Exhibit 99.d.5
SUBADVISORY AGREEMENT
AGREEMENT made this [DATE OF CLOSING] among ATLAS ADVISERS, INC., a
California corporation (the "Adviser"), ATLAS FUNDS, a Delaware statutory trust
(the "Trust"), on behalf of each series of the Trust listed in Appendix A
hereto, as amended from time to time (hereinafter referred to individually as a
"Fund" and collectively as the "Funds") and PILGRIM XXXXXX & ASSOCIATES, LTD, a
Delaware corporation(the "Subadviser").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management company and is authorized to issue
separate series, each of which offers a separate class of shares of capital
stock and each of which has its own investment objectives, policies and
limitations; and
WHEREAS, the Trust has retained the Adviser to render investment management
and administrative services to the Funds; and
WHEREAS, the Adviser and the Trust desire to retain the Subadviser to
furnish portfolio management services to the Funds in connection with the
Adviser's investment management activities on behalf of the Funds, and the
Subadviser is willing to furnish such services to the Adviser and the Trust;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Adviser, the Subadviser and the Trust as
follows:
1. APPOINTMENT. The Adviser and the Trust hereby appoint the Subadviser
to act as portfolio manager to each Fund listed in Appendix A (collectively, the
"Funds") on the terms set forth in this Agreement. The Subadviser accepts such
appointment and agrees to furnish the services described herein, for the
compensation provided in the Fee Schedule attached hereto as Appendix B.
2. REPRESENTATIONS OF THE TRUST. The Trust represents, warrants, and
agrees that:
A. The Trust is a statutory trust duly organized, validly existing
and in good standing under the laws of the state of Delaware.
B. The Adviser and Subadviser have been duly appointed by the Board
of Trustees of the Trust.
C. The Trust will deliver to the Subadviser a true and complete copy
of its Registration Statement filed with the SEC, as effective from time to
time, and such other documents or instruments governing the investment
objectives of the Funds and such other information as is necessary for the
Subadviser to carry out its obligations under this Agreement.
Subadvisery Agreement among Atlas Advisers, Inc., Atlas Funds and
Pilgrim Xxxxxx & Associates, Ltd.
Dated [DATE OF CLOSING]
1
D. The Trust is currently in compliance and shall at all times use
its best efforts to ensure continued compliance with the requirements imposed
upon the Trust by the 1940 Act and applicable state laws.
3. REPRESENTATIONS OF THE SUBADVISER. The Subadviser represents,
warrants, and agrees that:
A. The Subadviser is a Corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware.
B. The Subadviser is registered as an "Investment Adviser" under the
Investment Advisers Act of 1940 ("Advisers Act") and under applicable state laws
and is currently in compliance and shall at all times use its best efforts to
ensure compliance with the requirements imposed upon the Subadviser by the
Advisers Act and applicable state laws and has provided its current Form ADV to
the Adviser.
C. The Subadviser has adopted a written code of ethics complying
with the requirements of Rule 17j under the 1940 Act, will provide the Trust
with a copy of the code of ethics and evidence of its adoption, and will make
such reports to the Trust as are required by Rule 17j-1 under the 1940 Act.
4. REPRESENTATIONS OF THE ADVISER. The Adviser represents, warrants, and
agrees that:
A. The Adviser is a corporation duly organized, validly existing and
in good standing under the laws of the state of California.
B. The Adviser is registered as an "Investment Adviser" under the
Advisers Act and under applicable state laws and is currently in compliance and
shall at all times use its best efforts to ensure compliance with the
requirements imposed upon the Adviser by the Advisers Act and applicable state
laws and has provided its current Form ADV to the Subadviser.
C. The Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j under the 1940 Act, has provided the Trust with a
copy of the code of ethics and evidence of its adoption, and will make such
reports to the Trust as are required by Rule 17j-1 under the 1940 Act.
