Exhibit 99.d(1)
SUBADVISORY AGREEMENT
IN RESPECT TO ARIEL PREMIER GROWTH FUND
THIS SUBADVISORY AGREEMENT (the "Agreement") is made as of May 20,
2003, by and between ARIEL CAPITAL MANAGEMENT, INC., an Illinois corporation
("Ariel"), and LINCOLN EQUITY MANAGEMENT, LLC, a Delaware limited liability
company ("Lincoln").
In consideration of the mutual covenants hereinafter set forth, IT IS
HEREBY AGREED between the parties as follows:
1. Ariel is the Adviser/Manager of the series of the Ariel
Investment Trust (the "Trust"), entitled "Ariel Premier Growth Fund" (the
"Fund"), under a Management Agreement (the "Management Agreement") with the
Trust dated October 15, 2001. Ariel hereby retains Lincoln to manage the
investment and reinvestment of the assets of the Fund, subject to the
supervision of the Trust's Board of Trustees (the "Board of Trustees") on the
terms hereinafter set forth. Lincoln hereby accepts and agrees during such
period to render the services and to assume the obligations herein set forth for
the compensation herein provided. Lincoln shall for all purposes herein be
deemed to be an independent contractor and shall, except as expressly provided
or authorized (whether herein or otherwise), have no authority under this
Agreement to act for or represent Ariel or the Trust in any way or otherwise be
deemed an agent of either.
2. Lincoln undertakes to provide the following services and to
assume the following obligations:
a. Lincoln shall manage the investment and reinvestment of the
assets of the Fund, subject to and in accordance with the investment
objectives, policies and limitations of the Fund as set forth in the
Trust's effective registration statements under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933 as they
may be amended from time to time ("Registration Statements"). In
pursuance of the foregoing, Lincoln shall make all determinations with
respect to the investment of the assets of the Fund and the purchase
and sale of portfolio securities and shall take such action necessary
to implement the same.
x. Xxxxxxx shall place orders for the execution of the Trust's
portfolio transactions in accordance with the policies with respect
thereto set forth in the Registration Statements.
3. Lincoln shall provide Ariel or its designee with any reasonable
reports, analyses or other documentation Ariel requires to carry out its
responsibilities under its Management Agreement with the Trust, including
Ariel's administrative responsibilities and its responsibility to monitor
compliance with stated investment objectives, policies and limitations and the
investment performance of the Fund. Lincoln shall directly or through an agent,
provide daily information in respect to the portfolio transactions of the Fund
to Ariel or its designee. Lincoln shall provide all documentation reasonably
required by Ariel to maintain accounting records in respect to the Fund in
accordance with the 1940 Act and the Investment Advisers Act of 1940
and the regulations issued thereunder, and to preserve copies of all documents
and records related to asset transactions, positions and valuations related to
the Fund in the manner and for the periods prescribed by such regulations.
Lincoln agrees that all documents and records or copies of such documents and
records it maintains in respect to the Fund will be surrendered to Ariel or the
Trust upon the request of either. Lincoln agrees to provide information and to
allow inspection of such documents and records at reasonable times by any
authorized representative of Ariel, the Board of Trustees or any committee
thereof, the Trust's independent public accountants or any appropriate
regulatory authorities. Lincoln agrees to comply with directions issued by Ariel
or the Board of Trustees in respect to compliance and other administrative
matters.
4. Lincoln shall make its personnel who are engaged in activities on
behalf of the Fund available at reasonable times for consultations with Ariel
personnel, the Board of Trustees or any committee thereof, including attendance
at meetings of the Board of Trustees, and to make presentations in conjunction
with personnel of Ariel or an Ariel affiliate.
5. Lincoln shall provide all office facilities, equipment and
personnel for carrying out its duties hereunder at its own expense and shall pay
all its own travel and accommodation expenses.
6. As investment sub-adviser, Lincoln understands that it will be
responsible for complying with all provisions of applicable law, including the
1940 Act, the Investment Advisers Act of 1940, the Xxxxxxx Xxxxxxx and
Securities Fraud Enforcement Act of 1988 and all rules and regulations
thereunder. Lincoln agrees to adopt and comply at all times with a written Code
of Ethics and related procedures meeting the requirements of Rule 17j-1 under
the 1940 Act and acceptable to the Board of Trustees.
7. Lincoln shall promptly give Ariel (within 5 business days of the
event) written notice of the occurrence of any of the following events: (a) any
pending or threatened suit or claim in which Lincoln is named as a defendant and
the amount of alleged damages are not specifically stated, or if alleged damages
are specifically stated, they are stated at $250,000 or more; (b) any
investigation instituted against Lincoln, whether formal or informal, by any
state or the federal government, any agency thereof or any self regulatory
agency; (c) any administrative proceeding instituted against Lincoln by any
state or federal governmental, self-regulatory or administrative agency; (d) any
administrative order or action issued against Lincoln by any state or federal
governmental, self-regulatory or administrative agency; (e) any judgment or
order entered against Lincoln by a court of law in any suit, claim or
proceeding; (f) Lincoln's authorization to do business or its qualification to
serve as an investment adviser pursuant to section 9 (a) of the 1940 Act or
otherwise, is denied, suspended, revoked, or restricted by any state or federal
governmental, self-regulatory or administrative agency; or (g) any change in
Lincoln's senior officers, directors or portfolio managers who manage the Fund.
