XXXX XXXXXXX WORLD FUND
Xxxx Xxxxxxx Pacific Basin Equities Fund
Second Interim Sub-Investment Management Contract
Dated January 31, 2001
XXXX XXXXXXX ADVISERS, INC.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
XXXX XXXXXXX WORLD FUND
- Xxxx Xxxxxxx Pacific Basin Equities Fund
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
000 Xxxx Xxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Second Interim Sub-Investment Management Contract
Ladies and Gentlemen:
Xxxx Xxxxxxx World Fund (the "Trust") has been organized as a business trust
under the laws of The Commonwealth of Massachusetts to engage in the
business of an investment company. The Trust's shares of beneficial
interest may be classified into series, each series representing the entire
undivided interest in a separate portfolio of assets. Series may be
established or terminated from time to time by action of the Board of
Trustees of the Trust. As of the date hereof, the Trust has three series of
shares, representing interests in Xxxx Xxxxxxx Pacific Basin Equities Xxxx,
Xxxx Xxxxxxx Health Sciences Fund and Xxxx Xxxxxxx European Equity Fund.
The Board of Trustees of the Trust (the "Trustees") has selected Xxxx
Xxxxxxx Advisers, Inc. (the "Adviser") to provide overall investment advice
and management for the Xxxx Xxxxxxx Pacific Basin Equities Fund (the
"Fund"), and to provide certain other services, under the terms and
conditions provided in the Investment Management Contract, dated as of the
date hereof, between the Trust, the Fund and the Adviser (the "Investment
Management Contract"). The Adviser and the Trustees have selected
Xxxxxxxx-Xxxxxxxxx Capital Management (the "Sub-Adviser") to provide the
Adviser and the Fund with the advice and services set forth below, and the
Sub-Adviser is willing to provide such advice and services, subject to the
review of the Trustees and overall supervision of the Adviser, under the
terms and conditions hereinafter set forth. The Sub-Adviser hereby
represents and warrants that it is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended. Accordingly, the
Trust, on behalf of the Fund, and the Adviser agree with the Sub-Adviser as
follows: 1. Delivery of Documents. The Trust has furnished the Sub-Adviser
with copies, properly certified or otherwise authenticated, of each of the
following: (a) Amended and Restated Declaration of Trust of the Trust,
dated February 28, 1992, as amended from time to time (the "Declaration of
Trust"); (b) By-Laws of the Trust as in effect on the date hereof; (c)
Resolutions of the Trustees approving the form of this Agreement by and
among the Adviser, the Sub-Adviser and the Trust, on behalf of the Fund;
(d) Resolutions of the Trustees selecting the Adviser as investment adviser
for the Fund and approving the form of the Investment Management Contract;
(e) the Investment Management Contract; (f) the Fund's portfolio compliance
checklists; and (g) the Fund's current Registration Statement, including
the Fund's Prospectus and Statement of Additional Information; (h) the
Fund's Code of Ethics. The Trust will furnish to the Sub-Adviser from time
to time copies, properly certified or otherwise authenticated, of all
amendments of or supplements to the foregoing, if any. 2. Investment
Services. The Sub-Adviser will use its best efforts to provide to the Fund
continuing and suitable investment advice with respect to investments,
consistent with the investment policies, objectives and restrictions of the
Fund as set forth in the Fund's Prospectus and Statement of Additional
Information. In the performance of the Sub-Adviser's duties hereunder,
subject always (x) to the provisions contained in the documents delivered
to the Sub- Adviser pursuant to Section 1, as each of the same may from
time to time be amended or supplemented, and (y) to the limitations set
forth in the Registration Statement of the Trust, on behalf of the Fund, as
in effect from time to time under the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended (the "1940 Act"), the
Sub-Adviser will, have investment discretion with respect to the Fund and
will, at its own expense: (a) furnish the Adviser and the Fund with advice
and recommendations, consistent with the investment policies, objectives
and restrictions of the Fund as set forth in the Fund's Prospectus and
Statement of Additional Information, with respect to the purchase, holding
and disposition of portfolio securities including, the purchase and sale of
options; (b) furnish the Adviser and the Fund with advice as to the manner
in which voting rights, subscription rights, rights to consent to corporate
action and any other rights pertaining to the Fund's assets shall be
exercised, the Fund having the responsibility to exercise such voting and
other rights; (c) furnish the Adviser and the Fund with research, economic
and statistical data in connection with the Fund's investments and
investment policies; (d) submit such reports relating to the valuation of
the Fund's securities as the Trustees may reasonably request; (e) subject
to prior consultation with the Adviser, engage in negotiations relating to
the Fund's investments with issuers, investment banking firms, securities
brokers or dealers and other institutions or investors; (f) The Sub-Adviser
shall have full authority and discretion to select brokers and dealers to
execute portfolio transactions for the Fund and for the selection of the
markets on or in which the transaction will be executed. In providing the
Fund with investment management, it is recognized that the Sub-Adviser will
give primary consideration to securing the most favorable price and
efficient execution considering all circumstances. Within the framework of
this policy, the Sub-Adviser may consider the financial responsibility,
research and investment information and other research services and
products provided by brokers or dealers who may effect or be a party to any
such transaction or other transactions to which the Sub-Adviser's other
clients may be a party. It is understood that it is desirable for the Fund
that the Sub-Adviser have access to brokerage and research services and
products and security and economic analysis provided by brokers who may
execute brokerage transactions at a higher cost to the Fund than
broker-dealers that do not provide such brokerage and research services.
