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EXHIBIT (d)(3)
SUB-ADVISORY CONTRACT
THIS AGREEMENT is made as of August 1, 2001, between XXXXXXX ASSET
MANAGEMENT, INC., a Michigan corporation ("LAMI" or the "Adviser"), and
CASTLEARK MANAGEMENT, LLC, an Illinois limited liability company ("CastleArk" or
the "Subadviser").
WHEREAS, the Adviser has entered into an Investment Management
Agreement, dated as of August 1, 2001 (the "Management Agreement"), with Xxxxxxx
Investments (the "Trust"), a Massachusetts business trust and a diversified,
open-end management investment company registered under the Investment Company
Act of 1940 (the "1940 Act"), pursuant to which LAMI acts as Adviser of the
Trust's separate series of shares of beneficial interest one of which is the
Xxxxxxx Small-Cap Growth Fund (the "Fund"); and
WHEREAS, LAMI desires to retain the Subadviser to provide investment
advisory services to the Fund and to manage the Fund as the Adviser shall from
time to time direct, and the Subadviser is willing to render such investment
advisory services;
NOW, THEREFORE, the Parties agree as follows:
1. Subject to the direction of the Adviser and the Board of Trustees of
the Trust, the Subadviser shall provide portfolio management services to the
Fund, including (but not limited to) the purchase, retention and disposition of
portfolio securities in accordance with the Fund's investment objectives,
policies and restrictions as stated in the Prospectus and Statement of
Additional Information (such Prospectus and Statement of Additional Information
as currently in effect and as amended or supplemented from time to time, being
herein called the Prospectus), portfolio reconciliation, cash management,
back-office services, periodic reporting to the Adviser and the Board of
Trustees of the Trust and such other services as may be reasonably requested by
the Adviser. The Subadviser's activities shall be subject to the following
understandings:
(a) The Subadviser shall determine from time to time what
investments and securities will be purchased, retained, sold or loaned
by the Fund, and what portion of the assets will be invested or held
uninvested as cash or invested in cash equivalents.
(b) In the performance of its duties and obligations under
this Agreement, the Subadviser shall act in conformity with the
Declaration of Trust, Bylaws and Prospectus of the Fund and with the
instructions and directions of the Adviser and of the Board of Trustees
of the Trust, co-operate with the Adviser's (or its designee's)
personnel responsible for monitoring the Fund's compliance, and will
conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986 and all other applicable federal and
state laws and regulations. In connection therewith, the Subadviser
shall, among other things, comply with the Adviser's Code of Ethics,
soft dollar trading policy, brokerage allocation policy, and such other
policies as the Adviser or the Trust may establish, and it shall
prepare and file such reports as are, or may in the future be, required
by the Securities and Exchange Commission.
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(c) The Subadviser shall place orders with or through such
persons, brokers or dealers (but only with brokers or dealers that are
not affiliated with the Subadviser) to carry out the policy with
respect to brokerage as set forth in the Fund's Prospectus or as the
Board of Trustees or the Adviser may direct from time to time. In
providing the Fund with investment supervision, it is recognized that
the Subadviser will give primary consideration to securing the most
favorable price and efficient execution. Within the framework of this
policy, the Subadviser may consider the financial responsibility,
research and investment information and other services provided by
brokers or dealers who may effect or be a party to any such transaction
or other transactions to which the Subadviser's other clients may be a
party. It is understood that no broker or dealer affiliated with the
Subadviser may be used as principal broker for securities transactions.
It is also understood that it is desirable for the Fund that the
Subadviser have access to supplemental investment and market research
and security and economic analysis provided by brokers who may execute
brokerage transactions at a higher cost to the Fund than may result
when allocating brokerage to other brokers on the basis of seeking the
most favorable price and efficient execution. Therefore, the Subadviser
is authorized to place orders for the purchase and sale of securities
for the Fund with such brokers, subject to review by the Trust's Board
of Trustees and the Adviser from time to time with respect to the
extent and continuation of this practice. It is understood that the
services provided by such brokers may be useful to the Subadviser in
connection with the Subadviser's services to other clients.
