Exhibit 23(d)(19)
PREFERRED MID CAP GROWTH FUND
SUBADVISER AGREEMENT
Subadviser Agreement executed as of March 30, 2001 between CATERPILLAR
INVESTMENT MANAGEMENT LTD., a Delaware corporation (the "Manager"), and XXXXXX
INVESTMENT PARTNERS, INC., a Pennsylvania corporation (the "Subadviser").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY SUBADVISER TO THE TRUST.
(a) Subject always to the control of the trustees of The Preferred Group of
Mutual Funds (the "Trustees"), a Massachusetts business trust (the "Trust"), the
Subadviser, at its expense, will furnish continuously an investment program for
the Preferred Mid Cap Growth Fund series of the Trust (the "Fund") and will make
investment decisions on behalf of the Fund and place all orders for the purchase
and sale of portfolio securities and all other investments. In the performance
of its duties, the Subadviser (i) will comply with the provisions of the Trust's
Agreement and Declaration of Trust and By-laws, including any amendments thereto
(upon receipt of such amendments by the Subadviser), and the investment
objectives, policies and restrictions of the Fund as set forth in its current
Prospectus and Statement of Additional Information (copies of which will be
supplied to the Subadviser upon filing with the Securities and Exchange
Commission), (ii) will use its best efforts to safeguard and promote the welfare
of the Fund, (iii) will comply with other policies which the Trustees or the
Manager, as the case may be, may from time to time determine as promptly as
practicable after such policies have been communicated to the Subadviser in
writing, and (iv) shall exercise the same care and diligence expected of the
Trustees. The Subadviser and the Manager 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 regarding the
investment affairs of the Fund.
(b) The Subadviser, at its expense, will furnish (i) all necessary investment
and management facilities, including salaries of personnel, required for it to
execute its duties hereunder faithfully and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the investment affairs of the Fund, including oversight of
the pricing of the Fund's portfolio and assistance in obtaining prices for
portfolio securities (but excluding determination of net asset value,
shareholder accounting services and fund accounting services).
(c) In the selection of brokers, dealers or futures commissions merchants
(collectively, "brokers") and the placing of orders for the purchase and sale of
portfolio investments for the Fund, the Subadviser shall seek to obtain for the
Fund the most favorable price and execution available, except to the extent it
may be permitted to pay higher brokerage commissions for brokerage and research
services as described below. In using its best efforts to
obtain for the Fund the most favorable price and execution available, the
Subadviser, bearing in mind the Fund's best interests at all times, shall
consider all factors it deems relevant, including, by way of illustration,
price, the size of the transaction, the nature of the market for the security,
the amount of the commission, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial stability of
the broker involved and the quality of service rendered by the broker in other
transactions. Subject to such policies as the Trustees may determine and
communicate to the Subadviser in writing, 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 its having caused the Fund to pay a broker that
provides brokerage and research services to the Subadviser or any affiliated
person of the Subadviser an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another broker
would have charged for effecting that transaction, if the Subadviser determines
in good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such broker, viewed in
terms of either that particular transaction or the Subadviser's overall
responsibilities with respect to the Fund and to other clients of the Subadviser
and any affiliated person of the Subadviser as to which the Subadviser or any
affiliated person of the Subadviser exercises investment discretion. The Trust
agrees that any entity or person associated with the Subadviser or any
affiliated person of the Subadviser which is a member of a national securities
exchange is authorized to effect any transaction on such exchange for the
account of the Fund which is permitted by Section 11(a) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and Rule 11a2-2(T)
thereunder, and the Trust hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(2)(iv).
(d) The Subadviser shall not be obligated to pay any expenses of or for the
Trust or of or for the Fund not expressly assumed by the Subadviser pursuant to
this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder, partner, director, officer or
employee of, or be otherwise interested in, the Subadviser, and in any person
controlling, controlled by or under common control with the Subadviser, and that
the Subadviser and any person controlling, controlled by or under common control
with the Subadviser may have an interest in the Trust. It is also understood
that the Subadviser and persons controlling, controlled by or under common
control with the Subadviser have and may have advisory, management service,
distribution or other contracts with other organizations and persons, and may
have other interests and businesses.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUBADVISER.
The Manager will pay to the Subadviser as compensation for the
Subadviser's services rendered, for the facilities furnished and for the
expenses borne by the Subadviser pursuant to Section 1, a fee in accordance with
Schedule A of this Agreement.
