DRAFT 10/23/97
INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT, effective __________, 1997, by and
between Xxxxxxx Asset Management Company, Inc., a Delaware corporation
registered as an investment adviser under the Investment Advisers Act of 1940
(the "Adviser"), and State Street Bank and Trust Company. a Massachusetts
corporation (the "Subadviser").
WHEREAS, the Adviser is the investment adviser to The Xxxxxxx Fund,
an open-end, diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser desires to retain the Subadviser to furnish it
with certain investment advisory services in connection with the Adviser's
investment advisory activities on behalf of The Xxxxxxx Fund and any series of
The Xxxxxxx Fund, for which Schedules are attached hereto (each such series
referred to individually as the "Fund"); and
WHEREAS that, subject to approval of the Fund's shareholders, it is
contemplated that the Xxxxxxx Strategic Growth Fund will be merged into the
Xxxxxxx New Vision Small Cap Fund;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is hereby agreed as follows:
1. Services to be Rendered by the Subadviser to the Fund.
(a) Investment Program. Subject to the control of The
Xxxxxxx Fund's Board of Trustees and the Adviser, the Subadviser at
its expense continuously will furnish to the Fund an investment
program for such portion, if any, of Fund assets designated by the
Adviser from time to time. With respect to such assets, the
Subadviser will make investment decisions, subject to Section 1(g) of
this Agreement, and will place all orders for the purchase and sale
of portfolio securities. The Subadviser is deemed to be an
independent contractor and, except as expressly provided or
authorized by this Agreement, has no authority to act for or represent
the Fund or the Adviser in any way or otherwise be deemed an agent of
the Fund or the Adviser. In the performance of its duties, the
Subadviser will act in the best interests of the Fund and will comply
with (i) applicable laws and regulations, including, but not limited
to, the 1940 Act and Subchapter M of the Internal Revenue Code of
1986, as amended, (ii) the terms of this Agreement, (iii) the Fund's
Declaration of Trust, Bylaws and Registration Statement as from time
to time amended, (iv) relevant undertakings provided to State
securities regulators, (v) the stated investment objective, policies
and restrictions of the Fund, and (vi) such other guidelines as the
Trustees or Adviser may establish. The Adviser is responsible for
providing the Subadviser with current copies of the materials
specified in Subsections (a)(iii), (iv), (v) and (vi) of this Section
1.
(b) Availability of Personnel.The Subadviser at its
expense will make available to the Trustees and Adviser at reasonable
times its portfolio managers and other appropriate personnel, either
in person or, at the mutual convenience of the Adviser and the
Subadviser, by telephone, in order to review the Fund's investment
policies and to consult with the Trustees and Adviser regarding the
Fund's investment affairs, including economic, statistical and
investment matters relevant to the Subadviser's duties hereunder, and
will provide periodic reports to the Adviser relating to the
investment strategies it employs.
(c) Expenses, Salaries and Facilities. The Subadviser
will pay all expenses incurred by it in connection with its
activities under this Agreement (other than the cost of securities
and other investments, including any brokerage commissions and all
taxes, including any interest and penalties with respect thereto)
including, but not limited to, all salaries of personnel and
facilities required for it to execute its duties under this Agreement.
(d) Compliance Reports. The Subadviser at its expense
will provide the Adviser with such compliance reports relating to its
duties under this Agreement as may be agreed on by such parties from
time to time.
(e) Valuation. The Subadviser will assist the Fund and
its agents in determining whether prices obtained for valuation
purposes accurately reflect market price information relating to the
assets of the Fund for which the Subadviser has responsibility on a
daily basis (unless otherwise agreed on by the parties hereto) and at
such other times as the Adviser shall reasonably request.
(f) Executing Portfolio Transactions.
(i) Brokerage. In selecting brokers and dealers to
execute purchases and sales of investments for the
Fund, the Subadviser will use its best efforts to
obtain the most favorable price and execution
available in accordance with this paragraph. The
Subadviser agrees to provide the Adviser and the
Fund with copies of its policy with respect to
allocation of brokerage on trades for the Fund.
