INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
ATLAS ADVISERS, INC.
AND
BOSTON SAFE ADVISORS, INC.
SUBADVISORY AGREEMENT
AGREEMENT made as of February 27, 2004 among ATLAS ADVISERS, Inc., a
California corporation (the "Adviser"), ATLAS FUNDS, a Delaware statutory trust
(the "Trust") and BOSTON SAFE ADVISORS, INC., a Massachusetts corporation (the
"Subadviser").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and is authorized to issue separate series (the "Funds"), each of which will
offer a separate class of shares of beneficial interest, each Fund having its
own investment objectives, policies and limitations;
WHEREAS, the Trust currently offers shares in three series, which
invest in municipal securities (the "Municipal Funds"):
Atlas California Municipal Money Fund
Atlas California Municipal Bond Fund
Atlas National Municipal Bond Fund
WHEREAS, the Trust has retained the Adviser to render investment
management and related administrative services to the Municipal Funds;
WHEREAS, the Adviser and the Trust desire to retain the Subadviser
to furnish portfolio management services to the Municipal Funds in connection
with the Adviser's investment management activities on behalf of the Municipal
Funds, and the Subadviser is willing to furnish such services to the Adviser and
the Trust;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Adviser, the Subadviser and the Trust
as follows:
Appointment. The Adviser and the Trust hereby appoint the Subadviser to act as
Portfolio Manager to the Municipal Funds under the supervision of the Trust's
Board of Trustees and the Adviser for the periods and on the terms set forth in
this Agreement. The Subadviser accepts such appointment and agrees to furnish
the services herein set forth, for the compensation herein provided.
In the event the Trust designates one or more portfolio series ("Additional
Funds") other than the above named Municipal Funds with respect to which the
Adviser and the Trust desire to retain the Subadviser to render portfolio
management services hereunder, they shall notify the Subadviser in writing. If
the Subadviser is willing to render such services, it shall notify the Adviser
and the Trust in writing, whereupon such Additional Funds shall also be subject
to this Agreement.
Representations of the Trust. The Trust represents, warrants, and agrees that:
A. The Adviser and Subadviser have been duly appointed by the Board of
Trustees of the Trust.
B. The Trust will deliver to the Subadviser a true and complete copy of
its then current prospectus as effective from time to time and such other
documents or instruments governing the investment of the Municipal Funds and
such other information as is necessary for the Subadviser to carry out its
obligations under this Agreement.
C. The Trust is currently in compliance and shall at all times comply with
the requirements imposed upon the Trust by the 1940 Act and applicable state
laws.
Representations of the Subadviser. The Subadviser represents, warrants, and
agrees that:
A. The Subadviser is registered as an "Investment Adviser" under the
Investment Advisers Act of 1940 ("Advisers Act") and under applicable state
laws, is currently in compliance and shall at all times comply with the
requirements imposed upon the Adviser by the Advisers Act and applicable state
laws.
B. The Subadviser has a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act, will provide the Trust with a
copy of the code of ethics and evidence of its adoption, and will make such
reports to the Trust as are required by Rule 17j-1 under the 1940 Act.
Portfolio Management Duties.
A. Subject to the supervision of the Adviser and the Trust's Board of
Trustees, the Subadviser will provide a continuous investment program for the
Municipal Funds' portfolios, including investment research and management, with
respect to all securities and investments and cash equivalents in the portfolio.
The Subadviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Municipal Funds and will
place orders for execution of such portfolio transactions in accordance with
paragraph B below to effectuate the investment decisions made. The Subadviser
will provide the services under this Agreement in accordance with the Municipal
Funds' investment objectives, policies and restrictions as stated in the Trust's
registration statement filed with the Securities and Exchange Commission
("SEC"), as amended from time to time.
B. The Subadviser shall have authority and discretion to select brokers
and dealers to execute portfolio transactions for the Municipal Funds and for
the selection of the markets on or in which the transactions will be executed.
In placing orders with brokers and dealers, the Subadviser shall generally place
portfolio transactions with primary market makers for these securities on a net
basis, without any brokerage commission being paid by the Municipal Funds. It is
understood that transactions with dealers serving as primary market makers
reflect the spread between the bid and asked prices and that the Subadviser may
cause the Municipal Funds to pay fees to third parties for information as to
potential purchasers or sellers of securities but only if the Municipal Funds
would obtain the best price and execution, including such fee, on a particular
transaction. The Subadviser may make purchases of underwritten issues, which
include an underwriting fee paid to the underwriter.
