the portfolio manager(s) of the Fund or senior
management of the Adviser, in each case prior to or promptly after such change.
(e) The Adviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders as are required to
be maintained by the Trust under the 1940 Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Adviser or the Trust
pursuant to applicable law. To the extent required by law, the books and records
pertaining to the Trust which are in possession of the Adviser shall be the
property of the Trust. The Trust, or its representatives, shall have access to
such books and records at
21
all times during the Adviser's normal business hours. Upon the reasonable
request of the Trust, copies of any such books and records shall be provided
promptly by the Adviser to the Trust or its representatives.
(f) The Adviser will cooperate with each Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Adviser will provide the Funds' custodian and fund accountant
on each business day with such information relating to all transactions
concerning the Funds' assets as the custodian and fund accountant may reasonably
require. In accordance with procedures adopted by the Board, the Adviser is
responsible for assisting in the fair valuation of all Fund assets and will use
its reasonable efforts to arrange for the provision of prices from parties who
are not affiliated persons of the Adviser for each asset for which the Funds'
fund accountant does not obtain prices in the ordinary course of business.
(h) The Adviser shall authorize and permit any of its directors,
officers and employees who may be elected as Trustees or officers of the Trust
to serve in the capacities in which they are elected.
(i) The Adviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period in which the Fund invests all (or substantially
all) of its investment assets in a registered, open-end management investment
company, or separate series thereof, in accordance with Section 12(d)(1)(E)
under the 1940 Act.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each Fund, a fee at an annual rate as listed in Appendix A
hereto. Such fees shall be accrued by the Trust daily and shall be payable
monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month. If fees begin to accrue in
the middle of a month or if this Agreement terminates before the end of any
month, all fees for the period from that date to the end of that month or from
the beginning of that month to the date of termination, as the case may be,
shall be prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. Upon the termination of
this Agreement with respect to a Fund, the Trust shall pay to the Adviser such
compensation as shall be payable prior to the effective date of termination.
(b) No fee shall be payable hereunder with respect to a Fund during any
period in which the Fund invests all (or substantially all) of its investment
assets in a single registered, open-end management investment company, or
separate series thereof, in accordance with Section 12(d)(1)(E) under the 1940
Act;
(c) To the extent the Board determines that a Fund should invest a
portion of its assets directly in portfolio securities, rather than in a
portfolio of Core Trust (Delaware) or other portfolio, with respect to those
assets the Fund will pay the Adviser the same fee that the portfolio was paying
its adviser (the fees of each portfolio will be disclosed in the proxy statement
and prospectus).
(d) The Trust shall be responsible for and assumes the obligation for
payment of all of its expenses, including: (i) the fee payable under this
Agreement; (ii) the fees payable to each administrator under an agreement
between the administrator and the Trust; (iii) expenses of issue, repurchase and
redemption of Shares; (iv) interest charges, taxes and brokerage fees and
commissions; (v) premiums of insurance for the Trust, the Trustees and officers
and fidelity bond premiums; (vi) fees and expenses of third parties, including
the Trust's independent accountant, custodian, transfer agent, dividend
disbursing agent and fund accountant; (vii) fees of pricing, interest, dividend,
credit and other reporting services; (viii) costs of membership in trade
associations; (ix) telecommunications expenses; (x) funds transmission expenses;
(xi) auditing, legal and compliance expenses; (xii) costs of forming the Trust
and maintaining its existence; (xiii) costs of preparing, filing and printing
the Trust's Prospectuses, subscription application forms and shareholder reports
and other communications and delivering them to existing shareholders, whether
of record or beneficial; (xiv) expenses of meetings of shareholders and proxy
22
solicitations therefor; (xv) costs of reproduction, stationery, supplies and
postage; (xvi) fees and expenses of the Trust's Trustees and officers; (xvii)
the costs of personnel (who may be employees of the Adviser, an administrator or
their respective affiliated persons) performing services for the Trust; (xviii)
costs of Board, Board committee, and other corporate meetings; (xix) SEC
registration fees and related expenses; (xx) state, territory or foreign
securities laws registration fees and related expenses; and (xxi) all fees and
expenses paid by the Trust in accordance with any distribution or service plan
or agreement related to similar manners.
