EXHIBIT (D)(VII)
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement ("Agreement") is made as of the ___ day
of ________, 1999 by and between Wilshire Associates Incorporated, a California
corporation ("Adviser") and Xxxxxxx Partners __________________________, a
____________________________ ("Sub-Adviser").
WHEREAS Adviser is the investment adviser of the Xxxxxx Xxxx Mutual
Funds (the "Fund"), an open-end diversified, management investment
company registered under the Investment Company Act of 1940, as amended
("1940 Act"), currently consisting of seven separate series or
portfolios including the Xxxxxx Xxxx Growth Fund, the Xxxxxx Xxxx
Income Fund, the Xxxxxx Xxxx Balanced Fund, the Xxxxxx Xxxx Short-Term
Investment Fund, the Xxxxxx Xxxx Socially Responsible Fund, the Xxxxxx
Xxxx International Equity Fund, and the Xxxxxx Xxxx Small-Cap
Growth Fund;
WHEREAS Adviser desires to retain Sub-Adviser to furnish investment
advisory services for the _______________ Fund (the "Fund Portfolio"),
and Sub-Adviser wishes to provide such services, upon the terms and
conditions set forth herein;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows:
1. APPOINTMENT Adviser hereby appoints Sub-Adviser to provide certain
sub-investment advisory services to the Fund Portfolio for the period and on the
terms set forth in this Agreement. Sub-Adviser hereby accepts such appointment
and agrees to furnish the services set forth for the compensation herein
provided.
2. SUB-ADVISER SERVICES Subject always to the supervision of the Fund's Board of
Trustees and Adviser, Sub-Adviser will furnish an investment program in respect
of, and make investment decisions for, such portion of the assets of the Fund
Portfolio as Adviser shall from time to time designate (the "Portfolio Segment")
and place all orders for the purchase and sale of securities on behalf of the
Portfolio Segment. In the performance of its duties, Sub-Adviser will satisfy
its fiduciary duties to the Fund and the Fund Portfolio and will monitor the
Portfolio Segment's investments, and will comply with the provisions of the
Fund's Declaration of Trust and Bylaws, as amended from time to time, and the
stated investment objectives, policies and restrictions of the Fund Portfolio as
set forth in the prospectus and Statement of Additional Information for the Fund
Portfolio, as amended from time to time, as well as any other objectives,
policies or limitations as may be provided by Adviser to Sub-Adviser in writing
from time to time.
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Sub-Adviser will provide reports at least quarterly to the Board of Trustees and
to Adviser. SubAdviser will make its officers and employees available to Adviser
and the Board of Trustees from time to time at reasonable times to review
investment policies of the Fund Portfolio with respect to the Portfolio Segment
and to consult with Adviser regarding the investment affairs of the Portfolio
Segment.
Sub-Adviser agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will conform with all applicable rules and regulations of the
Securities and Exchange Commission in all material respects and in
addition will conduct its activities under this Agreement in accordance
with any applicable regulations of any governmental authority
pertaining to its investment advisory activities, including all
portfolio diversification requirements necessary for the Portfolio
Segment to comply with subchapter M of the Internal Revenue Code
as if it were a regulated investment company thereunder;
(c) to the extent directed by Adviser in writing, will execute
purchases and sales of portfolio securities for the Portfolio Segment
through brokers or dealers designated by Adviser and is hereby
authorized as the agent of the Fund to give instructions to the Fund's
custodian as to deliveries of securities or other investments and
payments of cash of the Portfolio Segment to such brokers or dealers
for the account of the Fund Portfolio. Adviser and the Fund understand
that the brokerage commissions or transaction costs in such
transactions will be negotiated by Adviser on behalf of the Fund rather
than by Sub-Adviser, and that such directions may result in the Fund
paying higher brokerage commissions or transaction costs or receiving
less favorable prices than those which the Sub-Adviser could obtain
from another broker or dealer;
(d) is authorized to and will select all other brokers or dealers that
will execute the purchases and sales of portfolio securities for the
Portfolio Segment and is hereby authorized as the agent of the Fund to
give instructions to the Fund's custodian as to deliveries of
securities or other investments and payments of cash of the Portfolio
Segment for the account of the Fund Portfolio. In making such
selection, Sub-Adviser is directed to use its best efforts to obtain