The primary objective of the Subadviser in placing orders for the purchase and
sale of securities for the Municipal Funds shall be to obtain the best price and
execution taking into account such factors as price, commission (negotiable in
the case of national securities exchange transactions), if any, size of order,
difficulty of execution and skill required of the executing broker/dealer. When
it can be done consistently with the policy of obtaining the best price and
execution, the Subadviser, in circumstances in which two or more broker/dealers
offer comparable prices and executions, may place such orders with
broker/dealers who supply market quotations to the custodian of the Municipal
Funds (the "Custodian") for appraisal purposes, or who supply research, market
and statistical information to its clients including the Municipal Funds or the
Subadviser. The term "research, market and statistical information" includes
advice as to the value of securities, the advisability of investing in,
purchasing or selling securities; and the availability of securities or
purchasers or sellers of securities; and furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and the performance of accounts. The Subadviser is not
authorized when placing portfolio transactions for a Municipal Fund to pay a
brokerage commission (to the extent applicable) in excess of that which another
broker might have charged for effecting the same transaction on account of the
receipt of research, market or statistical information although it may do so in
seeking to obtain the best execution with respect to a particular transaction.
In effecting transactions in over-the-counter securities, orders are placed with
the principal market-makers for the security being traded unless, after
exercising care, it appears that better prices or executions are available
otherwise.
C. All transactions will be consummated by payment to or delivery by the
Custodian for the Municipal Funds or such depositories or agents as may be
designated by the Custodian, of all cash and/or securities due to or from the
Municipal Funds, and the Subadviser shall not have possession or custody thereof
or any responsibility or liability with respect thereto. The Subadviser shall
advise the Custodian and the Trust daily of all investment orders placed by it
with broker/dealers pursuant to procedures agreed upon by the Subadviser and the
Trust. The Trust shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated by
the Subadviser. The Trust shall be responsible for all custodial arrangements
and the payment of all custodial charges and fees, and, upon giving proper
instructions to the Custodian, the Subadviser shall have no responsibility or
liability with respect to custodial arrangements or the acts, omissions or other
conduct of the Custodian.
Expenses. During the term of this Agreement, the Subadviser will pay all
expenses incurred by it, its staff and their activities, in connection with its
portfolio management under this Agreement. This does not include costs payable
by the Trust or the Adviser.
Compensation. For the services provided, the Adviser will pay the Subadviser a
fee, payable monthly based on the average daily net assets, as calculated by the
Custodian, of each Municipal Fund (and Additional Funds, if applicable) as
provided in the Fee Schedule attached to the Agreement. The "average daily net
assets" is defined as the average of the values placed on the net assets as of
4:00 p.m. (New York time), on each day on which the net asset value of a Fund's
portfolio is determined consistent with the provisions of Rule 22c-1 under the
1940 Act or, if the Trust lawfully determines the value of the net assets of a
Fund as of some other time on each business day, as of such time. The value of
net assets of a Fund shall be determined pursuant to the applicable provisions
of the Trust's current Registration Statement and the 1940 Act. If, pursuant to
such provisions, the determination of net assets value is suspended for any
particular business day, then for the purposes of this Section 6, the value of
the net assets of a Fund as last determined shall be deemed to be the value of
the net assets as of the close of the New York Stock Exchange, or as of such
other time as the value of the net assets of the Fund may lawfully be determined
on that day. If the determination of the net asset value of a Fund has been
suspended by the Trust pursuant to the Registration Statement and the 1940 Act
for a period including such month, the Subadviser's compensation payable at the
end of such month 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 month). If the
Trust determines the value of the net assets of a Fund more than once on any
day, the last such determination thereof on that day shall be deemed to be the
sole determination thereof on that day for the purposes of this Section 6.
Books and Records.
A. The Subadviser will make available to the Adviser and the Trust
promptly upon request its records and ledgers with respect to and relating to
the Municipal Funds' securities transactions to assist the Adviser and the Trust
in compliance with the 1940 Act and the Advisers Act, and other applicable laws.
The Subadviser will furnish the Trust's Board of Trustees with respect to the
Municipal Funds such periodic and special reports as the Adviser and the
Trustees may reasonably request.
B. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Subadviser hereby agrees that all records which it maintains for the
Municipal Funds are the property of the Trust and further agrees to surrender
promptly to the Trust any of such records upon the Trust's request. The
Subadviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act and to preserve the records required by Rule 204-2 under the Advisers
Act to the extent necessary or appropriate to comply with the period specified
in the Rule.
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Indemnification. The Subadviser agrees to indemnify and hold harmless the
Adviser, and its directors, officers and employees (absent the Adviser's willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under this Agreement with
respect to the matter which is the subject of the indemnification), and the
Trust and its Trustees, officers and employees (absent such person's willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his Office with respect to the matter which is the
subject of the indemnification), against any and all losses, claims, damages,
liabilities or litigation (including without limitation all legal and other
expenses) to which the Adviser or the Trust may become subject, arising out of
the Subadviser's responsibilities as portfolio manager of the Municipal Funds
(and Additional Funds, if applicable) which may be based upon any (a) willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under this Agreement with
respect to the matter which is the subject of the indemnification by the
Subadviser or (b) untrue statement or alleged untrue statement of a material
fact contained in a Trust's Registration or Proxy Statement or other regulatory
filing or the omission or alleged omission to state a material fact required to
be stated in a Trust's Registration or Proxy Statement or other regulatory
filing to make such filing not misleading, if such statement or omission was
made in reliance upon information furnished by the Subadviser to the Adviser or
the Trust.
