EXHIBIT A
SUB ADVISORY AGREEMENT
AGREEMENT made this 1st day of March, 2003 among ATLAS ADVISERS, INC., a
California corporation (the "Adviser"), ATLAS ASSETS, INC., a Maryland
corporation (the "Company"), on behalf of each series of the Company listed in
Appendix A hereto, as amended from time to time (hereinafter referred to
individually as a "Fund" and collectively as the "Funds") and Xxxxxx Investment
Partners, Inc., a Pennsylvania Corporation (the "Subadviser").
WHEREAS, the Company is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management company and is authorized to issue
separate series, each of which offers a separate class of shares of capital
stock and each of which has its own investment objectives, policies and
limitations; and
WHEREAS, the Company has retained the Adviser to render investment
management and administrative services to the Funds; and
WHEREAS, the Adviser and the Company desire to retain the Subadviser to
furnish portfolio management services to the Funds in connection with the
Adviser's investment management activities on behalf of the Funds, and the
Subadviser is willing to furnish such services to the Adviser and the Company;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Adviser, the Subadviser and the
Company as follows:
1. APPOINTMENT. The Adviser and the Company hereby appoint the
Subadviser to act as portfolio manager to each Fund listed in Appendix A
(collectively, the "Funds") on the terms set forth in this Agreement. The
Subadviser accepts such appointment and agrees to furnish the services described
herein, for the compensation provided in the Fee Schedule attached hereto as
Appendix B.
2. REPRESENTATIONS OF THE COMPANY. The Company represents, warrants,
and agrees that:
A. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of Maryland.
B. The Adviser and Subadviser have been duly appointed by the
Board of Directors of the Company including a majority of its Independent
Directors.
C. The Company will deliver to the Subadviser a true and
complete copy of its Registration Statement filed with the SEC, as effective
from time to time, and such other documents or instruments governing the
investment objectives of the Funds and such other information or documents as is
necessary for the Subadviser to carry out its obligations under this Agreement.
D. The Company is currently in compliance and shall at all
times use its best efforts to ensure continued compliance with the requirements
imposed upon the Company by the 1940 Act and applicable state laws.
3. REPRESENTATIONS OF THE SUBADVISER. The Subadviser represents,
warrants, and agrees that:
A. The Subadviser is a Corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania.
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B. The Subadviser is registered as an "Investment Adviser"
under the Investment Advisers Act of 1940 ("Advisers Act") and under applicable
state laws and is currently in compliance and shall at all times use its best
efforts to ensure compliance with the requirements imposed upon the Subadviser
by the Advisers Act and applicable state laws and has provided its current Form
ADV to the Adviser the receipt of which is hereby acknowledged.
C. The Subadviser has adopted a written code of ethics
complying with the requirements of Rule 17j under the 1940 Act, will provide the
Company with a copy of the code of ethics and evidence of its adoption, and will
make such reports to the Company as are required by Rule 17j-1 under the 1940
Act.
4. REPRESENTATIONS OF THE ADVISER. The Adviser represents, warrants,
and agrees that:
A. The Adviser is a corporation duly organized, validly
existing and in good standing under the laws of the state of California.
B. The Adviser is registered as an "Investment Adviser" under
the Advisers Act and under applicable state laws and is currently in compliance
and shall at all times use its best efforts to ensure compliance with the
requirements imposed upon the Adviser by the Advisers Act and applicable state
laws and has provided its current Form ADV to the Subadviser.
C. The Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j under the 1940 Act, has provided the Company
with a copy of the code of ethics and evidence of its adoption, and will make
such reports to the Company as are required by Rule 17j-1 under the 1940 Act.