SECTION 5. STANDARD OF CARE
(a) The Trust shall expect of the Adviser, and the Adviser will give
the Trust the benefit of, the Adviser's best judgment and efforts in rendering
its services to the Trust. The Adviser shall not be liable hereunder for any
mistake of judgment or in any event whatsoever, except for lack of good faith,
provided that nothing herein shall be deemed to protect, or purport to protect,
the Adviser against any liability to the Trust or to the Trust's security
holders to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of the Adviser's
duties hereunder, or by reason of the Adviser's reckless disregard of its
obligations and duties hereunder.
(b) The Adviser shall not be responsible or liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties (other than those related to the Adviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund
immediately upon approval by a majority of the outstanding voting securities of
that Fund.
(b) This Agreement shall remain in effect with respect to a Fund for a
period of two years from the date of its effectiveness and shall continue in
effect for successive annual periods with respect to the Fund; provided that
such continuance is specifically approved at least annually (i) by the Board or
by the vote of a majority of the outstanding voting securities of the Fund, and,
in either case, (ii) by a majority of the Trust's Trustees who are not parties
to this Agreement or interested persons of any such party (other than as
Trustees of the Trust); provided further, however, that if the continuation of
this Agreement is not approved as to a Fund, the Adviser may continue to render
to that Fund the services described herein in the manner and to the extent
permitted by the 1940 Act and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund on sixty (60) days'
written notice to the Adviser or (ii) by the Adviser on sixty (60) days' written
notice to the Trust. This Agreement shall terminate immediately upon its
assignment.
SECTION 7. ACTIVITIES OF THE ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's officers or employees to engage in any other
business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
services of any kind to any other corporation, trust, firm, individual or
association.
SECTION 8. REPRESENTATIONS OF ADVISER
The Adviser represents and warrants to the Trust that:
23
(a) It is either registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act") (and will continue to be so
registered for so long as this Agreement remains in effect) or exempt from
registration under the Advisers Act;
(b) It is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement;
(c) It has met, and will seek to continue to meet for so long as this
Agreement remains in effect, any other applicable federal or state requirements,
or the applicable requirements of any self-regulatory agency, necessary to be
met in order to perform the services contemplated by this Agreement; and
(d) It will promptly notify the Trust of the occurrence of any event that
would disqualify the Adviser from serving as an investment adviser of an
investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
SECTION 9. SUBADVISERS
At its own expense, the Adviser may carry out any of its obligations
under this Agreement by employing, subject to the direction and control of the
Board, one or more persons who are registered as investment advisers pursuant to
the Advisers Act or who are exempt from registration thereunder ("Subadvisers").
Each Subadviser's employment will be evidenced by a separate written agreement
approved by the Board and, if required, by the shareholders of the applicable
Fund. The Adviser shall not be liable hereunder for any act or omission of any
Subadviser, except to exercise good faith in the employment of the Subadviser
and except with respect to matters as to which the Adviser assumes
responsibility in writing.
SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Adviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Adviser's rights or claims relate in settlement of such rights
or claims, and not to the Trustees of the Trust or the shareholders of the
Funds.
SECTION 11. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the 1940 Act, by a vote of a majority of the
outstanding voting securities of any Fund thereby affected.
(b) No amendment to this Agreement or the termination of this Agreement
with respect to a Fund shall affect this Agreement as it pertains to any other
Fund, nor shall any such amendment require the vote of the shareholders of any
other Fund.
(c) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(d) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(e) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(f) This Agreement may be executed by the parties hereto in any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
24
(g) If any part, term or provision of this Agreement is held to be illegal,
in conflict with any law or otherwise invalid, the remaining portion or portions
shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid. This Agreement shall be construed as if drafted jointly by both the
Adviser and Trust and no presumptions shall arise favoring any party by virtue
of authorship of any provision of this Agreement.
(h) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(i) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(j) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(k) No affiliated person, employee, agent, director, officer or manager of
the Adviser shall be liable at law or in equity for the Adviser's obligations
under this Agreement.
(l) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person," "control" and "assignment" shall have
the meanings ascribed thereto in the 1940 Act.
(m) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
MEMORIAL FUNDS
By:__________________
Thomas G. Sheehan
Vice President
MEMORIAL INVESTMENT ADVISORS, INC.
By:___________________
Christopher W. Hamm
President
25
MEMORIAL FUNDS
INVESTMENT ADVISORY AGREEMENT
APPENDIX A
FEE AS A % OF THE ANNUAL
FUNDS OF THE TRUST AVERAGE DAILY NET ASSETS OF THE FUND
Government Bond Fund 0.XX
Corporate Bond Fund 0.XX
Value Equity Fund 0.XX
Growth Equity Fund 0.XX
MEMORIAL FUNDS
By:__________________
Thomas G. Sheehan
Vice President
MEMORIAL INVESTMENT ADVISORS, INC.