Therefore, in compliance with Section 28(e) of the Securities Exchange Act
of 1934 ("1934 Act"), the Sub-Adviser is authorized to place orders for the
purchase and sale of securities for the Fund with such brokers, that
provide brokerage and research products and/or services that charge an
amount of commission for effecting securities transaction in excess of the
amount of commission another broker would have charged for effecting that
transaction, provided the Sub-Adviser determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research products and/or services provided by such broker
viewed in terms of either that particular transaction or the overall
responsibilities of the Sub-Adviser for this or other advisory accounts,
subject to review by the Adviser from time to time with respect to the
extent and continuation of this practice. It is understood that the
information, services and products provided by such brokers may be useful
to the Sub-Adviser in connection with the Sub-Adviser's services to other
clients; (g) from time to time or at any time requested by the Adviser or
the Trustees, make reports to the Adviser or the Trust of the Sub-Adviser's
performance of the foregoing services; (h) subject to the supervision of
the Adviser, maintain all books and records with respect to the Fund's
securities transactions required by the 1940 Act, and preserve such records
for the periods prescribed therefor by the 1940 Act (the Sub-Adviser agrees
that such records are the property of the Trust and copies will be
surrendered to the Trust promptly upon request therefor); (i) give
instructions to the Fund's custodian as to deliveries of securities to and
from such custodian and transfer of payment of cash for the account of the
Fund, and advise the Adviser on the same day such instructions are given;
and (j) cooperate generally with the Fund and the Adviser to provide
information necessary for the preparation of registration statements and
periodic reports to be filed with the Securities and Exchange Commission,
including Form N-1A, periodic statements, shareholder communications and
proxy materials furnished to holders of shares of the Fund, filings with
state "blue sky" authorities and with United States agencies responsible
for tax matters, and other reports and filings of like nature. 3. Expenses
Paid by the Sub-Adviser. The Sub-Adviser will pay the cost of maintaining
the staff and personnel necessary for it to perform its obligations under
this Agreement, the expenses of office rent, telephone, telecommunications
and other facilities it is obligated to provide in order to perform the
services specified in Section 2, and any other expenses incurred by it in
connection with the performance of its duties hereunder. 4. Expenses of the
Fund Not Paid by the Sub-Adviser. The Sub-Adviser will not be required to
pay any expenses which this Agreement does not expressly make payable by
the Sub- Adviser. In particular, and without limiting the generality of the
foregoing but subject to the provisions of Section 3, the Sub-Adviser will
not be required to pay under this Agreement: (a) the compensation and
expenses of Trustees and of independent advisers, independent contractors,
consultants, managers and other agents employed by the Trust or the Fund
other than through the Sub-Adviser; (b) legal, accounting and auditing fees
and expenses of the Trust or the Fund; (c) the fees and disbursements of
custodians and depositories of the Trust or the Fund's assets, transfer
agents, disbursing agents, plan agents and registrars; (d) taxes and
governmental fees assessed against the Trust or the Fund's assets and
payable by the Trust or the Fund; (e) the cost of preparing and mailing
dividends, distributions, reports, notices and proxy materials to
shareholders of the Trust or the Fund except that the Sub-Adviser shall
bear the costs of providing the information referred to in Section 2(j) to
the Adviser; (f) brokers' commissions and underwriting fees; and (g) the
expense of periodic calculations of the net asset value of the shares of
the Fund. 5. Compensation of the Sub-Adviser. For all services to be
rendered, facilities furnished and expenses paid or assumed by the
Sub-Adviser as herein provided, for the Fund, the Adviser will pay the
Sub-Adviser quarterly, in arrears a fee at the annual rate of (a) .30% of
the first $100 million of the Fund's average daily net assets managed by
the Sub-Adviser plus (b) the following additional amount, based on a
percentage of the gross management fee pursuant to the Investment
Management Contract with respect to the Fund's average daily net assets in
excess of $100 million which are managed by the Sub-Adviser: Average Daily
Net Assets Percentage of Gross Managed by Sub-Adviser Management Fee More
than $100 million up to $250 million 40% More than $250 million 50% The
Sub-Adviser will receive a pro rata portion of such quarterly fee for any
periods in which the Sub-Adviser advises the Fund less than a full quarter.
