Exhibit (d)(ii)
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
This Agreement (Agreement) made this 29th day of October, 1998 by and between
Xxxxxx Xxxx Investors Inc., a registered investment adviser (Adviser) and
Xxxxxxx Xxxxxx Investments, Inc., a Delaware corporation and registered
investment adviser (Sub-Adviser).
WHEREAS, Adviser is the investment adviser and business manager for the
Xxxxxx Xxxx Mutual Funds (the Funds), an open-end diversified,
management investment company registered under the Investment Company
Act of 1940, as amended (1940 Act), currently consisting of seven
separate series or portfolios, including the Growth Fund, the Small Cap
Growth Fund, the International Equity Fund, the Socially Responsible
Fund, the Balanced Fund, the Income Fund, and the Short-Term Investment
Fund;
WHEREAS, Adviser desires to retain the Sub-Adviser to furnish
investment advisory services for the Xxxxxx Xxxx Socially Responsible
Fund and the Xxxxxx Xxxx International Equity Fund (the Fund
Portfolios), upon the terms and conditions set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows:
1. APPOINTMENT. Adviser hereby appoints Sub-Adviser to provide certain
sub-investment advisory services to the Fund Portfolios for the period
and on the terms set forth in this Agreement. Sub-Adviser accepts such
appointment and agrees to furnish the services set forth for the
compensation herein provided. Sub-Adviser represents that it is
registered as an Investment Adviser under federal laws and any
applicable state laws.
2. SUB-ADVISER SERVICES. Subject always to the supervision of the Fund's
Board of Trustees and the Adviser, Sub-Adviser will furnish an
investment program in respect of, and make investment decisions for,
all assets of the Fund Portfolios and place all orders for the purchase
and sale of securities, all on behalf of the Fund Portfolios. In the
performance of its duties, Sub-Adviser will satisfy its fiduciary
duties to the Fund and Fund Portfolios and will monitor the Fund
Portfolios' investments, and will comply with the provisions of the
Fund's Declaration of Trust and By-laws, as amended from time to time,
and the stated investment objectives, policies and restrictions of the
Fund Portfolios as set forth in the prospectus and Statement of
Additional Information for the Fund Portfolios, as amended from time to
time, as well as any other objectives, policies or limitations provided
by the Adviser from time to time.
Sub-Adviser will provide reports at least quarterly to the Board of
Trustees and to Adviser. Sub-Adviser will make its officers and
employees available to Adviser and the Board of Trustees from time to
time at reasonable times to review investment policies of the Fund
Portfolios and to consult with Adviser regarding the Investment affairs
of the Fund Portfolios.
Sub-Adviser agrees that it:
a. will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
b. will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission in all material respects and in
addition will conduct its activities under this Agreement in
accordance with any applicable regulations of any governmental
authority pertaining to its investment advisory activities,
including all requirements necessary for the Fund Portfolios to
comply with subchapter M and section 817(h) of the Internal
Revenue Code;
c. is authorized to and will select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the
Fund Portfolios and is directed to use its best efforts to obtain
best execution, which includes most favorable net results and
execution of the Fund Portfolios' orders, taking into account all
appropriate factors, including price, dealer spread or commission,
size and difficulty of the Transaction and research or other
services provided. It is understood that the Sub-Adviser will not
be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Fund or in respect of any Fund Portfolio, or
be in breach of any obligation owing to the Fund or in respect of
any Fund Portfolio under this Agreement, or otherwise, solely by
reason of its having caused the Fund to pay a member of a
securities exchange, a broker or a dealer a commission for
effecting a securities transaction of the Fund in excess of the
amount of commission another member of an exchange, broker or
dealer would have charged if the Sub-Adviser determined in good
faith that the commission paid was reasonable in relation to the
brokerage and research services provided by such member, broker,
or dealer, viewed in terms of that particular transaction or the
Sub-Adviser's overall responsibilities with respect to its
accounts, including the Fund, as to which it exercises investment
discretion. Some securities considered for investment by the Fund
Portfolios may also be appropriate for other funds and/or clients
served by the Sub-Adviser. To assure fair treatment of the Fund
Portfolios and all clients of the Sub-Adviser in situations in
which two or more clients' accounts participate simultaneously in
a buy or sell program involving the same security, such
transactions will be allocated among the Fund Portfolios and
clients in a manner deemed equitable by the Sub-Adviser;
d. will report regularly to Adviser and to the Board of Trustees and
will make appropriate persons available for the purpose of
reviewing with representatives of Adviser and the Board of
Trustees on a regular basis at reasonable times the management of
the Fund Portfolios, including without limitation, review of the
general investment strategies of the Fund Portfolios, the
performance of the Fund Portfolios in relation to standard
industry indices, interest rate considerations and general
conditions affecting the marketplace and will provide various
other reports from time to time as reasonably requested by
Adviser;
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e. will prepare such books and records with respect to the Fund
Portfolios' securities transactions as requested by the Adviser
and will furnish Adviser and Fund's Board of Trustees such
periodic and special reports as the Board or Adviser may
reasonably request;
f. will act upon reasonable instructions from Adviser which, in the
reasonable determination of Sub-Adviser, are not inconsistent with
Sub-Adviser's fiduciary duties under this Agreement;
3. EXPENSE. During the terms of this Agreement, Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage
commission, if any), purchased for the Fund Portfolios.
