SUB-ADVISORY AGREEMENT
AGREEMENT made as of ____________________, 1996 between CAM
Investment Advisors, Inc. (the "Investment Advisor"), a Delaware corporation,
and Wolf, Webb, Xxxx & Xxxxxxxx, Inc. (the "Sub-Advisor"), a Pennsylvania
corporation.
WHEREAS, CAM Balanced Fund, Inc. (the "Fund"), a Maryland
corporation, is registered as a closed-end, diversified, management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, pursuant to an Investment Advisory Agreement (the
"Investment Advisory Agreement") dated the date hereof, by and between the Fund
and the Investment Advisor, the Investment Advisor has agreed to furnish
investment advisory services to the Fund; and
WHEREAS, the Investment Advisor desires to retain the
Sub-Advisor to furnish investment advisory services to the Fund and the
Sub-Advisor is willing to so furnish such services;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Investment Advisor hereby appoints the
Sub-Advisor to act as its sub-adviser for the period and on the terms set forth
in this Agreement. The Sub-Advisor accepts such appointment and agrees to
furnish the services herein set forth, for the compensation herein provided.
2. Management. Subject to the supervision of the Investment
Advisor and the Fund's Board of Directors, the Sub-Advisor will perform the
following services:
(i) Provide a continuous investment program
and strategy for the Fund, including investment research and
management with respect to all securities and investments and
cash equivalents in the Fund, determining from time to time
what securities and other investments will be invested,
reinvested, owned, held or traded by the Fund. The Sub-Advisor
will provide this service under this Agreement in accordance
with the Fund's investment objective, policies and
restrictions as stated in the Prospectus and resolutions of
the Fund's Board of Directors adopted from time to time;
A-1
(ii) Transmit information concerning purchases
and sales of the Fund's portfolio securities to the
custodian for proper settlement;
(iii) Supply the Fund and its Board of
Directors with reports and statistical data as requested; and
(iv) Prepare a quarterly brokerage allocation
summary and monthly security transaction listing for the Fund.
3. Other Covenants.
The Sub-Advisor further agrees that:
(i) It will conform with all applicable Rules
and Regulations of the Securities and Exchange Commission;
(ii) It will place orders pursuant to its
investment determinations for the Fund either directly with
the issuer or with any broker or dealer. In executing
portfolio transactions and selecting brokers or dealers, the
Sub-Advisor will use its best efforts to seek on behalf of the
Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Sub-Advisor
shall consider all factors that it deems relevant, including
the breadth of the market in the security, the price of the
security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a
continuing basis. In evaluating the best overall terms
available, and in selecting the broker dealer to execute a
particular transaction, the Sub-Advisor may also consider the
brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided
to the Fund and/or other accounts over which the Sub-Advisor
or an affiliate of the Sub-Advisor exercises investment
discretion. The Sub-Advisor is authorized to pay to a broker
or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund
which is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction
if, but only if, the Sub-Advisor determines in good faith
that such commission was reasonable in relation to the value
of the brokerage and research services provided by such broker
or dealer, viewed in terms of that particular
A-2
transaction or in terms of the overall responsibilities of the
Sub-Advisor to the Fund. In addition, the Sub-Advisor is
authorized to take into account the sale of shares of the Fund
in allocating to brokers or dealers purchase and sale orders
for the Fund's portfolio securities, provided the Sub-Advisor
believes that the quality of the transaction and the
commission are comparable to what they would be with other
qualified firms. The Sub-Advisor will make investment
decisions for the Fund independently from those of other
clients of the Sub-Advisor. However, the same security may be
held in the portfolio of more than one client when the same
security is believed suited for the investment objectives of
more than one client. Should two or more clients of the
Sub-Advisor simultaneously be engaged in the purchase or sale
of the same security, to the extent possible, the transactions
will be allocated as to price and amount in a manner fair and
equitable to each client;
(iii) It will maintain or supervise the
maintenance of all books and records with respect to the
securities transactions of the Fund, keep its books of account
and will furnish the Fund's Board of Directors with such
periodic and special reports as the Board may request; and
(iv) It will treat confidentially and as proprietary
information of the Fund all records and other information
relative to the Fund and prior, present or potential
shareholders, and will not use such records and information
for any purpose other than performance of its responsibilities
and duties hereunder (except after prior notification to and
approval in writing by the Fund, which approval may not be
withheld where Sub-Advisor would be exposed to civil or
criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted
authorities, or when so requested by the Fund).
