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EXHIBIT 6.2
SUB-ADVISORY AGREEMENT
AGREEMENT made this 1st day of April, 1998, between American
Diversified Asset Management, Inc. (the "Adviser") and Ladas & Xxxxxxx, Inc.
(the "Sub-Adviser").
WHEREAS, Xxx-Xxxxxx Funds, Inc. (the "Company") is registered as an
open-end, management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, Xxx-Xxxxxx Balanced Fund (the "Fund") is a separate
investment series of the Company; and
WHEREAS, the Adviser has been appointed investment adviser to the
Fund; and
WHEREAS, the Adviser desires to retain the Sub-Adviser to assist it
in the provision of a continuous investment program for the Fund and the
Sub-Adviser is willing to do so upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser to act as
sub-adviser to the Fund as permitted by the Adviser's Investment Advisory
Agreement with the Company pertaining to the Fund. Intending to be legally
bound, the Sub-Adviser accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
2. Sub-Advisory Services. Subject to the supervision of the Board of
Directors, the Sub-Adviser shall assist the Adviser in providing a continuous
investment program with respect to the Fund's portfolio, including investment
research and management with respect to all securities and investments and cash
equivalents in the Fund. The Sub-Adviser may, subject to the Adviser's review,
determine the securities and investments to be purchased, sold or retained by
the Fund, and the Sub-Adviser may place orders directly with the issuer or any
broker or dealer for such securities and investments. The Sub-Adviser will
provide services under this Agreement in accordance with the Fund's investment
objective, policies and restrictions as stated in the Fund's prospectus and
Statement of Additional Information, which shall be forwarded to the Sub-Adviser
by the Adviser from time to time, and resolutions of the Board of Directors
applicable to the Fund provided those resolutions are communicated to the
Sub-Adviser and a reasonable amount of time is provided in order for it to
comply.
Without limiting the generality of the foregoing, the Sub-Adviser
further 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;
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(b) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission under the 1940 Act applicable to
sub-advisers to registered investment companies and in addition will
conduct its activities under this Agreement in accordance with any
applicable regulations of any governmental authority pertaining to
the investment advisory activities of the Sub-Adviser;
(c) will place or cause to be placed orders for the Fund either directly
with the issuer or with any broker or dealer. In placing orders with
brokers and dealers, the Sub-Adviser will attempt to obtain prompt
execution of orders in an effective manner at the most favorable
price. Consistent with this obligation and to the extent permitted by
the 1940 Act, when the execution and price offered by two or more
brokers or dealers are comparable, the Sub-Adviser may, in its
discretion, purchase and sell portfolio securities to and from
brokers and dealers who provide the Sub-Adviser with research advice
and other services;
(d) will maintain or cause to be maintained all books and records with
respect to the securities transactions of the Fund and will furnish
the Board of Directors with such periodic and special reports as the
Board may request; and
(e) will treat confidentially and as proprietary information of the
Company all records and other information relative to the Company and
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.
3. Services Not Exclusive. Except as provided herein, the services
furnished by the Sub-Adviser hereunder are deemed not to be exclusive, and the
Sub-Adviser shall be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby.
4. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which
it maintains for the Company are the property of the Company and further agrees
to surrender promptly to the Company any of such records upon the Company's
request. The Sub-Adviser 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.
5. Expenses. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Fund.
6. Compensation. For the services provided and the expenses assumed
with respect to the Fund pursuant to this Agreement, the Sub-Adviser will be
entitled to a fee of 1/12th of .50% monthly (equivalent to .50% annually) on the
first $20,000,000 of the net assets of the Fund as of the close of business on
the last business day of each calendar month during the Fund's fiscal
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year, reduced to 1/12th of .375% monthly (equivalent to .375% annually) of such
net assets in excess of $20,000,000 up to $100,000,000, reduced to 1/12th of
.25% monthly (equivalent to .25% annually) of such net assets in excess of
$100,000,000 up to $200,000,000, and reduced to 1/12th of .225% monthly
(equivalent to .225% annually) of all such net assets in excess of $200,000,000.
7. Limitation of Liability. The Sub-Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund 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-Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement. Notwithstanding the foregoing or any other provision of this
Agreement, nothing herein shall in any way constitute a waiver or limitation of
any rights that the Company, the Fund or the Adviser may have under the United
States federal or State securities laws, which may impose liability on persons
who act in good faith.
8. Duration and Termination. Unless sooner terminated, this Agreement
shall continue until ____________, 2000, and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by the Company's Board of Directors or
vote of the lesser of (a) 67% of the shares of the Fund represented at a meeting
if holders of more than 50% of the outstanding shares of the Fund are present
in person or by proxy or (b) more than 50% of the outstanding shares of the
Fund, provided that in either event its continuance also is approved by a
majority of the Directors who are not "interested persons" (as defined in the
0000 Xxx) of any party to this Agreement (the "Independent Directors"), by vote
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement is terminable at any time without penalty, on 60 days' notice, by
the Adviser, the Sub-Adviser or by the Board of Directors or by vote of the
lesser of (a) 67% of the shares of the Fund represented at a meeting if holders
of more than 50% of the outstanding shares of the Fund are present in person or
by proxy or (b) more than 50% of the outstanding shares of the Fund. This
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
9. Amendment of this Agreement. 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.
10. Governing Law. This Agreement shall be governed by and its
provisions shall be construed in accordance with the laws of the State of
California.
11. Possession of Fund Assets. At all times the assets of the Fund
(consisting of all cash, securities and other instruments held by the Fund)
shall remain exclusively under the management and control of the Fund's
custodian. At no time will the Sub-Adviser have custody or possession of any
such assets of the Fund.
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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.
AMERICAN DIVERSIFIED ASSET
MANAGEMENT, INC.
By:
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Name: Xxxxx X. Xxx, Xx.
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Title: President
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LADAS & XXXXXXX, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
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Title: President
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