By:___________________
Christopher W. Hamm
President
26
EXHIBIT B
FORM OF
MEMORIAL FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made as of the ___ day of ______, 2001, by and among Memorial
Funds, a Delaware business trust, with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 (the "Trust"), Memorial
Investment Advisors, Inc., a Delaware corporation, with its principal office and
place of business at 5847 San Felipe, Suite 875 Houston, Texas 77057 (the
"Adviser"), and [Subadviser], with its principal office and place of business at
[address] (the "Subadviser").
WHEREAS, Adviser has entered into an Investment Advisory Agreement
dated the [date] ("Advisory Agreement") with the Trust;
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended, (the "1940 Act"), as an open-end, management investment
company and may issue its shares of beneficial interest, no par value (the
"Shares"), in separate series;
WHEREAS, pursuant to the Advisory Agreement, and subject to the
direction and control of the Board of Trustees of the Trust (the "Board"), the
Adviser acts as investment adviser for each series of the Trust listed on
Schedule A hereto (each, a "Fund" and, collectively, the "Funds");
WHEREAS, the Trust and Adviser desire to retain the Subadviser to
perform investment advisory services for the Fund and Subadviser is willing to
provide those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Adviser and the Subadviser hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust and the Adviser hereby employ Subadviser, subject to the
direction and control of the Board, to manage the investment and reinvestment of
the assets in each Fund and, without limiting the generality of the foregoing,
to provide other services as specified herein. The Subadviser accepts this
employment and agrees to render its services for the compensation set forth
herein.
(b) In connection therewith, the Trust has delivered to the Subadviser
copies of (i) the Trust's Trust Instrument, (ii) the Trust's Registration
Statement and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the 1940 Act (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information of each
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), and (iv) all procedures adopted by the Trust with respect to any
Fund (I.E., repurchase agreement procedures), and shall promptly furnish the
Adviser with all amendments of or supplements to the foregoing. The Trust shall
deliver to the Subadviser (x) a certified copy of the resolution of the Board
appointing the Subadviser and authorizing the execution and delivery of this
Agreement, (y) a copy of all proxy statements and related materials relating to
any Fund, and (z) any other documents, materials or information that the
Subadviser shall reasonably request to enable it to perform its duties pursuant
to this Agreement.
(c) The Subadviser has delivered to the Adviser and the Trust (i) a
copy of its Form ADV as most recently filed with the SEC and (ii) a copy of its
code of ethics complying with the requirements of Rule 17j-1 under the 1940 Act
(the "Code"). The Subadviser shall promptly furnish the Adviser and Trust with
all amendments of or supplements to the foregoing at least annually.
27
SECTION 2. DUTIES OF THE TRUST AND ADVISER
(a) In order for the Subadviser to perform the services required by
this Agreement, the Trust and the Adviser (i) shall, cause all service providers
to the Trust to furnish information relating to any Fund to the Subadviser and
assist the Subadviser as may be required and (ii) shall ensure that the
Subadviser has reasonable access to all records and documents maintained by the
Trust, or any service provider to the Trust.
(b) In order for the Subadviser to perform the services required by
this Agreement, the Adviser shall deliver to the Subadviser all material it
provides to the Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to all purchases
and sales of securities and other investment assets in each Fund to the extent
such authority is delegated by the Adviser. To carry out such decisions, the
Subadviser is hereby authorized, as agent and attorney-in-fact for the Trust,
for the account of, at the risk of and in the name of the Trust, to place orders
and issue instructions with respect to those transactions of the Funds. In all
purchases, sales and other transactions in securities and other investments for
the Funds, the Subadviser is authorized to exercise full discretion and act for
the Trust in the same manner and with the same force and effect as the Trust
might or could do with respect to such purchases, sales or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
Consistent with Section 28(e) of the Securities Exchange Act of 1934,
as amended, the Subadviser may allocate brokerage on behalf of the Funds to
broker-dealers who provide research services. The Subadviser may aggregate sales
and purchase orders of the assets of the Funds with similar orders being made
simultaneously for other accounts advised by the Subadviser or its affiliates.