5. PORTFOLIO MANAGEMENT DUTIES.
A. Subject to the supervision of the Adviser and the Trust's Board
of Trustees, the Subadviser will provide a continuous investment program for the
portfolio of each Fund listed in Appendix A. The Subadviser will determine from
time to time what securities and other investments will be purchased, retained
or sold by a Fund and will place orders for execution of such portfolio
transactions in accordance with paragraph C below to effect the investment
decisions made. The Subadviser will provide the services identified in this
Agreement in accordance with each respective Fund's investment objectives,
policies and restrictions as stated in the Trust's Registration Statement filed
with the SEC, as effective from time to time, and as interpreted by the
2
Adviser and communicated to the Subadviser, on behalf of the Trust, from time to
time. The Adviser will be responsible for all other services to be provided to
each Fund that is identified in Appendix A hereto.
B. The Subadviser shall use its best efforts to furnish to the
Adviser or any company supplying investment company accounting or security
pricing, timely notice of significant events which come to the Subadviser's
attention concerning securities in which it has caused the Fund to invest which
could require the Fund to fairly value such securities in the daily calculation
of the Fund's net asset value per share.
C. Subject to any applicable regulatory restriction or prohibition,
the Subadviser shall have authority and discretion to select brokers and dealers
(hereinafter "broker-dealers") to execute portfolio transactions for the Funds
and for the selection of the markets on or in which the transactions will be
executed.
The primary objective of the Subadviser in placing orders for the
purchase and sale of securities for a Fund shall be to obtain the "best
execution" (prompt and reliable execution at the most favorable security price
obtainable) taking into account such factors as price, commission, if any, size
of order, difficulty of execution and skill required of the executing broker or
dealer. The Subadviser shall have discretion, in the interests of each Fund, to
allocate brokerage on each Fund's portfolio transactions to broker-dealers who
provide brokerage and/or research services (as such services are defined Section
28(e)(3) of the Securities Exchange Act of 1934) for any of the Funds. The term
"research" includes advice as to the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of securities
or purchasers or sellers of securities; and furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. Subject to such policies as
the Adviser and the Trust's Board of Trustees may determine, the Subadviser
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having caused a
Fund to pay a broker for effecting a portfolio investment transaction in excess
of the amount of commission another broker-dealer would have charged for
effecting that transaction if the Subadviser determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker-dealer, viewed in terms of either
that particular transaction or the Subadviser's overall responsibilities with
respect to the Fund and/or its other clients. In reaching such determination,
the Subadviser will not be required to place or attempt to place a specific
dollar value on the brokerage and/or research services provided or being
provided by such broker/dealer. The Subadviser shall have no duty or obligation
to seek advance competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to select any
broker-dealer on the basis of its purported or "posted" commission rate but
will, to the best of its ability, endeavor to be aware of the current level of
the charges of eligible broker-dealers and to minimize the expense incurred by
the Funds for effecting their portfolio transactions.
D. All transactions will be consummated by payment to or delivery by
the Trust's Custodian, or such depositories or agents as may be designated by
the Custodian, of all cash and/or securities due to or from a Fund, and the
Subadviser shall not have possession or custody thereof or any responsibility or
liability with respect thereto. The Subadviser shall advise the
3
Custodian and the Trust daily of all investment orders placed by it with
broker-dealers pursuant to procedures agreed upon by the Subadviser and the
Trust. The Subadviser shall not be responsible for obtaining prices for any such
investment order, but will use its best efforts to direct the Custodian to
pricing sources and assist the Custodian in obtaining dealer quotes if so
requested by the Custodian. The Trust or its authorized agents, the Adviser and
Subadviser, shall issue to the Custodian such instructions as may be appropriate
in connection with the settlement of any transaction initiated by the
Subadviser. The Trust shall be responsible for all custodial arrangements and
the payment of all custodial charges and fees, and, upon transmitting to the
Custodian the investment orders placed by it with broker-dealers, the Subadviser
shall have no responsibility or liability with respect to custodial arrangements
or the acts, omissions or other conduct of the Custodian.
E. The Custodian shall, on a daily basis pursuant to procedures and
in a format agreed upon by the Subadviser and the Trust, provide portfolio
reports to the Subadviser that shall include a listing of all portfolio
investments of each Fund and its cash position.
