SUBADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT is made as of the 20th day of January, 2004
("Agreement"), among Regions Xxxxxx Xxxxxx Select Funds, a Massachusetts
business trust ("Trust"), Xxxxxx Asset Management, Inc., a Tennessee corporation
("Adviser") and Channing Capital Management, Inc., a Delaware corporation
("Sub-Adviser").
WHEREAS, the Adviser has entered into an Advisory Agreement dated August 8,
2003 ("Advisory Agreement") with the Trust, an open-end management investment
company registered under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Regions Xxxxxx Xxxxxx Select Strategic Equity Fund ("Fund") is
a series of the Trust; and
WHEREAS, under the Advisory Agreement, the Adviser has agreed to provide
certain investment advisory services to the Fund; and
WHEREAS, the Adviser desires to delegate to the Sub-Adviser its investment
advisory responsibilities with respect to the Fund; and
WHEREAS, the Sub-Adviser is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Trust, Adviser and the Sub-Adviser agree as follows:
1. APPOINTMENT. Adviser hereby appoints and employs the Sub-Adviser as an
investment sub-adviser, on the terms and conditions set forth herein, of the
Fund.
2. ACCEPTANCE OF APPOINTMENT. The Sub-Adviser accepts that appointment
and agrees to render the services herein set forth, for the compensation herein
provided.
3. DUTIES AS SUB-ADVISER.
A. Subject to, and in accordance with, the supervision and direction of
the Trust's Board of Trustees ("Board") and of the Adviser, and all written
guidelines adopted by the Board and/or the Adviser that are provided to the
Sub-Adviser, the Sub-Adviser will provide a continuous investment program with
respect to the Fund, including investment research and management for all
securities and investments and cash equivalents in the Fund. The Sub-Adviser
will determine from time to time what investments will be purchased, retained or
sold by the Fund. The Sub-Adviser will be responsible for placing purchase and
sell orders for investments and for other related transactions with respect to
the Fund. The Sub-Adviser will provide services under this Agreement in
accordance with the Fund's investment objective, policies and restrictions as
stated in the Trust's currently effective registration statement under the 1940
Act, and any amendments or supplements thereto ("Registration Statement").
B. The Sub-Adviser agrees that, in placing orders with brokers, it will
seek to obtain the best net result in terms of price and execution; provided
that, on behalf of the Fund, the Sub-Adviser may, in its discretion, use brokers
(including brokers that may be affiliates of the Sub-Adviser to the extent
permitted by Section 3(c) hereof) who provide the Sub-Adviser with research,
analysis, advice and similar services to execute portfolio transactions, and the
Sub-Adviser may pay to those brokers in return for brokerage and research
services a higher commission than may be charged by other brokers, subject to
the Sub-Adviser's determining in good faith that such commission is reasonable
in terms either of the particular transaction or of the overall responsibility
of the Sub-Adviser to the Fund and its other clients and that the total
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commissions paid by the Fund will be reasonable in relation to the benefits to
the Fund over the long term. In no instance will portfolio securities be
purchased from or sold to the Sub-Adviser, or any affiliated person thereof,
except in accordance with the federal securities laws and the rules and
regulations thereunder. Whenever the Sub-Adviser simultaneously places orders to
purchase or sell the same security on behalf of the Fund and one or more other
accounts advised by the Sub-Adviser, the orders will be allocated as to price
and amount among all such accounts in a manner believed to be equitable over
time to each account. The Adviser recognizes that in some cases this procedure
may adversely affect the results obtained for the Fund.
C. The Sub-Adviser will maintain all books and records required to be
maintained pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to actions by the Sub-Adviser on behalf of the Fund, and
will furnish the Board and the Adviser with such periodic and special reports as
the Board or the Adviser reasonably may request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees
that all records that it creates and/or maintains for the Fund are the property
of the Trust, agrees to preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any records that it maintains for the Trust and that are required
to be maintained by Rule 31a-1 under the 1940 Act, and further agrees to
surrender promptly to the Trust any records that it maintains for the Fund upon
request by the Trust.