best execution, which includes most favorable net results and
execution of the Portfolio Segment's orders, taking into account all
appropriate factors, including price, dealer spread or commission,
size and difficulty of the transaction and research or other services
provided. It is understood that Sub-Adviser will not be deemed to have
acted unlawfully, or to have breached a fiduciary duty to the Fund or
in respect of the Fund Portfolio, or be in breach of any obligation
owing to the Fund or in respect of the Fund Portfolio under this
Agreement, or otherwise, solely by reason of its having caused the
Fund Portfolio to pay a member of a securities exchange, a broker or a
dealer a commission for effecting a securities transaction of the Fund
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Portfolio in excess of the amount of commission another member of an
exchange, broker or dealer would have charged if Sub-Adviser
determined in good faith that the commission paid was reasonable in
relation to the brokerage and research services provided by such
member, broker, or dealer, viewed in terms of that particular
transaction or Sub-Adviser's overall responsibilities with respect to
its accounts, including the Fund, as to which it exercises investment
discretion;
(e) is authorized to consider for investment by the Portfolio Segment
securities that may also be appropriate for other funds and/or clients
served by Sub-Adviser. To assure fair treatment of the Portfolio
Segment and all other clients of Sub-Adviser in situations in which
two or more clients' accounts participate simultaneously in a buy or
sell program involving the same security, such transactions will be
allocated among the Portfolio Segment and other clients in a manner
deemed equitable by Sub-Adviser. Sub-Adviser is authorized to
aggregate purchase and sale orders for securities held (or to be held)
in the Portfolio Segment with similar orders being made on the same
day for other client accounts or portfolios managed by Sub-Adviser.
When an order is so aggregated, the actual prices applicable to the
aggregated transaction will be averaged and the Portfolio Segment and
each other account or portfolio participating in the aggregated
transaction will be treated as having purchased or sold its portion of
the securities at such average price, and all transaction costs
incurred in effecting the aggregated transaction will be shared on a
pro-rata basis among the accounts or portfolios (including the
Portfolio Segment) participating in the transaction. Adviser and the
Fund understand that Sub-Adviser may not be able to aggregate
transactions through brokers or dealers designated by Adviser with
transactions through brokers or dealers selected by Sub-Adviser, in
which event the prices paid by the Portfolio Segment will not be so
averaged and may be greater than those paid by other accounts or
portfolios of Sub-Adviser;
(f) will report regularly to Adviser and to the Board of Trustees and
will make appropriate persons available for the purpose of reviewing
with representatives of Adviser and the Board of Trustees on a regular
basis at reasonable times the management of the Portfolio Segment,
including without limitation, review of the general investment
strategies of the Portfolio Segment, the performance of the Portfolio
Segment in relation to standard industry indices, interest rate
considerations and general conditions affecting the marketplace, and
will provide various other reports from time to time as reasonably
requested by Adviser;
(g) will prepare such books and records with respect to the Portfolio
Segment's securities transactions as requested by Adviser and will
furnish Adviser and the Fund's Board of Trustees such periodic and
special reports as the Board or Adviser may reasonably request;
(h) will vote all proxies with respect to securities in the Portfolio
Segment; and
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(i) will act upon reasonable instructions from Adviser which, in the
reasonable determination of Sub-Adviser, are not inconsistent with
Sub-Adviser's fiduciary duties under this Agreement.
3. EXPENSES During the term of this Agreement, Sub-Adviser will provide the
office space, furnishings, equipment and personnel required to perform its
activities under this Agreement, and will pay all customary management expenses
incurred by it in connection with its activities under this Agreement, which
shall not include the cost of securities (including brokerage commissions, if
any) purchased for the Portfolio Segment.
4. COMPENSATION For the services provided and the expenses assumed under this
Agreement, Adviser will pay Sub-Adviser, and Sub-Adviser agrees to accept as
full compensation therefor, a sub-advisory fee computed and paid as set forth in
Exhibit 1 - Fee Schedule.
