SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 28th day of June, 1999 by and between Xxxxxx
Xxxxxxx Xxxx Xxxxxx Advisors Inc., a Delaware corporation (herein referred to
as the "Investment Manager"), and TCW Funds Management, Inc., a California
Corporation, (herein referred to as the "Sub-Advisor").
WHEREAS, Xxxxxx Xxxxxxx Xxxx Xxxxxx Small Cap Growth Fund (herein referred
to as the "Fund") is engaged in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (the "Act"); and
WHEREAS, the Investment Manager has entered into an Investment Management
Agreement with the Fund (the "Investment Management Agreement") wherein the
Investment Manager has agreed to provide investment management services to the
Fund; and
WHEREAS, the Sub-Advisor is registered as an investment advisor under the
Investment Advisors Act of 1940, and engages in the business of acting as an
investment advisor; and
WHEREAS, the Investment Manager desires to retain the services of the
Sub-Advisor to render investment advisory services for the Fund in the manner
and on the terms and conditions hereinafter set forth; and
WHEREAS, the Sub-Advisor desires to be retained by the Investment Manager
to perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to the supervision of the Fund, its officers and Trustees, and
the Investment Manager, and in accordance with the investment objectives,
policies and restrictions set forth in the then-current Registration Statement
relating to the Fund, and such investment objectives, policies and restrictions
from time to time prescribed by the Trustees of the Fund and communicated by
the Investment Manager to the Sub-Advisor, the Sub-Advisor agrees to provide
the Fund with investment advisory services with respect to the Fund's
investments to obtain and evaluate such information and advice relating to the
economy, securities markets and securities as it deems necessary or useful to
discharge its duties hereunder; to continuously manage the assets of the Fund
in a manner consistent with the investment objective and policies of the Fund;
to make decisions as to foreign currency matters and make determinations as to
forward foreign exchange contracts and options and futures contracts in foreign
currencies; shall determine the securities to be purchased, sold or otherwise
disposed of by the Fund and the timing of such purchases, sales and
dispositions; to take such further action, including the placing of purchase
and sale orders on behalf of the Fund, as it shall deem necessary or
appropriate; to furnish to or place at the disposal of the Fund and the
Investment Manager such of the information, evaluations, analyses and opinions
formulated or obtained by it in the discharge of its duties as the Fund and the
Investment Manager may, from time to time, reasonably request. The Investment
Manager and the Sub-Advisor shall each make its officers and employees
available to the other from time to time at reasonable times to review
investment policies of the Fund and to consult with each other.
2. The Sub-Advisor shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it shall
from time to time determine to be necessary or useful to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Sub-Advisor shall be deemed to
include persons employed or otherwise retained by the Sub-Advisor to furnish
statistical and other factual data, advice regarding economic factors and
trends, information with respect to technical and scientific developments, and
such other information, advice and assistance as the Investment Manager may
desire. The Sub-Advisor shall maintain whatever records as may be required to
be maintained by it under the Act. All such records so maintained shall be made
available to the Fund, upon the request of the Investment Manager or the Fund.
3. The Fund will, from time to time, furnish or otherwise make available
to the Sub-Advisor such financial reports, proxy statements and other
information relating to the business and affairs of the Fund
1
as the Sub-Advisor may reasonably require in order to discharge its duties and
obligations hereunder or to comply with any applicable law and regulations and
the investment objectives, policies and restrictions from time to time
prescribed by the Trustees of the Fund.
4. The Sub-Advisor shall bear the cost of rendering the investment
advisory services to be performed by it under this Agreement, and shall, at its
own expense, pay the compensation of the officers and employees, if any, of the
Fund, employed by the Sub-Advisor, and such clerical help and bookkeeping
services as the Sub-Advisor shall reasonably require in performing its duties
hereunder.
5. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including, without limitation: any fees paid to the Investment
Manager; fees pursuant to any plan of distribution that the Fund may adopt; the
charges and expenses of any registrar, any custodian, sub-custodian or
depository appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property, and any stock transfer or dividend agent or
agents appointed by the Fund; brokers' commissions chargeable to the Fund in
connection with portfolio securities transactions to which the Fund is a party;
all taxes, including securities issuance and transfer taxes, and fees payable
by the Fund to federal, state or other governmental agencies or pursuant to any
foreign laws; the cost and expense of engraving or printing certificates
representing shares of the Fund; all costs and expenses in connection with the
registration and maintenance of registration of the Fund and its shares with
the Securities and Exchange Commission and various states and other
jurisdictions or pursuant to any foreign laws (including filing fees and legal
fees and disbursements of counsel); the cost and expense of printing (including
typesetting) and distributing prospectuses of the Fund and supplements thereto
to the Fund's shareholders; all expenses of shareholders' and Trustees'
meetings and of preparing, printing and mailing proxy statements and reports to
shareholders; fees and travel expenses of Trustees or members of any advisory
board or committee who are not employees of the Investment Manager or
Sub-Advisor; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption whether in shares or in cash; charges
and expenses of any outside service used for pricing of the Fund's shares;
charges and expenses of legal counsel, including counsel to the Trustees of the
Fund who are not interested persons (as defined in the Act) of the Fund, the
Investment Manager or the Sub-Advisor, and of independent accountants, in
connection with any matter relating to the Fund; membership dues of industry
associations; interest payable on Fund borrowings; postage; insurance premiums
on property or personnel (including officers and Trustees) of the Fund which
inure to its benefit; extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs of the Fund's operation
unless otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Sub-Advisor, the Investment Manager shall pay to the
Sub-Advisor monthly compensation equal to 40% of its monthly compensation
receivable pursuant to the Investment Management Agreement. Any subsequent
change in the Investment Management Agreement which has the effect of raising
or lowering the compensation of the Investment Manager will have the
concomitant effect of raising or lowering the fee payable to the Sub-Advisor
under this Agreement. In addition, if the Investment Manager has undertaken in
the Fund's Registration Statement as filed under the Act (the "Registration
Statement") or elsewhere to waive all or part of its fee under the Investment
Management Agreement, the Sub-Advisor's fee payable under this Agreement will
be proportionately waived in whole or in part. The calculation of the fee
payable to the Sub-Advisor pursuant to this Agreement will be made, each month,
at the time designated for the monthly calculation of the fee payable to the
Investment Manager pursuant to the Investment Management Agreement. If this
Agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for the part of the
month this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fee as set forth above. Subject to the provisions of
paragraph 7 hereof, payment of the Sub-Advisor's compensation for the preceding
month shall be made as promptly as possible after completion of the
computations contemplated by paragraph 7 hereof.
7. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to the Investment Management
Agreement, for any fiscal year ending on a date on which this Agreement is in
effect, exceed the expense limitations applicable to the Fund imposed by state
2
securities laws or regulations thereunder, as such limitations may be raised or
lowered from time to time, the Sub-Advisor shall reduce its advisory fee to the
extent of 40% of such excess and, if required, pursuant to any such laws or
regulations, will reimburse the Investment Manager for annual operating
expenses in the amount of 40% of such excess of any expense limitation that may
be applicable, it being understood that the Investment Manager has agreed to
effect a reduction and reimbursement of 100% of such excess in accordance with
the terms of the Investment Management Agreement; provided, however, there
shall be excluded from such expenses the amount of any interest, taxes,
brokerage commissions, distribution fees and extraordinary expenses (including
but not limited to legal claims and liabilities and litigation costs and any
indemnification related thereto) paid or payable by the Fund. Such reduction,
if any, shall be computed and accrued daily, shall be settled on a monthly
basis, and shall be based upon the expense limitation applicable to the Fund as
at the end of the last business day of the month. Should two or more such
expense limitations be applicable as at the end of the last business day of the
month, that expense limitation which results in the largest reduction in the
Investment Manager's fee or the largest expense reimbursement shall be
applicable. For purposes of this provision, should any applicable expense
limitation be based upon the gross income of the Fund, such gross income shall
include, but not be limited to, interest on debt securities in the Fund's
portfolio accrued to and including the last day of the Fund's fiscal year, and
dividends declared on equity securities in the Fund's portfolio, the record
dates for which fall on or prior to the last day of such fiscal year, but shall
not include gains from the sale of securities.
8. The Sub-Advisor will use its best efforts in the performance of
investment activities on behalf of the Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Sub-Advisor shall not be liable to the Investment
Manager or the Fund or any of its investors for any error of judgment or
mistake of law or for any act or omission by the Sub-Advisor or for any losses
sustained by the Fund or its investors.
9. It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee of,
or be otherwise interested in, the Sub-Advisor, and in any person controlled by
or under common control with the Sub-Advisor, and that the Sub-Advisor and any
person controlled by or under common control with the Sub-Advisor may have an
interest in the Fund. It is also understood that the Sub-Advisor and any
affiliated persons thereof or any persons controlled by or under common control
with the Sub-Advisor have and may have advisory, management service or other
contracts with other organizations and persons, and may have other interests
and businesses, and further may purchase, sell or trade any securities or
commodities for their own accounts or for the account of others for whom they
may be acting.
10. This Agreement shall remain in effect until April 30, 2000 and from
year to year thereafter provided such continuance is approved at least annually
by the vote of holders of a majority, as defined in the Act, of the outstanding
voting securities of the Fund or by the Trustees of the Fund; provided, that in
either event such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party, which vote must
be cast in person at a meeting called for the purpose of voting on such
approval; provided, however, that (a) the Fund may, at any time and without the
payment of any penalty, terminate this Agreement upon thirty days' written
notice to the Investment Manager and the Sub-Advisor, either by majority vote
of the Trustees of the Fund or by the vote of a majority of the outstanding
voting securities of the Fund; (b) this Agreement shall immediately terminate
in the event of its assignment (within the meaning of the Act) unless such
automatic termination shall be prevented by an exemptive order of the
Securities and Exchange Commission; (c) this Agreement shall immediately
terminate in the event of the termination of the Investment Management
Agreement; (d) the Investment Manager may terminate this Agreement without
payment of penalty on thirty days' written notice to the Fund and the
Sub-Advisor and; (e) the Sub-Advisor may terminate this Agreement without the
payment of penalty on thirty days' written notice to the Fund and the
Investment Manager. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed post-paid, to the other party at the
principal office of such party.
11. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund to supply any omission, to cure,
correct or supplement any ambiguous, defective or
3
inconsistent provision hereof, or if they deem it necessary to conform this
Agreement to the requirements of applicable federal laws or regulations, but
neither the Fund, the Investment Manager nor the Sub-Advisor shall be liable
for failing to do so.
12. This Agreement shall be construed in accordance with the law of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
XXXXXX XXXXXXX XXXX XXXXXX
ADVISORS INC.
By:_______________________________________
Attest:___________________________________
TCW FUNDS MANAGEMENT, INC.
By:_______________________________________
Attest:___________________________________
Accepted and agreed to as of the day and year first above written:
XXXXXX XXXXXXX XXXX XXXXXX
SMALL CAP GROWTH FUND
By:_______________________________________
Attest:___________________________________
4