In addition, Lincoln shall provide Ariel any amendments to Parts I and II of
Lincoln's Form ADV within a reasonable time after such amendments are made. For
the purposes of this paragraph 7, Lincoln shall also include each executive
officer of Lincoln in his or her capacity as an officer of Lincoln Equity
Management but not in any other capacity.
8. Lincoln's services are not to be deemed exclusive and it shall be
free to render similar services or other services to others provided that (i)
Lincoln's services hereunder are not impaired and are not in violation of
federal or state securities laws and (ii) Lincoln shall not provide services to
any registered investment company or series thereof which primarily invests in
equity securities while Lincoln acts as a subadviser to the Fund, without
Ariel's express written permission. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of Lincoln's obligations or duties
hereunder, Lincoln shall not be subject to liability for any act or omission in
the cause of, or connected with, rendering service hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security. In the
event of any claim, arbitration, suit, or administrative proceedings in which
Lincoln or Ariel is a party and in which it is finally determined that there is
a liability or wrongdoing by only one party, the party liable or found to be the
wrongdoer shall pay for all liability and expenses of such claim or proceeding
including reasonable attorneys' fees. If it is determined that there is
liability or wrongdoing by both parties or neither party, then each party shall
pay for its own liability and expenses. In the event of any settlement of any
such claim, arbitration, suit or proceeding before final determination by a
court or arbitrator(s), the liability and expenses shall be assumed as agreed
between the parties, but if there is no agreement within thirty (30) days of
such settlement, then the responsibility for liability and expenses shall be
settled by arbitration, in accordance with the then applicable rules of the
American Arbitration Association. Judgment upon the award rendered by the
arbitrator shall be final and binding and may be entered in any court having
jurisdiction. The parties shall pay for their own costs and expenses in respect
to any such arbitration, which may be included in the arbitrator's award.
9. Ariel shall pay to Lincoln a fee based on the average daily net
assets of the Fund set forth in the attached addendum and reimburse expenses
expressly approved for reimbursement by Ariel. Payment for Lincoln's services
and reimbursement of expenses approved by Ariel shall be made monthly. No fee
waiver or reimbursements of expenses of the Fund by Ariel shall affect Ariel's
payments hereunder unless Lincoln expressly agrees in writing to assume part of
such waivers or reimbursements.
10. This Agreement shall become effective on May 20, 2003 (the
"Effective Date"). Thereafter, subject to the termination provisions herein,
this Agreement shall continue in effect until two (2) years after the Effective
Date, and thereafter shall continue in force from year to year, but only as long
as such continuance is specifically approved at least annually in the manner
required by the 1940 Act; provided, however, that if the continuation of this
Agreement is not approved, you may continue to serve in the manner and to the
extent permitted by the 1940 Act and the rules and regulations thereunder.
11. In addition to the provisions of Section 10, this Agreement shall
automatically terminate immediately in the event of its assignment (except as
otherwise permitted by the 1940 Act or rules thereunder) or in the event of the
termination of the Management Agreement. This Agreement may be terminated
without payment of any penalty at any time (a) upon thirty (30) days' written
notice to Lincoln by Ariel or upon thirty (30) days' written notice to Lincoln
by the Trust pursuant to action by the Board of Trustees or by the vote of a
majority of the outstanding voting securities of the Fund, or (b) upon sixty
(60) or more days' written notice by Lincoln to Ariel and the Trust. The terms
"assignment" and "vote of a majority of the outstanding voting
securities" shall have the meaning set forth in the 1940 Act and the rules and
regulations thereunder. Termination of this Agreement shall not affect Lincoln's
right to receive payments on any unpaid balance of the compensation earned and
reimbursable expenses incurred prior to such termination.
12. This Agreement shall be construed according to the laws of the
State of Illinois. It may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.
ARIEL CAPITAL MANAGEMENT, INC. LINCOLN EQUITY MANAGEMENT, LLC
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxx X. Xxxx, XX
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Name: Xxxxxxx Xxxxxx Name: Xxxx X. Xxxx, XX
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Title: President Title: LLC Member/Manager
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Acknowledged and Approved:
ARIEL INVESTMENT TRUST
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
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Title: President
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ADDENDUM TO SUBADVISORY AGREEMENT
DATED MAY 20, 2003 BETWEEN
ARIEL CAPITAL MANAGEMENT, INC. AND
LINCOLN EQUITY MANAGEMENT, LLC
The compensation payable by Ariel Capital Management, Inc. pursuant to
Section 9 of the Agreement shall be at the following annual rates: provided,
however, that no fee shall be due or payable in respect to any day in which the
net assets are less than $50 million dollars.
ANNUAL RATE VALUE OF AVERAGE DAILY NET ASSETS OF THE FUND
0.4675% First $20 million
0.3500% Next $130 million
0.2500% Next $350 million
0.2000% Next $500 million
0.1500% Next $1,500 million
0.1000% Over $2,500 million
Dated May 20, 2003
ARIEL CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
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Title: President
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LINCOLN EQUITY MANAGEMENT, LLC
By: /s/ Xxxx X. Xxxx, XX
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Name: Xxxx X. Xxxx, XX
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Title: LLC Member/Manager
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Acknowledged and Approved:
ARIEL INVESTMENT TRUST
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
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Title: President
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