EXHIBIT (D)(3)
SUB-ADVISORY AGREEMENT WITH XXXXXXX ASSET MANAGEMENT, INC.
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SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT (this "Agreement") is made as of the 1st day
of May, 1999, by and among PRINCIPAL PRESERVATION PORTFOLIOS, INC., a Maryland
corporation (the "Fund"), X.X. XXXXXXX AND COMPANY, a Wisconsin corporation
(the "Advisor"), and XXXXXXX ASSET MANAGEMENT, INC., a Wisconsin corporation
(the "Sub- Advisor").
W I T N E S S E T H
For good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and among the parties hereto as follows:
1. IN GENERAL
The Sub-Advisor agrees, as more fully set forth herein, to act
as Sub-Advisor to the Fund with respect to the investment and
reinvestment of the assets of each Portfolio of the Fund identified
on Exhibit A attached hereto, as the same may be amended from time
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to time (individually a or the "Portfolio" and together the
"Portfolios"). The Sub-Advisor agrees to supervise and arrange the
purchase of securities and the sale of securities held in the
investment portfolio of each Portfolio.
2. DUTIES AND OBLIGATIONS OF THE SUB-ADVISOR WITH RESPECT TO
INVESTMENTS OF ASSETS OF EACH PORTFOLIO
(a) Subject to the succeeding provisions of this section and
subject to the oversight and review of the Advisor and the direction
and control of the Board of Directors of the Fund, the Sub-Advisor
shall:
(i) Determine what securities shall be purchased or sold
by each Portfolio;
(ii) Arrange for the purchase and the sale of securities
held in each Portfolio; and
(iii) Provide the Advisor and the Directors with such
reports as may reasonably be requested in connection with the
discharge of the foregoing responsibilities and the discharge
of the Advisor's responsibilities under its Investment Advisory
Agreement with the Fund and those of X.X. Xxxxxxx and Company
(the "Distributor") under its Distribution Agreement with the
Fund.
(b) Any investment purchases or sales made by the Sub-Advisor
under this section shall at all times conform to, and be in
accordance with, any requirements imposed by: (1) the provisions of
the Investment Company Act of 1940 (the "Act") and of any rules or
regulations in force thereunder; and (2) the provisions of the
Articles of Incorporation and By-Laws of the Fund as amended from
time to time; (3) any policies and determinations of the Board of
Directors of the Fund; and (4) the fundamental policies of the
relevant Portfolio, as reflected in the Fund's registration
statement (or post-effective amendments thereto) under the Act and
the Securities Act of 1933 (including the relevant Portfolio's
current Prospectus and Statement of Additional Information), or as
amended by the shareholders of the relevant Portfolio; provided that
copies of the items referred to in clauses (2), (3) and (4) shall
have been furnished to the Sub-Advisor.
(c) The Sub-Advisor shall give the Fund the benefit of its
best judgment and effort in rendering services hereunder. In the
absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations or duties ("disabling
conduct") hereunder on the part of the Sub-Advisor (and its
officers, directors, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the Sub-
Advisor) the Sub-Advisor shall not be subject to liability to the
Fund or to any shareholder of the Fund for any act or omission in
the course of, or connected with, rendering services hereunder,
including without limitation any error of judgment or mistake of law
or for any loss suffered by any of them in connection with the
matters to which this Agreement relates, except to the extent
specified in Section 36(b) of the Act concerning loss resulting from
a breach of fiduciary duty with respect to the receipt of
compensation for services. Except for such disabling conduct, the
Fund shall indemnify the Sub-Advisor (and its officers, directors,
agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Sub-Advisor) against any
liability arising from the Sub-Advisor's conduct under this
Agreement to the extent permitted by the Fund's Articles of
Incorporation, By-Laws and applicable law.
(d) Nothing in this Agreement shall prevent the Sub-Advisor or
any affiliated person (as defined in the Act) of the Sub-Advisor
from acting as investment advisor or manager for any other person,
firm or corporation and shall not in any way limit or restrict the
Sub-Advisor or any such affiliated person from buying, selling or
trading any securities for its or their own accounts or for the
accounts of others for whom it or they may be acting, provided,
however, that the Sub-Advisor expressly represents that it will
undertake no activities which, in its judgment, will adversely
affect the performance of its obligations to the Fund under this
Agreement or under the Act. It is agreed that the Sub-Advisor shall
have no responsibility or liability for the accuracy or completeness
of the Fund's Registration Statement under the Act and the
Securities Act of 1933 (and will be indemnified by the Fund for
claims related thereto), except for information supplied by the Sub-
Advisor for inclusion therein. The Sub-Advisor shall be deemed to
be an independent contractor and, unless otherwise expressly
provided or authorized, have no authority to act for or represent
the Fund in any way or otherwise be deemed an agent of the Fund.
(e) In connection with its duties to arrange for the purchase
and sale of each Portfolio's portfolio securities, the Sub-Advisor
shall follow the principles set forth in any investment advisory
agreement in effect from time to time between the Fund and the
Advisor, provided that a copy of any such agreement shall have been
provided to the Sub-Advisor. The Sub-Advisor will promptly
communicate to the Advisor and to the officers and the Directors of
the Fund such information relating to portfolio transactions as they
may reasonably request.