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS AGREEMENT.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment or in the event that the Management
Contract dated as of March 30, 2001
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between the Manager and the Trust, with respect to the Fund, shall have
terminated for any reason, and the Manager shall provide notice of any such
termination of the Management Contract to the Subadviser; and this Agreement
shall not be amended unless such amendment be 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 who are not interested persons of the Trust or of the
Manager or of the Subadviser.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective upon its execution, and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) The Trust may at any time terminate this Agreement by written
notice delivered or mailed by registered mail, postage prepaid, to the Manager
and the Subadviser, or
(b) If (i) the Trustees or the shareholders of the Trust by the
affirmative vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Trustees who are not interested persons of the Trust or of the
Manager or of the Subadviser, by vote cast in person at a meeting called for the
purpose of voting on such approval, do not specifically approve at least
annually the continuance of this Agreement, then this Agreement shall
automatically terminate at the close of business on the second anniversary of
its execution, or upon the expiration of one year from the effective date of the
last such continuance, whichever is later; provided, however, that if the
continuance of this Agreement is submitted to the shareholders of the Fund for
their approval and such shareholders fail to approve such continuance of this
Agreement as provided herein, the Subadviser may continue to serve hereunder in
a manner consistent with the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules and regulations thereunder, or
(c) The Manager may at any time terminate this Agreement 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 by not less than 90 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager.
Action by the Trust under paragraph (a) above may be taken either (i)
by vote of a majority of the Trustees, or (ii) by the affirmative vote of a
majority of the outstanding shares of the Fund.
Termination of this Agreement pursuant to this Section 5 shall be
without the payment of any penalty.
6. CERTAIN INFORMATION.
The Subadviser shall promptly notify the Manager in writing of the
occurrence of any of the following events: (a) the Subadviser shall fail to be
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended from time to time, and under the laws of any jurisdiction in which
the Subadviser is required to be registered as an investment adviser in order to
perform its obligations under this Agreement or any other agreement concerning
the provision
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of investment advisory services to the Trust, (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, involving the affairs of the Trust, (c) there is a change in control of
the Subadviser or any parent of the Subadviser within the meaning of the 1940
Act or (d) there is a material adverse change in the business or financial
position of the Subadviser.
7. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the "affirmative vote of a majority
of the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Fund present (in person or by proxy) and entitled to vote at such meeting, if
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Fund entitled to vote at such
meeting, whichever is less.
For the purposes of this Agreement, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings 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 the 1940 Act; the term "specifically approve at least
annually" shall be construed in a manner consistent with the 1940 Act and the
rules and regulations thereunder; and the term "brokerage and research services"
shall have the meaning given in the 1934 Act and the rules and regulations
thereunder.
8. NONLIABILITY OF SUBADVISER.
In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Subadviser, or reckless disregard of its obligations and duties
hereunder, the Subadviser shall not be subject to any liability to the Manager,
to the Trust, to the Fund, or to any shareholder, officer, director or Trustee
thereof, for any act or omission in the course of, or connected with, rendering
services hereunder.
9. EXERCISE OF VOTING RIGHTS.
Except with the agreement or on the specific instructions of the
Trustees or the Manager, the Subadviser shall exercise or procure the exercise
of any voting right attaching to investments of the Fund.
10. NOTICES.
All notices, requests and consents shall be in writing and shall be
personally delivered or mailed by registered mail, postage prepaid, to the other
party at such address as may be furnished in writing by such party.
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IN WITNESS WHEREOF, CATERPILLAR INVESTMENT MANAGEMENT LTD. and XXXXXX
INVESTMENT PARTNERS, INC. have each caused this instrument to be signed in
duplicate on its behalf by its duly authorized representative, all as of the day
and year first above written.
CATERPILLAR INVESTMENT
MANAGEMENT LTD.
By: _______________________________
Title:
XXXXXX INVESTMENT PARTNERS, INC.
By: _______________________________
Title:
The foregoing is accepted by:
THE PREFERRED GROUP OF MUTUAL FUNDS
By: __________________________
Title:
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SCHEDULE A
1. For purposes of calculating the fee to be paid to the Subadviser under
this Agreement:
"Fund Assets" shall mean the net assets of the Fund;
"Plan Assets" shall mean the net assets managed by the
Subadviser, excluding the Fund, (i) of any constituent fund of the
Caterpillar Investment Management Ltd. Tax Exempt Group Trust, (ii) and
managed or advised by the Manager for which the Subadviser has been
appointed subadviser by the Manager, (iii) of Caterpillar Inc. or any
of its subsidiaries or (iv) of any employee benefit plan sponsored by
Caterpillar Inc. or any of its subsidiaries;
"Combined Assets" shall mean the sum of Fund Assets and Plan
Assets; and
"Average Quarterly Net Assets" shall mean the average of the
net asset value of the Fund Assets, Plan Assets or Combined Assets, as
the case may be, as of the last business day of each month in the
calendar quarter.
2. The Subadviser fee shall be paid in arrears (within 10 days of receipt
by the Manager of an invoice from the Subadviser) based upon the Average
Quarterly Net Assets of the Combined Assets during the preceding calendar
quarter. The fee payable for the calendar quarter shall be calculated by
applying the annual rate of 0.75% to the Average Quarterly Net Assets of the
Combined Assets, and dividing by four. The portion of the quarterly fee to be
paid by the Manager shall be prorated based upon the Average Quarterly Net
Assets of the Fund Assets as compared to the Average Quarterly Net Assets of the
Combined Assets. For a calendar quarter in which this Agreement becomes
effective or terminates, the portion of the Subadviser fee due hereunder shall
be prorated on the basis of the number of days that the Agreement is in effect
during the calendar quarter.