Subject to review by the Trustees of appropriate
policies and procedures, the Subadviser may cause
the Fund to pay a broker a commission for effecting
a portfolio transaction, in excess of the
commission another broker would have charged for
effecting the same transaction. If the first
broker provided brokerage and/or research services,
including statistical data, to the Subadviser, 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
acting according to such authorization.
(ii) Aggregate Transactions. In executing
portfolio transactions for the Fund, the Subadviser
may, but will not be obligated to, aggregate the
securities to be sold or purchased with those of
its other clients where such aggregation is not
inconsistent with the policies of the Fund, to the
extent permitted by applicable laws and
regulations. If the Subadviser chooses to
aggregate sales or purchases, it will allocate the
securities as well as the expenses incurred in the
transaction in the manner it considers to be the
most equitable and consistent with its fiduciary
obligations to the Fund and its other clients
involved in the transaction..
(iii) Directed Brokerage. The Adviser may
direct the Subadviser to use a particular broker or
dealer for one or more trades if, in the sole
opinion of the Adviser, it is in the best interest
of the Fund to do so.
(iv) Brokerage Accounts. The Adviser
authorizes and empowers the Subadviser to direct
the Fund's custodian to open and maintain brokerage
accounts for securities and other property,
including financial and commodity futures and
commodities and options thereon (all such accounts
hereinafter called "brokerage accounts") for and in
the name of the Fund and to execute for the Fund as
its agent and attorney-in-fact standard customer
agreements with such broker or brokers as the
Subadviser shall select as provided above. The
Subadviser may, using such of the securitites and
other property in the Fund as the Subadviser deems
necessary or desirable, direct the Fund's custodian
to deposit for the Fund original and maintenance
brokerage and margin deposits and otherwise direct
payments of cash, cash equivalents and securities
and other property into such brokerage accounts and
to such brokers as the Subadviser deems desirable
or appropriate
(g) Social Screening. The Adviser is responsible for
screening those investments of the Fund subject to social screening
("Securities") to determine that the Securities investments meet the
Fund's social investment criteria, as may be amended from time to
time by the Trustees and for notifying the Subadviser of its
determination. The Subadviser will buy only those Securities
permitted by the Fund's investment program which the Adviser
determines pass the Fund's social screens and of which the Adviser
has notified the Subadviser. In the event that the Adviser notifies
the Subadviser that a security already in the Fund's portfolio no
longer passes the Fund's social screen, the Adviser shall instruct
the Subadviser whether the Subadviser should dispose of the security
immediately or at such time as the Subadviser believes would be least
detrimental to the Fund. To the extent instructed by the Adviser,
the Subadviser shall have no liability for the disposition of any
securities under this paragraph. With respect to this paragraph, the
form of notification shall be mutually agreed upon by the parties.
(h) Voting Proxies. The Subadviser agrees to take
appropriate action (which includes voting) on all proxies for the
Fund's portfolio investments in a timely manner in accordance with the
Adviser's Proxy Voting Guidelines, a copy of which has been provided
to the Subadviser.
(i) Furnishing Information for the Fund's Proxies and
Other Required Mailings. The Subadviser agrees to provide the
Adviser in a timely manner with all information necessary, including
information concerning the Subadviser's controlling persons, for
preparation of the Fund's proxy statements or other required
mailings, as may be needed from time to time.
2. Books and Records.
(a) In connection with the purchase and sale of the
Fund's portfolio securities, the Subadviser shall arrange for the
transmission to the Fund's custodian, and/or the Adviser on a daily
basis, of such confirmations, trade tickets or other documentation as
may be necessary to enable the Adviser to perform its accounting and
administrative responsibilities with respect to the management of the
Fund.
