Exhibit 99(d)(iv)
FORM OF INTERIM
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
X. X. XXXXXX INVESTMENT MANAGEMENT INC.
AND
BLACKROCK ADVISORS, INC.
INVESTMENT SUBADVISORY AGREEMENT, effective as of the 31st day of January 2005
(the "Effective Date"), between X.X. Xxxxxx Investment Management Inc. (the
"Adviser"), a corporation organized and existing under the laws of the State of
Delaware, and BLACKROCK ADVISORS, INC. ("Subadviser"), a corporation organized
and existing under the laws of the State of Delaware.
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated as
of the 21st day of January 2003 ("Advisory Agreement") with X.X. Xxxxxx Xxxxxxx
Series Trust, a Massachusetts business trust (the "Trust"), which is engaged in
business as an open-end management investment company registered under the
Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, the Trust is and will continue to be a series fund having two or more
investment portfolios, each with its own assets, investment objectives, policies
and restrictions (each a "Fund"); and
WHEREAS, the existing sub-advisory agreement relating to the Fund between the
Adviser and State Street Research and Management Company ("SSRM"), a Delaware
Corporation, has been terminated as of the date of this Agreement due to the
assignment of SSRM's sub-advisory agreement to BlackRock Advisors, Inc.;
WHEREAS, the Subadviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940 ("Advisers Act"); and
WHEREAS, the Adviser desires to retain the Subadviser to assist it in the
provision of a continuous investment program for that portion of the assets of
the Fund listed on Appendix A which the Adviser may from time to time assign to
the Subadviser (the "Subadviser Assets") and the Subadviser is willing to
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual promises herein set
forth, the parties hereto agree as follows:
1. APPOINTMENT. Adviser hereby retains the Subadviser to act as investment
adviser for and to manage the Subadviser Assets for the period and on the terms
set forth in this Agreement. The Subadviser accepts such employment and agrees
to render the services herein set forth, for the compensation herein provided.
2. DUTIES OF THE SUBADVISER
A. INVESTMENT SUBADVISORY SERVICES. Subject to the supervision of the
Trust's Board of Trustees (the "Board") and the Adviser, the Subadviser
shall (a) manage the investments of the Subadviser Assets in accordance
with the Fund's investment objective, policies, and restrictions as
provided in the Trust's Prospectus and Statement of Additional Information,
as currently in effect and as amended or supplemented from time to time
(hereinafter referred to as the "Prospectus"), and in compliance with the
requirements applicable to registered investment companies under applicable
laws and those requirements applicable to regulated investment companies
under Subchapter M of the Internal Revenue Code of 1986, as amended
("Code") and such other limitations as the Adviser may institute. The
Subadviser shall (a) make investment decisions for the Subadviser Assets;
(b) place purchase and sale orders for portfolio transactions for the
Subadviser Assets; and (c) employ
professional portfolio managers and securities analysts to provide research
services to the Subadviser Assets. In providing these services, the
Sub-Adviser will conduct a continual program of investment, evaluation and,
if appropriate, sale and reinvestment of the Subadviser Assets.
B. SUBADVISER UNDERTAKINGS. In all matters relating to the performance of
this Agreement, the Subadviser shall act in conformity with the Trust's
Articles of Incorporation, By-Laws, and Prospectus and with the written
instructions and directions of the Board and the Adviser. The Subadviser
hereby agrees to:
(i) regularly report to the Board and the Adviser (in such form and
frequency as the Adviser and Subadviser mutually agree) with
respect to the implementation of the investment program,
compliance of the Subadviser Assets with the Prospectus, the
1940 Act and the Code, and on other topics as may reasonably be
requested by the Board or the Adviser, including attendance at
Board meetings, as reasonably requested, to present such reports
to the Board;
(ii) consult with the Trust's pricing agent regarding the valuation
of securities that are not registered for public sale, not
traded on any securities markets, or otherwise may be deemed
illiquid for purposes of the 1940 Act and for which market
quotations are not readily available;
(iii) Provide, subject to any obligations or undertakings reasonably
necessary to maintain the confidentiality of the Subadviser's
non-public information, any and all information, records and
supporting documentation about the composite of accounts and the
funds the Subadviser manages that have investment objectives,
policies, and strategies substantially similar to those employed
by the Subadviser in managing the Subadviser Assets which may be
reasonably necessary, under applicable laws, to allow the Trust
or its agent to present historical performance information
concerning the Subadviser's similarly managed accounts and
funds, for inclusion in the Trust's Prospectus and any
other reports and materials prepared by the Trust or its agent,
in accordance with regulatory requirements or as requested by
applicable federal or state regulatory authorities.
