EXHIBIT D(2)
June 4, 1999
XXXXXXX INVESTORS TRUST, on behalf of
Xxxxxxx Financial Services Fund
0000 Xxxxxx xx xxx Xxxxxxxx, 00 xx Xxxxx
Xxx Xxxx, XX 00000
MENDON CAPITAL ADVISORS CORP.
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
SUB-ADVISORY AGREEMENT
Dear Sirs:
Xxxxxxx Investors Trust (the "trust"), of which Xxxxxxx Financial
Services Fund (the "fund") is a series, has been organized as a business trust
under the laws of the State of Delaware to engage in the business of an
investment company. The trust's shares of beneficial interest are currently
divided into five series (including the fund), each series representing the
entire undivided interest in a separate portfolio of assets.
The board of trustees of the trust (the "trustees") has selected
Xxxxxxx Asset Management Corp. (the "adviser") to provide overall investment
advice and management for the fund, and to provide certain other services, under
the terms and conditions provided in the investment advisory agreement, dated as
of the date hereof, between the trust, on behalf of the fund, and the adviser
(the "investment advisory agreement").
The adviser and the trustees have selected Mendon Capital Advisors
Corp. (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 (the
"Advisers Act"). 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) agreement and declaration of trust of the trust,
dated August 20, 1998 (the "declaration of trust");
(b) by-laws of the trust as in effect on the date hereof;
(c) resolutions of the trustees selecting the sub-adviser
as the investment sub-adviser to the fund and
approving this sub-advisory agreement (the
"agreement");
(d) resolutions of the trustees selecting the adviser as
investment adviser to the fund and approving the
investment advisory agreement and resolutions adopted
by the initial shareholder of the fund approving the
investment advisory agreement;
(e) the adviser's investment advisory agreement;
(f) the fund's prospectus and statement of additional
information; and
(g) the trust's code of ethics.
The adviser will furnish the sub-adviser from time to time with 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 to the provisions
contained in the documents delivered to the sub-adviser pursuant to
Section 1 above, as from time to time amended or supplemented, the
sub-adviser 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 above, with respect to the purchase,
holding and disposition of portfolio securities and
other permitted investments;
(b) furnish the adviser and the fund with advice in
connection with policy decisions to be made by the
board of trustees or any committee thereof about the
fund's investments and, as requested, furnish the
fund with research, economic and statistical data in
connection with the fund's investments and investment
policies that is reasonably available to the
sub-adviser and necessary for the sub-adviser to
perform its obligations hereunder;
(c) submit such reports relating to the valuation of the
fund's securities as the adviser may reasonably
request;
(d) subject to prior consultation with the adviser,
assist the fund in any negotiations relating to the
fund's investments with issuers, investment banking
firms, securities brokers or dealers and other
institutions or investors;
(e) consistent with the provisions of Section 7 of this
agreement, place orders for the purchase, sale or
exchange of portfolio securities for the fund's
account with brokers or dealers selected by the
adviser or the sub-adviser, provided that in
connection with the placing of such orders and the
selection of such brokers or dealers the sub-adviser
will seek to obtain best price and execution, except
as otherwise provided in the prospectus and statement
of additional information of the fund or except as
otherwise required by the fund;
(f) from time to time or at any time reasonably requested
by the adviser or the trustees, make reports to the
adviser or the trustees, as requested, of the
sub-adviser's performance of the foregoing services;
(g) subject to the supervision of the adviser, maintain
and preserve the records required by the Investment
Company Act of 1940 (the "1940 Act") to be maintained
by the sub-adviser (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);
(h) give instructions to the custodian (including any
sub-custodian) of the fund as to deliveries of
securities to and from such custodian and payments of
cash for the account of the fund, and advise the
adviser on the same day such instructions are given;
(i) 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, semi-annual reports on Form
N-SAR, periodic statements, shareholder
communications and proxy materials furnished to
holders of shares of the fund, filings with states
and with United States agencies responsible for tax
matters, and other reports and filings of like
nature.
In the performance of its duties hereunder, the sub-adviser is and will
be an independent contractor and unless otherwise expressly provided or
authorized will have no authority to act for or represent the fund or
trust in any way or otherwise be deemed to be an agent of the fund, the
trust or of the adviser.
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 that 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 state will be 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
any fund expense or to reimburse the adviser for any such expense that
the adviser is required to pay or costs of any broker-dealer in
connection with the fund.
5. COMPENSATION OF THE SUB-ADVISER. The adviser will pay the sub-adviser,
as compensation for services and expenses assumed hereunder, a fee as
set forth in Schedule I. Sub-advisory fees payable hereunder will be
computed daily and paid monthly in arrears. If this agreement is
effective subsequent to the first day of the month, or if this
agreement is terminated, the fee provided in this section will be
computed on the basis of the number of days in the month for which this
agreement is in effect, subject to a pro rata adjustment based on the
number of days elapsed in the current month as a percentage of the
total number of days in such month. The sub-adviser understands and
agrees that neither the trust nor the fund has any liability for the
sub-adviser's fee hereunder. Calculations of the sub-adviser's fee will
be based on average net asset values as provided by the adviser.