The Sub-Adviser understands and agrees that neither the Trust nor the Fund
has any liability for the Sub-Adviser's compensation hereunder.
Calculations of the Sub-Adviser's fee will be based on average net asset
values as provided by the Adviser. In addition to the foregoing, the
Sub-Adviser may from time to time agree not to impose all or a portion of
its fee otherwise payable hereunder (in advance of the time such fee or
portion thereof would otherwise accrue) and/or undertake to pay or
reimburse the Fund for all or a portion of its expenses not otherwise
required to be borne or reimbursed by it. Any such fee reduction or
undertaking may be discontinued or modified by the Sub-Adviser at any time.
The fees payable to the Sub-Adviser by the Adviser under this
Sub-Investment Management Contract shall, upon receipt by the Adviser of
its fees under the Investment Management Contract, be paid by the Adviser
into an interest-bearing escrow account. If the holders of "a majority of
the outstanding voting securities" (as defined in the 1940 Act) of the Fund
have voted to approve a new Sub-Investment Management Contract with the
Sub-Adviser by May 12, 2001, the fees paid by the Adviser into such escrow
account (and interest thereon) shall be paid to the Sub-Adviser. If such
approval has not been obtained by May 12, 2001, this Sub-Investment
Management Contract shall terminate and the Sub-Adviser shall be paid from
the escrow account the lesser of: (i) the costs incurred in performing its
obligations under this Sub-Investment Management Contract (plus interest
earned on that amount while in escrow), or (ii) the total amount in the
escrow account (plus interest earned). 6. Other Activities of the
Sub-Adviser and Its Affiliates. Nothing herein contained shall prevent the
Sub-Adviser or any associate of the Sub-Adviser from engaging in any other
business or from acting as investment adviser or investment manager for any
other person or entity, understood that officers, directors and employees
of the Sub-Adviser or its affiliates may continue to engage in providing
portfolio management services and advice to other investment companies,
whether or not registered, to other investment advisory clients of the
Sub-Adviser or its affiliates and to said affiliates themselves. 7.
Avoidance of Inconsistent Position. In connection with purchases or sales
of portfolio securities for the account of the Fund, neither the
Sub-Adviser nor any of its investment management subsidiaries nor any of
such investment management subsidiaries' directors, officers or employees
will act as principal or agent or receive any commission, except as may be
permitted by the 1940 Act and rules and regulations promulgated thereunder.
The Sub-Adviser shall not knowingly recommend that the Fund purchase, sell
or retain securities of any issuer in which the Sub-Adviser has a financial
interest without obtaining prior approval of the Adviser prior to the
execution of any such transaction. Nothing herein contained shall limit or
restrict the Sub-Adviser or any of its officers, affiliates or employees
from buying, selling or trading in any securities for its or their own
account or accounts. The Trust and Fund acknowledge the Sub-Adviser and its
officers, affiliates, and employees, and its other clients may at any time
have, acquire, increase, decrease or dispose of positions in investments
which are at the same time being acquired or disposed of hereunder. The
Sub-Adviser shall have no obligation to acquire with respect to the Fund, a
position in any investment which the Sub-Adviser, its officers, affiliates
or employees may acquire for its or their own accounts or for the account
of another client, if in the sole discretion of the Sub-Adviser, it is not
feasible or desirable to acquire a position in such investment on behalf of
the Fund. Nothing herein contained shall prevent the Sub-Adviser from
purchasing or recommending the purchase of a particular security for one or
more funds or clients while other funds or clients may be selling the same
security. 8. No Partnership or Joint Venture. The Trust, the Fund, the
Adviser and the Sub-Adviser are not partners of or joint venturers with
each other and nothing herein shall be construed so as to make them such
partners or joint venturers or impose any liability as such on any of them.