5. PORTFOLIO MANAGEMENT DUTIES.
A. Subject to the supervision of the Adviser and the Company's
Board of Directors, the Subadviser will provide a continuous investment program
for the portfolio of each Fund listed in Appendix A. The Subadviser will
determine from time to time what securities and other investments will be
purchased, retained or sold by a Fund and will place orders for execution of
such portfolio transactions in accordance with paragraph C below to effect the
investment decisions made. The Subadviser will provide the services identified
in this Agreement in accordance with each respective Fund's investment
objectives, policies and restrictions as stated in the Company's Registration
Statement filed with the SEC, as effective from time to time, and as interpreted
by the Adviser and communicated to the Subadviser, on behalf of the Company,
from time to time. The Adviser will be responsible for all other services to be
provided to each Fund that is identified in Appendix A hereto.
B. The Subadviser shall use its best efforts to furnish to the
Adviser or any company supplying investment company accounting or security
pricing, timely notice of significant events which come to the Subadviser's
attention concerning securities in which it has caused the Fund to invest which
could require the Fund to fairly value such securities in the daily calculation
of the Fund's net asset value per share.
C. Subject to any applicable regulatory restriction or
prohibition, the Subadviser shall have authority and discretion to select
brokers and dealers (hereinafter "broker-dealers") to execute portfolio
transactions for the Funds and for the selection of the markets on or in which
the transactions will be executed. The Company and the Adviser acknowledge and
agree that the Subadviser may place orders through its affiliates and that such
affiliates may receive compensation therefor.
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D. The primary objective of the Subadviser in placing orders
for the purchase and sale of securities for a Fund shall be to obtain the "best
execution" (prompt and reliable execution at the most favorable security price
obtainable) taking into account such factors as price, commission, if any, size
of order, difficulty of execution and skill required of the executing broker or
dealer. The Subadviser shall have discretion, in the interests of each Fund, to
allocate brokerage on each Fund's portfolio transactions to broker-dealers who
provide brokerage and/or research services (as such services are defined
Section 28(e)(3) of the Securities Exchange Act of 1934) for any of the Funds.
The term "research" includes advice as to the value of securities; the
advisability of investing in, purchasing or selling securities; 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. Subject to such
policies as the Adviser and the Company's Board of Directors may determine, 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 a Fund to pay a broker for effecting a portfolio investment transaction
in excess of the amount of commission another broker-dealer 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-dealer, viewed in terms
of either that particular transaction or the Subadviser's overall
responsibilities with respect to the Fund and/or its other clients. In reaching
such determination, the Subadviser will not be required to place or attempt to
place a specific dollar value on the brokerage and/or research services provided
or being provided by such broker/dealer. The Subadviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable commission
rate applicable to any particular portfolio transactions or to select any
broker-dealer on the basis of its purported or "posted" commission rate but
will, to the best of its ability, endeavor to be aware of the current level of
the charges of eligible broker-dealers and to minimize the expense incurred by
the Funds for effecting their portfolio transactions.
E. All transactions will be consummated by payment to or
delivery by the Company's Custodian, prior notice of which shall be provided to
the Subadviser by the Company or the Adviser, or such depositories or agents as
may be designated by the Custodian, of all cash and/or securities due to or from
a Fund, 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 Company daily of all investment orders placed by it with
broker-dealers pursuant to procedures agreed upon by the Subadviser and the
Company. The Subadviser shall not be responsible for obtaining prices for any
such investment order, but will use its best efforts to direct the Custodian to
pricing sources and assist the Custodian in obtaining dealer quotes if so
requested by the Custodian. The Company or its authorized agents, the Adviser
and Subadviser, shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated by
the Subadviser. The Company shall be responsible for all custodial arrangements
and the payment of all custodial charges and fees, and, upon transmitting to the
Custodian the investment orders placed by it with broker-dealers, the Subadviser
shall have no responsibility or liability with respect to custodial arrangements
or the acts, omissions or other conduct of the Custodian.
F. The Custodian shall, on a daily basis pursuant to
procedures and in a format agreed upon by the Subadviser and the Company,
provide portfolio reports to the Subadviser that shall include a listing of all
portfolio investments of each Fund and its cash position.