D. All transactions will be consummated by payment to or delivery by the
custodian designated by the Trust (the "Custodian"), or such depositories or
agents as may be designated by the Custodian in writing, of all cash and/or
securities due to or from the Fund, and the Sub-Adviser shall not have
possession or custody thereof. The Sub-Adviser shall advise the Custodian and
confirm in writing to the Trust and to the Adviser or any other designated agent
of the Fund, all investment orders for the Fund placed by it with brokers and
dealers at the time and in the manner set forth in Rule 31a-1 under the 1940
Act. The Trust shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated by
the Sub-Adviser.
E. At such times as shall be reasonably requested by the Board or the
Adviser, the Sub-Adviser will provide the Board and the Adviser with economic
and investment analyses and reports as well as quarterly and annual reports
setting forth the performance of the Fund and make available to the Board and
Adviser any economic, statistical and investment services that the Sub-Adviser
normally makes available to its institutional or other customers.
F. In accordance with procedures adopted by the Board, as amended from
time to time, the Sub-Adviser is responsible for assisting in the fair valuation
of all portfolio securities and will use its reasonable efforts to arrange for
the provision of valuation information or a price(s) from a party(ies)
independent of the Sub-Adviser for each portfolio security for which the
custodian does not obtain prices in the ordinary course of business from an
automated pricing service.
4. FURTHER DUTIES. In all matters relating to the performance of this
Agreement, the Sub-Adviser will act in conformity with the Trust's Restated and
Amended Declaration of Trust, By-Laws and Registration Statement and with the
written instructions and written directions of the Board and the Adviser; and
will comply with the requirements of the 1940 Act and the Investment Advisers
Act of 1940, as amended ("Advisers Act") and the rules under each, and all other
federal and state laws and regulations applicable to the Trust and the Fund. The
Adviser agrees to provide to the Sub-Adviser copies of the Trust's Restated and
Amended Declaration of Trust, By-Laws and Registration Statement, written
instructions and directions of the Board and the Adviser, and any amendments or
supplements to any of these materials as soon as practicable after such
materials become available.
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5. PROXIES. The Sub-Adviser will vote all proxies solicited by or with
respect to issuers of securities in which assets of the Fund may be invested
from time to time and will maintain records of such voting in compliance with
the requirements of Rule 30b1-4 and Form N-PX under the 1940 Act. At the request
of the Sub-Adviser, the Adviser shall provide the Sub-Adviser with its or the
Trust's recommendations as to the voting of such proxies.
6. EXPENSES. During the term of this Agreement, the Sub-Adviser will bear
all expenses incurred by it in connection with its services under this Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased or sold for the Fund.
7. COMPENSATION. For the services provided and the expenses assumed by
the Sub-Adviser pursuant to this Agreement, Adviser, not the Fund, will pay
Sub-Adviser a sub-advisory fee in accordance with the attached Schedule A.
8. 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, the
Trust, its shareholders or by the Adviser in connection with the matters to
which this Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its services and
duties or from reckless disregard by it of its obligations and duties under this
Agreement. Nothing in this paragraph shall be deemed a limitation or waiver of
any obligation or duty that may not by law be limited or waived.
9. REPRESENTATIONS OF THE TRUST. The Trust represents, warrants and
agrees that:
A. The Sub-Adviser has been duly appointed by the Adviser to provide
investment services to the Fund Account as contemplated hereby.
B. The Trust will deliver to the Sub-Adviser a true and complete copy of
the Fund's Registration Statement as effective from time to time and such other
documents or instruments governing the investment of the Fund and such other
information as is necessary for the Sub-Adviser to carry out its obligations
under this Agreement.
C. The Trust is currently in compliance and shall at all times continue
to comply with the requirements imposed upon the Trust by applicable law and
regulations.
10. REPRESENTATIONS OF THE ADVISER. The Adviser represents, warrants and
agrees that:
A. The Adviser has been duly authorized by the Board of Trustees to
delegate to the Sub-Adviser the provision of investment services to the Fund as
contemplated hereby.
