FORM OF NEW SUB-ADVISORY AGREEMENT
AGREEMENT made as of the day of , 1998 by and between Xxxx Xxxxxx
InterCapital Inc., a Delaware corporation (herein referred to as the
"Investment Manager"), and Xxxxxx Xxxxxxx Asset Management Inc., a Delaware
Corporation, (herein referred to as the "Sub-Adviser").
WHEREAS, Xxxx Xxxxxx Growth Fund (herein referred to as the "Fund") is
engaged in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Investment Manager has entered into an Investment Management
Agreement with the Fund (the "Investment Management Agreement") wherein the
Investment Manager has agreed to provide investment management services to
the Fund; and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as an
investment adviser; and
WHEREAS, the Investment Manager desires to retain the services of the
Sub-Adviser to render investment advisory services for the Fund in the manner
and on the terms and conditions hereinafter set forth; and
WHEREAS, the Sub-Adviser desires to be retained by the Investment Manager
to perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to the supervision of the Fund, its officers and Trustees, and
the Investment Manager, and in accordance with the investment objectives,
policies and restrictions set forth in the then-current Registration
Statement relating to the Fund, and such investment objectives, policies
and restrictions from time to time prescribed by the Trustees of the Fund
and communicated by the Investment Manager to the Sub-Adviser, the
Sub-Adviser agrees to provide the Fund with investment advisory services
with respect to the Fund's investments to obtain and evaluate such
information and advice relating to the economy, securities markets and
securities as it deems necessary or useful to discharge its duties
hereunder; to continuously manage the assets of the Fund in a manner
consistent with the investment objective and policies of the Fund; to make
decisions as to foreign currency matters and make determinations as to
forward foreign exchange contracts and options and futures contracts in
foreign currencies; shall determine the securities to be purchased, sold
or otherwise disposed of by the Fund and the timing of such purchases,
sales and dispositions; to take such further action, including the placing
of purchase and sale orders on behalf of the Fund, as it shall deem
necessary or appropriate; to furnish to or place at the disposal of the
Fund and the Investment Manager such of the information, evaluations,
analyses and opinions formulated or obtained by it in the discharge of its
duties as the Fund and the Investment Manager may, from time to time,
reasonably request. The Investment Manager and the Sub-Adviser shall each
make its officers and employees available to the other from time to time
at reasonable times to review investment policies of the Fund and to
consult with each other.
2. The Sub-Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without limiting the
generality
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of the foregoing, the staff and personnel of the Sub-Adviser shall be
deemed to include persons employed or otherwise retained by the
Sub-Adviser to furnish statistical and other factual data, advice
regarding economic factors and trends, information with respect to
technical and scientific developments, and such other information, advice
and assistance as the Investment Manager may desire. The Sub-Adviser shall
maintain whatever records as may be required to be maintained by it under
the Act. All such records so maintained shall be made available to the
Fund, upon the request of the Investment Manager or the Fund.
3. The Fund will, from time to time, furnish or otherwise make available
to the Sub-Adviser such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the
Sub-Adviser may reasonably require in order to discharge its duties and
obligations hereunder or to comply with any applicable law and regulations
and the investment objectives, policies and restrictions from time to time
prescribed by the Trustees of the Fund.
4. The Sub-Adviser shall bear the cost of rendering the investment
advisory services to be performed by it under this Agreement, and shall,
at its own expense, pay the compensation of the officers and employees, if
any, of the Fund, employed by the Sub-Adviser, and such clerical help and
bookkeeping services as the Sub-Adviser shall reasonably require in
performing its duties hereunder.
5. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including, without limitation: any fees paid to the
Investment Manager; fees pursuant to any plan of distribution that the
Fund may adopt; the charges and expenses of any registrar, any custodian,
sub-custodian or depository appointed by the Fund for the safekeeping of
its cash, portfolio securities and other property, and any stock transfer
or dividend agent or agents appointed by the Fund; brokers' commissions
chargeable to the Fund in connection with portfolio securities
transactions to which the Fund is a party; all taxes, including securities
issuance and transfer taxes, and fees payable by the Fund to federal,
state or other governmental agencies or pursuant to any foreign laws; the
cost and expense of engraving or printing certificates representing shares
of the Fund; all costs and expenses in connection with the registration
and maintenance of registration of the Fund and its shares with the
Securities and Exchange Commission and various states and other
jurisdictions or pursuant to any foreign laws (including filing fees and
legal fees and disbursements of counsel); the cost and expense of printing
(including typesetting) and distributing prospectuses of the Fund and
supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Trustees' meetings and of preparing, printing and
mailing proxy statements and reports to shareholders; fees and travel
expenses of Trustees or members of any advisory board or committee who are
not employees of the Investment Manager or Sub-Adviser; all expenses
incident to the payment of any dividend, distribution, withdrawal or
redemption whether in shares or in cash; charges and expenses of any
outside service used for pricing of the Fund's shares; charges and
expenses of legal counsel, including counsel to the Trustees of the Fund
who are not interested persons (as defined in the Act) of the Fund, the
Investment Manager or the Sub-Adviser, and of independent accountants, in
connection with any matter relating to the Fund; membership dues of
industry associations; interest payable on Fund borrowings; postage;
insurance premiums on property or personnel (including officers and
Trustees) of the Fund which inure to its benefit; extraordinary expenses
(including but not limited to legal claims and liabilities and litigation
costs and any indemnification related thereto); and all other charges and
costs of the Fund's operation unless otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Sub-Adviser, the Investment Manager shall pay to
the Sub-Adviser monthly compensation equal to 40% of its monthly
compensation receivable pursuant to the Investment Management Agreement.