4. COMPENSATION. For the services provided and the expenses assumed under
this Agreement for each Fund Portfolio, Adviser will pay Sub-Adviser,
and Sub-Adviser agrees to accept as full compensation therefor, at the
end of each calendar month a Sub-Advisory fee computed at the annual
rate set forth in Exhibit 1 -- Fee Schedule, applied to the average
daily net assets of the Fund Portfolio during that calendar month.
5. SERVICES TO OTHERS. Adviser understands and has advised Fund's Board of
Trustees, that Sub-Adviser acts as an investment adviser or
sub-investment adviser to other investment companies and other advisory
clients.
6. LIMITATION OF LIABILITY. Neither the Sub-Adviser nor any of its
directors, officers, stockholders, agents or employees shall have any
liability to the Adviser, the Fund or any shareholder of the Fund for
any error of judgment, mistake of law, or any loss arising out of any
investment, or for any other act or omission in the performance by the
Sub-Adviser of its duties hereunder except of liability resulting from
willful misfeasance, bad faith, or negligence on Sub-Adviser's part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
7. TERM, TERMINATION, AMENDMENT. This Agreement shall become effective
with respect to the Fund Portfolios on October 29, 1998, provided that
it is approved by a vote of a majority of the outstanding voting
securities of each Fund Portfolio in accordance with the requirement of
the 1940 Act and shall remain in full force until November 30, 1998
unless sooner terminated as hereinafter provided. This Agreement shall
continue in force from year to year thereafter with respect to each
Fund Portfolio, but only as long as such continuance is specifically
approved for each Fund Portfolio at least annually in the manner
required by the 1940 Act and the rules and regulations thereunder,
provided, however, that if the continuation of this Agreement is not
approved for a Fund Portfolio, the Sub-Adviser may continue to serve in
such capacity for such Fund Portfolio in the manner and to the extent
permitted by the 1940 Act and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any
penalty by the Adviser or by the Sub-
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Adviser on sixty days' written notice to the other party. This
Agreement may also be terminated by the Fund with respect to any Fund
Portfolio by action of the Board of Trustees or by a vote of a majority
of the outstanding voting securities of such Fund Portfolio on sixty
days written notice to Sub-Adviser by the Fund.
This Agreement may be terminated with respect to any Fund Portfolio at
any time without the payment of any penalty by the Adviser, the Board
of Trustees or by a vote of majority of the outstanding voting
securities of such Fund Portfolio in the event the Sub-Adviser or any
officer or director of the Sub-Adviser has taken any action which
results in a material breach of the covenants of the Sub-Adviser under
this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the
compensation described in Section 4 earned prior to such termination.
This Agreement shall automatically terminate with respect to a Fund
Portfolio in the event the Investment Management Agreement between
Adviser and that Fund Portfolio is terminated, assigned or not renewed.
8. NOTICE. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such
notice.
9. LIMITATIONS ON LIABILITY. All parties are expressly put on notice of
the Fund's Agreement and Declaration of Trust and all amendments
thereto, all of which are on file with the Secretary of the State of
Delaware, and the limitation of shareholder and trustee liability
contained therein. The obligations of the Fund entered in the name or
on behalf thereof by any of the Trustees, representatives or agents are
made not individually but only in such capacities and are not binding
upon any of the Trustees, officers, or shareholders of the Fund
individually but are binding upon only the assets and property of the
Fund, and persons dealing with the Fund must look solely to the assets
of the Fund and those assets belonging to the subject Fund Portfolio
for the enforcement of any claims.
10. ADVISER RESPONSIBILITY. Adviser will provide Sub-Adviser with copies of
the Fund's Declaration of Trust, By-laws, prospectus, and Statement of
Additional Information and any amendment thereto, and any objectives,
policies or limitations not appearing therein as they may be relevant
to Sub-Adviser's performance under this Agreement.
11. MILSCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction of effect.
If any provision of this Agreement is held or made invalid by a court
decision, statue, rule or otherwise, the remainder of this Agreement
will not be affected thereby. This Agreement will be binding upon and
shall inure to the benefit of the parties and their respective
successors.
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12. APPLICABLE LAW. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 10 above which will be
construed in accordance with Delaware law) the laws of the state of
Illinois.
The Adviser and the Sub-Adviser have caused this Agreement to be executed as of
the date and year first above written.
XXXXXX XXXX INVESTORS, INC. XXXXXXX XXXXXX
INVESTMENTS, INC.
By: By:
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Title: Title:
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Exhibit 1
SUB-ADVISORY FEE SCHEDULE FOR XXXXXX XXXX MUTUAL FUNDS
INTERNATIONAL EQUITY FUND
.70% on the First $40,000,000
.50% on the Next $60,000,000
.45% on all assets over $100,000,000
There is no minimum annual fee.
SOCIALLY RESPONSIBLE FUND
.55% on the First $20,000,000
.45% on the Next $20,000,000
.30% on the Next $60,000,000
.275% on all assets over $100,000,000
There is no minimum annual fee.
The above fee schedule shall remain in effect through March 3, 1999, and after
such time fees will be subject to renegotiation.
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