C. EXPENSES. The Subadviser will bear all of its expenses in connection
with the performance of its services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be borne by the
Trust, except to the extent specifically assumed by the Subadviser. The
expenses to be borne by the Trust include, without limitation, the
following: organizational costs, taxes, interest, brokerage fees and
commissions, Trustees' fees, Securities and Exchange Commission fees and
state Blue Sky qualification fees, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
independent pricing services, costs of maintaining existence, costs
attributable to investor services (including, without limitation, telephone
and personnel expenses), costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing stockholders, costs of stockholders' reports and
meetings, and any extraordinary expenses.
D. BROKERAGE. The Subadviser will select brokers and dealers to effect all
orders for the purchase and sale of Subadviser Assets. In selecting brokers
or dealers to execute transactions on behalf of the Subadviser Assets of
the Fund, the Subadviser will seek the best overall terms available. In
assessing the best overall terms available for any transaction, the
Subadviser will consider factors it deems relevant, including, without
limitation, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In selecting brokers or dealers to
execute a particular transaction, and in evaluating the best overall terms
available, the Subadviser is authorized to consider the brokerage and
research services (within
the meaning of Section 28(e) of the Securities Exchange Act of 1934, as
amended) provided to the Fund and/or other accounts over which the
Subadviser exercises investment discretion. Until permitted by rule or
order of the SEC, Subadviser will not engage in principal transactions with
any affiliate of the Adviser or of any other Subadviser to the Fund, and
will engage in agency transactions with such affiliates only in accordance
with all applicable rules and regulations. Subadviser will provide a list
of its affiliates to Adviser, as such may be amended from time to time.
Adviser will provide to Subadviser a list of affiliated brokers and dealers
of the Adviser and of each other Subadviser to the Fund.
E. AGGREGATION OF ORDERS. On occasions when the Subadviser deems the
purchase or sale of a security to be in the best interest of the Subadviser
Assets as well as other clients of the Subadviser, the Subadviser to the
extent permitted by applicable laws and regulations, may, but shall be
under no obligation to, aggregate the orders for securities to be purchased
or sold. 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 the Subadviser considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and to its other
clients. The Adviser recognizes that, in some cases, the Subadviser's
allocation procedure may limit the size of the position that may be
acquired or sold for the Subadviser Assets.
F. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Subadviser hereby agrees that all records which it
maintains for the Subadviser Assets of the Fund are the property of the
Trust and further agrees to surrender promptly to the Trust copies of any
of such records upon the Fund's or the Adviser's request, provided,
however, that Subadviser may retain copies of any records to the extent
required for it to comply with applicable laws. The Subadviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940
Act the records relating to its activities hereunder
required to be maintained by Rule 31a-1 under the 1940 Act and to preserve
the records relating to its activities hereunder required by Rule 204-2
under the Advisers Act for the period specified in said Rule.
Notwithstanding the foregoing, Subadviser has no responsibility for the
maintenance of the records of the Fund, except for those related to the
Subadviser Assets.
G. SUBADVISER COMPLIANCE RESPONSIBILITIES. The Subadviser and the Adviser
acknowledge that the Subadviser is not the compliance agent for the Fund,
and does not have access to all of the Trust's books and records necessary
to perform certain compliance testing. However, to the extent that the
Subadviser has agreed to perform the services specified in this Agreement,
the Subadviser shall perform compliance testing with respect to the
Subadviser Assets based upon information in its possession and upon
information and written instructions received from the Adviser or the
Trust's Administrator and shall not be held in breach of this Agreement so
long as it performs in accordance with such information and instructions.
Specifically, the Subadviser shall not be responsible for the Fund being in
violation of any applicable law or regulation or investment policy or
restriction applicable to the Fund as a whole or for the Fund's failure to
qualify as a regulated investment company under the Code if the securities
and other holdings of the Subadviser Assets would not be in such violation
or failing to so qualify if the Subadviser Assets were deemed a separate
series of the Trust or a separate regulated investment company under the
Code. The Adviser or Trust's Administrator shall promptly provide the
Subadviser with copies of the Trust's Articles of Incorporation, By-Laws,
current Prospectus and any written policies or procedures adopted by the
Board applicable to the Fund and any amendments or revisions thereto.
Subadviser shall supply such reports or other documentation as reasonably
requested from time to time by the Adviser to evidence Subadviser's
compliance with such Prospectus, policies or procedures.