6. OTHER ACTIVITIES OF THE SUB-ADVISER AND ITS AFFILIATES. Nothing herein
contained will prevent the sub-adviser or any of its affiliates,
directors, employees, or associates from engaging in any other business
or from acting as investment adviser or investment manager for any
other person or entity, whether or not having investment policies or a
portfolio similar to the fund. It is specifically understood that
officers, directors and employees of the sub-adviser and its affiliates
may engage in providing portfolio management services and advice to
other investment advisory clients of the sub-adviser or of its
affiliates.
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 directors, officers or employees will act as
principal or agent or receive any commission. The sub-adviser will 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. Access persons (as defined in Rule 17j-1 under the
1940 Act) of the sub-adviser will provide personal trading reports to a
designated representative of the adviser in accordance with the trust's
code of ethics.
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. LIMITATION OF LIABILITY OF THE SUB-ADVISER. Neither the sub-adviser or
any director, employee or shareholder of the sub-adviser will be liable
for any error of judgment or mistake of law or for any loss suffered by
the trust, 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.
10. DURATION AND TERMINATION OF THIS AGREEMENT. This agreement will remain
in effect until June 4, 2001 and from year to year thereafter, but only
so long as such continuance is specifically approved at least annually
by (a) a majority of the trustees who are not interested persons of the
adviser, of the sub-adviser or (other than as board members) of the
trust, cast in person at a meeting called for the purpose of voting on
such approval, and (b) either (i) the trustees or (ii) a majority of
the outstanding voting securities of the fund. This agreement may, on
60 days written notice, be terminated at any time without the payment
of any penalty by the fund by vote of a majority of the outstanding
voting securities of the fund or by the board of trustees or by the
adviser or by the sub-adviser. Termination of this agreement with
respect to the fund will not be deemed to terminate or otherwise
invalidate any provisions of any contract between you and any other
series of the trust. This agreement will automatically terminate in the
event of its assignment or upon the termination of the adviser's
investment advisory agreement. In interpreting the provisions of this
Section 10, the definitions contained in Section 2(a) of the 1940 Act
(including the definitions of "assignment," "interested person" and
"voting security"), will be applied.
11. AMENDMENT OF THIS AGREEMENT. No provision of this agreement may be
changed or waived orally, but only by an instrument in writing signed
by the party against which enforcement of the change or waiver is
sought. No amendment, transfer, assignment, sale, hypothecation or
pledge of this agreement will 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) the trust, 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.
12. 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 Xxxxxxx Investors Trust is the
designation of the trustees under the declaration of trust,
dated August 20, 1998 and the declaration of trust has been
filed with the Secretary of State of the State of Delaware.
The obligations of the trust and the fund are not personally
binding upon, nor will resort be had to the private property
of, any of the trustees, shareholders, officers, employees or
agents of the trust or the fund, but only the fund's property
will be bound. The fund will not be liable for the obligations
of any other series of the trust.
(b) Nothing herein contained will limit or restrict the
sub-adviser or any of its directors, 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 that the sub-adviser and its directors, 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 by the fund. The sub-adviser will have no
obligation to acquire for the fund, a position in any
investment which the sub-adviser, its directors, 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 for the fund. Nothing
herein contained will 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.
(c) 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 confidential and may be
used only by the fund and/or its agents, and only in
connection with the fund and its investments.
(d) GOVERNING LAW. This agreement shall be governed by the
substantive law of the State of New York and the applicable
provisions of the 1940 Act.
Yours very truly,
XXXXXXX ASSET MANAGEMENT CORP.
By: /S/ XXXX X. XXXXXXX
-----------------------
Xxxx X. Xxxxxxx
Its: PRESIDENT AND CHIEF EXECUTIVE OFFICER
The foregoing agreement is hereby
agreed to as of the date thereof.
MENDON CAPITAL ADVISORS CORP.
By: /S/ XXXXX XXXXXX
------------------
Xxxxx Xxxxxx
Its: PRESIDENT
-----------------
SCHEDULE I
ANNUAL FEE RATE AS A PERCENTAGE FUND OF
---------------------------------------
AVERAGE DAILY NET ASSET VALUE
-----------------------------
Xxxxxxx Financial Services Fund 0.45%
The average net asset value for the month will be based on the net
asset value used in determining the price at which fund shares are sold,
repurchased or redeemed on each day of the month.
If this agreement becomes effective as to a fund subsequent to the
first day of a month, or terminates before the last day of a month, your
compensation for such fraction of the month will be determined by applying the
foregoing percentages to the average daily net asset value of the fund during
such fraction of a month and in the proportion that such fraction of a month
bears to the entire month.