9. Name of the Trust, the Fund and the Sub-Adviser. The Trust and the Fund
may use the name "Xxxx Xxxxxxx" or any name or names derived from or
similar to the names "Xxxx Xxxxxxx Advisers, Inc." or "Xxxx Xxxxxxx Life
Insurance Company" only for so long as this Agreement remains in effect. At
such time as this Agreement shall no longer be in effect, the Trust and the
Fund will (to the extent that they lawfully can) cease to use such a name
or any other name indicating that the Fund is advised by or otherwise
connected with the Adviser. The Fund acknowledges that it has adopted the
name Xxxx Xxxxxxx Pacific Basin Equities Fund through permission of Xxxx
Xxxxxxx Life Insurance Company, a Massachusetts insurance company, and
agrees that Xxxx Xxxxxxx Life Insurance Company reserves to itself and any
successor to its business the right to grant the nonexclusive right to use
the name "Xxxx Xxxxxxx" or any similar name or names to any other
corporation or entity, including but not limited to any investment company
of which Xxxx Xxxxxxx Life Insurance Company or any subsidiary or affiliate
thereof shall be the investment adviser. In addition, the Fund and the
Trust hereby consent to the reasonable use of the name of the Fund in
marketing/client materials developed and distributed by or on behalf of
Sub-Adviser. In addition, it is understood that the name
"Xxxxxxxx-Xxxxxxxxx" or the name of any of its affiliates, or any
derivative associated with those names, are the valuable property of the
Sub- Adviser and its affiliates and that the Fund, Trust and/or the Adviser
have the right to use such name(s) or derivative(s) in offering materials
and sales literature so long as this Agreement is in effect. Upon
termination of the Agreement, such authorization shall forthwith cease to
be in effect. 10. Limitation of Liability of Sub-Adviser. The Sub-Adviser
shall not be liable for any error of judgment or mistake of law or for any
loss suffered by the Trust or the Fund or 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 the Sub-Adviser's
part in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement. Any person, even though
also employed by the Sub-Adviser, who may be or become an employee of and
paid by the Trust or the Fund shall be deemed, when acting within the scope
of his employment by the Trust or the Fund, to be acting in such employment
solely for the Trust or the Fund and not as the Sub-Adviser's employee or
agent. 11. Duration and Termination of this Agreement. This Agreement shall
remain in force until May 12, 2001 or shareholder approval of a new
Agreement. This Agreement may, on 10 days' written notice, be terminated at
any time without the payment of any penalty by the Trust or the Fund by
vote of a majority of the outstanding voting securities of the Fund, by the
Trustees, the Adviser or the Sub-Adviser. Termination of this Agreement
with respect to the Fund shall not be deemed to terminate or otherwise
invalidate any provisions of any contract between the Sub- Adviser and any
other series of the Trust. This Agreement shall automatically terminate in
the event of its assignment or upon termination of the Investment
Management Contract. In interpreting the provisions of this Section 11, the
definitions contained in Section 2(a) of the 1940 Act (particularly the
definitions of "assignment," "interested person" or "voting security"),
shall be applied. 12. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought, and no
amendment, transfer, assignment, sale, hypothecation or pledge of this
Agreement shall be effective until approved by (a) the Trustees, including
a majority of the Trustees who are not interested persons of the Adviser,
the Sub-Adviser, or (other than as Board members) of the Trust or the Fund,
cast in person at a meeting called for the purpose of voting on such
approval, and (b) a majority of the outstanding voting securities of the
Fund, as defined in the 1940 Act. 13. Governing Law. This Agreement shall
be governed and construed in accordance with the laws of the Commonwealth
of Massachusetts. 14. Severability. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that
for any reason any other or others of them may be deemed invalid or
unenforceable in whole or in part. 15. Miscellaneous. (a) The captions in
this Agreement are included for convenience of reference only and in no way
define or limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. The
name Xxxx Xxxxxxx World Fund is the designation of the Trustees under the
Amended and Restated Declaration of Trust dated February 28, 1992, as
amended from time to time. The Declaration of Trust has been filed with the
Secretary of The Commonwealth of Massachusetts. The obligations of the
Trust and the Fund are not personally binding upon, nor shall resort be had
to the private property of, any of the Trustees, shareholders, officers,
employees or agents of the Fund, but only the Fund's property shall be
bound. The Trust or the Fund shall not be liable for the obligations of any
other series of the Trust. (b) Any information supplied by the Sub-Adviser,
which is not otherwise in the public domain, in connection with the
performance of its duties hereunder is to be regarded as confidential and
for use only by the Fund and/or its agents, and only in connection with the
Fund and its investments. 16. Xxxxxxxx-Xxxxxxxxx undertakes to promptly
notify Fund of any change in its general partner(s). 17. The Fund agrees to
obtain and maintain insurance coverage satisfying any insurance
requirements under the 1940 Act, to carry errors and omissions coverage in
the amount of $10,000,000. 18. The Adviser has received from Sub-Adviser
and reviewed the disclosure statement or "brochure" required to be
delivered pursuant to Rule 204-3 of the Act (the "Brochure"), which
Xxxxxxxx was received and reviewed by the Adviser more than 48 hours prior
to entering into this Agreement. Yours very truly,
XXXX XXXXXXX WORLD FUND on behalf
of Xxxx Xxxxxxx Pacific Basin Equities Fund
By: ___________________________________
President
The foregoing contract
is hereby agreed to as
of the date hereof.
XXXX XXXXXXX ADVISERS, INC.
By: ______________________________________
President
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
By: ____________________________
Name:
Title:
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