H. PROXY VOTING. The Subadviser shall use its good faith judgment in a
manner which it reasonably believes best serves the interests of the Fund's
shareholders to
vote or abstain from voting all proxies solicited by or with respect to the
issuers of securities in the Subadviser Assets. The Adviser shall cause to
be forwarded to Subadviser all proxy solicitation materials that Adviser
receives. Subadviser shall provide to the Advisor a summary of the votes
cast.
I. USE OF NAMES. The Subadviser shall not use the name, logo, insignia, or
other identifying xxxx of the Trust or the Adviser or any of their
affiliates or any derivative or logo or trade or service xxxx thereof, or
disclose information related to the business of the Adviser or any of its
affiliates in material relating to the Subadviser in any manner not
approved prior thereto by the Adviser; provided, however, that the Adviser
shall approve all uses of its or the Trust's name and that of their
affiliates which merely refer in accurate terms to the appointment of the
Subadviser hereunder or which are required by the SEC or a state securities
commission; and provided, further, that in no event shall such approval be
unreasonably withheld. The Adviser shall not use the name, logo, insignia,
or other identifying xxxx of the Subadviser or any of its affiliates in any
prospectus, sales literature or other material relating to the Trust in any
manner not approved prior thereto by the Subadviser; provided, however,
that the Subadviser shall approve all uses of its name which merely refer
in accurate terms to the appointment of the Subadviser hereunder or which
are required by the SEC or a state securities commission; and provided,
further that in no event shall such approval be unreasonably withheld.
J. OTHER SUBADVISERS. With respect to any Fund, (i) the Subadviser will not
consult with any other Subadviser to that Fund (including, in the case of
an offering of securities subject to Section 10(f) of the 1940 Act, any
Subadviser that is a principal underwriter or an affiliated person of a
principal underwriter of such offering) concerning transactions for that
Fund in securities or other assets, except, in the case of transactions
involving securities of persons engaged in securities-related businesses,
for purposes of complying with the conditions of paragraphs (a) and (b) of
Rule 12d3-1 under the 1940 Act; and (ii) the Subadviser will provide
advice and otherwise perform services hereunder exclusively with respect to
the Subadviser Assets of that Fund.
3. COMPENSATION OF SUBADVISER. The Adviser will pay the Subadviser, with
respect to each Fund on Appendix A attached hereto the compensation specified in
Appendix A. Such fees will be computed daily and paid monthly, calculated at an
annual rate based on the Subadviser Assets' average daily net assets as
determined by the Trust's accounting agent. Compensation for any partial period
shall be pro-rated based on the length of the period.
Further, notwithstanding any other provision of this Agreement:
A. Prior to this Agreement being approved by a vote of a majority of the
Fund's outstanding voting securities in accordance with the 1940 Act:
(i) in no event shall compensation paid to the Subadviser hereunder
exceed the amount permitted by Rule 15a-4 under the 1940 Act;
(ii) Such compensation shall be held in an interest-bearing escrow
account ("Escrow Account") with JPMorgan Chase Bank or another bank
selected by the Adviser in its sole discretion; and
(iii) this Agreement may be terminated at any time without the payment
of any penalty, by vote of the Trustees of the Fund or by a vote of a
majority of the outstanding voting securities of the Fund on 10 days' prior
written notice to the Subadviser. Funds held in the Escrow Account,
including interest earned, shall be paid to the Subadviser promptly after
approval of this Agreement by the vote of a majority of the Fund's
outstanding voting securities in accordance with the 1940 Act, provided
that such approval is obtained no later than 150 days after the Effective
Date (as defined in Section 9) of this Agreement.
B. If a majority of the outstanding voting securities of the Fund do not
approve a new Sub-Advisory Agreement between the Adviser and the Subadviser:
(i) this Agreement shall immediately terminate; and
(ii) the Subadviser shall receive from the Escrow Account the lesser of:
(a) any costs incurred in performing this Agreement (plus interest
earned on that amount in the Escrow Account) or
(b) the total amount in the Escrow Account (plus interest earned
thereon).
