INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT, effective February 24, 1998, by and
between Xxxxxxx Asset Management Company, Inc., a Delaware corporation
registered as an investment Advisor under the Investment Advisors Act of 1940
(the "Advisor"), and State Street Bank and Trust Company, a Massachusetts
corporation (the "Subadvisor").
WHEREAS, the Advisor is the investment advisor to the Xxxxxxx Social
Investment Fund (the "Trust"), an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Advisor desires to retain the Subadvisor to furnish it
with certain investment advisory services in connection with the Advisor's
investment advisory activities on behalf of the Trust and any series of the
Trust, for which Schedules are attached hereto (each such series referred to
individually as the "Fund").
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is hereby agreed as follows:
1. Services to be Rendered by the Subadvisor to the Fund.
(a) Investment Program. Subject to the control of the
Trust's Board of Trustees and the Advisor, the Subadvisor at its
expense continuously will furnish to the Fund an investment program
for such portion, if any, of Fund assets designated by the Advisor
from time to time. With respect to such assets, the Subadvisor will
make investment decisions, subject to Section 1(g) of this Agreement,
and will place all orders for the purchase and sale of portfolio
securities. The Subadvisor is deemed to be an independent contractor
and, except as expressly provided or authorized by this Agreement,
has no authority to act for or represent the Trust or the Advisor in
any way or otherwise be deemed an agent of the Trust or the Advisor.
In the performance of its duties, the Subadvisor will act in the best
interests of the Fund and will comply with (i) applicable laws and
regulations, including, but not limited to, the 1940 Act and
Subchapter M of the Internal Revenue Code of 1986, as amended, (ii)
the terms of this Agreement, (iii) the Trust 's Declaration of Trust,
Bylaws and Registration Statement as from time to time amended, (iv)
relevant undertakings provided to State securities regulators, (v)
the stated investment objective, policies and restrictions of the
Fund, and (vi) such other guidelines as the Board of Trustees or
Advisor may establish. The Advisor is responsible for providing the
Subadvisor with current copies of the materials specified in
Subsections (a)(iii), (iv), (v) and (vi) of this Section 1.
(b) Availability of Personnel.The Subadvisor at its
expense will make available to the Trustees and Advisor at reasonable
times its portfolio managers and other appropriate personnel, either
in person or, at the mutual convenience of the Advisor and the
Subadvisor, by telephone, in order to review the Fund's investment
policies and to consult with the Trustees and Advisor regarding the
Fund's investment affairs, including economic, statistical and
investment matters relevant to the Subadvisor's duties hereunder, and
will provide periodic reports to the Advisor relating to the
investment strategies it employs.
(c) Expenses, Salaries and Facilities. The Subadvisor
will pay all expenses incurred by it in connection with its
activities under this Agreement (other than the cost of securities
and other investments, including any brokerage commissions and all
taxes, including any interest and penalties with respect thereto)
including, but not limited to, all salaries of personnel and
facilities required for it to execute its duties under this Agreement.
(d) Compliance Reports. The Subadvisor at its expense
will provide the Advisor with such compliance reports relating to its
duties under this Agreement as may be agreed on by such parties from
time to time.
(e) Valuation. The Subadvisor will assist the Fund and
its agents in determining whether prices obtained for valuation
purposes accurately reflect market price information relating to the
assets of the Fund for which the Subadvisor has responsibility on a
daily basis (unless otherwise agreed on by the parties hereto) and at
such other times as the Advisor shall reasonably request.
(f) Executing Portfolio Transactions.
(i) Brokerage. In selecting brokers and dealers to
execute purchases and sales of investments for the
Fund, the Subadvisor will use its best efforts to
obtain the most favorable price and execution
available in accordance with this paragraph. The
Subadvisor agrees to provide the Advisor and the
Fund with copies of its policy with respect to
allocation of brokerage on trades for the Fund.
Subject to review by the Trustees of appropriate
policies and procedures, the Subadvisor may cause
the Fund to pay a broker a commission for effecting
a portfolio transaction, in excess of the
commission another broker would have charged for
effecting the same transaction. If the first
broker provided brokerage and/or research services,
including statistical data, to the Subadvisor, the
Subadvisor shall not be deemed to have acted
unlawfully, or to have breached any duty created by
this Agreement, or otherwise, solely by reason of
acting according to such authorization.