(b) Pursuant to Rule 31a-3 under the 1940 Act, Rule
204-2 under the Investment Advisers Act of 1940, and any other
applicable laws, rules or regulations regarding recordkeeping, the
Subadviser agrees that: (i) all records it maintains for the Fund
are the property of the Fund; (ii) it will surrender promptly to the
Fund or Adviser any such records upon the Fund's or Adviser's
request; (iii) it will maintain for the Fund the records that the
Fund is required to maintain under Rule 31a-1(b) or any other
applicable rule insofar as such records relate to the investment
affairs of the Fund for which the Subadviser has responsibility under
this Agreement; and (iv) it will preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records it maintains for the
Fund.
(c) The Subadviser represents that it has adopted and
will maintain at all times a suitable Code of Ethics that covers its
activities with respect to its services to the Fund.
(d) The Subadviser shall supply to the Fund Board its
policies on "soft dollars," trade allocations and brokerage
allocation procedures. The Subadviser shall maintain appropriate
fidelity bond and errors and omission insurance policies.
3. Exclusivity. Each party and its affiliates may have
advisory, management service or other agreements with other organizations and
persons, and may have other interests and businesses; provided, however, that
during the term of the Agreement, the Subadviser will not provide investment
advisory services ("Services") to any other investment company offered to the
public and registered under the 1940 Act which is "socially screened" except
to the extent that, as of October 1, 1997, the Subadviser has entered into a
written agreement(s) to provide such Services or to the extent mutually agreed
upon in writing between the parties.
4. Compensation. The Adviser will pay to the Subadviser as
compensation for the Subadviser's services rendered pursuant to this Agreement
an annual Subadvisory fee as specified in one or more Schedules attached
hereto and made part of this Agreement. Such fees shall be paid by the
Adviser (and not by the Fund). Such fees shall be payable for each month
within 15 business days after the end of such month. If the Subadviser shall
serve for less than the whole of a month, the compensation as specified shall
be prorated based on the portion of the month for which services were
provided. The Schedules may be amended from time to time, in writing agreed to
by the Adviser and the Subadviser, provided that amendments are made in
conformity with applicable laws and regulations and the Declaration of Trust
and Bylaws of the Fund. Any change in the Schedule pertaining to any new or
existing series of the Fund shall not be deemed to affect the interest of any
other series of the Fund and shall not require the approval of shareholders of
any other series of the Fund.
5. Assignment and Amendment of Agreement. This Agreement
automatically shall terminate without the payment of any penalty in the event
of its assignment (as defined under the 0000 Xxx) or if the Investment
Advisory Agreement between the Adviser and the Fund shall terminate for any
reason. This Agreement constitutes the entire agreement between the parties,
and may not be amended except in a writing signed by both parties. This
Agreement shall not be materially amended unless, if required by Securities
and Exchange Commission rules and regulations, such amendment is approved by
the affirmative vote of a majority of the outstanding shares of the Fund, and
by the vote, cast in person at a meeting called for the purpose of voting on
such approval, of a majority of the Trustees of The Xxxxxxx Fund who are not
interested persons of the Fund, the Adviser or the Subadviser.
6. Duration and Termination of the Agreement. This Agreement
shall become effective upon its execution; provided, however, that this
Agreement shall not become effective with respect to any Fund now existing or
hereafter created unless it has first been approved (a) by a vote of the
majority of those Trustees of The Xxxxxxx Fund who are not parties to this
Agreement or interested persons of such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by a vote of a
majority of that Fund's outstanding voting securities. This Agreement shall
remain in full force and effect with respect to a Fund continuously thereafter
(unless terminated automatically as set forth in Section 5.) except as follows:
(a) The Xxxxxxx Fund may at any time terminate this
Agreement without penalty with respect to any or all Funds by
providing not less than 60 days written notice delivered or mailed by
registered mail, postage prepaid, to the Adviser and the Subadviser.
Such termination can be authorized by the affirmative vote of a
majority of the (i) Trustees of The Xxxxxxx Fund or (ii) outstanding
voting securities of the applicable Fund.
