EXHIBIT A
To Be Presented to Equity Portfolio
Shareholders for Vote on April 19, 1996
INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT ("Agreement"), effective
__________, 1996, by and between XXXXXXX ASSET MANAGEMENT COMPANY, INC., a
Delaware corporation registered as an investment advisor under the
Investment Advisers Act of 1940 (the "Advisor"), and Xxxxxx, Xxxxxx & Co.,
L.P. a Delaware partnership (the "Subadvisor").
WHEREAS, the Advisor is the investment advisor to Xxxxxxx Social
Investment Fund, an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Advisor desires to retain the Subadvisor to furnish
it with certain investment advisory services in connection with the
Advisor's investment advisory activities on behalf of the Equity
Portfolio, a series of Xxxxxxx Social Investment Fund and any additional
series of Xxxxxxx Social Investment Fund, for which Schedules are attached
hereto (each such series referred to individually as the "Fund");
NOW, THEREFORE, in consideration of the promises and the terms
and conditions hereinafter set forth, it is agreed as follows:
1. Services to be Rendered by the Subadvisor to the Fund.
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(a) Investment Program. Subject to the control of
the Fund's Board of Trustees ("Trustees") and the Advisor, the
Subadvisor at its expense continuously will furnish to the Fund
an investment program for such portion, if any, of Fund assets
designated by the Advisor from time to time. With respect to
such assets, the Subadvisor will make investment decisions, apply
investment selection social screens, as described more fully at
Section 1(g) of this Agreement, to determine that all investments
meet the Fund's social criteria, and will place all orders for
the purchase and sale of portfolio securities. The Subadvisor
shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized,
have no authority to act for or represent the Fund or the Advisor
in any way or otherwise be deemed an agent of the Fund or the
Advisor. In the performance of its duties, the Subadvisor 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, (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 Advisor may establish. The Advisor
shall be responsible for providing the Subadvisor with current
copies of the materials specified in Subsections (a)(iii), (iv),
(v) and (vi) of this Section 1.
(b) Availability of Personnel. The Subadvisor at its
expense will make available to the Trustees and Advisor at
reasonable times its Chief Portfolio Strategist, Xxxxxx X.
Schettewi ("Schettewi"), portfolio managers and other appropriate
personnel, either in person, or, at the mutual convenience of the
Advisor and the Subadvisor, by telephone, in order to review the
Fund's investment policies and to consult with the Trustees and
Advisor regarding the Fund's investment affairs, including
economic, statistical and investment matters relevant to the
Subadvisor's duties hereunder, and will provide periodic reports
to the Advisor relating to the investment strategies it employs.
(c) Expenses, Salaries and Facilities. The
Subadvisor will pay all expenses incurred by it in connection
with its activities under this Agreement, 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 Subadvisor at its
expense will provide the Advisor with such compliance reports
relating to its duties under this Agreement as may be agreed upon
by such parties from time to time.
(e) Valuation. The Subadvisor 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 Subadvisor has
responsibility on a daily basis (unless otherwise agreed upon by
the parties hereto) and at such other times as the Advisor shall
reasonably request.
(f) Executing Portfolio Transactions. In selecting
brokers and dealers to execute purchases and sales of investments
for the Fund, the Subadvisor will use its best efforts to obtain
the most favorable price and execution available in accordance
with this paragraph. The Subadvisor agrees to provide the
Advisor 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 Subadvisor 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 Subadvisor,
the Subadvisor 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.
(g) Social Screening. The Advisor is responsible for
screening all investments to determine that all investments meet
the Fund's social investment criteria, as may be amended from
time to time by the Trustees. The Advisor may, but is not
required to, hire additional parties ("Additional Parties") at
the Advisor's expense to assist with the oversight of the social
screening process. The Subadvisor agrees to fully cooperate with
the Advisor or such Additional Parties.
(h) Voting Proxies. The Subadvisor agrees to vote
all proxies for the Fund's portfolio investments in a timely
manner, subject to the direction of the Trustees and Advisor.
(i) Furnishing Information for the Fund's Proxies.
The Subadvisor agrees to provide the Advisor in a timely manner
with all information necessary, including the Subadvisor's
certified balance sheet and information concerning the
Subadvisor's controlling persons, for preparation of the Fund's
proxy statements, as may be needed from time to time.
2. Books and Records. In connection with the purchase and
sale of the Fund's portfolio securities, the Subadvisor shall arrange for
the transmission to the Fund's custodian, on a daily basis, of such
confirmations, trade tickets or other documentation as may be necessary to
enable the Advisor to perform its accounting and administrative
responsibilities with respect to the management of the Fund. Pursuant to
Rule 31a-3 under the 1940 Act, and any other laws, rules or regulations
regarding recordkeeping, the Subadvisor agrees that: (a) all records it
maintains for the Fund are the property of the Fund; (b) it will surrender
promptly to the Fund or Advisor any such records upon the Fund's or
Advisor's request; (c) it will maintain for the Fund the records that the
Fund is required to maintain under Rule 31a-1(b) insofar as such records
relate to the investment affairs of the Fund for which the Subadvisor has
responsibility under this Agreement; and (d) it will preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records it
maintains for the Fund.
3. Other Agreements, 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 the Subadvisor agrees that it will not
sponsor or provide investment advice to another registered investment
company which is "socially screened", as that term is commonly understood.
Additionally, Subadvisor agrees that Schettewi, will not manage another
registered investment company with a similar investment objective, whether
sponsored by the Subadvisor or others, for a period of twelve (12) months
from the effective date of this Agreement.
