EXHIBIT g(ii)
SUB-ADVISORY AGREEMENT
AGREEMENT made as of this 7th day of October, 1996, by and between PanAgora
Asset Management, Inc. (the "Sub-Adviser"), and F. L. Xxxxxx Investment
Management Company, (the "Manager").
W I T N E S S E T H :
WHEREAS, the Principled Equity Market Fund, a Massachusetts business trust
(the "Fund"), is engaged in business as a closed-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended; and
WHEREAS, each of the Manager and the Sub-Adviser is engaged in the business
of rendering investment advisory services and is registered under the Investment
Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires to retain the Manager to furnish management
services and the Manager desires to retain the Sub-Advisor to furnish certain of
such services, with the approval of the Fund;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
(a) Services Rendered and Expenses Paid by the Sub-Adviser.
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The Sub-Adviser, subject to the control, direction and supervision of
the Board of Trustees of the Fund and in conformity with applicable laws, this
Agreement, the Fund's Declaration of Trust, By-Laws, registration statements and
amendments thereto, prospectuses and statements of additional information as in
effect from time to time, and stated investment objectives, policies and
restrictions, shall, at its own expense:
(i) with full discretion manage the investment and
reinvestment of securities which have been selected by the Manager and
designated by the Manager as Acceptable securities as described in the
Fund's current prospectus from time to time; and
(ii) with full discretion place all orders for the purchase
and sale of such investments and, as requested by the Manager from time
to time, other investments for the Fund's account with brokers or
dealers selected by the Sub-Adviser or the Manager.
(b) In performing the services described in sub-paragraph (ii)
above, the Sub-Adviser shall seek to obtain for the Fund the most
favorable price and execution available. The Sub-Adviser may, to the
extent authorized by law, cause the Fund to pay a broker or dealer that
provides brokerage or research services to the Sub-Adviser or the
Manager or their affiliates an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission
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another broker or dealer would have charged for effecting that
transaction. 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 any investment policy or the purchase, sale, or
retention of any investment on the recommendation of the Sub-Adviser;
provided, however, that nothing herein contained shall be construed to
protect the Sub-Adviser against any liability to the Fund or the
Manager by reason of willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of reckless disregard of
its obligations and duties under this Agreement.
(c) Role of the Sub-Adviser.
(i) The Sub-Adviser, and any person controlling, controlled by
or under common control with the Sub-Adviser, shall be free to render
similar services to others and to engage in other activities, so long
as the services rendered to the Fund are not impaired.
(ii) Except as otherwise required by the Investment Company
Act of 1940, as amended, 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-Adviser, and in any
person controlling, controlled by or under common control with, the
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Sub-Adviser, and the Sub-Adviser, and any person controlling,
controlled by or under common control with the Sub-Adviser, may have an
interest in the Fund.
(iii) Except as otherwise agreed, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations or duties hereunder, the Sub-Adviser shall not be subject
to liability to the Fund or the Manager for any act or omission in the
course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any
security.
(d) Compensation of the Sub-Adviser.
(i) As full compensation for the services rendered,
facilities furnished and expenses paid by the Sub-Adviser under this
Agreement, the Manager agrees to pay to the Sub-Adviser a fee at the
annual rate of .15% of the Fund's average monthly net assets. Such fee
shall be accrued and paid at such intervals, not less frequently than
monthly, as soon as practicable after the end of each month or shorter
period. For purposes of calculating such fee, the Fund's average
monthly net assets shall be determined in the manner provided in the
Fund's prospectus and statement of additional information.
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(ii) If the Sub-Adviser shall serve for less than the whole of
any period, the foregoing compensation shall be prorated.
(e) Term and Termination.
(i) This Agreement shall become effective on the date hereof,
shall remain in full force and effect for two years from the date
hereof and shall continue in full force and effect for successive
periods of one year thereafter, but only so long as each such
continuance is approved at least annually by the Manager and (i) by
either the Board of Trustees of the Fund or by vote of a majority of
the outstanding voting securities of the Fund and in either event and
(ii) by vote of a majority of the Board of Trustees of the Fund who are
not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval.
(ii) This Agreement may be terminated at any time without the
payment of any penalty by vote of the Board of Trustees of the Fund or
by vote of a majority of the outstanding voting securities of the Fund
or by the Manager, or the Sub-Adviser on not more than sixty (60) days,
nor less than thirty (30) days, written notice to the other party, or
upon such shorter notice as may be mutually agreed upon.
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(iii) This Agreement shall automatically terminate in the
event of its assignment.
(f) Miscellaneous. For the purposes of this Agreement, the
terms "affiliated person," "assignment," "interested person," and
"majority of the outstanding voting securities" shall have their
respective meanings defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder, subject, however, to
such exemptions as may be granted to either the Manager or the Fund by
the Securities and Exchange Commission, and the term "brokerage and
research services" shall have the meaning given in the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
(g) Limitation of Liability of the Trustees and Shareholders.
A copy of the Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees
of the Fund as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees, officers
or shareholders of the Fund but are binding only upon the assets and
property of the Fund.
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IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
F. L. XXXXXX INVESTMENT MANAGEMENT
COMPANY
By: /s/Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx, Authorized Officer
PANAGORA ASSET MANAGEMENT, INC.
By: /s/ Xxxxxxxx DeVivo_
Xxxxxxxx XxXxxx, Compliance Officer
Accepted and approved as of the date first above-written:
THE PRINCIPLED EQUITY MARKET FUND
By: /s/Xxxxx X.X. Xxxxxx
Xxxxx X.X. Xxxxxx, President