Duration and Termination.
A. The initial term of this Agreement shall begin on February 27, 2004,
which term shall continue for two (2) years from the Effective Date if the
agreement is approved by the vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of each Municipal Fund, and shall be
renewed annually thereafter, unless terminated, if approved by (a) the vote of a
majority of the entire Board of Trustees of the Trust, or by the vote of a
majority of the entire Board of Trustees of the Trust, or by the vote of a
majority of the outstanding voting securities of each Municipal Fund (as defined
in the 1940 Act), and (b) the vote of a majority of those Trustees of the Trust
who are not parties to this agreement or interested persons (as such term is
defined in the 0000 Xxx) of any such party, cast in person at a meeting called
for the purpose of voting on such approval.
B. Notwithstanding the foregoing, this Agreement may be terminated at any
time without payment of any penalty by (a) the Adviser, upon sixty (60) days'
written notice to the Subadviser and the Trust, (b) the Trust, upon the vote of
a majority of the Trust's Board of Trustees or a majority of the outstanding
voting securities of each Series, upon sixty (60) days' written notice to the
Adviser and the Subadviser, (c) the Subadviser upon one hundred twenty (120)
days' written notice to the Adviser and the Trust. The Agreement shall
automatically terminate in the event of its assignment (as such term is defined
in the 1940 Act).
Amendments. 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 of this Agreement shall be effective until approved by a
vote of a majority of the outstanding voting securities of the Fund, if such
approval is required by applicable law.
Use of Name. It is understood that the name "Boston Safe Advisors, Inc." or the
name of any of its affiliates, or any derivative associated with those names,
are the valuable property of the Subadviser and its affiliates and that the
Trust and/or the Trust's distributor, Atlas Securities, Inc., have the right to
use such name(s) or derivative(s) in offering materials and sales literature of
the Trust so long as this agreement is in effect with respect to any Municipal
Fund or Additional Fund, provided that the manner of such use shall have the
Subadviser's prior written approval, which approval may not be unreasonably
withheld. Upon termination of the Agreement with respect to any or all of the
Municipal Funds or Additional Funds the Trust (or Fund) shall forthwith cease to
use such names(s) or derivative(s).
Miscellaneous.
A. This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder.
B. The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
C. 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 and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
D. Except as expressly authorized and provided for in this Agreement, the
Subadviser shall be deemed to be an independent contractor and shall not in any
way be deemed an agent of the Adviser, the Trust or the Municipal Funds.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed as of the day and year first above written.
ATLAS ADVISERS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------
Xxxxxxx X. Xxxxxx
Senior Vice President
ATLAS FUNDS
By: /s/ Xxxxxxx X. Xxxxxx
----------------------
Xxxxxxx X. Xxxxxx
Senior Vice President
BOSTON SAFE ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------
Xxxx X. Xxxxxxx
APPENDIX A
SUBADVISORY AGREEMENT - BOSTON SAFE ADVISORS, INC.
REVISION DATED: DECEMBER 1, 2004
The provisions of the attached Subadvisory Agreement apply to the
following separate series of shares of the Trust:
1. Atlas California Municipal Money Fund
2. Atlas California Municipal Bond Fund
3. Atlas National Municipal Bond Fund
4. Atlas Money Market Fund
5. Atlas U.S. Treasury Money Fund
APPENDIX B - FEE SCHEDULE
REVISION DATED: DECEMBER 1, 2004
FUND ANNUAL RATE
ATLAS MONEY MARKET FUND AND
ATLAS U.S. TREASURY MONEY FUND
On Daily Net Assets 0.10%
ATLAS CALIFORNIA MUNICIPAL MONEY FUND
On Daily Net Assets 0.14%
ATLAS CALIFORNIA MUNICIPAL BOND FUND AND
ATLAS NATIONAL MUNICIPAL BOND FUND
On the Portion of Daily Total Net Asset Value
on Assets up to and including $100 million 0.20%
On the Portion of Daily Total Net Asset Value
on Assets over $100 million 0.15%
Agreed to December 1, 2004
ATLAS ADVISERS, INC. BOSTON SAFE ADVISORS, INC.
By: /s/ X. Xxxxxxxx Key By: /s/ Xxxx X. Xxxxxxx
-------------------- --------------------
X. Xxxxxxxx Key Xxxx X. Xxxxxxx
President and Chief Operating Officer
ATLAS FUNDS
By: /s/ X. Xxxxxxxx Key
--------------------
X. Xxxxxxxx Key
President and Chief Operating Officer