4. STANDARD OF CARE. The Subadviser shall exercise its best judgment in
rendering its services described in this Agreement. Except as may otherwise be
required by the 1940 Act or the rules thereunder or other applicable law, the
Subadviser shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Fund or the Adviser in connection with the matters
to which this Agreement relates, except a loss resulting from Subadviser's
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties hereunder or from reckless disregard by it of its
obligations and duties under this Agreement
5. INDEMNIFICATION.
A. The Adviser agrees to indemnify and hold harmless the Subadviser from
and against any and all claims, losses, liabilities or damages (including
reasonable attorneys' fees and other related expenses) ("Losses"), howsoever
arising, from or in connection with this Agreement or the performance by the
Subadviser of its duties hereunder; provided however that the Adviser will not
indemnify the Subadviser for Losses resulting from the Subadviser's willful
misfeasance, bad faith or gross negligence in the performance of its duties or
from the Subadviser's reckless disregard of its obligations and duties under
this Agreement
B. The Subadviser agrees to indemnify and hold harmless the Adviser from
and against any and all Losses resulting from the Subadviser's willful
misfeasance, bad faith, or gross negligence in the performance of, or from
reckless disregard of, the Subadviser's obligations and duties under this
Agreement; provided however that the Subadviser will not indemnify the Adviser
for Losses resulting from the Adviser's willful misfeasance, bad faith or gross
negligence in the performance of its duties or from the Adviser's reckless
disregard of its obligations and duties under this Agreement.
6. NON-EXCLUSIVITY. The services of the Subadviser to the Fund and the Trust
are not to be deemed to be exclusive, and the Subadviser and its affiliates
shall be free to render investment advisory or other services to others
(including other investment companies) and to engage in other activities. It is
understood and agreed that the directors, officers, and employees of the
Subadviser are not prohibited from engaging in any other business activity or
from rendering services to any other person, or from serving as partners,
officers, directors, trustees, or employees of any other firm or corporation,
including other investment companies. Adviser acknowledges that Subadviser or
its affiliates may give advice and take actions in the performance of its duties
to clients which differ from the advice, or the timing and nature of actions
taken, with respect to other clients' accounts or employee accounts which may
invest in some of the same securities recommended to advisory clients. In
addition, advice provided by the Subadviser may differ from advice given by its
affiliates.
7. MAINTENANCE OF INSURANCE. During the term of this Agreement and for a
period of one year after the termination hereof, Subadviser will maintain
comprehensive general liability coverage and will carry a fidelity bond covering
it and each of its employees and authorized agents with limits of not less than
those considered commercially reasonable and appropriate under current industry
practices.
8. CONFIDENTIALITY. Each party to this Agreement shall keep confidential any
nonpublic information concerning the other party and will not use or disclose
such information for any purpose other than the performance of its
responsibilities and duties hereunder, unless the non-disclosing party has
authorized such disclosure or if such disclosure is expressly required or
requested by applicable federal or state regulatory authorities. Nonpublic
information shall not include information a party to this Agreement can clearly
establish was (a) known to the party prior to this Agreement; (b) rightfully
acquired by the party from third parties whom the party reasonably believes are
not under an obligation of confidentiality to the other party to this Agreement;
(c) placed in public domain without fault of the party or its affiliates; or
(d) independently developed by the party without reference or reliance upon the
nonpublic information.
9. TERM OF AGREEMENT. This Agreement shall become effective as of the
Effective Date, and
A. unless otherwise terminated, this Agreement shall continue in effect
until a new Sub-Advisory Agreement between the Adviser and the Subadviser is
approved by the shareholders of the Fund or for 150 days, whichever is sooner;
B. this Agreement may at any time be terminated on ten days' written notice
to the Subadviser by vote of the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Fund, or on sixty days'
written notice to the Subadviser by the Adviser; and
C. this Agreement shall automatically terminate in the event of its
assignment. Termination of this Agreement pursuant to this Section 9 shall be
without the payment of any penalty.
10. REPRESENTATIONS OF SUBADVISER. The Subadviser represents, warrants, and
agrees as follows:
A. The Subadviser: (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement;
(iii) has met, and will continue to meet for so long as this Agreement
remains in effect, any other applicable federal or state requirements, or
the applicable requirements of any regulatory or industry self-regulatory
organization, necessary to be met in order to perform the services
contemplated by this Agreement; (iv) has the authority to enter into and
perform the services contemplated by this Agreement; and (v) will promptly
notify the Adviser of the occurrence of any event that would disqualify the
Subadviser
from serving as an investment adviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise.
B. The Subadviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and, if it has not already
done so, will provide the Adviser and the Trust with a copy of such code of
ethics. On at least an annual basis, the Subadviser will comply with the
reporting requirements of Rule 17j-1, which may include (i) certifying to
the Adviser that the Subadviser and its Access Persons have complied with
the Subadviser's Code of Ethics with respect to the Subadviser Assets and
(ii) identifying any material violations which have occurred with respect
to the Subadviser Assets.