Whenever the Subadviser simultaneously places orders to purchase or sell the
same asset on behalf of a Fund and one or more other accounts advised by the
Subadviser, the orders will be allocated as to price and amount among all such
accounts in a manner believed to be equitable over time to each account.
(b) The Subadviser will report to the Board at each meeting thereof as
requested by the Adviser or the Board all material changes in each Fund since
the prior report, and will also keep the Board informed of important
developments affecting the Trust, the Funds and the Subadviser, and on its own
initiative, will furnish the Board from time to time with such information as
the Subadviser may believe appropriate for this purpose, whether concerning the
individual companies whose securities are included in the Funds' holdings, the
industries in which they engage, the economic, social or political conditions
prevailing in each country in which the Funds maintain investments, or
otherwise. The Subadviser will also furnish the Board with such statistical and
analytical information with respect to investments of the Funds as the
Subadviser may believe appropriate or as the Board reasonably may request. In
making purchases and sales of securities and other investment assets for the
Funds, the Subadviser will bear in mind the policies set from time to time by
the Board as well as the limitations imposed by the Trust Instrument and
Registration Statement, the limitations in the 1940 Act, the Securities Act, the
Internal Revenue Code of 1986, as amended, and other applicable laws and the
investment objectives, policies and restrictions of the Funds.
(c) The Subadviser will from time to time employ or associate with such
persons as the Subadviser believes to be particularly fitted to assist in the
execution of the Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may be incurred on
the Trust's or Adviser's behalf in any such respect.
(d) The Subadviser will report to the Board all material matters
related to the Subadviser. On an annual basis, the Subadviser shall report on
its compliance with its Code to the Adviser and to the Board and upon the
written request of the Adviser or the Trust, the Subadviser shall permit the
Adviser and the Trust, or their respective representatives to examine the
reports required to be made to the Subadviser under the Code. The Subadviser
will notify the Adviser and the Trust of any change of control of the Subadviser
and any changes in the key
28
personnel who are either the portfolio manager(s) of the Fund or senior
management of the Subadviser, in each case prior to or promptly after such
change.
(e) The Subadviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders as are required to
be maintained by the Trust under the 1940 Act. The Subadviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Subadviser pursuant to this
Agreement required to be prepared and maintained by the Subadviser or the Trust
pursuant to applicable law. To the extent required by law, the books and records
pertaining to the Trust which are in possession of the Subadviser shall be the
property of the Trust. The Adviser and the Trust, or their respective
representatives, shall have access to such books and records at all times during
the Subadviser's normal business hours. Upon the reasonable request of the
Adviser or the Trust, copies of any such books and records shall be provided
promptly by the Subadviser to the Adviser and the Trust, or their respective
representatives.
(f) The Subadviser will cooperate with each Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Subadviser will provide the Funds' custodian and fund
accountant on each business day with such information relating to all
transactions concerning the Funds' assets under the Subadviser's control as the
custodian and fund accountant may reasonably require. In accordance with
procedures adopted by the Board, the Subadviser is responsible for assisting in
the fair valuation of all Fund assets and will use its reasonable efforts to
arrange for the provision of prices from parties who are not affiliated persons
of the Subadviser for each asset for which the Funds' fund accountant does not
obtain prices in the ordinary course of business.
(h) The Subadviser shall authorize and permit any of its directors,
officers and employees who may be elected as Trustees or officers of the Trust
to serve in the capacities in which they are elected. The Subadviser agrees to
notify the Trust and Adviser of any significant changes in its partnership
structure that would modify any of party's rights under this Agreement.
(i) Except as otherwise agreed to by the Trust, the Adviser and the
Subadviser, during any period in which a Fund invests all (or substantially all)
of its investment assets in a registered, open-end management investment
company, or separate series thereof, in accordance with Section 12(d)(1)(E)
under the 1940 Act, the Subadviser shall have no duties or obligations pursuant
to this Agreement with respect to the Fund.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall pay the
Subadviser, with respect to each Fund, a fee at an annual rate as listed in
Appendix A hereto. Such fees shall be accrued by the Adviser daily and shall be
payable monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month. If fees begin to accrue in
the middle of a month or if this Agreement terminates before the end of any
month, all fees for the period from that date to the end of that month or from
the beginning of that month to the date of termination, as the case may be,
shall be prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. Upon the termination of
this Agreement with respect to a Fund, the Adviser shall pay to the Subadviser
such compensation as shall be payable prior to the effective date of
termination.