(b) This Agreement will terminate automatically with
respect to a fund unless, by January 1, 1999, and at least annually
thereafter, the continuance of the Agreement is specifically approved
by (i) the Trustees of The Xxxxxxx Fund or the shareholders of such
Fund by the affirmative vote of a majority of the outstanding shares
of such Fund, and (ii) a majority of the Trustees of The Xxxxxxx Fund
who are not interested persons of the Fund, Adviser or Subadviser, by
vote cast in person at a meeting called for the purpose of voting on
such approval. If the continuance of this Agreement is submitted to
the shareholders of any series for their approval and such
shareholders fail to approve such continuance as provided herein, the
Subadviser may continue to serve hereunder in a manner consistent
with the 1940 Act and the rules and regulations thereunder.
(c) The Adviser may at any time terminate this
Agreement with respect to any or all Funds by not less than 60 days
written notice delivered or mailed by registered mail, postage
prepaid, to the Subadviser, and the Subadviser may at any time
terminate this Agreement with respect to any or all Funds by not less
than 90 days written notice delivered or mailed by registered mail,
postage prepaid, to the Adviser, unless otherwise mutually agreed in
writing.
(d) The Adviser may terminate this Agreement with
respect to any or all Funds immediately by written notice if the
Confidentiality and Non-Use Agreement referred to in Section II of
this Agreement is, in the sole opinion of the Adviser violated.
Upon termination of this Agreement with respect to any Fund, the
duties of the Adviser delegated to the Subadviser under this Agreement with
respect to such Fund automatically shall revert to the Adviser.
7. Notification to the Adviser. The Subadviser promptly shall
notify the Adviser in writing of the occurrence of any of the following events:
(a) the Subadviser shall fail to qualify as a "bank" under
the Investment Advisers Act of 1940, as amended;
(b) the Subadviser shall have been served or otherwise have
notice of any action, suit, proceeding, inquiry or investigation, at
law or in equity, before or by any court, public board or body,
directly involving the affairs of the Fund;
(c) a material violation of the Subadviser's Code of Ethics
is discovered and, again, when action has been taken to rectify such
violations; or
(d) any other event, including but not limited to, a change
in executive personnel or the addition or loss of major clients of
the Subadviser that might affect the ability of the Subadviser to
provide the Services provided for under this Agreement.
8. Definitions. For the purposes of this Agreement, the terms
"vote of a majority of the outstanding Shares," "affiliated person," "control,"
"interested person" and "assignment" shall have their respective meanings as
defined in the 1940 Act and the rules and regulations thereunder subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission under said Act; and the term "specifically approve at least
annually" shall be construed in a manner consistent with the 1940 Act and the
rules and regulations thereunder.
9. Indemnification. The Subadviser shall indemnify and hold
harmless the Adviser, the Fund and their respective trustees, directors,
officers and shareholders from any and all claims, losses, expenses,
obligations and liabilities (including reasonable attorneys fees) arising or
resulting from the Subadviser's willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties hereunder.
The Adviser shall indemnify and hold harmless the Subadviser, the
Fund and their respective Trustees, directors, officers, employees and agents
and shareholders from any and all claims, losses, expenses, obligations and
liabilities (including reasonable attorneys fees) arising or resulting from
the Adviser's willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties hereunder or under its Investment Advisory Agreement
with the Fund.
10. Applicable Law and Jurisdiction. This Agreement shall be
governed by Maryland law, and any dispute arising from this Agreement or the
services rendered hereunder shall be resolved through legal proceedings,
whether state, federal, or otherwise, conducted in the state of Maryland or in
such other manner or jurisdiction as shall be mutually agreed upon by the
parties hereto.
11. Confidentiality. This Agreement is not binding on the
Adviser unless the Subadviser has signed and is subject to a confidentiality
and non-use agreement ("Non-Use Agreement") not materially different than the
one attached hereto as Exhibit 1. For a period of two (2) years from the date
of termination of this Agreement, the Subadviser shall not attempt to develop,
market or sell any product which uses or employs any Confidential Information,
as that term is defined in the Non-Use Agreement.