6. EXPENSES. During the term of this Agreement, the Subadviser will
pay all expenses incurred by it or its staff in connection with rendering
portfolio management services under this
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Agreement. This does not include expenses and costs of the Funds' operations
payable by the Company or the Adviser, or their Agents including, but not
limited to, those for: interest and taxes; brokerage commissions; custody,
transfer agency, dividend disbursement, accounting, pricing, legal and auditing
services; insurance premiums for fidelity and other coverage required for their
operations; filing and registration of shares; shareholder reports; meetings of
the Company's shareholders or directors (except those called solely to
accommodate the Subadviser, in which case such expenses shall be borne as the
Parties may agree); printing and postage; office facilities, stationery and
supplies; the clerical, executive and administrative costs incurred by the
Adviser in overseeing or administering all of the above; other direct
administrative and service costs; and such extraordinary non-recurring expenses
as may arise, including litigation, affecting any of the Funds.
7. COMPENSATION. For the services provided, the Adviser will pay the
Subadviser a fee, payable monthly based on the aggregate daily net assets of the
Funds, as provided in the Fee Schedule attached to this Agreement as Appendix B.
The "aggregate daily net assets" is defined as the aggregate of the values
placed on the net assets of all Funds as of 4:00 p.m. (New York time), on each
day on which the net asset value of the Funds' portfolios is determined
consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the
Company lawfully determines the net asset value of a Fund's portfolio as of some
other time on each business day, as of such time. The net asset value of each
Fund's portfolio shall be determined pursuant to the applicable provisions of
the Company's current Registration Statement and the 1940 Act. If the
determination of net asset value for a Fund is suspended in conformity with the
1940 Act for any particular business day, then the value of the net assets of
such Fund's portfolio 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 such other time as
the net asset value of the portfolio may lawfully be determined, on that day. If
the Company has suspended the determination of the net asset value of a Fund's
portfolio 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 Company
determines the value of the net assets of a Fund's portfolio more than once on
any day, the last such determination on that day shall be deemed to be the sole
determination on that day for the purposes of this Section 7.
8. BOOKS AND RECORDS.
A. The Subadviser will make available to the Adviser and the
Company promptly upon request its records and ledgers with respect to and
relating to each Fund's securities transactions to assist the Adviser and the
Company in compliance with the 1940 Act and the Advisers Act, and other
applicable laws. The Subadviser will furnish the Company's Board of Directors
such periodic and special reports on each Fund as the Adviser and the Directors
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 Funds are the property of the Company and further agrees to surrender
promptly to the Company any of such records upon the Company'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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9. INDEMNIFICATION.
A. Absent the Adviser's or the Company's gross negligence,
willful misconduct or bad faith in the performance of its duties, or reckless
disregard of its obligations and duties under this Agreement, the Subadviser
agrees to indemnify and hold harmless the Adviser, the Company and their
officers and employees against any and all costs and liabilities (including
legal and other expenses) which the Adviser or the Company may incur, arising
out of the Subadviser's (a) gross negligence, willful misconduct or bad faith in
the performance of its duties, or reckless disregard of its obligations and
duties under this Agreement, or (b) untrue statement or omission of a material
fact required in the Registration or Proxy Statements or other regulatory
filing, if such statement or omission was made in reliance upon information
furnished in writing by the Subadviser for inclusion in such regulatory filings.
B. Absent the Subadviser's gross negligence, willful
misconduct or bad faith in the performance of its duties, or reckless disregard
of its obligations and duties under this Agreement, the Adviser and the Company
agree to indemnify and hold harmless the Subadviser and its officers and
employees against any and all costs and liabilities (including legal and other
expenses) which the Subadviser may incur, arising out of the Adviser's or the
Company's (a) gross negligence, willful misconduct or bad faith in the
performance of its duties, or reckless disregard of its obligations and duties
under this Agreement, or (b) untrue statement or omission of a material fact
required in the Registration or Proxy Statements or other regulatory filing,
unless such statement or omission was made in reliance upon information
furnished in writing by the Subadviser for inclusion in such regulatory filings.