5. OTHER SERVICES Sub-Adviser will for all purposes herein be deemed to be an
independent contractor and will, unless otherwise expressly provided or
authorized, have no authority to act for or represent Adviser, the Fund or the
Fund Portfolio or otherwise be deemed an agent of Adviser, the Fund or the Fund
Portfolio. Adviser understands and has advised the Fund's Board of Trustees that
Sub-Adviser acts as an investment adviser or sub-investment adviser to other
investment companies and other advisory clients. Sub-Adviser understands that
during the term of this Agreement Adviser may retain one or more other
sub-advisers with respect to any portion of the assets of the Fund Portfolio
other than the Portfolio Segment.
6. AFFILIATED BROKER In connection with the purchase or sale of securities or
other investments for the Portfolio Segment, Sub-Adviser may allocate orders for
purchase and sale transactions to any broker-dealer affiliated with Sub-Adviser
("Affiliated Broker"), may purchase securities underwritten by Affiliated
Broker, and may cause the Portfolio or the Fund to compensate Affiliated Broker
for effecting such transactions, subject to: (a) the requirement that
Sub-Adviser seek to obtain best execution as set forth above; (b) compliance
with procedures adopted by the Fund pursuant to Rule l7e-1 and Rule l0f-3 under
the Investment Company Act of 1940, as amended; (c) the provisions of the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); (d) the
provisions of the Securities Exchange Act of 1934, as amended; and (e) other
applicable provisions of law.
From time to time Affiliated Broker may be in a position to buy for its other
clients securities which are being sold for the Fund or to sell for its other
clients securities which are being purchased for the Fund ("agency cross
transactions"). Because Sub-Adviser is making the investment decision and
Affiliated Broker may be receiving commissions from the parties on both sides of
the transaction. Sub-Adviser has a potential conflicting division of loyalties
and responsibilities. Advisor hereby acknowledges and agrees that Sub-Adviser
and Affiliated Broker may participate in agency cross transactions on behalf of
the Portfolio Segment and that
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Affiliated Broker may receive compensation from both parties to the transaction
in connection therewith.
Adviser of the Fund may revoke any or all of the consents and authorizations
given hereby at any time and without penalty by providing written notice to
Sub-Adviser.
7. REPRESENTATIONS OF SUB-ADVISER Sub-Adviser is registered with the Securities
and Exchange Commission under the Advisers Act. Sub-Adviser shall remain so
registered throughout the term of this Agreement and shall notify Adviser
immediately if Sub-Adviser ceases to be so registered as an investment adviser.
Sub-Adviser: (a) is duly organized and validly existing under the laws of the
state of its organization with the power to own and possess its assets and carry
on its business as it is now being conducted, (b) has the authority to enter
into and perform the services contemplated by this Agreement, (c) is not
prohibited by the 1940 Act or the Advisers Act from performing the services
contemplated by this Agreement, (d) has met, and will continue to seek to meet
for the duration of this Agreement, any other applicable federal or state
requirements, and the applicable requirements of any regulatory or industry
self-regulatory agency, necessary to be met in order to perform its services
under this Agreement, and (e) will promptly notify Adviser of the occurrence of
any event that would disqualify it from serving as an investment adviser to an
investment company pursuant to Section 9(a) of the 1940 Act.
8. BOOKS AND RECORDS Sub-Adviser will maintain, in the form and for the period
required by Rule 31a-2 under the 1940 Act, all records relating to the
Portfolio Segment's investments that are required to be maintained by the Fund
pursuant to the requirements of paragraphs (b)(5), (b)(6), (b)(7), (b)(9),
(b)(10) and (f) of Rule 31a-2 under the 1940 Act. Sub-Adviser agrees that all
books and records which it maintains for the Fund Portfolio or the Fund are the
property of the Fund and further agrees to surrender promptly to the Adviser or
the Fund any such books, records or information upon the Adviser's or the Fund's
request (provided, however, that Sub-Adviser may retain copies of such records).
