SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of September, 2002 among ATLAS ADVISERS, INC.,
a California corporation (the "Adviser"), ATLAS ASSETS, INC., a Maryland
corporation (the "Company"), on behalf of each series of the Company listed in
Appendix A hereto, as amended from time to time (hereinafter referred to
individually as a "Fund" and collectively as the "Funds") and Madison Investment
Advisors, Inc., a Wisconsin Corporation (the "Sub adviser").
WHEREAS, the Company is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management company and is authorized to issue
separate series, each of which offers a separate class of shares of capital
stock and each of which has its own investment objectives, policies and
limitations; and
WHEREAS, the Company has retained the Adviser to render investment
management and administrative services to the Funds; and
WHEREAS, the Adviser and the Company desire to retain the Sub adviser to
furnish portfolio management services to the Funds in connection with the
Adviser's investment management activities on behalf of the Funds, and the Sub
adviser is willing to furnish such services to the Adviser and the Company;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Adviser, the Sub adviser and the Company as
follows:
1. APPOINTMENT. The Adviser and the Company hereby appoint the Sub adviser
to act as portfolio manager to each Fund listed in Appendix A (collectively, the
"Funds") on the terms set forth in this Agreement. The Sub adviser accepts such
appointment and agrees to furnish the services described herein, for the
compensation provided in the Fee Schedule attached hereto as Appendix B.
2. REPRESENTATIONS OF THE COMPANY. The Company represents, warrants, and
agrees that:
A. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the state of Maryland.
B. The Adviser and Sub adviser have been duly appointed by the Board
of Directors of the Company.
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C. The Company will deliver to the Sub adviser a true and complete
copy of its Registration Statement filed with the SEC, as effective from time to
time, and such other documents or instruments governing the investment
objectives of the Funds and such other information as is necessary for the Sub
adviser to carry out its obligations under this Agreement.
D. The Company is currently in compliance and shall at all times use
its best efforts to ensure continued compliance with the requirements imposed
upon the Company by the 1940 Act and applicable state laws.
3. REPRESENTATIONS OF THE SUB ADVISER. The Sub adviser represents,
warrants, and agrees that:
A. The Sub adviser is a Corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware.
B. The Sub adviser is registered as an "Investment Adviser" under the
Investment Advisers Act of 1940 ("Advisers Act") and under applicable state laws
and is currently in compliance and shall at all times use its best efforts to
ensure compliance with the requirements imposed upon the Sub adviser by the
Advisers Act and applicable state laws and has provided its current Form ADV to
the Adviser.
C. The Sub adviser has adopted a written code of ethics complying with
the requirements of Rule 17j under the 1940 Act, will provide the Company with a
copy of the code of ethics and evidence of its adoption, and will make such
reports to the Company as are required by Rule 17j-1 under the 1940 Act.
4. REPRESENTATIONS OF THE ADVISER. The Adviser represents, warrants, and
agrees that:
A. The Adviser is a corporation duly organized, validly existing and
in good standing under the laws of the state of California.
B. The Adviser is registered as an "Investment Adviser" under the
Advisers Act and under applicable state laws and is currently in compliance and
shall at all times use its best efforts to ensure compliance with the
requirements imposed upon the Adviser by the Advisers Act and applicable state
laws and has provided its current Form ADV to the Sub adviser.
C. The Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j under the 1940 Act, has provided the Company with a
copy of the code of ethics and evidence of its adoption, and will make such
reports to the Company as are required by Rule 17j-1 under the 1940 Act.
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5. PORTFOLIO MANAGEMENT DUTIES.
A. Subject to the supervision of the Adviser and the Company's Board
of Directors, the Sub adviser will provide a continuous investment program for
the portfolio of each Fund listed in Appendix A. The Sub adviser will determine
from time to time what securities and other investments will be purchased,
retained or sold by a Fund and will place orders for execution of such portfolio
transactions in accordance with paragraph C below to effect the investment
decisions made. The Sub adviser will provide the services identified in this
Agreement in accordance with each respective Fund's investment objectives,
policies and restrictions as stated in the Company's Registration Statement
filed with the SEC, as effective from time to time, and as interpreted by the
Adviser and communicated to the Sub adviser, on behalf of the Company, from time
to time. The Adviser will be responsible for all other services to be provided
to each Fund that is identified in Appendix A hereto.
B. The Sub adviser shall use its best efforts to furnish to the
Adviser or any company supplying investment company accounting or security
pricing, timely notice of significant events which come to the Sub adviser's
attention concerning securities in which it has caused the Fund to invest which
could require the Fund to fairly value such securities in the daily calculation
of the Fund's net asset value per share.
C. Subject to any applicable regulatory restriction or prohibition,
the Sub adviser shall have authority and discretion to select brokers and
dealers (hereinafter "broker-dealers") to execute portfolio transactions for the
Funds and for the selection of the markets on or in which the transactions will
be executed.