On occasions when the Subadviser deems the purchase or sale of
a security to be in the best interest of the Fund as well as other
clients of the Subadviser, the Subadviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation
to, aggregate the securities to be sold or purchased in order to obtain
the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made
by the Subadviser in the manner the Subadviser considers to be the most
equitable and consistent with its fiduciary obligations to the Fund and
to such other clients.
(d) The Subadviser shall maintain all books and records with
respect to the Fund's portfolio transactions required by subparagraphs
(b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1
under the 1940 Act, and shall render to the Trust's Board of Trustees
and to the Adviser such periodic and special reports as the Trustees or
the Adviser may reasonably request. The Subadviser shall make
reasonably available its employees and officers for consultation with
any of the Trustees or officers or employees of the Fund or the Adviser
with respect to any matter discussed herein, including, without
limitation, the valuation of the Fund's securities.
(e) The Subadviser shall provide to the Adviser and to the
Fund's Custodian on each business day information relating to all
transactions concerning the Fund's assets that it manages, including
(but not limited to) any pricing discrepancies from daily closing
prices
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reported by the Fund's pricing services, and shall provide the Adviser
with such other information as the Adviser may request.
(f) The Subadviser and Adviser understand and agree that the
Adviser intends to manage the Fund in a "manager-of-managers" style,
and that the Adviser will, among other things, (i) continually evaluate
the performance of the Subadviser to the Fund through quantitative and
qualitative analysis and consultations with the Subadviser, (ii)
periodically make recommendations to the Trust's Board of Trustees as
to whether this contract with the Subadviser should be renewed,
modified, or terminated and (iii) periodically report to the Trust's
Board of Trustees regarding the results of its evaluation and
monitoring functions. The Subadviser recognizes that its services may
be terminated or modified pursuant to this process.
(g) The Subadviser will support all marketing and sales
activities with respect to the Fund, including (but not limited to)
providing press and other publicity interviews, attending conferences
and seminars that the Adviser deems to be appropriate and meeting with
prospective and existing shareholders, registered investment advisers
and other financial intermediaries. The Adviser will reimburse the
Subadviser for its out-of-pocket expenses incurred in connection with
such marketing support, provided that the expenses are approved in
advance by the Adviser.
(h) The Adviser shall have the right to approve the specific
individuals employed by the Subadviser to perform the investment
management services described above, and the Adviser shall also have
the right to direct that the Subadviser terminate the involvement of
any one or more of such individuals with respect to the Fund's
investment management activities, but any such change in personnel of
the Subadviser shall not be deemed to be a termination of this
Agreement.
(i) The Subadviser will not provide portfolio management
services to any other mutual fund using the same investment process or
style as the Subadviser uses with respect to the Fund without the prior
written consent of the Adviser, nor will the Subadviser organize a
mutual fund with a substantially similar investment objective as the
Fund. The Subadviser agrees to offer to the Trust the first opportunity
to organize and register any new mutual fund that the Subadviser
develops.
2. The Subadviser may authorize and permit any of its directors,
officers and employees who may be elected as Trustees or officers of the Fund to
serve in the capacities in which they are elected. Services to be furnished by
the Subadviser under this Agreement may be furnished through the medium of any
of such directors, officers or employees.
3. The Subadviser shall keep the Fund's books and records required to
be maintained by the Subadviser pursuant to Section 1(d) hereof and shall timely
furnish to the Adviser all information relating to the Subadviser's services
hereunder needed by the Adviser to keep the other books and
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records of the Fund required by Rule 31a-1 under the 1940 Act. The Subadviser
agrees that all records which it maintains for the Fund are the property of the
Fund and the Subadviser will surrender promptly to the Fund any of such records
upon the Fund's request, provided, however, that the Subadviser may retain a
copy of such records. The Subadviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any such records as are required to
be maintained by it pursuant to Section 1(d) hereof.