All such books and records shall be made available, within five business days of
a written request, to the Fund's accountants or auditors during regular business
hours at SubAdviser's offices. Adviser and the Fund or either of their
authorized representative shall have the right to copy any records in the
possession of Sub-Adviser which pertain to the Fund Portfolio or the Fund. Such
books, records, information or reports shall be made available to properly
authorized government representatives consistent with state and federal law
and/or regulations. In the event of the termination of this Agreement, all such
books, records or other information shall be returned to Adviser or the Fund
(provided, however, that Sub-Adviser may retain copies of such records as
required by law).
Sub-Adviser agrees that it will not disclose or use any records or confidential
information obtained pursuant to this Agreement in any manner whatsoever except
as authorized in this Agreement or in writing by Adviser or the Fund, or if such
disclosure is required by federal or state regulatory authorities. Sub-Adviser
may disclose the investment performance of the Portfolio Segment, provided that
such disclosure does not reveal the identity of Adviser, the
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Fund Portfolio or the Fund or the composition of the Portfolio Segment.
Sub-Adviser may, however, disclose that Adviser, the Fund and the Fund Portfolio
are its clients.
9. CODE OF ETHICS Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1(b) and (c) under the 1940 Act and will
provide Adviser and the Fund with a copy of such code. Within 20 days of the end
of each calendar quarter during which this Agreement remains in effect, the
president or a vice president of Sub-Adviser shall certify to Adviser or the
Fund that Sub-Adviser has complied with the requirements of Rule 17j-1 during
the previous quarter and that there have been no violations of Sub-Adviser's
code of ethics or, if such a violation has occurred, the nature of such
violation and of the action taken in response to such violation.
10. LIMITATION OF LIABILITY Neither Sub-Adviser nor any of its directors,
officers, stockholders, agents or employees shall have any liability to Adviser,
the Fund or any shareholder of the Fund for any error of judgment, mistake of
law, or loss arising out of any investment, or for any other act or omission in
the performance by Sub-Adviser of its duties hereunder, except for liability
resulting from willful misfeasance, bad faith, or negligence on Sub-Adviser's
part in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement, except to the extent otherwise
provided in Section 36(b) of the 1940 Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services.
Sub-Adviser agrees to indemnify and defend Adviser, its officers, directors,
employees and any person who controls Adviser for any loss or expense (including
reasonable attorneys' fees) arising out of or in connection with any claim,
demand, action, suit or proceeding relating to any actual or alleged material
misstatement or omission in the Fund's registration statement, any proxy
statement, or any communication to current or prospective investors in the Fund
Portfolio, made by Sub-Adviser and provided to Adviser or the Fund by
Sub-Adviser.
11. TERM AND TERMINATION This Agreement shall become effective with respect to
the Portfolio Segment on _, 199_, and shall remain in full force until ___,
unless sooner terminated as hereinafter provided. This Agreement shall continue
in force from year to year thereafter with respect to the Fund Portfolio, but
only as long as such continuance is specifically approved for the Fund Portfolio
at least annually in the manner required by the 1940 Act and the rules and
regulations thereunder; provided, however, that if the continuation of this
Agreement is not approved for the Fund Portfolio, Sub-Adviser may continue to
serve in such capacity for the Fund Portfolio in the manner and to the extent
permitted by the 1940 Act and the rules and regulations thereunder.
This Agreement shall terminate as follows:
(a) This Agreement shall automatically terminate in the event of its assignment
(as defined in the 0000 Xxx) and may be terminated at any time without the
payment of any
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penalty by Adviser or by Sub-Adviser on sixty days written notice to the other
party. This Agreement may also be terminated by the Fund with respect to the
Fund Portfolio by action of the Board of Trustees or by a vote of a majority of
the outstanding voting securities of the Fund Portfolio (as defined in the 0000
Xxx) on sixty days written notice to Sub-Adviser by the Fund.
(b) This Agreement may be terminated with respect to the Fund Portfolio at any
time without payment of any penalty by Adviser, the Board of Trustees or a vote
of majority of the outstanding voting securities of the Fund Portfolio in the
event that Sub-Adviser or any officer or director of SubAdviser has taken any
action which results in a material breach of the covenants of Sub-Adviser under
this Agreement.