6. EXPENSES. During the term of this Agreement, the Subadviser will pay
all expenses incurred by it or its staff in connection with rendering portfolio
management services under this Agreement. This does not include expenses and
costs of the Funds' operations payable by the Trust or the Adviser, including,
but not limited to, those for: interest and taxes; brokerage commissions;
custody, transfer agency, dividend disbursement, accounting, pricing, legal and
auditing services; insurance premiums for fidelity and other coverage required
for their operations; filing and registration of shares; shareholder reports;
meetings of the Trust's shareholders or trustees (except those called solely to
accommodate the Subadviser); printing and postage; office facilities, stationery
and supplies; the clerical, executive and administrative costs incurred by the
Adviser in overseeing or administering all of the above; other direct
administrative and service costs; and such extraordinary non-recurring expenses
as may arise, including litigation, affecting any of the Funds.
7. COMPENSATION. For the services provided, the Adviser will pay the
Subadviser a fee, payable monthly based on the aggregate daily net assets of the
Funds, as provided in the Fee Schedule attached to this Agreement as Appendix B.
The "aggregate daily net assets" is defined as the aggregate of the values
placed on the net assets of all Funds as of 4:00 p.m. (New York time), on each
day on which the net asset value of the Funds' portfolios is determined
consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the Trust
lawfully determines the net asset value of a Fund's portfolio as of some other
time on each business day, as of such time. The net asset value of each Fund's
portfolio shall be determined pursuant to the applicable provisions of the
Trust's current Registration Statement and the 1940 Act. If the determination of
net asset value for a Fund is suspended in conformity with the 1940 Act for any
particular business day, then the value of the net assets of such Fund's
portfolio as last determined shall be deemed to be the value of the net assets
as of the close of the New York Stock Exchange, or such other time as the net
asset value of the portfolio may lawfully be determined, on that day. If the
Trust has suspended the determination of the net asset value of a Fund's
portfolio pursuant to the Registration Statement and the 1940 Act for a period
including such month, the Subadviser's compensation payable at the end of such
month shall be computed on the basis of the value of the net assets of the Fund
as last determined (whether during or prior to such month). If the Trust
determines the value of the net
4
assets of a Fund's portfolio more than once on any day, the last such
determination on that day shall be deemed to be the sole determination on that
day for the purposes of this Section 7.
8. BOOKS AND RECORDS.
A. The Subadviser will make available to the Adviser and the Trust
promptly upon request its records and ledgers with respect to and relating to
each Fund's securities transactions to assist the Adviser and the Trust in
compliance with the 1940 Act and the Advisers Act, and other applicable laws.
The Subadviser will furnish the Trust's Board of Trustees such periodic and
special reports on each Fund as the Adviser and the Trustees may reasonably
request.
B. In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Subadviser hereby agrees that all records which it maintains for the
Funds are the property of the Trust and further agrees to surrender promptly to
the Trust any of such records upon the Trust's request. The Subadviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act and to
preserve the records required by Rule 204-2 under the Advisers Act to the extent
necessary or appropriate to comply with the period specified in the Rule.
9. INDEMNIFICATION.
A. Absent the Adviser's or the Trust's gross negligence, willful
misconduct or bad faith in the performance of its duties, or reckless disregard
of its obligations and duties under this Agreement, the Subadviser agrees to
indemnify and hold harmless the Adviser, the Trust and their officers and
employees against any and all costs and liabilities (including legal and other
expenses) which the Adviser or the Trust may incur, arising out of the
Subadviser's (a) gross negligence, willful misconduct or bad faith in the
performance of its duties, or reckless disregard of its obligations and duties
under this Agreement, or (b) untrue statement or omission of a material fact
required in the Registration or Proxy Statements or other regulatory filing, if
such statement or omission was made in reliance upon information furnished in
writing by the Subadviser for inclusion in such regulatory filings.
B. Absent the Subadviser's gross negligence, willful misconduct or
bad faith in the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement, the Adviser and the Trust agree to
indemnify and hold harmless the Subadviser and its officers and employees
against any and all costs and liabilities (including legal and other expenses)
which the Subadviser may incur, arising out of the Adviser's or the Trust's (a)
gross negligence, willful misconduct or bad faith in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, or (b) untrue statement or omission of a material fact required in
the Registration or Proxy Statements or other regulatory filing, unless such
statement or omission was made in reliance upon information furnished in writing
by the Subadviser for inclusion in such regulatory filings.