4. Services Not Exclusive. The investment management services
furnished by the Sub-Advisor hereunder are deemed not to be exclusive, and the
Sub-Advisor shall be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby. The Sub-Advisor will for
all purposes herein be deemed to be an independent contractor and will, unless
otherwise expressly authorized, have no authority to act for or represent the
Fund or the Investment Advisor in any way or otherwise be deemed to be their
agent.
A-3
5. Books and Records. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Sub-Advisor hereby agrees that all records
which it maintains for the Fund are the property of the Fund and further agrees
to surrender promptly to the Fund any of such records upon the Fund's request.
The Sub-Advisor 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 permit the Investment Advisor and the Fund access to
the Sub-Advisor's records upon the Investment Advisor's or Fund's request.
6. Expenses. During the term of this Agreement, the
Sub-Advisor will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund.
7. Compensation. For the services provided to the Fund
pursuant to this Agreement, the Investment Advisor will pay to the Sub-Advisor
and the Sub-Advisor will accept as full compensation therefor, a fee, payable on
or before the tenth (10th) day of each calendar month, equal to 75% of the fees
(after subtracting any fee waivers) paid to the Investment Advisor by the Fund
for the preceding calendar month under the Investment Advisory Agreement. If
this Agreement shall become effective subsequent to the first day of a month, or
shall terminate before the last day of a month, the Sub-Advisor's compensation
for such fraction of the month shall be determined by applying the foregoing
percentage to the average of the weekly net asset values of the Fund during such
fraction of a month (or, if none, to the asset value of the Fund as calculated
on the last business day of the preceding month) and in the proportion that such
fraction of a month bears to the entire month. The Sub-Advisor understands and
agrees that the Fund shall have no liability for payment of the Sub-Advisor's
fee hereunder, and that the Sub-Advisor's sole recourse for payment of such fee
shall be to the Investment Advisor.
8. Limitation of Liability. The Sub-Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund or the Investment Advisor in connection with the performance of this
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Sub-Advisor in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
9. Duration and Termination. This Agreement will become
effective on the date first written above, and unless sooner terminated as
provided herein, shall continue in effect
A-4
for two (2) years. Thereafter, if not terminated, this Agreement shall continue
in effect for successive annual periods, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of the Fund's Board of Directors who are not interested persons of any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Fund's Board of Directors or by vote of
a majority of the outstanding voting securities of the Fund. Notwithstanding the
foregoing, this Agreement may be terminated at any time on sixty days' written
notice, without the payment of any penalty, by the Fund (by vote of the Fund's
Board of Directors or by vote of a majority of the outstanding voting securities
of the Fund), by the Investment Advisor, or by the Sub-Advisor. This Agreement
will immediately and automatically terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meaning
of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this
Agreement may be changed, 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. No amendment of this
Agreement shall be effective until approved by vote of a majority of the
outstanding voting securities of the Fund.
11. Miscellaneous. Any notice made pursuant to this Agreement
shall be given in writing, addressed and delivered or mailed postage prepaid,
return-receipt requested, to the other party to this Agreement at its principal
place of business. Notice given by a party's attorney shall be deemed to be
notice given by the party. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provisions of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Maryland law.
A-5
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
WOLF, WEBB, XXXX & XXXXXXXX, INC.
--------------------------------------
By:
-----------------------------------
Title:
--------------------------------
CAM INVESTMENT ADVISORS, INC.
-------------------------------------
By:
----------------------------------
Title:
-------------------------------
A-6