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Any subsequent change in the Investment Management Agreement which has the
effect of raising or lowering the compensation of the Investment Manager
will have the concomitant effect of raising or lowering the fee payable to
the Sub-Adviser under this Agreement. In addition, if the Investment
Manager has undertaken in the Fund's Registration Statement as filed under
the Act (the "Registration Statement") or elsewhere to waive all or part
of its fee under the Investment Management Agreement, the Sub-Adviser's
fee payable under this Agreement will be proportionately waived in whole
or in part. The calculation of the fee payable to the Sub-Adviser pursuant
to this Agreement will be made, each month, at the time designated for the
monthly calculation of the fee payable to the Investment Manager pursuant
to the Investment Management Agreement. If this Agreement becomes
effective subsequent to the first day of a month or shall terminate before
the last day of a month, compensation for the part of the month this
Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fee as set forth above. Subject to the provisions of
paragraph 7 hereof, payment of the Sub-Adviser's compensation for the
preceding month shall be made as promptly as possible after completion of
the computations contemplated by paragraph 7 hereof.
7. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to the Investment Management
Agreement, for any fiscal year ending on a date on which this Agreement is
in effect, exceed the expense limitations applicable to the Fund imposed
by state securities laws or regulations thereunder, as such limitations
may be raised or lowered from time to time, the Sub-Adviser shall reduce
its advisory fee to the extent of 40% of such excess and, if required,
pursuant to any such laws or regulations, will reimburse the Investment
Manager for annual operating expenses in the amount of 40% of such excess
of any expense limitation that may be applicable, it being understood that
the Investment Manager has agreed to effect a reduction and reimbursement
of 100% of such excess in accordance with the terms of the Investment
Management Agreement; provided, however, there shall be excluded from such
expenses the amount of any interest, taxes, brokerage commissions,
distribution fees and extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any indemnification
related thereto) paid or payable by the Fund. Such reduction, if any,
shall be computed and accrued daily, shall be settled on a monthly basis,
and shall be based upon the expense limitation applicable to the Fund as
at the end of the last business day of the month. Should two or more such
expense limitations be applicable as at the end of the last business day
of the month, that expense limitation which results in the largest
reduction in the Investment Manager's fee or the largest expense
reimbursement shall be applicable. For purposes of this provision, should
any applicable expense limitation be based upon the gross income of the
Fund, such gross income shall include, but not be limited to, interest on
debt securities in the Fund's portfolio accrued to and including the last
day of the Fund's fiscal year, and dividends declared on equity securities
in the Fund's portfolio, the record dates for which fall on or prior to
the last day of such fiscal year, but shall not include gains from the
sale of securities.
8. The Sub-Adviser will use its best efforts in the performance of
investment activities on behalf of the Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Sub-Adviser shall not be liable to the
Investment Manager or the Fund or any of its investors for any error of
judgment or mistake of law or for any act or omission by the Sub-Adviser
or for any losses sustained by the Fund or its investors.
9. It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee
of, or be otherwise interested in, the Sub-Adviser, and in any person
controlled by or under common control with the Sub-Adviser, and that the
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Sub-Adviser and any person controlled by or under common control with the
Sub-Adviser may have an interest in the Fund. It is also understood that
the Sub-Adviser and any affiliated persons thereof or any persons
controlled by or under common control with the Sub-Adviser have and may
have advisory, management service or other contracts with other
organizations and persons, and may have other interests and businesses,
and further may purchase, sell or trade any securities or commodities for
their own accounts or for the account of others for whom they may be
acting.
10. This Agreement shall remain in effect until April 30, 1999 and from
year to year thereafter provided such continuance is approved at least
annually by the vote of holders of a majority, as defined in the Act, of
the outstanding voting securities of the Fund or by the Trustees of the
Fund; provided, that in either event such continuance is also approved
annually by the vote of a majority of the Trustees of the Fund who are not
parties to this Agreement or "interested persons" (as defined in the Act)
of any such party, which vote must be cast in person at a meeting called
for the purpose of voting on such approval; provided, however, that (a)
the Fund may, at any time and without the payment of any penalty,
terminate this Agreement upon thirty days' written notice to the
Investment Manager and the Sub-Adviser, either by majority vote of the
Trustees of the Fund or by the vote of a majority of the outstanding
voting securities of the Fund; (b) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the Act)
unless such automatic termination shall be prevented by an exemptive order
of the Securities and Exchange Commission; (c) this Agreement shall
immediately terminate in the event of the termination of the Investment
Management Agreement; (d) the Investment Manager may terminate this
Agreement without payment of penalty on thirty days' written notice to the
Fund and the Sub-Adviser and; (e) the Sub-Adviser may terminate this
Agreement without the payment of penalty on thirty days' written notice to
the Fund and the Investment Manager. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed post-paid, to the
other party at the principal office of such party.
11. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund to supply any omission, to cure,
correct or supplement any ambiguous, defective or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal laws or regulations, but neither the
Fund, the Investment Manager nor the Sub-Adviser shall be liable for
failing to do so.
12. This Agreement shall be construed in accordance with the law of the
State of New York and the applicable provisions of the Act. To the extent
the applicable law of the State of New York, or any of the provisions
herein, conflict with the applicable provisions of the Act, the latter
shall control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
XXXX XXXXXX INTERCAPITAL INC.
By:
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Attest:
XXXXXX XXXXXXX ASSET
MANAGEMENT INC.
By:
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Attest:
Accepted and agreed to as of the day and year first above written:
XXXX XXXXXX GROWTH FUND
By:
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Attest:
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