(ii) Aggregate Transactions. In executing
portfolio transactions for the Fund, the Subadvisor
may, but will not be obligated to, aggregate the
securities to be sold or purchased with those of
its other clients where such aggregation is not
inconsistent with the policies of the Fund, to the
extent permitted by applicable laws and
regulations. If the Subadvisor chooses to
aggregate sales or purchases, it will allocate the
securities as well as the expenses incurred in the
transaction in the manner it considers to be the
most equitable and consistent with its fiduciary
obligations to the Fund and its other clients
involved in the transaction..
(iii) Directed Brokerage. The Advisor may
direct the Subadvisor to use a particular broker or
dealer for one or more trades if, in the sole
opinion of the Advisor, it is in the best interest
of the Fund to do so.
(iv) Brokerage Accounts. The Advisor
authorizes and empowers the Subadvisor to direct
the Fund's custodian to open and maintain brokerage
accounts for securities and other property,
including financial and commodity futures and
commodities and options thereon (all such accounts
hereinafter called "brokerage accounts") for and in
the name of the Fund and to execute for the Fund as
its agent and attorney-in-fact standard customer
agreements with such broker or brokers as the
Subadvisor shall select as provided above. The
Subadvisor may, using such of the securities and
other property in the Fund as the Subadvisor deems
necessary or desirable, direct the Fund's custodian
to deposit for the Fund original and maintenance
brokerage and margin deposits and otherwise direct
payments of cash, cash equivalents and securities
and other property into such brokerage accounts and
to such brokers as the Subadvisor deems desirable
or appropriate.
(g) Social Screening. The Advisor is responsible for
screening those investments of the Fund subject to social screening
("Securities") to determine that the Securities investments meet the
Fund's social investment criteria, as may be amended from time to
time by the Trustees and for notifying the Subadvisor of its
determination. The Subadvisor will buy only those Securities
permitted by the Fund's investment program which the Advisor
determines pass the Fund's social screens and of which the Advisor
has notified the Subadvisor. In the event that the Advisor notifies
the Subadvisor that a security already in the Fund's portfolio no
longer passes the Fund's social screen, the Advisor shall instruct
the Subadvisor whether the Subadvisor should dispose of the security
immediately or at such time as the Subadvisor believes would be least
detrimental to the Fund. To the extent instructed by the Advisor,
the Subadvisor shall have no liability for the disposition of any
securities under this paragraph. With respect to this paragraph, the
form of notification shall be mutually agreed upon by the parties.
(h) Voting Proxies. The Subadvisor agrees to take
appropriate action (which includes voting) on all proxies for the
Fund's portfolio investments in a timely manner in accordance with the
Advisor's Proxy Voting Guidelines, a copy of which has been provided
to the Subadvisor.
(i) Furnishing Information for the Fund's Proxies and
Other Required Mailings. The Subadvisor agrees to provide the
Advisor in a timely manner with all information necessary, including
information concerning the Subadvisor's controlling persons, for
preparation of the Fund's proxy statements or other required
mailings, as may be needed from time to time.
2. Books and Records.
(a) In connection with the purchase and sale of the
Fund's portfolio securities, the Subadvisor shall arrange for the
transmission to the Fund's custodian, and/or the Advisor on a daily
basis, of such confirmations, trade tickets or other documentation as
may be necessary to enable the Advisor to perform its accounting and
administrative responsibilities with respect to the management of the
Fund.
(b) Pursuant to Rule 31a-3 under the 1940 Act, Rule
204-2 under the Investment Advisors Act of 1940, and any other
applicable laws, rules or regulations regarding recordkeeping, the
Subadvisor agrees that: (i) all records it maintains for the Fund
are the property of the Fund; (ii) it will surrender promptly to the
Fund or Advisor any such records upon the Fund's or Advisor's
request; (iii) it will maintain for the Fund the records that the
Fund is required to maintain under Rule 31a-1(b) or any other
applicable rule insofar as such records relate to the investment
affairs of the Fund for which the Subadvisor has responsibility under
this Agreement; and (iv) it will preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records it maintains for the
Fund.
(c) The Subadvisor represents that it has adopted and
will maintain at all times a suitable Code of Ethics that covers its
activities with respect to its services to the Fund.
(d) The Subadvisor shall supply to the Trust's Board of
Trustees its policies on "soft dollars," trade allocations and
brokerage allocation procedures. The Subadvisor shall maintain
appropriate fidelity bond and errors and omission insurance policies.