4. Compensation. The Advisor will pay to the Subadvisor as
compensation for the Subadvisor'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 Advisor (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
Subadvisor shall serve for less than the whole of a month, the
compensation as specified shall be prorated. The Schedules may be amended
from time to time, 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 or if the Investment Advisory Agreement between
the Advisor and the Fund shall terminate with respect to any series of the
Xxxxxxx Social Investment Fund is applicable for any reason. This
Agreement shall not be materially amended unless, if required by SEC 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 Fund who are not interested persons of
the Fund, the Advisor or the Subadvisor.
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 series
now existing or hereafter created unless it has first been approved (a) by
a vote of the majority of those Trustees of the 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 series' outstanding voting securities or as
otherwise provided by law. This Agreement shall remain in full force and
effect continuously thereafter (unless terminated automatically as set
forth in Section 5) except as follows:
(a) The Fund may at any time terminate this Agreement
without penalty with respect to any or all series by providing
not more than 60 days, written notice delivered or mailed by
registered mail, postage prepaid, to the Advisor and the
Subadvisor. Such termination can be authorized by the
affirmative vote of a majority of the (i) Trustees of the Fund,
or (ii) outstanding voting securities of the applicable series.
(b) This Agreement will terminate automatically with
respect to a series unless, by January 1, 1997, and at least
annually thereafter, the continuance of the Agreement is
specifically approved by (i) the Trustees of the Fund or the
shareholders of such series by the affirmative vote of a majority
of the outstanding shares of such series, and (ii) a majority of
the Trustees of the Fund who are not interested persons of the
Fund, Advisor or Subadvisor, 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 Subadvisor may
continue to serve hereunder in a manner consistent with the 1940
Act and the rules and regulations thereunder.
(c) The Advisor may at any time terminate this
Agreement with respect to any or all series by not less than 60
days' written notice delivered or mailed by registered mail,
postage prepaid, to the Subadvisor, and the Subadvisor may at any
time terminate this Agreement with respect to any or all series
by not less than 90 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Advisor.
Upon termination of this Agreement, the duties of the Advisor delegated to
the Subadvisor under this Agreement with respect to such series
automatically shall revert to the Advisor.
7. Notification of the Advisor. The Subadvisor promptly
shall notify the Advisor in writing of the occurrence of any of the
following events:
(a) the Subadvisor shall fail to be registered as an
investment advisor under the Investment Advisers Act of 1940, as
amended, and under the laws of any jurisdiction in which the
Subadvisor is required to be registered as an investment advisor
in order to perform its obligations under this Agreement;
(b) the Subadvisor shall have a change in the
membership of its partnership;
(c) the Subadvisor 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, involving the affairs of the Fund; or
(d) any other occurrence that might affect the
ability of the Subadvisor 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 Subadvisor shall indemnify and hold
harmless the Advisor, the Fund, their respective, directors, trustees,
officers and shareholders from any and all claims, losses, expenses,
obligation and liabilities (including reasonable attorneys fees) which
arise or result from the Subadvisor's willful misfeasance, bad faith, or
gross negligence or reckless disregard of its duties hereunder.
The Advisor shall indemnify and hold harmless the Subadvisor, the
Fund, their respective, directors, officers, partners and shareholders
from any and all claims, losses, expenses, obligation and liabilities
(including reasonable attorneys fees) which arise or result from the
Advisor's willful misfeasance, bad faith, or gross negligence or reckless
disregard of its duties hereunder.
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. Miscellaneous. 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.
IN WITNESS WHEREOF, and have each caused this instrument to be signed in
duplicate on its behalf by its duly authorized representative.
Attest: XXXXXXX ASSET MANAGEMENT COMPANY, INC.
BY: ________________ BY: _________________________________
(Name and Title)
Attest: XXXXXX, XXXXXX & CO., L.P.
BY: ________________ BY: _________________________________
(Name and Title)
Schedule
to the
Investment
Subadvisory Agreement
between
Xxxxxxx Asset Management Company, Inc.
and
Xxxxxx, Xxxxxx & Co. L.P.
As compensation pursuant to Section 4 of the Subadvisory
Agreement between Xxxxxxx Asset Management Company (the "Advisor") and
Xxxxxx, Xxxxxx & Co., L.P. (the "Subadvisor"), the Advisor shall pay the
Subadvisor a Subadvisory Fee for the Xxxxxxx Social Investment Fund,
Equity Portfolio ("Fund") consisting of a base fee ("Base Fee") plus or
minus a performance fee ("Performance Fee"). The Base Fee shall be 25
basis points of average daily net assets.
The Performance Fee shall be +/- 7 basis points if the net
cumulative investment performance of the Fund ("Investment Performance")
exceeds or trails the cumulative investment record of the reinvested
Standard & Poors 500 Stock Composite Index ("Investment Record") by 6
percent +/- 14 basis points if the Investment Performance exceeds or
trails the Investment Record by 12 percent and +/- 20 basis points if the
Investment Performance exceeds or trails the Investment Record by 18
percent.
The period for calculating the Performance Fee ("Base Period")
shall begin June 1, 1994 ("Beginning Date") and shall be incremented by 1
month until May 31, 1997. Thereafter the Base Period shall be a rolling
36 months.
The computation of the Investment Performance and the Investment
Record will be made in accordance with Rule 205-1 under the Investment
Advisors Act of 1940 or any other applicable rule as, from time to time,
may be adopted or amended.