D. The primary objective of the Sub adviser in placing orders for the
purchase and sale of securities for a Fund shall be to obtain the "best
execution" (prompt and reliable execution at the most favorable security price
obtainable) taking into account such factors as price, commission, if any, size
of order, difficulty of execution and skill required of the executing broker or
dealer. The Sub adviser shall have discretion, in the interests of each Fund, to
allocate brokerage on each Fund's portfolio transactions to broker-dealers who
provide brokerage and/or research services (as such services are defined Section
28(e)(3) of the Securities Exchange Act of 1934) for any of the Funds. The term
"research" includes advice as to the value of securities; the advisability of
investing in, purchasing or selling securities; the availability of securities
or purchasers or sellers of securities; and furnishing analyses and reports
concerning issuers, industries, securities, economic
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factors and trends, portfolio strategy and the performance of accounts. Subject
to such policies as the Adviser and the Company's Board of Directors may
determine, the Sub adviser shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by reason
of its having caused a Fund to pay a broker for effecting a portfolio investment
transaction in excess of the amount of commission another broker-dealer would
have charged for effecting that transaction if the Sub adviser determines in
good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such broker-dealer,
viewed in terms of either that particular transaction or the Sub adviser's
overall responsibilities with respect to the Fund and/or its other clients. In
reaching such determination, the Sub adviser will not be required to place or
attempt to place a specific dollar value on the brokerage and/or research
services provided or being provided by such broker/dealer. The Sub adviser shall
have no duty or obligation to seek advance competitive bidding for the most
favorable commission rate applicable to any particular portfolio transactions or
to select any broker-dealer on the basis of its purported or "posted" commission
rate but will, to the best of its ability, endeavor to be aware of the current
level of the charges of eligible broker-dealers and to minimize the expense
incurred by the Funds for effecting their portfolio transactions.
E. All transactions will be consummated by payment to or delivery by
the Company's Custodian, or such depositories or agents as may be designated by
the Custodian, of all cash and/or securities due to or from a Fund, and the Sub
adviser shall not have possession or custody thereof or any responsibility or
liability with respect thereto. The Sub adviser shall advise the Custodian and
the Company daily of all investment orders placed by it with broker-dealers
pursuant to procedures agreed upon by the Sub adviser and the Company. The Sub
adviser shall not be responsible for obtaining prices for any such investment
order, but will use its best efforts to direct the Custodian to pricing sources
and assist the Custodian in obtaining dealer quotes if so requested by the
Custodian. The Company or its authorized agents, the Adviser and Sub adviser,
shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Sub adviser.
The Company shall be responsible for all custodial arrangements and the payment
of all custodial charges and fees, and, upon transmitting to the Custodian the
investment orders placed by it with broker-dealers, the Sub adviser shall have
no responsibility or liability with respect to custodial arrangements or the
acts, omissions or other conduct of the Custodian.
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F. The Custodian shall, on a daily basis pursuant to procedures and in
a format agreed upon by the Sub adviser and the Company, provide portfolio
reports to the Sub adviser that shall include a listing of all portfolio
investments of each Fund and its cash position.
6. EXPENSES. During the term of this Agreement, the Sub adviser will pay
all expenses incurred by it or its staff in connection with rendering portfolio
management services under this Agreement. This does not include expenses and
costs of the Funds' operations payable by the Company or the Adviser, including,
but not limited to, those for: interest and taxes; brokerage commissions;
custody, transfer agency, dividend disbursement, accounting, pricing, legal and
auditing services; insurance premiums for fidelity and other coverage required
for their operations; filing and registration of shares; shareholder reports;
meetings of the Company's shareholders or directors (except those called solely
to accommodate the Sub adviser); printing and postage; office facilities,
stationery and supplies; the clerical, executive and administrative costs
incurred by the Adviser in overseeing or administering all of the above; other
direct administrative and service costs; and such extraordinary non-recurring
expenses as may arise, including litigation, affecting any of the Funds.
7. COMPENSATION. For the services provided, the Adviser will pay the Sub
adviser a fee, payable monthly based on the aggregate daily net assets of the
Funds, as provided in the Fee Schedule attached to this Agreement as Appendix B.
The "aggregate daily net assets" is defined as the aggregate of the values
placed on the net assets of all Funds as of 4:00 p.m. (New York time), on each
day on which the net asset value of the Funds' portfolios is determined
consistent with the provisions of Rule 22c-1 under the 1940 Act or, if the
Company lawfully determines the net asset value of a Fund's portfolio as of some
other time on each business day, as of such time. The net asset value of each
Fund's portfolio shall be determined pursuant to the applicable provisions of
the Company's current Registration Statement and the 1940 Act. If the
determination of net asset value for a Fund is suspended in conformity with the
1940 Act for any particular business day, then the value of the net assets of
such Fund's portfolio as last determined shall be deemed to be the value of the
net assets as of the close of the New York Stock Exchange, or such other time as
the net asset value of the portfolio may lawfully be determined, on that day. If
the Company has suspended the determination of the net asset value of a Fund's
portfolio pursuant to the Registration Statement and the 1940 Act for a period
including such month, the Sub adviser's compensation payable at the end of such
month shall be computed on the basis of the value of the net assets of the Fund
as last
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determined (whether during or prior to such month). If the Company determines
the value of the net assets of a Fund's portfolio more than once on any day, the
last such determination on that day shall be deemed to be the sole determination
on that day for the purposes of this Section 7.