4. The Subadviser agrees to maintain its registration as an investment
adviser under the Investment Advisers Act of 1940 (the "Advisers Act") and to
maintain adequate compliance procedures to ensure its compliance with the 1940
Act, the Advisers Act and any other applicable state and federal laws or
regulations.
5. The Subadviser shall furnish to the Adviser copies of all records
prepared in connection with (i) the performance of this Agreement and (ii) the
maintenance of compliance procedures pursuant to Section 1(b) hereof as the
Adviser may reasonably request.
6. For the services provided and the expenses assumed pursuant to this
Agreement, the Adviser shall pay the Subadviser as full compensation therefor, a
fee equal to 50% of the monthly management fee paid to the Adviser; provided,
however, that for the period from August 1, 2001 through November 16, 2001, the
compensation payable hereunder to the Subadviser shall not be less than $64,773.
Payment by the Adviser to the Subadviser of such fee shall be made within three
(3) business days after receipt by the Adviser of payment of its monthly
management fee from the Trust.
7. The Subadviser shall not be liable for any error of judgment or for
any loss suffered by 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 Subadviser's part in the performance of its
duties or from its reckless disregard of its obligations and duties under this
Agreement.
8. This Agreement shall continue in effect for a period of more than
two years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Fund at any
time, without the payment of any penalty, by the Board of Trustees of the Trust
or by vote of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of the Fund, or by the Adviser or the Subadviser at any time, without
the payment of any penalty, on not more than 60 days' nor less than 30 days'
written notice to the other party. This Agreement shall terminate automatically
in the event of its assignment (as defined in the 0000 Xxx) or upon the
termination of the Management Agreement.
9. Nothing in this Agreement shall limit or restrict the right of any
of the Subadviser's directors, officers or employees who may also be a Trustee,
officer or employee of the Fund to engage in any other business or to devote his
or her time and attention in part to the management or other aspects of any
business, whether of a similar or dissimilar nature, nor limit or restrict the
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Subadviser's right to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
10. During the term of this Agreement, the Adviser agrees to furnish
the Subadviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared for
distribution to shareholders of the Fund or the public, which refer to the
Subadviser in any way, prior to use thereof and not to use material if the
Subadviser reasonably objects in writing within three (3) business days (or such
other time as may be mutually agreed) after receipt thereof. Sales literature
may be furnished to the Subadviser hereunder by first-class or overnight mail,
facsimile transmission equipment or hand delivery.
11. This Agreement may be amended by mutual consent, but the consent of
the Fund must be obtained in conformity with the requirements of the 1940 Act.
12. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act or the Advisers Act shall be resolved by reference to such term
or provision of the 1940 Act or the Advisers Act and to interpretations thereof,
if any, by the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the SEC issued
pursuant to said Acts. In addition, where the effect of a requirement of the
1940 Act or the Advisers Act reflected in any provision of the Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. Subject to the
foregoing, this Agreement shall be governed by and construed in accordance with
the laws (without reference to conflicts of law provisions) of the State of
Illinois.
13. Any notices or other communications required or permitted hereunder
shall be deemed to have been given if sent by first class mail, overnight
delivery or hand delivery to the following addresses:
If to the Adviser, to:
Xxxxxxx Asset Management, Inc.
000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
If to the Subadviser, to:
CastleArk Management, LLC
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
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IN WITNESS WHEREOF, the Parties hereto have caused this instrument to
be executed by their officers designed below as of the day and year first above
written.
XXXXXXX ASSET MANAGEMENT, INC.
By: /S/ XXXX X. XXXXXXXX
Xxxx X. Xxxxxxxx
CASTLEARK MANAGEMENT, LLC
By: /S/ XXXXXX X. XXXXXXXXXX
Xxxxxx X. Xxxxxxxxxx
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