NORTH AMERICAN FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made as of January 1, 1998 , between CypressTree Asset Management
Corporation, Inc., a Delaware corporation ("Cypress" or the "Adviser"), and
Xxxxxxxx, Xxxx & Xxxx, Inc. (the "Subadviser"). In consideration of the
mutual covenants contained herein, the parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and,
subject to the supervision of the Trustees of North American Funds (the "Trust")
and the terms of this Agreement, to manage the investment and reinvestment of
the assets of the Portfolio or Portfolios specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Subadviser from time to
time (each, a "Portfolio"). The Subadviser will be an independent contractor and
will have no authority to act for or represent the Trust or Adviser in any way
except as expressly authorized in this Agreement or another writing by the Trust
and Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction, supervision and control of the
Trustees of the Trust and the Adviser, the Subadviser shall have full
discretionary authority to, and shall, manage the investments and
determine the composition of the assets of the Portfolios in
accordance with the Portfolio's registration statement, as amended. In
fulfilling its obligations to manage the investments and reinvestments
of the assets of the Portfolio, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical,
financial and other information affecting the economy generally and
individual companies or industries the securities of which are
included in the Portfolio or are under consideration for inclusion in
the Portfolio;
ii. formulate and implement a continuous investment program for
each Portfolio consistent with the investment objectives and related
investment policies for each such Portfolio as described in the
Trust's registration statement, as amended;
iii. take steps reasonably necessary to implement these
investments programs by the purchase and sale of securities including
the placing of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect
to the
implementation of these investment programs; and
v. provide determinations, in accordance with procedures and
methods established by the Trustees of the Trust, of the fair value of
securities held by the Portfolios for which market quotations are not
readily available for purposes of assisting the Trustees, the Adviser
and the Trust's Custodian to calculate the fair value of such
securities and the Portfolio's net asset value.
The Subadviser, at its own expense, shall furnish all necessary
investment, management, administrative and clerical facilities,
and personnel necessary for the performance of its duties
hereunder. The Subadviser shall not be responsible, however, for
shareholder, custodian, administration and transfer agency
services and expenses, or for brokerage commissions, transfer
fees, taxes, federal or state registration fees and other
expenses of the Trust or Adviser.
The Subadviser will select brokers and dealers to effect all
transactions subject to the following conditions: the Subadviser
will place all orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is
directed at all times to seek to execute brokerage transactions
for the Portfolio in accordance with such policies or practices
as may be established by the Trustees and described in the
Trust's registration statement as amended. In selecting brokers
and dealers to effect transactions with respect to a Portfolio,
the Subadviser may take into account research and brokerage
services supplied by brokers and dealers to the Subadviser. The
Subadviser also may pay a broker-dealer which provides research
and brokerage services a higher spread or commission for a
particular transaction than otherwise might have been charged by
another broker-dealer, if the Subadviser determines that the
higher spread or commission is reasonable in relation to the
value of the brokerage and research services that such broker-
dealer provides, viewed in terms of either the particular
transaction or the Subadviser's overall responsibilities with
respect to accounts managed by the Subadviser. The Subadviser may
use for the benefit of the Subadviser's other clients, or make
available to companies affiliated with the Subadviser or to its
directors for the benefit of its clients, any such brokerage and
research services that the Subadviser obtains from brokers or
dealers.
The Subadviser will maintain all accounts, books and records with
respect to the Portfolio as are required of an investment adviser
of a registered investment company pursuant to the Investment
Company Act of 1940 (the "Investment Company Act") and Investment
Advisers Act of 1940 (the "Investment Advisers Act") and the
rules thereunder. The Adviser will maintain its own accounts
books and records with respect to the Trust and Portfolio as are
required of an investment adviser to a registered investment
company pursuant
-2-
to the Investment Company Act and the Investment Advisers Act and
rules thereunder.
The Subadviser shall have no responsibility for the custody or
safekeeping of assets of the Portfolio, or for the settlement of
transactions, the collection of income or dividends, the
withholding of taxes or other functions incident to the role of
custodian.