10. SERVICES NOT EXCLUSIVE. It is understood that the services of the
Subadviser are not exclusive, and nothing in this Agreement shall prevent the
Subadviser from providing similar services to other investment companies or
investment accounts (whether or not their investment objectives and policies are
similar to those of a Fund) or from engaging in other activities. When the
Subadviser recommends the purchase or sale of a security for other investment
companies and other clients, and at the same time the Subadviser recommends the
purchase or sale of the same security for one or more Funds, it is understood
that such transactions will be executed on a basis that is fair and equitable to
each Fund.
11. DURATION. The term of this Agreement, with respect to each Fund,
shall begin on the effective date of a Post-Effective Amendment to the Company's
Registration Statement that discloses the Subadviser as such for that Fund and
shall remain in effect until the first meeting of such Fund's shareholders held
thereafter, and, if approved at such meeting, shall continue in effect for two
years from the effective date of the Post-Effective Amendment with respect to
such Fund and continue on an annual basis thereafter if approved for each Fund
each year by (a) the vote of a majority of the entire Board of Directors of the
Company or by the vote of a majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act), and by (b) the vote of a majority of those
Directors of the Company 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.
12. TERMINATION. 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 Company (which notice may be waived by the Subadviser
and the Company), (b) the Company, on behalf of any one or more of the Funds,
upon the vote of a majority of the Company's Board of Directors or a majority of
the outstanding voting securities of such Fund, upon sixty (60) days' written
notice to the
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Adviser and the Subadviser, or (c) the Subadviser, upon sixty (60) days' written
notice to the Adviser and the Company (which notice may be waived by the Adviser
and the Company). Termination of this Agreement with respect to a Fund shall not
effect the continuing applicability of this Agreement with respect to other
Funds. This Agreement shall automatically terminate in the event of its
assignment (as such term is defined in the 1940 Act and interpreted by the U.S.
Securities and Exchange Commission). Termination of this Agreement shall not
affect the right of the Subadviser to receive payments of any unpaid balance of
the compensation described in Section 7 earned prior to such termination.
13. 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 material amendment of this Agreement shall be
effective with respect to a Fund until approved by a vote of a majority of the
outstanding voting securities of such Fund, if such approval is required by
applicable law.
14. USE OF NAME. It is understood that the name Xxxxxx Investment
Partners, Inc. or any derivative thereof or logo associated with that name is
the valuable property of the Subadviser and its affiliates and that the Company
and each Fund have the right to use such name (or derivative or logo) in
offering and sales materials so long as the Subadviser is portfolio manager to
such Fund and provided the Subadviser shall have reviewed and approved in
writing such use, which approval may not be unreasonably withheld. Upon
termination of this Agreement, the Company and the Adviser shall promptly cease
to use such name.
15. 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
there under.
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 invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and the provisions of this Agreement shall be
deemed to be severable.
D. Any notice under this Agreement shall be in writing
addressed and delivered or mailed, postage prepaid, to the other party at the
address below or at such other address as such other party may designate
hereunder for the receipt of such notice:
If to the Adviser or the Company:
Atlas Advisers, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: X. Xxxxxxxx Key, Group Senior Vice President
If to the Subadviser:
Xxxxxx Investment Partners, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx, Chief Operating Officer
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E. Each party agrees that it will treat confidentially all
information provided by another party regarding the other party's business and
operations, including without limitation the investment activities or holdings
of a Fund. All confidential information provided by a party hereto shall not be
disclosed to any unaffiliated third party without the prior consent of the
providing party. The foregoing shall not apply to any information that is public
when provided or thereafter becomes public or which is required to be disclosed
by any regulatory authority in the lawful and appropriate exercise of its
jurisdiction, by any auditor of a party, pursuant to judicial or administrative
process or otherwise in accordance with applicable law or regulation.
F. This Agreement may be executed in counterparts, each of
which shall be deemed an original.
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. XXXXXX INVESTMENT PARTNERS, INC.
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By: X. Xxxxxxxx Key By: Xxxxxxx X. Xxxxxxx
Its Group Senior Vice President Its President
ATLAS ASSETS, INC.
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By: X. Xxxxxxxx Key
Its Group Senior Vice President
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