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Exhibit (d)(3)
FIRST AMENDMENT TO
INVESTMENT SUB-ADVISORY AGREEMENT
FIRST AMENDMENT made this 26th day of January, 2000, to the Investment
Sub-Advisory Agreement dated January 14, 1999, between Xxxxxx Trust, N.A., (the
"Adviser") and Richfield Bank & Trust Co. (the "Sub-Adviser").
WHEREAS, Xxxxxx Investment Funds, Inc., a Maryland corporation (the
"Fund"), is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated December 17, 1996 (the "Advisory Agreement") with the Fund, pursuant to
which the Adviser will act as investment adviser to the Legacy Minnesota
Municipal Bond Fund (the "Portfolio"), which is a series of the Fund;
WHEREAS, the Adviser, with the approval of the Fund, has retained the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio; and
WHEREAS, the parties hereto desire to amend this Agreement to clarify
certain of the duties of the Sub-Adviser contained in Section 1d. hereof.
NOW, THEREFORE, the parties hereto amend and restate this Agreement as
follows:
1. Duties of the Sub-Adviser. Subject to supervision by the Adviser
and the Fund's Board of Directors, the Sub-Adviser will manage the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), in accordance with the Portfolio's investment objectives,
policies and restrictions as stated in the Portfolio's prospectus and
statement of additional information, as amended or supplemented from time
to time (referred to collectively as the "Prospectus"), and subject to the
following:
a. The Sub-Adviser will, in consultation with and subject to
the direction of the Adviser, determine from time to time what Assets will be
purchased, retained or sold by the Portfolio, and what portion of the Assets
will be invested or held uninvested in cash.
b. In the performance of its duties and obligations under this
Agreement, the Sub-Adviser will act in conformity with the Fund's Articles of
Incorporation (as defined herein) and the Prospectus and with the instructions
and directions of the Adviser and of the Board of Directors of the Fund and will
conform to and comply with the requirements of the 1940 Act, the Internal
Revenue Code of 1986, and all other applicable federal and state laws and
regulations, as each is amended from time to time.
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c. At the direction of the Adviser, the Sub-Adviser may place
orders with or through such persons, brokers or dealers to carry out the policy
with respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Directors or the Adviser
may direct from time to time, in conformity with federal securities laws. In
executing Portfolio transactions, the Sub-Adviser will use its best efforts to
seek on behalf of the Portfolio the best overall terms available. The
Sub-Adviser may cause the Portfolio to pay a broker-dealer which provides
brokerage and research services, as such services are defined in Section 28(e)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), a
commission for effecting a securities transaction in excess of the amount
another broker-dealer would have charged for effecting such transaction, if the
Sub-Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of brokerage and research services provided
by the executing broker-dealer, viewed in terms of either that particular
transaction or such broker-dealer's overall responsibilities with respect to the
accounts as to which such broker-dealer exercises investment discretion (as
defined in Section 3(a)(35) of the Exchange Act). In addition, the Sub-Adviser
may, at the direction of the Adviser, allocate purchase and sale orders for
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Adviser, Sub-Adviser or the Fund's principal underwriter) to
take into account the sale of shares of the Fund if the Sub-Adviser believes
that the quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however, will the
Assets be purchased from or sold to the Adviser, Sub-Adviser, the Fund's
principal underwriter, or any affiliated person of either the Fund, Adviser, the
Sub-Adviser or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and Exchange
Commission ("SEC") and the 0000 Xxx.
d. The Sub-Adviser will provide the Adviser with such
investment portfolio accounting and will maintain and provide such detailed
records and reports relating to the activities of the Sub-Adviser as the Adviser
may from time to time reasonably request, including daily processing of
investment transactions and periodic valuations of investment portfolio
positions conducted by the Sub-Adviser and preparation of such reports and
compilation of such data as may be required by the Adviser to comply with the
obligations imposed upon it under the Management Agreement. The Adviser
acknowledges and agrees that such accounts and records may be maintained by a
third-party service provider on behalf of the Fund and the Sub-Adviser. The
Sub-Adviser will provide to the Adviser or the Board of Directors such periodic
and special reports, balance sheets or financial information, and such other
information with regard to its affairs as the Adviser or Board of Directors may
reasonably request.
The Sub-Adviser will timely furnish to the Adviser all
information relating to the Sub-Adviser's services under this Agreement needed
by the Adviser to keep the books and records of the Portfolio required by Rule
31a-1 under the 1940 Act.