C. The Subadviser has provided the Adviser and the Trust with a copy of its
Form ADV as most recently filed with the SEC and hereafter will furnish a
copy of its annual amendment to the Adviser. The Adviser acknowledges
receipt of the Subadviser's Form ADV more than 48 hours prior to the
execution of this Agreement.
11. PROVISION OF CERTAIN INFORMATION BY SUBADVISER. The Subadviser will
promptly notify the Adviser (1) in the event the SEC or other governmental
authority has censured the Subadviser; placed limitations upon its activities,
functions or operations; suspended or revoked its registration, if any, as an
investment adviser; or has commenced proceedings or an investigation that may
result in any of these actions or (2) upon having a reasonable basis for
believing that the Fund has ceased to qualify or might not qualify as a
regulated investment company under Subchapter M of the Code. The Subadviser
further agrees to notify the Adviser promptly of any material fact known to the
Subadviser respecting or relating to the Subadviser that is not contained in the
Prospectus, and is required to be stated therein or necessary to make the
statements therein not misleading, or of any statement contained therein that
becomes untrue in any material respect. As reasonably requested by the Adviser
or the Fund and in accordance with the scope of Subadviser's obligations and
responsibilities contained in this Agreement, Subadviser will cooperate to
provide assistance to Adviser or the Fund in
connection with Adviser's or Fund's compliance with the Xxxxxxxx-Xxxxx Act and
the rules and regulations promulgated by the SEC thereunder.
12. PROVISION OF CERTAIN INFORMATION BY THE ADVISER. The Adviser will promptly
notify the Subadviser (1) in the event that the SEC has censured the Adviser or
the Trust; placed limitations upon either of their activities, functions, or
operations; suspended or revoked the Adviser's registration as an investment
adviser; or has commenced proceedings or an investigation that may result in any
of these actions and (2) upon having a reasonable basis for believing that the
Fund has ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Code.
13. AMENDMENT OF AGREEMENT. No provision of this Agreement may be changed,
waived, discharged, or terminated orally, but only by an instrument in writing
signed by both parties.
14. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of New York, without giving effect to the conflicts of
laws principles thereof, and with the 1940 Act. To the extent that the
applicable laws of the State of New York conflict with the applicable
provisions of the 1940 Act, the latter shall control.
B. CAPTIONS. The Captions contained 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.
C. ENTIRE AGREEMENT. This Agreement represents the entire agreement and
understanding of the parties hereto and shall supersede any prior
agreements between the parties relating to the subject matter hereof .
D. DEFINITIONS. Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the
United States courts or, in the absence of any controlling decision of any
such court, by rules, releases or orders of the SEC validly issued pursuant
to the Act. As used in this Agreement, the terms "majority of the
outstanding voting securities," "affiliated person," "interested person,"
"assignment," "broker," "investment adviser," "net assets," "sale," "sell,"
and "security" shall have the same meaning as such terms have in the 1940
Act, subject to such exemptions as may be granted by the SEC by any rule,
release or order. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Agreement is made less
restrictive by a rule, release, or order of the SEC, whether of special or
general application, such provision shall be deemed to incorporate the
effect of such rule, release, or order.
E. NOTICES. Any notice herein required is to be in writing and is deemed to
have been given to Subadviser or Adviser upon receipt of the same at their
respective addresses set forth below. All written notices required or
permitted to be given under this Agreement will be delivered by personal
service, by postage mail return receipt requested or by facsimile machine
or similar means of delivery that provide evidence of receipt. All notices
to Adviser shall be sent to the Fund Secretary: X.X. Xxxxxx Investment
Management Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx
X. Xxxxxx.
All notices to Subadviser shall be sent to: Xxxxxx Xxxxxxxx, General
Counsel, BlackRock Advisors, Inc., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
Attest: By:
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(Title)
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Date:
BLACKROCK ADVISORS, INC.
Attest: By:
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(Title)
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Date:
APPENDIX A
FEE SCHEDULE
For the services provided by Subadviser to the Subadviser Assets, pursuant to
the attached Investment Sub-Advisory Agreement, the Adviser will pay the
Subadviser a fee, computed daily and payable monthly, based on the average daily
net assets of the Sub-Advisory Assets at the following annual rates of the
average daily net assets of the Subadviser Assets as determined by the Trust's
accounting agent:
FUND RATE
JPMorgan Multi-Manager Small Cap Growth Fund 0.55%