3. ALLOCATION OF EXPENSES
The Sub-Advisor agrees that it will furnish the Fund, at the
Sub-Advisor's expense, with all office space and facilities,
equipment and clerical personnel that the Sub-Advisor reasonably
deems necessary for carrying out its duties under this Agreement.
Such office space, facilities, equipment and personnel may be used
by the Sub-Advisor for its services to other clients. The Sub-
Advisor will also pay all compensation of those of the Fund's
officers and employees, if any, and of those Directors, if any, who
in each case are affiliated persons of the Sub-Advisor.
4. CERTAIN RECORDS
Any records required to be maintained and preserved pursuant to
the provisions of Rule 31a-1 and Rule 31a-2 under the Act which are
prepared or maintained by the Sub-Advisor on behalf of the Fund are
the property of the Fund and will be surrendered promptly to the
Fund or the Advisor on request.
5. REFERENCE TO THE SUB-ADVISOR
Neither the Fund nor the Advisor or any affiliate or agent
thereof shall make reference to or use the name of the Sub-Advisor
or any of its affiliates in any advertising or promotional materials
without the prior approval of the Sub-Advisor, which approval shall
not be unreasonably withheld.
6. COMPENSATION OF THE SUB-ADVISOR
The Advisor agrees to pay the Sub-Advisor, and the Sub-Advisor
agrees to accept as full compensation for all services rendered by
the Sub-Advisor as such, a management fee for each Portfolio as
specified on Exhibit A attached hereto.
7. DURATION AND TERMINATION
(a) This Agreement shall go into effect with respect to each
Portfolio on the date set forth for such Portfolio on Exhibit A
attached hereto. This Agreement shall, unless terminated as
hereinafter provided, continue in effect with respect to each
Portfolio for a period of two years following the effective date for
such Portfolio, and thereafter from year to year, but only so long
as such continuance is specifically approved at least annually by a
majority of the Fund's Board of Directors, or by the vote of the
holders of a "majority" (as defined in the Act) of the outstanding
voting securities of the relevant Portfolio, and, in either case, a
majority of the Directors who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party cast
in person at a meeting called for the purpose of voting on such
approval.
(b) This Agreement may be terminated (either in its entirety
or with respect to one or more Portfolios) by the Sub-Advisor at any
time without penalty upon giving the Fund and the Advisor sixty (60)
days' written notice (which notice may be waived by the Fund and the
Advisor) and may be terminated (either in its entirety or with
respect to one or more Portfolios) by the Fund or the Advisor at any
time without penalty upon giving the Sub-Advisor sixty (60) days'
written notice (which notice may be waived by the Sub-Advisor),
provided that such termination by the Fund shall be directed or
approved by the vote of a majority of all of its Directors in office
at the time or by the vote of the holders of a "majority" (as
defined in the Act) of the voting securities of the relevant
Portfolio(s). This Agreement shall automatically terminate in the
event of its "assignment" (as defined in the Act). This Agreement
will also automatically terminate in the event that the Investment
Advisory Agreement by and between the Fund and the Advisor is
terminated for any reason.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereto affixed, all as of the day and year first above written.
PRINCIPAL PRESERVATION
PORTFOLIOS, INC.
By: ------------------------------------------------
Xxxxxx X. Xxxxxxxxx, President
X.X. XXXXXXX AND COMPANY
By: -----------------------------------------------
Xxxxx X. Xxxxxxx, President and Chief Executive Officer
XXXXXXX ASSET MANAGEMENT, INC.
By: -------------------------------------------------
Xxxxxxxx X. Xxxxxx, Xx., President and Chief Executive Officer
EXHIBIT A
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PRINCIPAL PRESERVATION PORTFOLIOS, INC.
XXXXXXX ASSET MANAGEMENT, INC.
SUB-ADVISORY AGREEMENT
1. S&P 100 PLUS PORTFOLIO
a. Effective Date: May 1, 1999
b. Sub-Advisory Fee: Computed daily and paid monthly in an amount
equal to one-fourth (1/4) of the investment advisory fee paid by the
Portfolio to the Advisor, without giving effect to any fee waivers
or expense reimbursements by the Advisor.
2. DIVIDEND ACHIEVERS PORTFOLIO
a. Effective Date: May 1, 1999
b. Sub-Advisory Fee: Computed daily and paid monthly in an amount
equal to one-fourth (1/4) of the investment advisory fee paid by the
Portfolio to the Advisor, without giving effect to any fee waivers
or expense reimbursements by the Advisor.
3. PSE TECH 100 INDEX PORTFOLIO
a. Effective Date: May 1, 1999
b. Sub-Advisory Fee: Computed daily and paid monthly in an amount
equal to one-fourth (1/4) of the investment advisory fee paid by the
Portfolio to the Advisor, without giving effect to any fee waivers
or expense reimbursements by the Advisor.