The Sub-Adviser agrees that all records that it maintains
on behalf of the Portfolio are property of the Portfolio and the Sub-Adviser
will surrender promptly to the Portfolio any of such records upon the
Portfolio's request; provided, however, that the Sub-Adviser may retain a copy
of such records. In addition, for the duration of this Agreement, the
Sub-Adviser will preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any such records as are
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required to be maintained by it pursuant to this Agreement, and will transfer
said records to any successor sub-adviser upon the termination of this Agreement
(or, if there is no successor sub-adviser, to the Adviser).
e. On each business day on which there is a transaction by the
Sub-Adviser concerning the Assets, the Sub-Adviser will provide the Portfolio's
custodian and the Adviser with a report detailing such transactions.
f. The investment management services provided by the
Sub-Adviser under this Agreement are not to be deemed exclusive and the
Sub-Adviser will be free to render similar services to others, as long as such
services do not impair the services rendered to the Adviser or the Fund.
g. The Sub-Adviser will promptly notify the Adviser of any
financial condition that is likely to impair the Sub-Adviser's ability to
fulfill its commitment under this Agreement.
Services to be furnished by the Sub-Adviser under this
Agreement may be furnished through the medium of any of the Sub-Adviser's
partners, officers or employees.
2. Duties of the Adviser.
a. The Adviser will continue to have responsibility for all
services to be provided to the Portfolio pursuant to the Advisory Agreement and
will oversee and review the Sub-Adviser's performance of its duties under this
Agreement; provided, however, that in connection with its management of the
Assets, nothing herein will be construed to relieve the Sub-Adviser of
responsibility for compliance with the Fund's Articles of Incorporation (as
defined herein), the Prospectus, the instructions and directions of the Board of
Directors of the Fund, the requirements of the 1940 Act, the Internal Revenue
Code of 1986, and all other applicable federal and state laws and regulations,
as each is amended from time to time.
b. On each business day on which there is a transaction by the
Adviser concerning the Assets, the adviser will provide the Portfolio's
custodian and the Sub-Adviser with a report detailing such transactions.
3. Delivery of Documents. The Adviser has furnished the Sub-Adviser
with copies properly certified or authenticated of each of the following
documents:
a. The Fund's Articles of Incorporation, as filed with the
Secretary of State of Maryland (such Articles of Incorporation, as in effect on
the date of this Agreement and as amended from time to time, herein called the
"Articles of Incorporation");
b. Bylaws of the Fund (such Bylaws, as in effect on the date
of this Agreement and as amended from time to time, are herein called the
"Bylaws");
c. Prospectus(es) of the Portfolio.
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4. Compensation to the Sub-Adviser. For the services to be provided by
the Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation therefor,
a sub-advisory fee calculated in accordance with the Schedule which is attached
hereto and made part of this Agreement. The fee will be paid to the Sub-Adviser
monthly. The Sub-Adviser will not be entitled to any compensation for any period
after which this Agreement is terminated. Except as may otherwise be prohibited
by law or regulation (including any then current SEC staff interpretation), the
Sub-Adviser may, in its discretion and from time to time, waive a portion of its
fee.
5. Indemnification. The Sub-Adviser will indemnify and hold harmless
the Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 will be reduced to the extent that the claim
against, or the loss, liability or damage experienced by the Adviser, is caused
by or is otherwise directly related to (a) the carrying out by the Sub-Adviser
of a specific direction made by the Adviser to the Sub-Adviser, (b) the
Adviser's own willful misfeasance, bad faith or negligence, or (c) the reckless
disregard of the Adviser's duties under this Agreement. The Adviser will
indemnify and hold harmless the Sub-Adviser from and against any and all
claims, losses, liabilities or damages (including reasonable attorneys' fees and
other related expenses) howsoever arising from or in connection with the
performance of the Sub-Adviser's duties under this Agreement as a result of a
specific direction made by the Adviser to the Sub-Adviser; provided, however,
that the Adviser's obligations under this Section 5 will be reduced to the
extent that the claim against, or the loss, liability or damage experienced by
the Sub-Adviser, is caused by or is otherwise directly related to the
Sub-Adviser's own willful misfeasance, bad faith or negligence or the reckless
disregard of the Sub-Adviser's duties under this Agreement.
6. Representations and Warranties of Sub-Adviser. The Sub-Adviser
represents and warrants that it is either (a) registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), or (b) is exempt from registration under the Advisers Act and any
applicable state law pertaining to the regulation of investment advisers.