10. SERVICES NOT EXCLUSIVE. It is understood that the services of the
Subadviser are not exclusive, and nothing in this Agreement shall prevent the
Subadviser from providing similar services to other investment companies
(whether or not their investment objectives and policies are
5
similar to those of a Fund) or from engaging in other activities. When the
Subadviser recommends the purchase or sale of a security for other investment
companies and other clients, and at the same time the Subadviser recommends the
purchase or sale of the same security for one or more Funds, it is understood
that such transactions will be executed on a basis that is fair and equitable to
each Fund.
11. DURATION. The term of this Agreement, with respect to each Fund, shall
begin on [DATE OF CLOSING] the SEC declares effective the Post-Effective
Amendment to the Trust's Registration Statement that discloses the Subadviser as
such for that Fund and shall remain in effect until the first meeting of such
Fund's shareholders held thereafter (except that in the case of the Atlas Growth
and Income Fund, such shareholders meeting may be held prior to the date the SEC
declares effective the applicable Registration Statement), and, if approved at
such meeting, shall continue in effect for two years from the effective date of
the Post-Effective Amendment with respect to such Fund and continue on an annual
basis thereafter if approved for each Fund each year by (a) the vote of a
majority of the entire Board of Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act), and by (b) the vote of a majority of those Trustees of the Trust who
are not parties to this Agreement or interested persons (as such term is defined
in the 0000 Xxx) of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
12. TERMINATION. This Agreement may be terminated at any time without
payment of any penalty by (a) the Adviser, upon sixty (60) days' written notice
to the Subadviser and the Trust (which notice may be waived by the Subadviser
and the Trust), (b) the Trust, on behalf of any one or more of the Funds, upon
the vote of a majority of the Trust's Board of Trustees or a majority of the
outstanding voting securities of such Fund, upon sixty (60) days' written notice
to the Adviser and the Subadviser, or (c) the Subadviser, upon one hundred
twenty (120) days' written notice to the Adviser and the Trust (which notice may
be waived by the Adviser and the Trust). Termination of this Agreement with
respect to a Fund shall not effect the continuing applicability of this
Agreement with respect to other Funds. This Agreement shall automatically
terminate in the event of its assignment (as such term is defined in the 1940
Act and interpreted by the U.S. Securities and Exchange Commission). Termination
of this Agreement shall not affect the right of the Subadviser to receive
payments of any unpaid balance of the compensation described in Section 7 earned
prior to such termination.
13. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought and no amendment of this Agreement shall be effective with
respect to a Fund until approved by a vote of a majority of the outstanding
voting securities of such Fund, if such approval is required by applicable law.
14. USE OF NAME. It is understood that the name "Pilgrim Xxxxxx" or any
derivative thereof or logo associated with that name is the valuable property of
the Subadviser and its affiliates and that the Trust and each Fund have the
right to use such name (or derivative or logo) in offering and sales materials
so long as the Subadviser is portfolio manager to such Fund and provided the
Subadviser shall have reviewed and approved in writing such use, which approval
may not be
6
unreasonably withheld. Upon termination of this Agreement, the Trust shall
promptly cease to use such name.
15. MISCELLANEOUS.
A. This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder.
B. The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
C. If any provision of this Agreement shall be held invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and the provisions of this Agreement shall be
deemed to be severable.
D. Any notice under this Agreement shall be in writing addressed and
delivered or mailed, postage prepaid, to the other party at the address below or
at such other address as such other party may designate hereunder for the
receipt of such notice:
If to the Adviser or the Trust:
Atlas Advisers, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: X. Xxxxxxxx Key, Group Senior Vice President
If to the Subadviser:
Pilgrim Xxxxxx & Associates, Ltd.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx Xxxx, General Counsel
7
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ATLAS ADVISERS, INC. PILGRIM XXXXXX & ASSOCIATES, LTD.
By: By:
--------------------------------- -----------------------------------
X. Xxxxxxxx Key Xxxx X. Xxxxxxxxx
Group Senior Vice President Senior Vice President and CFO
and Chief Operating Officer
Atlas Funds
By:
---------------------------------
X. Xxxxxxxx Key
Group Senior Vice President
and Chief Operating Officer
8