3. Exclusivity. Each party and its affiliates may have
advisory, management service or other agreements with other organizations and
persons, and may have other interests and businesses; provided, however, that
during the term of the Agreement, the Subadvisor will not provide investment
advisory services ("Services") to any other investment company offered to the
public and registered under the 1940 Act which is "socially screened" and has
an investment objective, a Matrix and/or quantitative strategy and the same
asset class (large cap U.S. equity) as the Fund except to the extent that, as
of January 1, 1998 the Subadvisor has entered into a written agreement(s) to
provide such Services or to the extent mutually agreed upon in writing between
the parties.
4. Compensation. The Advisor will pay to the Subadvisor as
compensation for the Subadvisor's services rendered pursuant to this Agreement
an annual Subadvisory fee as specified in one or more Schedules attached
hereto and made part of this Agreement. Such fees shall be paid by the
Advisor (and not by the Fund). Such fees shall be payable for each month
within 15 business days after the end of such month. If the Subadvisor shall
serve for less than the whole of a month, the compensation as specified shall
be prorated based on the portion of the month for which services were
provided. The Schedules may be amended from time to time, in writing agreed to
by the Advisor and the Subadvisor, provided that amendments are made in
conformity with applicable laws and regulations and the Declaration of Trust
and Bylaws of the Trust. Any change in the Schedule pertaining to any new or
existing series of the Trust shall not be deemed to affect the interest of any
other series of the Trust and shall not require the approval of shareholders
of any other series of the Trust.
5. Assignment and Amendment of Agreement. This Agreement
automatically shall terminate without the payment of any penalty in the event
of its assignment (as defined under the 0000 Xxx) or if the Investment
Advisory Agreement between the Advisor and the Trust relating to the Fund shall
terminate for any reason. This Agreement constitutes the entire agreement
between the parties, and may not be amended except in a writing signed by both
parties. This Agreement shall not be materially amended unless, if required
by Securities and Exchange Commission rules and regulations, such amendment is
approved by the affirmative vote of a majority of the outstanding shares of
the Fund, and by the vote, cast in person at a meeting called for the purpose
of voting on such approval, of a majority of the Trustees of the Trust who are
not interested persons of the Trust, the Advisor or the Subadvisor.
6. Duration and Termination of the Agreement. This Agreement
shall become effective upon its execution; provided, however, that this
Agreement shall not become effective with respect to any Fund now existing or
hereafter created unless it has first been approved (a) by a vote of the
majority of those Trustees of the Trust who are not parties to this Agreement
or interested persons of such party, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by a vote of a majority of
that Fund's outstanding voting securities. This Agreement shall remain in
full force and effect with respect to a Fund continuously thereafter (unless
terminated automatically as set forth in Section 5.) except as follows:
(a) The Trust may at any time terminate this Agreement
without penalty with respect to any or all Funds by providing not
less than 60 days written notice delivered or mailed by registered
mail, postage prepaid, to the Advisor and the Subadvisor. Such
termination can be authorized by the affirmative vote of a majority
of the (i) Trustees of the Trust or (ii) outstanding voting
securities of the applicable Fund.
(b) This Agreement will terminate automatically with
respect to a Fund unless, within two years of the effective date of
that Fund, and at least annually thereafter, the continuance of the
Agreement is specifically approved by (i) the Trustees of the Trust
or the shareholders of such Fund by the affirmative vote of a
majority of the outstanding shares of such Fund, and (ii) a majority
of the Trustees of the Trust who are not interested persons of the
Trust, Advisor or Subadvisor, by vote cast in person at a meeting
called for the purpose of voting on such approval. If the
continuance of this Agreement is submitted to the shareholders of any
Fund for their approval and such shareholders fail to approve such
continuance as provided herein, the Subadvisor may continue to serve
hereunder in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
(c) The Advisor may at any time terminate this
Agreement with respect to any or all Funds by not less than 60 days
written notice delivered or mailed by registered mail, postage
prepaid, to the Subadvisor, and the Subadvisor may at any time
terminate this Agreement with respect to any or all Funds by not less
than 90 days written notice delivered or mailed by registered mail,
postage prepaid, to the Advisor, unless otherwise mutually agreed in
writing.
(d) The Advisor may terminate this Agreement with
respect to any or all Funds immediately by written notice if the
Confidentiality and Non-Use Agreement referred to in Section 11 of
this Agreement is, in the sole opinion of the Advisor, violated.
Upon termination of this Agreement with respect to any Fund, the
duties of the Advisor delegated to the Subadvisor under this Agreement with
respect to such Fund automatically shall revert to the Advisor.