(b) The Subadviser may agree to waive all or part of its fees by
separate agreement.
(c) No fee shall be payable hereunder with respect to a Fund during any
period in which the Fund invests all (or substantially all) of its investment
assets in a registered, open-end, management investment company, or separate
series thereof, in accordance with Section 12(d)(1)(E) under the 1940 Act.
29
SECTION 5. STANDARD OF CARE
(a) The Trust and Adviser shall expect of the Subadviser, and the
Subadviser will give the Trust and Adviser the benefit of, the Subadviser's best
judgment and efforts in rendering its services hereunder. The Subadviser shall
not be liable to the Adviser or the Trust hereunder for any mistake of judgment
or in any event whatsoever, except for lack of good faith, provided that nothing
herein shall be deemed to protect, or purport to protect, the Subadviser against
any liability to the Adviser or the Trust to which the Subadviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Subadviser's duties hereunder, or by reason
of the Subadviser's reckless disregard of its obligations and duties hereunder.
(b) The Subadviser shall not be liable to the Adviser or the Trust for
any action taken or failure to act in good faith reliance upon: (i) information,
instructions or requests, whether oral or written, with respect to a Fund that
the Subadviser reasonably believes were made by a duly authorized officer of the
Adviser or the Trust, (ii) the advice of counsel to the Trust, and (iii) any
written instruction or certified copy of any resolution of the Board.
(c) The Subadviser shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control including, without limitation, acts of civil or military authority,
national emergencies, labor difficulties (other than those related to the
Subadviser's employees), fire, mechanical breakdowns, flood or catastrophe, acts
of God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund
immediately upon the later of approval by a majority of the Trust's trustees who
are not parties to this Agreement or interested persons of any such party (other
than as trustees of the Trust) and, if required by applicable law, by a vote of
a majority of the outstanding voting securities of the Fund.
(b) This Agreement shall remain in effect with respect to a Fund for a
period of two years from the date of its effectiveness and shall continue in
effect for successive annual periods with respect to the Fund; provided that
such continuance is specifically approved at least annually (i) by the Board or
by the vote of a majority of the outstanding voting securities of the Fund, and,
in either case, (ii) by a majority of the Trust's trustees who are not parties
to this Agreement or interested persons of any such party (other than as
trustees of the Trust); provided further, however, that if the continuation of
this Agreement is not approved as to a Fund, the Subadviser may continue to
render to that Fund the services described herein in the manner and to the
extent permitted by the 1940 Act and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Board, by a vote of a
majority of the outstanding voting securities of the Fund or by the Adviser on
60 days' written notice to the Subadviser or (ii) by the Subadviser on 60 days'
written notice to the Trust. This Agreement shall terminate immediately (x) upon
its assignment or (y) upon termination of the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Subadviser's right, or
the right of any of the Subadviser's directors, officers or employees to engage
in any other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, trust, firm, individual or
association.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
30
The Subadviser represents and warrants that (i) it is either registered
as an investment adviser under the Investment Advisers Act of 1940, as amended
("Advisers Act") (and will continue to be so registered for so long as this
Agreement remains in effect) or exempt from registration under the Advisers Act,
(ii) is not prohibited by the 1940 Act or the Advisers Act from performing the
services contemplated by this Agreement, (iii) has met, and will seek to
continue to meet for so long as this Agreement remains in effect, any other
applicable federal or state requirements, or the applicable requirements of any
self-regulatory agency, necessary to be met in order to perform the services
contemplated by this Agreement, and (iv) will promptly notify the Adviser and
the Trust of the occurrence of any event that would disqualify the Subadviser
from serving as an investment adviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Subadviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Subadviser's rights or claims relate in settlement of such
rights or claims, and not to the Trustees of the Trust or the shareholders of
the Funds.
SECTION 10. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and approved by the Trust in the manner set forth in Section 6(b)
hereof.
(b) No amendment to this Agreement or the termination of this Agreement
with respect to a Fund shall effect this Agreement as it pertains to any other
Fund, nor shall any such amendment require the vote of the shareholders of any
other Fund.
(c) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(d) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(e) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(f) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(g) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(h) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(i) Any notices given by the Trust, Adviser or Subadviser shall be in
writing and shall be deemed to have been duly given on the date of delivery if
delivered personally or sent by fax, or two days after being deposited in the
U.S. mail if sent to the following address:
31
To the Trust: Memorial Funds
Attn: Vice President
Two Portland Square
Portland, Maine 04101
Facsimile: 207-879-8913
To the Adviser: Memorial Investment Advisors, Inc.