The Subadviser shall be responsible for the voting of all proxies, the
giving or withholding of all consents and the exercise of all
other rights and privileges with respect to securities of the
Portfolio as the Trustees or the Adviser may from time to time
request, in each case in accordance with such policies or
guidelines as the Trustees or Adviser shall provide to the
Subadviser. The Adviser shall cause the Trust's custodian to
transmit promptly to the Subadviser all materials received with
respect to proxies, consents and other rights and privileges
concerning securities of the Portfolio, and the Subadviser shall
not be responsible for not acting upon materials not timely
received;
The Adviser shall notify the Subadviser in writing of any change in
the Portfolio's investment objectives, policies and restrictions,
whether appearing in the Trust's registration statement or
otherwise. The Subadviser shall have not responsibility for
complying with any objective, policy or restriction for which it
has not been so notified.
The Adviser shall not cause, and shall prevent any of its affiliates
from causing, any marketing material or sales literature relating
to the Portfolio or Trust that makes reference to the Subadviser
to be released unless the Subadviser has first consented to such
release, which consent shall not unreasonably be withheld.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its shareholders, directors, officers or
employees shall be liable to the Adviser or Trust for any loss suffered by the
Adviser or Trust resulting from any error of judgment made in the good faith
exercise of the Subadviser's investment discretion in connection with selecting
Portfolio investments except for losses resulting from willful misfeasance, bad
faith or gross negligence of, or from reckless disregard of, the duties of the
Subadviser or any of its directors, officers or employees; and neither the
Subadviser nor any of
-3-
its shareholders, directors, officers or employees shall be liable to the
Adviser or Trust for any loss suffered by the Adviser or Trust resulting from
any other matters to which this Agreement relates (i.e., those other matters
specified in Sections 2 and 8 of this Agreement), except for losses resulting
from willful misfeasance, bad faith, or gross negligence in the performance of,
or from disregard of, the duties of the Subadviser or any of its officers or
employees.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons affiliated
with the Subadviser to better enable it to fulfill its obligations under this
Agreement for the provision or certain personnel and facilities to the
Subadviser.
6. CONFLICTS OF INTEREST
It is understood that Trustees, officers, agents and shareholders of
the Trust are or may be interested in the Subadviser as
shareholders, directors, officers or otherwise; that
shareholders, directors, officers, and agents of the Subadviser
are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested
in the Trust; and that the existence of any such dual interest
shall not affect the validity hereof or of any transactions
hereunder except as otherwise provided in the Agreement and
Declaration of Trust of the Trust and the Articles of
Organization of the Subadviser, respectively, or by specific
provision of applicable law.
The services to be rendered by the Subadviser shall not be considered
exclusive. Nothing in this Agreement will in any way limit or
restrict the Subadviser, its affiliates or its or their officers,
directors, or employees from buying, selling or trading in any
securities for its or their own accounts or other accounts. The
Subadviser may act as an investment adviser to any other person,
firm or corporation, and may perform investment management and
any other services for any other person, association,
corporation, firm or other entity pursuant to any contract or
otherwise, and take any action or do any thing in connection
therewith or related thereto; and no such performance of
management or other services or taking of any such action or
doing of any such thing shall be in any manner restricted or
otherwise affected by any aspect of any relationship of the
Subadviser to or with the Trust or Adviser or deemed to violate
or give rise to any duty or obligation of the Subadviser to the
Trust except as otherwise imposed by law. The Adviser and the
Trust recognize that Subadviser, in effecting transactions for
its various accounts, may not always be able to take or liquidate
investment positions in the same security at the same time and at
the same price.
c. On occasions when the Subadviser deems the purchase or sale
of a security to be in the best interest of the Portfolio as well
as other clients, the Subadviser, to the extent permitted by
applicable laws and regulations, may
-4-
aggregate the securities to be sold or purchased in order to
obtain the best execution and lower brokerage commissions, if
any. 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 it considers to be the
most equitable and consistent with its fiduciary obligations to
the Portfolio and to such clients.