7. Notification to the Advisor. The Subadvisor promptly shall
notify the Advisor in writing of the occurrence of any of the following events:
(a) the Subadvisor shall fail to qualify as a "bank" under
the Investment Advisors Act of 1940, as amended;
(b) the Subadvisor shall have been served or otherwise have
notice of any action, suit, proceeding, inquiry or investigation, at
law or in equity, before or by any court, public board or body,
directly involving the affairs of the Fund;
(c) a material violation of the Subadvisor's Code of Ethics
is discovered and, again, when action has been taken to rectify such
violations; or
(d) any other event, including but not limited to, a change
in executive personnel or the addition or loss of major clients of
the Subadvisor that might affect the ability of the Subadvisor to
provide the Services provided for under this Agreement.
8. Definitions. For the purposes of this Agreement, the terms
"vote of a majority of the outstanding Shares," "affiliated person," "control,"
"interested person" and "assignment" shall have their respective meanings as
defined in the 1940 Act and the rules and regulations thereunder subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission under said Act; and the term "specifically approve at least
annually" shall be construed in a manner consistent with the 1940 Act and the
rules and regulations thereunder.
9. Indemnification. The Subadvisor shall indemnify and hold
harmless the Advisor, the Trust and their respective trustees, directors,
officers and shareholders from any and all claims, losses, expenses,
obligations and liabilities (including reasonable attorneys fees) arising or
resulting from the Subadvisor's willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties hereunder.
The Advisor shall indemnify and hold harmless the Subadvisor, the
Trust and their respective Trustees, directors, officers, employees and agents
and shareholders from any and all claims, losses, expenses, obligations and
liabilities (including reasonable attorneys fees) arising or resulting from
the Advisor's willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties hereunder or under its Investment Advisory Agreement
with the Trust.
10. Applicable Law and Jurisdiction. This Agreement shall be
governed by Maryland law, and any dispute arising from this Agreement or the
services rendered hereunder shall be resolved through legal proceedings,
whether state, federal, or otherwise, conducted in the state of Maryland or in
such other manner or jurisdiction as shall be mutually agreed upon by the
parties hereto.
11. Confidentiality. This Agreement is not binding on the
Advisor unless the Subadvisor has signed and is subject to a confidentiality
and non-use agreement ("Non-Use Agreement") not materially different than the
one attached hereto as Exhibit 1. For a period of two (2) years from the date
of termination of this Agreement, the Subadvisor shall not attempt to develop,
market or sell any product which uses or employs any Confidential Information,
as that term is defined in the Non-Use Agreement.
12. Miscellaneous. Notices of any kind to be given to a party
hereunder shall be in writing and shall be duly given if mailed, delivered or
communicated by answer back facsimile transmission to such party at the
address set forth below, attention President, or at such other address or to
such other person as a party may from time to time specify.
Subadvisor agrees that for a period of two (2) years from the date of
termination of this Agreement, it shall not directly or indirectly, hire,
employ or engage, or attempt to hire, employ or engage any employee of the
Advisor or any affiliate thereof without the prior written permission of the
Advisor.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof. The
captions in this Agreement are included for convenience only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect.
Each party represents and warrants that it has all requisite
authority to enter into and carry out its responsibilities under this
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be signed in duplicate on its behalf by its duly authorized representative,
all as of the day and year first written above.
Witness: Xxxxxxx Asset Management Company, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000X
Xxxxxxxx, Xxxxxxxx 00000
By:__________________ By:______________________________
Witness: State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Compliance Officer
By:__________________ By:_______________________________
Fee Schedule to the Investment Subadvisory Agreement
between Xxxxxxx Asset Management Company, Inc.
and State Street Bank and Trust
As compensation pursuant to Section 4 of the Investment Subadvisory
Agreement between Xxxxxxx Asset Management Company, Inc. (the "Advisor") and
State Street Bank and Trust (the "Subadvisor"), the Advisor shall pay the
Subadvisor an annual Subadvisory fee computed daily and payable monthly, at an
annual rate equal to the greater of: (a) 0.35% of the first $100 million of
average daily net assets of Xxxxxxx Social Investment Fund, Managed Index
Portfolio ("MIP") and 0.25% on the average daily net assets of MIP in excess of
$100 million or (b) $150,000 annually ("Minimum"). Compensation shall commence
on the first day Subadvisor provides active investment Subadvisory services for
MIP (Compensation Date). The Minimum shall not apply to any annual period if
gross sales during such annual period are $55,000,000.00 or more. Annual
periods shall start on the Compensation Date and each anniversary thereof.