Attn: President
5847 San Felipe, Suite 875
Houston, Texas 77057
Facsimile: 713-243-9035
To Subadviser: [Insert contact information]
(j) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund are separate and distinct
from the assets and liabilities of any other series of the Trust and that no
Fund or other series of the Trust shall be liable or shall be charged for any
debt, obligation or liability of any other Fund or series, whether arising under
this Agreement or otherwise.
(k) No affiliated person, employee, agent, director, officer or manager
of the Subadviser shall be liable at law or in equity for the Subadviser's
obligations under this Agreement.
(l) The terms "vote of a majority of the outstanding voting
securities", "interested person", "affiliated person," "control" and
"assignment" shall have the meanings ascribed thereto in the 1940 Act.
(m) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
MEMORIAL FUNDS
Thomas G. Sheehan
Vice President
MEMORIAL INVESTMENT ADVISORS, INC.
Christopher W. Hamm
President
[SUBADVISER]
Name:
Office:
32
FORM OF
MEMORIAL FUNDS
SUBADVISORY AGREEMENT
Appendix A
PERCENTAGE OF THE AVERAGE ANNUAL DAILY NET ASSETS OF
FUNDS OF THE TRUST THE FUND REPRESENTED BY SHARES OWNED BY INVESTORS FOR
WHICH SUBADVISER PROVIDES SERVICES PURSUANT TO THIS
AGREEMENT
Fund Name .XX%*
33
MEMORIAL FUNDS
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Revoking any such prior appointments, the undersigned appoints D. Blaine Riggle,
Thomas G. Sheehan and David I. Goldstein (or, if only one shall act, that one)
proxies with the power of substitution to vote all of the shares of Corporate
Bond Fund, Government Bond Fund, Growth Equity Fund and Value Equity Fund (each
a "Fund"), four series of Memorial Funds (the "Trust"), registered in the name
of the undersigned at the Special Meeting of Shareholders of the Fund to be held
at the offices of Forum Administrative Services, LLC, Two Portland Square,
Portland, Maine 04101, on May 25, 2001, at 10:00 a.m. (Eastern Time), and at any
adjournment or adjournments thereof.
The shares of beneficial interest represented by this Proxy will be voted in
accordance with the instructions given by the undersigned below. IF NO
INSTRUCTIONS ARE GIVEN, SUCH SHARES WILL BE VOTED FOR THE PROPOSAL SET FORTH
BELOW. The Trust has proposed the Proposals. The Board of Trustees recommends
voting FOR the Proposals.
PROPOSAL 1:
(NOTE: SHAREHOLDERS OF ALL FUNDS VOTE ON PROPOSAL 1)
To approve a new Investment Advisory Agreement between the Trust and Memorial
Investment Advisors, Inc.
FOR _____ AGAINST _____ ABSTAIN _____
PROPOSAL 2:
(NOTE: SHAREHOLDERS OF ALL FUNDS VOTE ON PROPOSAL 2)
To approve a new Investment policy for each Fund to permit Memorial Investment
Advisors, Inc. to hire and terminate subadvisers and modify subadvisory
agreement without shareholder approval.
FOR _____ AGAINST _____ ABSTAIN _____
PROPOSAL 3:
(NOTE: ONLY SHAREHOLDERS OF CORPORATE BOND FUND, VOTE ON PROPOSAL3)
To approve a new Investment Subadvisory Agreement between the Trust and American
General Investment Management, L.P.;
FOR _____ AGAINST _____ ABSTAIN _____
(NOTE: Checking the box labeled ABSTAIN will result in the shares covered by the
Proxy being treated as if they were voted AGAINST the proposal.) Receipt is
acknowledged of the Notice and Proxy Statement for the Special Meeting of
Shareholders to be held on May 25, 2001. PLEASE SIGN AND DATE THIS PROXY IN THE
SPACE PROVIDED. Execution by shareholders who are not individuals must be made
by an authorized signatory. Executors, administrators, trustees, guardians and
others signing in a representative capacity should give their full title as
such.
34
Authorized Signature Date
Printed Name (and Title if Applicable)
Authorized Signature (Joint Investor or Second Signatory) Date
Printed Name (and Title if Applicable)