EXHIBIT (D)(2)
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SUB-ADVISORY AGREEMENT
WITH
NAVELLIER MANAGEMENT, INC.
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
SUB-ADVISORY AGREEMENT
AGREEMENT, made this 1st day of June, 1999, between the Avalon Fund of Xxx
Arbor, Inc. (the "Company"), Questar Capital Corporation ("Questar") and
Navellier Management, Inc., (the "Sub-Advisor"), registered as an investment
Advisor under the Investment Advisors Act of 1940, as amended (the "Act").
BACKGROUND
WHEREAS, the Company is registered as a diversified, open-end management
investment company of the series type under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, Questar is a corporation duly organized under the laws of the
State of Michigan and is registered as an investment adviser with the Securities
and Exchange Commission, and
WHEREAS, Questar presently serves as investment adviser to the company
under a written agreement for such services, and
WHEREAS, the Sub-Adviser is a corporation duly organized under the laws of
the State of Michigan and is registered as an investment adviser with the
Securities and Exchange Commission, and WHEREAS, Questar desires to retain the
Sub-Adviser to furnish investment advisory services to the Avalon Capital
Appreciation Fund (the "Fund") series of the company pursuant to the terms and
conditions of this Agreement, the Sub-Adviser is willing to so furnish such
services, and the Company consents to the appointment of the Sub-Adviser;
NOW THEREFORE, in consideration of the foregoing and the agreements and
covenants herein contained, the parties hereto, intending to be legally bound,
agree as follows:
1. Appointment
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Questar hereby appoints the Sub-Adviser, and the Company consents to
the appointment, to act as Investment Advisor to the Avalon Capital Appreciation
Fund (the "Fund") for the periods and on the terms set forth in this Agreement.
The Sub-Adviser accepts the appointment and agrees to furnish the services
herein set forth for the compensation herein provided.
2. Delivery of Documents
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The Company has furnished the Sub-Adviser with copies properly
certified or authenticated copies of each of the following:
a. The company's Articles of Incorporation, as filed with the State of
Maryland (such Articles, as presently in effect and as from time to
time amended, are herein called the "Articles");
b. The Company's by-laws (such by-laws, as presently in effect and as
they may be from time to time amended, are herein called the
"by-laws")
c. Resolutions of the Company's Board of Directors authorizing the
appointment of the Sub-Adviser and approving this Agreement;
d. The Company's Registration Statement on form N-1A promulgated under
the 1940 Act and under the Securities Act of 1933, as amended (the
"1933 Act"), relating to shares of beneficial interest of the Fund
(herein called the "Shares") as filed with the Securities and Exchange
Commission ("SEC") and all amendments thereto;
e. The Fund's Prospectus, Statement of Additional Information (such
Prospectus, together with the statement of Additional Information, as
presently in effect and all amendments and supplements thereto are
herein called the "Prospectus")
The Company will furnish the Sub-Adviser from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to
the foregoing at the same time as such documents are required to be filed
with the SEC.
3. Management
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Subject to the supervision of Questar and the Company's Board of
Directors, the Sub-Adviser will provide a continuous investment program for the
Fund, including investment research and management with respect to all
securities, investments, cash and cash equivalents in the Fund. The Sub-Adviser
will determine from time to time what securities and other investments will be
purchased, retained or sold by the Fund. The Sub-Adviser will provide the
services under this Agreement in accordance with the Fund's investment
objectives, policies and restrictions as such are set forth in the prospectus
from time to time. The Sub-Adviser further agrees that it:
(a) Will conform its activities to all applicable rules and Regulations of
the SEC and will, in addition, conduct its activities under this
agreement in accordance with the regulations of any other Federal and
State agencies which may now or in the future have jurisdiction over
its activities under this Agreement.
(b) Will place orders pursuant to its investment determinations for the
Fund either directly with the respective issuers or with any broker or
dealer. In placing orders with brokers or dealers, the Sub-Adviser
will attempt to obtain the best net price and the most favorable
execution of its orders. Consistent with this obligation, when the
Sub-Adviser believes two or more brokers or dealers are comparable in
price and execution, the Sub-Adviser may prefer: (i) brokers and
dealers who provide the Fund with research advice and other services,
or who recommend or sell Fund shares, and (ii) brokers who are
affiliated with the Fund or the Sub-Adviser; provided, however, that
in no instance will portfolio securities be purchased from or sold to
the Sub-Adviser in principal transactions;
(c) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities on
behalf of the Fund.