12. Miscellaneous. Notices of any kind to be given to a party
hereunder shall be in writing and shall be duly given if mailed, delivered or
communicated by answer back facsimile transmission to such party at the
address set forth below, attention President, or at such other address or to
such other person as a party may from time to time specify.
Subadviser agrees that for a period of two (2) years from the date of
termination of this Agreement, it shall not directly or indirectly, hire,
employ or engage, or attempt to hire, employ or engage any employee of the
Adviser or any affiliate thereof without the prior written permission of the
Adviser.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof. The
captions in this Agreement are included for convenience only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect.
Each party represents and warrants that it has all requisite
authority to enter into and carry out its responsibilities under this
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be signed in duplicate on its behalf by its duly authorized representative,
all as of the day and year first written above.
Witness: Xxxxxxx Asset Management
Company, Inc.
0000 Xxxxxxxxxx Xxxxxx,
Xxxxx 0000X
Xxxxxxxx, Xxxxxxxx 00000
By:_______________________
By:_______________________
Witness: State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx
00000
Attn.: Compliance
Officer.
By:________________________
By:________________________
CONFIDENTIALITY AND NON-USE AGREEMENT
THIS AGREEMENT is entered into this ____ day of _____, 1997, by and
between Xxxxxxx Group, Ltd. a Delaware corporation (hereinafter "Xxxxxxx") and
State Street Bank and Trust, a Massachusetts corporation (hereinafter
"Recipient").
RECITALS:
WHEREAS, Xxxxxxx has developed certain confidential and proprietary
technology and materials relating to investment products;
WHEREAS, Recipient is interested in entering into a business
relationship with Xxxxxxx to develop and market such products; and
WHEREAS, Recipient is prepared to provide assurances to Xxxxxxx
regarding the protection of such proprietary information of Xxxxxxx.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and intending to be legally bound hereby, the
parties agree as follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings set forth below:
1.1 "Confidential Information" shall mean any
non-public information provided by Xxxxxxx relating to the securities that
Xxxxxxx considers to have passed its screens, the list of such securities, and
the screening process used by Xxxxxxx and its affiliates to determine
appropriate securities to be purchased by the Product, including, but not
limited to, the lists of securities comprising the Product, and written
materials relating to the foregoing, whether visually observed by Recipient or
otherwise disclosed by Xxxxxxx to Recipient.
1.2 "Products" shall mean Xxxxxxx'x socially
responsible investment products, including mutual funds.
1.3 "Purpose" shall mean Recipient's activities under
the Investment Subadvisory Agreement between Xxxxxxx Asset Management Company,
Inc. and Recipient dated as of _______ (the "Advisory Agreement").
ARTICLE 2. CONFIDENTIALITY AND NON-USE
2.1 Recipient agrees that it shall only utilize the
Confidential Information for the Purpose and only until Xxxxxxx notifies
Recipient in writing to cease all use of the Confidential Information and
return the same to Xxxxxxx, which demands Recipient shall properly perform,
and Recipient shall not disclose any Confidential Information to any third
party.
2.2 The attendance at any discussion, meeting or
presentation of any Confidential Information to Recipient to its employees
shall be limited to those employees whose duties justify their need to be
present or to know such information and then only on the basis of a clear
understanding by such employees of their obligation to maintain the
confidentiality of such information and to restrict the use thereof solely for
the Purpose.
2.3 Recipient shall not, directly or indirectly, copy
or use any Confidential Information other than for the Purpose.
2.4 For a period of two (2) years from the date hereof,
Recipient shall not and shall not attempt to develop, market or sell any
product or use any information which performs functions the same as or similar
to the Product or the Confidential Information.
2.5 Recipient agrees that for a period of two (2) years
from the date hereof, it shall not directly or indirectly, hire, employ or
engage, or attempt to hire, employ or engage any employee, agent or consultant
or representative of Xxxxxxx without the prior written permission of Xxxxxxx.