B. The Adviser is currently in compliance and shall at all times continue
to comply with the requirements imposed upon the Adviser by applicable law and
regulations.
11. REPRESENTATIONS OF THE SUB-ADVISER. The Sub-Adviser represents,
warrants and agrees as follows:
A. The Sub-Adviser (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the 1940 Act, the Advisers Act or
other law, regulation or order from performing the services contemplated by this
Agreement; (iii) has met and will seek to continue to meet for so long as this
Agreement remains in effect, any other applicable federal or state requirements,
or the applicable requirements of any regulatory or industry self-regulatory
agency necessary to be met in order to perform the services contemplated by this
Agreement; (iv) has the authority to enter into and perform the services
contemplated by this Agreement; and (v) will promptly notify Adviser of the
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occurrence of any event that would disqualify the Sub-Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the 1940
Act or otherwise. The Sub-Adviser will also immediately notify the Fund and the
Adviser if it is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, involving the affairs of the Fund.
B. The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide the Adviser
and the Board with a copy of such code of ethics, together with evidence of its
adoption. Within forty-five days of the end of the last calendar quarter of each
year that this Agreement is in effect, the president or a vice-president of the
Sub-Adviser shall certify to the Adviser that the Sub-Adviser has complied with
the requirements of Rule 17j-1 during the previous year and that there has been
no violation of the Sub-Adviser's code of ethics or, if such a violation has
occurred, that appropriate action was taken in response to such violation. Upon
the written request of the Adviser, the Sub-Adviser shall permit the Adviser,
its employees or its agents to examine the reports required to be made to the
Sub-Adviser by Rule 17j-1(c)(1) and all other records relevant to the
Sub-Adviser's code of ethics.
C. The Sub-Adviser has provided the Trust and the Adviser with a copy of
its Form ADV, which as of the date of this Agreement is its Form ADV as most
recently filed with the Securities and Exchange Commission ("SEC") and promptly
will furnish a copy of all amendments to the Trust and the Adviser at least
annually.
D. The Sub-Adviser agrees to maintain an appropriate level of errors and
omissions or professional liability insurance coverage.
E. The Sub-Adviser agrees that neither it, nor any of its affiliates,
will in any way refer directly or indirectly to its relationship with the Trust,
the Fund, the Adviser or any of their respective affiliates in offering,
marketing or other promotional materials without the express written consent of
the Adviser.
12. SERVICES NOT EXCLUSIVE. The Sub-Adviser has notified the Trust and the
Adviser of any investment companies registered under the 1940 Act to which it
provides investment advisory services, and the Sub-Adviser will not without the
written consent of the Adviser and the Trust, provide investment advisory
services to any investment company registered under the 1940 Act other than
those it provides such services to as of the date of this agreement. The
services furnished by the Sub-Adviser hereunder are not to be deemed to be
exclusive, and the Sub-Adviser shall be free to furnish similar services to
others, except as noted above and as prohibited by applicable law or agreed upon
in writing among the Sub-Adviser and the Adviser, the Trust or the Fund.
13. CONFIDENTIALITY. Subject to the duty of the Sub-Adviser and the
Adviser to comply with applicable law, including any demand of any regulatory or
taxing authority having jurisdiction, the parties hereto shall treat as
confidential all material non public information pertaining to the Fund and the
actions of the Sub-Adviser, the Adviser and the Fund in respect thereof.
14. EFFECTIVE DATE; TERM.
This Agreement shall continue in effect for two years and from year to year
thereafter only so long as specifically approved annually by (i) vote of a
majority of those trustees of the Trust 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, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of the Fund.
15. ASSIGNMENT. No "assignment" of this Agreement shall be made by the
Sub-Adviser, and this Agreement shall terminate automatically in event of such
assignment. The Sub-Adviser will notify the Adviser of any change of control of
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the Sub-Adviser, including any change of its controlling persons or 25%
shareholders, as applicable, and any changes in the key personnel who are either
the portfolio manager(s) of the Fund or senior management of the Sub-Adviser, in
each case prior to, or promptly after, such change. The Sub-Adviser agrees to
bear all reasonable expenses of the Fund, if any, arising out of such change in
control.
16. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Sub-Adviser, the Trust and the Adviser and, where
required by the 1940 Act, the shareholders of the Fund in the manner required by
the 1940 Act and the rules thereunder.
17. TERMINATION. This Agreement:
A. may at any time be terminated without payment of any penalty by
the Trust (by vote of the Board or by "vote of a majority of the
outstanding voting securities") on sixty (60) days' written
notice to the Adviser and Sub-Adviser;
B. shall immediately terminate in the event of its "assignment" or
upon termination of the Advisory Agreement as it relates to the
Fund;
C. may be terminated by the Adviser on sixty (60) days' written
notice to the Sub-Adviser and the Trust; and
D. may be terminated by the Sub-Adviser at any time after a year
from the date of this agreement on sixty (60) days' written
notice to the Adviser and the Trust.
18. DEFINITIONS. As used in this Agreement, the terms "affiliated person,"
"interested person," "assignment," "broker," "control," "interested person,"
"investment adviser," "net assets," "sale," "sell," "security," and "vote of a
majority of the outstanding voting securities" shall have the meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to any
applicable orders of exemption issued by the SEC.
19. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postage prepaid to the other parties to this
Agreement at their principal place of business.
20. SEVERABILITY. If any provision 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.
21. GOVERNING LAW. To the extent that state law has not been preempted by
the provisions of any law of the United States, this Agreement shall be
administered, construed and enforced according to the laws of the State of
Massachusetts.
22. MISCELLANEOUS. 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. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors. Where the effect of a requirement of the
federal securities laws reflected in any provision of this Agreement is made
less restrictive by a rule, regulation or order of the SEC, whether of special
or general application, such provision shall be deemed to incorporate the effect
of such rule, regulation or order. This Agreement and the Schedule(s) attached
hereto embody the entire agreement and understanding among the parties. This
Agreement may be signed in counterparts.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year
first-above written.
REGIONS XXXXXX XXXXXX SELECT FUNDS
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
By:
---------------------------------------
XXXXXX ASSET MANAGEMENT, INC.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
By:
---------------------------------------
CHANNING CAPITAL MANAGEMENT, INC.
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
By:
---------------------------------------
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SCHEDULE A
SUB-ADVISORY FEES
FEE SCHEDULE
Annualized % of average
Fund daily net assets
---- ----------------
Regions Xxxxxx Xxxxxx Select 32.5%
Strategic Equity Fund ("Fund")
This sub-advisory fee shall be payable quarterly as soon as practicable
after the last day of each quarter based on the average of the daily values
placed on the net assets of the Fund as determined at the close of business on
each day throughout the quarter. The assets of the Fund will be valued
separately as of the close of regular trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time) on each business day throughout the quarter
or, if Regions Xxxxxx Xxxxxx Select Funds ("Trust") lawfully determines the
value of the net assets of the Fund as of some other time on each business day,
as of such time. The first payment of such fee shall be made as promptly as
possible at the end of the quarter next succeeding the effective date of this
Agreement. In the event that Channing Capital Management, Inc. ("Sub-Adviser")'s
right to such fee commences on a date other than the last day of the quarter,
the fee for such quarter shall be based on the average daily assets of the Fund
in that period from the date of commencement to the last day of the quarter. If
the Trust determines the value of the net assets of the Fund more than once on
any business day, the last such determination on that day shall be deemed to be
the sole determination on that day. The value of net assets shall be determined
pursuant to the applicable provisions of the Trust's Restated and Amended, its
By-Laws and the 1940 Act. If, pursuant to such provisions, the determination of
the net asset value of the Fund is suspended for any particular business day,
then the value of the net assets of the Fund on that day shall be deemed to be
the value of its net assets as determined on the preceding business day. If the
determination of the net asset value of the Fund has been suspended for more
than one quarter, the Sub-Adviser's compensation payable at the end of that
quarter shall be computed on the basis of the value of the net assets of the
Fund as last determined (whether during or prior to such quarter).
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