4. Services not Exclusive
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The advisory services to be furnished by the Sub-Adviser hereunder are
not to be considered exclusive, and the Sub-Adviser shall be free to furnish
similar services to others so long as its services under this Agreement are not
impaired thereby; provided, however, that without the written consent of the
Directors of the Company, the Sub-Adviser will not serve as an investment
adviser to any other investment company having a similar investment objective to
that of the Fund.
5. Books and Records
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In compliance with Rule 31a-3 promulgated under the 1940 Act, that
Sub-Adviser hereby agrees that all records which it maintains for the benefit of
the Fund are the property of the Fund and further agrees to surrender promptly
to the Fund any of such records upon the Fund's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 promulgated under
the 1940 Act, the records required to be maintained by it pursuant to Rule 31a-1
promulgated under the 1940 Act that are not maintained by others on behalf of
the Fund.
6. Expenses
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During the term of this Agreement, the Sub-Adviser will pay all
expenses incurred by it in connection with its investment advisory services
furnished to the Fund other than the costs of securities and other investments
(including brokerage commissions and other transaction charges) purchased or
sold for the Fund.
7. Compensation
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Questar will pay the Sub-Adviser, and the Sub-Adviser will accept as
full compensation for its services rendered hereunder, an investment advisory
fee, computed at the end of each month and payable quarterly, according to the
following schedule:
Accounts under $25,000,000- 0.50% per annum
Next $25,000,000- 0.45% per annum
Next $50,000,000- 0.40% per annum
Over $100,000,000- 0.35% per annum
The fee is computed and billed in arrears at the end of each quarter by applying
one-fourth the annual rate to the aggregate market value of all assets in the
portfolio at the end of the quarter. The valuation of the client's portfolio is
based on the closing prices on the last day of the quarterly period. In the
event of commencement of limitation of the Agreement during a quarterly period,
the mount of the fee payable shall be prorated as of the date of the
commencement or termination.
8. Limitation of Liability
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The Sub-Adviser shall not be liable for any error of judgement,
mistake of law or for any other loss suffered by the Fund in connection with the
performance of this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful malfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard by it of its
obligations or duties under this Agreement.
9. Duration and Termination
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This Agreement shall become effective as of June 1, 1999 and, unless
sooner terminated as provided herein, shall continue in effect for two years.
Thereafter, this Agreement shall be renewable for successive periods of one year
each, provided such continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of Directors
who are not parties to the Agreement or interested persons of any such
party (as that term is defined in the 1940 Act), cast in person at a
meeting called for the purpose of voting on such approval; and
(b) By vote of either the Board of Directors or a majority (as that term
is defined in the 0000 Xxx) of the outstanding voting securities of
the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the
Company, Questar or by the Sub-Adviser at any time upon sixty (60) days written
notice, without payment of any penalty. Provided that termination by the Company
must be authorized by vote of the Board of Directors or by vote of a majority of
the outstanding voting securities of the Fund. This Agreement will automatically
terminate in the event of its assignment (as that term is defined in the 1940
Act).
10. Amendment of this Agreement
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No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by a written instrument signed by the party against
which enforcement of the change, waiver, discharge or termination is sought. No
material amendment of this Agreement shall be effective until approved by vote
of the holders of a majority of the Fund's outstanding voting securities (as
defined in the 1940 Act).
11. Miscellaneous
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The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of the Agreement shall not be affected thereby. This
Agreement shall be binding on, and shall inure to the benefit of, the parties
hereto and their respective successors.
12. Counterparts
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This Agreement may be executed in counterparts by the parties hereto,
each of which shall constitute and original, and all of which, together, shall
constitute one Agreement.
13. Governing Law
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This Agreement shall be construed in accordance with, and governed by,
the laws of the State of Michigan.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the day and year first
written above.
Attest: AVALON FUND OF XXX ARBOR, INC.
By: By: /s/ Xxxxxx X. Xxxxx
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Title: Title: President
Attest: QUESTAR CAPITAL CORPORATION
By: By: /s/ Xxxxxx X. Xxxxx
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Title: Title: President
Attest: NAVELLIER MANAGEMENT INC.
By: By: /s/ Xxxxx X. Xxxxxxxxx
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Title: Title: President
