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EXHIBIT (d)(3)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this 14th day of January, 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"); and
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; and
WHEREAS, the Adviser, with the approval of the Fund, desires to retain
the Sub-Adviser to provide investment advisory services to the Adviser in
connection with the management of the Portfolio, and the Sub-Adviser is willing
to render such investment advisory services.
NOW, THEREFORE, the parties hereto agree 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.
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
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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 maintain all books and records with respect to
transactions by the Sub-Adviser involving the Assets required by subparagraphs
(b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act. 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 keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and 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 other books and
records of the Portfolio required by Rule 31a-1 under the 1940 Act. The
Sub-Adviser will also furnish to the Adviser any other information relating to
the Assets that is required to be filed by the Adviser or the Fund with the SEC
or sent to shareholders under the 1940 Act (including the rules adopted
thereunder) or any exemptive or other relief that the Adviser or the Fund
obtains from the SEC.
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
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).
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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 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.
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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:
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.
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.
XXXXXX TRUST, N.A. RICHFIELD BANK & TRUST CO.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxx
---------------------------- --------------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxx
Title: President Title: Vice President and Senior
Trust Investment Officer
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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 the Adviser pays a portion of the Total Management Fee to a
third-party institution as compensation for shareholders services, 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 4 above will be paid to the
Adviser as its management fee.
[End of Schedule.]
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