(c) This Agreement shall automatically terminate in the event the Investment
Management Agreement between Adviser and the Fund with respect to the Fund
Portfolio is terminated, assigned or not renewed.
Termination of this Agreement shall not affect the right of Sub-Adviser to
receive payments of any unpaid balance of the compensation described in Section
4 earned prior to such termination.
12. NOTICE Any notice under this Agreement by a party shall be in writing,
addressed and personally delivered, mailed postage prepaid, or sent by facsimile
transmission with confirmation of receipt, to the other party at such address as
such other party may designate for the receipt of such notice.
13. LIMITATIONS ON LIABILITY All parties are expressly put on notice of the
Fund's Agreement and Declaration of Trust and all amendments thereto, and the
limitation of shareholder and trustee liability contained therein. The
obligations of the Fund entered into in the name or on behalf thereof by any of
its Trustees, representatives or agents are made not individually but only in
such capacities and are not binding upon any of the Trustees, officers, or
shareholders of the Fund individually but are binding upon only the assets and
property of the Fund, and persons dealing with the Fund, with respect to a Fund
Portfolio, must look solely to the assets belonging to the Fund Portfolio for
the enforcement of any claims.
14. ADVISER RESPONSIBILITY Adviser will provide Sub-Adviser with copies of the
Fund's Declaration of Trust, By-laws, prospectus, and Statement of Additional
Information and any amendment thereto, and any objectives, policies or
limitations not appearing therein as they may be relevant to Sub-Adviser's
performance under this Agreement; provided, however, that no changes or
modifications to the foregoing shall be binding on Sub-Adviser until it is
notified thereof.
15. ARBITRATION OF DISPUTES Any claim or controversy arising out of or relating
to this Agreement which is not settled by agreement of the parties shall be
settled by arbitration in Santa Monica, California before a panel of three
arbitrators in accordance with the commercial
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arbitration rules of the American Arbitration Association then in effect. The
parties agree that such arbitration shall be the exclusive remedy hereunder, and
each party expressly waives any right it may have to seek redress in any other
forum. Any arbitrator acting hereunder shall be empowered to assess no remedy
other than payment of fees and out-of-pocket damages. Each party shall bear its
own expenses of arbitration, and the expenses of the arbitrators and of a
transcript of any arbitration proceeding shall be divided equally between the
parties. Any decision and award of the arbitrators shall be binding upon the
parties, and judgment thereon may be entered in the Superior Court of the State
of California or any other court having jurisdiction. If litigation is commenced
to enforce any such award, the prevailing party will be entitled to recover
reasonable attorneys' fees and costs.
16. MISCELLANEOUS This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof and may be amended only by
written consent of both parties. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to the benefit of
the parties and their respective successors.
17. APPLICABLE LAW This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 10 above which will be
construed in accordance with Delaware law) the laws of the state of California.
Adviser and Sub-Adviser have caused this Agreement to be executed as of the date
and year first above written.
WILSHIRE ASSOCIATES INCORPORATED ____________________________________________
By _________________ By _______________
Title _______________ Title _____________
By ________________ By ________________
Title _____________ Title _______________
EXHIBIT I
FEE SCHEDULE
Adviser shall pay Sub-Adviser, promptly after receipt by Adviser of its advisory
fee from the Fund with respect to the Fund Portfolio each calendar month during
the term of this Agreement, a fee based on the average daily net assets of the
Portfolio Segment, at the following annual rate:
Sub-Adviser's fee shall be accrued daily at 1/365th of the annual rate set forth
above. For the purpose of accruing compensation, the net assets of the Portfolio
Segment will be determined in the manner and on the dates set forth in the
current prospectus of the Fund with respect to the Fund Portfolio and, on days
on which the net assets are not so determined, the net asset value computation
to be used will be as determined on the immediately preceding day on which the
net assets were determined. Upon the termination of this Agreement, all
compensation due through the date of termination will be calculated on a
pro-rata basis through the date of termination and paid within thirty business
days of the date of termination.
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