7. REGULATION
The Subadviser shall submit to all regulatory and administrative
bodies having jurisdiction over the services provided pursuant to this Agreement
any information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio
on the later of: (i) its execution; (ii) the effective date of the registration
statement of the Portfolio; and (iii) the date of the meeting of the
shareholders of the Portfolio, at which meeting this Agreement is approved by
the vote of a majority of the outstanding voting securities (as defined in the
Investment Company Act) of the Portfolio. The Agreement will continue in effect
for a period more than two years from the date of its execution only so long as
such continuance is specifically approved at least annually either by the
Trustees of the Trust or by a majority of the outstanding voting securities of
each of the Portfolios, provided that in either event such continuance shall
also be approved by the vote of a majority of the Trustees of the Trust who are
not interested persons (as defined in the Investment Company Act) of any party
to this Agreement cast in person at a meeting called for the purpose of voting
on such approval. The required shareholder approval of the Agreement or of any
continuance of the Agreement shall be effective with respect to any Portfolio if
a majority of the outstanding voting securities of the series (as defined in
Rule 18f-2(h) under the Investment Company Act) of shares of that Portfolio
votes to approve the Agreement or its continuance, notwithstanding that the
Agreement or its continuance may not have been approved by a majority of the
outstanding voting securities of (a) any other Portfolio affected by the
Agreement or (b) all the portfolios of the Trust.
In the event the termination of this Agreement as to a Portfolio, the
Subadviser may continue to act as investment subadviser to the Portfolio pending
the requisite approval of a new agreement to the extent permitted by Rule 15a-4
under the Investment Company Act or any successor rule, as either may be amended
from time to time.
This Agreement may be terminated by the Trustees of the Trust at any time,
without the payment of any penalty, or with respect to any Portfolio by the vote
of a majority of the outstanding voting securities of such Portfolio, on sixty
days' written notice to the Adviser and the Subadviser, or by the Adviser or
Subadviser on sixty days' written notice to the Trust and the other party. This
Agreement will automatically terminate, without the payment of any penalty,
-5-
in the event of its assignment (as defined in the Investment Company Act) or in
the event the Advisory Agreement between the Adviser and the Trust terminates
for any reason.
9. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered or qualified as an
investment adviser under the Investment Advisers Act or under the laws
of any jurisdiction in which the Subadviser is required to be
registered or qualified as an investment adviser in order to perform
its obligations under this Agreement;
b. the Subadviser is served or otherwise receives notice of any
action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, public board or body, involving the
affairs of the Trust; and
c. any assignment (as defined in the Investment Company Act) of this
Agreement or any change in actual control or management of the
Subadviser or the portfolio manager of any Portfolio.
10. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of each of the Portfolios affected by the amendment and by the vote
of a majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Portfolio if a majority of the outstanding voting securities
of that Portfolio vote to approve the amendment, notwithstanding that the
amendment may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the amendment or (b) all the
portfolios of the Trust.
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
-6-
13. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
14. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
15. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, without regard to
the conflict of law principles thereof, or any of the applicable provisions of
the Investment Company Act. To the extent that the laws of The Commonwealth of
Massachusetts, or any of the provisions in this Agreement, conflict with
applicable provisions of the Investment Company Act, the latter shall control.
16. LIMITATION OF LIABILITY
The Amended and Restated Agreement and Declaration of Trust of the
Trust dated February 18, 1994, a copy of which, together with all amendments
thereto (the "Declaration"), is on file in the office of the Secretary of The
Commonwealth of Massachusetts, provides that the name "North American Funds"
refers to the Trustees under the Declaration collectively as Trustees, but not
as individuals or personally; and no Trustee, shareholder, officer, employee or
agent of the Trust shall be held to any personal liability, nor shall resort be
had to their private property, for the satisfaction of any obligation or claim,
in connection with the affairs of the Trust or any portfolio thereof, but only
the assets belonging to the Trust, or to the particular portfolio with which the
obligee or claimant dealt, shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above
CYPRESSTREE ASSET MANAGEMENT
CORPORATION, INC.
By:_________________________________
XXXXXXXX, XXXX & XXXX, INC.
-7-
By:__________________________________
-8-
APPENDIX A
The Subadviser shall serve as investment subadviser for the following
Portfolio or Porfolios of the Trust. The Adviser will pay the Subadviser, as
full compensation for all services provided under this Agreement, the fee
computed separately for each such Portfolio at an annual rate as follows (the
"Subadviser Percentage Fee"):
The Subadviser Percentage Fee for each Portfolio shall be accrued for each
calendar day and the sum of the daily fee accruals shall be paid monthly to the
Subadviser. The daily fee accruals will be computed by multiplying the fraction
of one over the number of calendar days in the year by the applicable annual
rate described in the preceding paragraph, and multiplying this product by the
net assets of the Portfolio as determined in accordance with the Trust's
prospectus and statement of additional information as of the close of business
on the previous business day on which the Trust was open for business.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
-9-