7. Duration and Termination. This Agreement will become effective upon
its approval by the Fund's Board of Directors and a vote of a majority of the
outstanding voting securities of the Portfolio. This Agreement will continue in
effect for a period of more than two years from the date hereof only so long as
continuance is specifically approved at least annually in conformance with the
1940 Act; provided, however, that this Agreement may be terminated with respect
to the Portfolio (a) by the Portfolio at any time, without the payment of any
penalty, by the vote of a majority of Directors of the Fund or by the vote of a
majority of the outstanding voting securities of the Portfolio, (b) by the
Adviser at any time, without the payment of any penalty, on not more than 60
days' nor less than 30 days' written notice to the Sub-Adviser, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser. This Agreement will terminate automatically and
immediately in the event of its assignment, or in the event of a termination of
the Adviser's agreement with the Fund. As used in this Section 7, the terms
"assignment" and "vote of a majority of the outstanding voting securities" will
have the respective
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meanings set forth in the 1940 Act and the rules and regulations thereunder,
subject to such exceptions as may be granted by the SEC under the 1940 Act.
8. Governing Law. This Agreement will be governed by the internal laws
of Minnesota without regard to conflict of law principles; provided, however,
that nothing herein will be construed as being inconsistent with the 1940 Act.
9. Severability. Should any part of this Agreement be held 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 will inure to
the benefit of the parties hereto and their respective successors.
10. Notice: Any notice, advice or report to be given pursuant to this
Agreement will be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at:
------------------
Xx. Xxxx X. Xxxxxxx, Xx.
Xxxxxx Trust, N.A.
0000 Xxxxxx Xxxxxx xxxxx
Xx. Xxxxx, XX 00000
To the Sub-Adviser at:
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Richfield Bank & Trust Co.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
11. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to this Agreement's subject matter. This Agreement
may be executed in any number of counterparts, each of which will be deemed to
be an original, but such counterparts will, together, constitute only one
instrument.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision will be deemed to
incorporate the effect of such rule, regulation or order.
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IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to the Agreement to be executed by their officers designated below as
of the day and year first written above.
XXXXXX TRUST, N.A. RICHFIELD BANK & TRUST CO.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxx
----------------------------- -----------------------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxx
Title: President Title: Vice President
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SCHEDULE
TO THE
SUB-ADVISORY AGREEMENT
Pursuant to Article 4, the Adviser will pay the Sub-Adviser
compensation for services under the Agreement as described in this Schedule.
Under the terms of the separate Advisory Agreement between the Fund and
the Adviser, the Fund is obligated to pay the Adviser a management fee at an
annual rate of 0.55% of the average daily net assets of the Portfolio, computed
daily and paid monthly. This amount is referred to herein as the "Total
Management Fee." The average daily net assets of the Portfolio, computed on a
daily basis, are referred to herein as the "NAV."
The Total Management Fee will be allocated among the Adviser and
Sub-Adviser in accordance with the arrangements described below. The amount of
the Total Management Fee allocated to the Sub-Adviser will constitute the
Sub-Adviser's fee under the Agreement.
1. The Sub-Adviser will receive a fee at an annual rate of 0.50% of the
NAV for the period from April 1, 1999 to March 31, 2000, attributable to shares
of the Portfolio beneficially owned by holders of accounts maintained with the
Sub-Adviser and shares of the Portfolio sold through the broker-dealers
designated on Exhibit A hereto.
2. The Sub-Adviser will receive a fee at an annual rate of 0.45% of the
NAV for the period from April 1, 2000 to March 31, 2001, attributable to shares
of the Portfolio beneficially owned by holders of accounts maintained with the
Sub-Adviser and shares of the Portfolio sold through the broker-dealers
designated on Exhibit A hereto.
3. The Sub-Adviser will receive a fee at an annual rate of 0.40% of the
NAV for the period from April 1, 2001 and thereafter, attributable to shares of
the Portfolio beneficially owned by holders of accounts maintained with the
Sub-Adviser and shares of the Portfolio sold through the broker-dealers
designated on Exhibit A hereto.
4. The Sub-Adviser will receive a fee at an annual rate of 0.275% of
the NAV attributable to shares of the Portfolio which are not beneficially owned
by holders of accounts maintained with either the Adviser or the Sub-Adviser and
which were not sold through the broker-dealers designated on Exhibit A hereto.
5. In the case of any shares of the Portfolio sold through an
arrangement in which a portion of the Total Management Fee is paid to a
third-party institution, the Adviser and Sub-Adviser will split the remaining
portion of the Total Management Fee equally.
Any portion of the Total Management Fee which is not required to be
paid to the Sub-Adviser under paragraphs 1 through 5 above will be paid to the
Adviser as its management fee.
[End of Schedule.]
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