2.6 Recipient agrees that all rights in and to the
Confidential Information, whether under patent, trademark, copyright or any
application therefor, trade secret, know-how, or other proprietary rights,
belong to Xxxxxxx and that no licenses relating to the foregoing or to the
Confidential Information are granted under this Agreement.
2.7 Recipient acknowledges that Confidential
Information supplied by Xxxxxxx in or reduced to written or other tangible
form is the property of Xxxxxxx and, upon written request, shall no longer be
used by Recipient, and be promptly returned to Xxxxxxx together with all
reproductions thereof, in any form, with Recipient may have in its possession
or under its control.
2.8 The obligations of Recipient under Section 2.1
above shall not apply to any information which:
2.8.1 is or becomes generally publicly available, as
evidenced by published material, through no action or failure to take action
by Recipient;
2.8.2 becomes available to Recipient from a third party
which received such information on an unrestricted basis; or
2.8.3 is already known to Recipient prior to receipt from
Xxxxxxx as can be shown by the written records of Recipient.
2.8.4 is required to be disclosed by law or legal
proceedings, subpoena, civil investigative demand or other similar
process, provided that Xxxxxxx is given timely notice of any such
request so that Xxxxxxx may seek relief or other appropriate remedy;
2.8.5 is required to be disclosed to the
Securities and Exchange Commission or any other regulatory body with authority
over the Products, including in a required filing; or
2.8.6 is disclosed with the consent of Xxxxxxx or one of
its affiliates.
2.9 Recipient shall not remove any proprietary notice
from any Confidential Information.
2.10 Recipient agrees that Xxxxxxx would be irreparably
harmed by a violation of this Agreement and that monetary damages for such
breach would not be readily calculable and that Xxxxxxx would not have an
adequate remedy at law therefor and Recipient acknowledges, consents and
agrees that (i) the U.S. District Court for the State of Maryland shall have
personal jurisdiction over Recipient to adjudicate any remedy available to
Xxxxxxx for such breach, and (ii) Xxxxxxx shall be entitled to equitable
relief, including injunctive relief and/or specific performance, in the event
of any actual, threatened or likely breach of this Agreement, in addition to
all other remedies available to Xxxxxxx at law or in equity.
ARTICLE 3. MISCELLANEOUS
3.1 Xxxxxxx hereby expressly disclaims any and all
warranties, express or implied, arising from or relating to the demonstration,
operation, use or implementation of the Confidential Information and under no
circumstances will Xxxxxxx be liable hereunder for damages, whether direct,
special, incidental, or consequential, including without limitation, lost
profits or loss resulting from business interruption, and whether in tort,
negligence, contract or otherwise. This in no way limits any liability
Xxxxxxx or its affiliates may have under the terms of the Advisory Agreement.
3.2 This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns and
legal representatives; provided that, neither this Agreement nor any of
Recipient's rights, privileges, duties or obligations under this Agreement may
be assigned, sublicensed, sold, mortgaged, pledged or otherwise transferred or
encumbered by Recipient.
3.3 This Agreement and any claim arising hereunder or
relating hereto will be governed by and interpreted in accordance with the
laws and adjudicated in the State of Maryland without regard to the conflicts
of laws provisions thereof.
3.4 No waiver by Xxxxxxx of any breach of this
Agreement will constitute a waiver of any other breach of the same or other
provisions of the Agreement. No waiver by Xxxxxxx unless made in writing and
signed by both Xxxxxxx.
3.5 If any provision in this Agreement is invalid or
unenforceable in any circumstances, its application in any other circumstances
and the remaining provisions of this Agreement will not be affected thereby.
3.6 This Agreement constitutes the entire agreement and
understanding of the parties relating to the subject matter hereof and no
representative, condition, understanding or agreement of any kind, oral or
written, will be binding upon the parties unless expressly set forth herein.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
Witness: Xxxxxxx Group, Ltd.
By:_______________________
By:______________________________
Witness: State Street Bank and
Trust Company
By:________________________
By:_______________________________