8. BOOKS AND RECORDS.
A. The Sub adviser will make available to the Adviser and the Company
promptly upon request its records and ledgers with respect to and relating to
each Fund's securities transactions to assist the Adviser and the Company in
compliance with the 1940 Act and the Advisers Act, and other applicable laws.
The Sub adviser will furnish the Company's Board of Directors such periodic and
special reports on each Fund as the Adviser and the Directors may reasonably
request.
B. In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Sub adviser hereby agrees that all records which it maintains for the
Funds are the property of the Company and further agrees to surrender promptly
to the Company any of such records upon the Company's request. The Sub adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act
and to preserve the records required by Rule 204-2 under the Advisers Act to the
extent necessary or appropriate to comply with the period specified in the Rule.
9. INDEMNIFICATION.
A. Absent the Adviser's or the Company's gross negligence, willful
misconduct or bad faith in the performance of its duties, or reckless disregard
of its obligations and duties under this Agreement, the Sub adviser agrees to
indemnify and hold harmless the Adviser, the Company and their officers and
employees against any and all costs and liabilities (including legal and other
expenses) which the Adviser or the Company may incur, arising out of the Sub
adviser's (a) gross negligence, willful misconduct or bad faith in the
performance of its duties, or reckless disregard of its obligations and duties
under this Agreement, or (b) untrue statement or omission of a material fact
required in the Registration or Proxy Statements or other regulatory filing, if
such statement or omission was made in reliance upon information furnished in
writing by the Sub adviser for inclusion in such regulatory filings.
B. Absent the Sub adviser's gross negligence, willful misconduct or
bad faith in the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement, the Adviser and the Company agree
to indemnify and hold harmless the Sub adviser
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and its officers and employees against any and all costs and liabilities
(including legal and other expenses) which the Sub adviser may incur, arising
out of the Adviser's or the Company's (a) gross negligence, willful misconduct
or bad faith in the performance of its duties, or reckless disregard of its
obligations and duties under this Agreement, or (b) untrue statement or omission
of a material fact required in the Registration or Proxy Statements or other
regulatory filing, unless such statement or omission was made in reliance upon
information furnished in writing by the Sub adviser for inclusion in such
regulatory filings.
10. SERVICES NOT EXCLUSIVE. It is understood that the services of the Sub
adviser are not exclusive, and nothing in this Agreement shall prevent the Sub
adviser from providing similar services to other investment companies (whether
or not their investment objectives and policies are similar to those of a Fund)
or from engaging in other activities. When the Sub adviser recommends the
purchase or sale of a security for other investment companies and other clients,
and at the same time the Sub adviser recommends the purchase or sale of the same
security for one or more Funds, it is understood that such transactions will be
executed on a basis that is fair and equitable to each Fund.
11. DURATION. The term of this Agreement, with respect to each Fund, shall
begin on the effective date of a Post-Effective Amendment to the Company's
Registration Statement that discloses the Sub adviser as such for that Fund and
shall remain in effect until the first meeting of such Fund's shareholders held
thereafter, and, if approved at such meeting, shall continue in effect for two
years from the effective date of the Post-Effective Amendment with respect to
such Fund and continue on an annual basis thereafter if approved for each Fund
each year by (a) the vote of a majority of the entire Board of Directors of the
Company or by the vote of a majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act), and by (b) the vote of a majority of those
Directors of the Company who are not parties to this Agreement or interested
persons (as such term is defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
12. TERMINATION. This Agreement may be terminated at any time without
payment of any penalty by (a) the Adviser, upon sixty (60) days' written
notice to the Sub adviser and the Company (which notice may be waived by the
Sub adviser and the Company), (b) the Company, on behalf of any one or more
of the Funds, upon the vote of a majority of the Company's Board of Directors
or a majority of the outstanding voting securities of such Fund, upon sixty
(60) days'
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written notice to the Adviser and the Sub adviser, or (c) the Sub adviser,
upon one hundred twenty (120) days' written notice to the Adviser and the
Company (which notice may be waived by the Adviser and the Company).
Termination of this Agreement with respect to a Fund shall not effect the
continuing applicability of this Agreement with respect to other Funds. This
Agreement shall automatically terminate in the event of its assignment (as
such term is defined in the 1940 Act and interpreted by the U.S. Securities
and Exchange Commission). Termination of this Agreement shall not affect the
right of the Sub adviser to receive payments of any unpaid balance of the
compensation described in Section 7 earned prior to such termination.
13. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against which enforcement of the change, waiver, discharge or
termination is sought and no amendment of this Agreement shall be effective
with respect to a Fund until approved by a vote of a majority of the
outstanding voting securities of such Fund, if such approval is required by
applicable law.
14. USE OF NAME. It is understood that the name "[New Sub adviser]" or any
derivative thereof or logo associated with that name is the valuable property
of the Sub adviser and its affiliates and that the Company and each Fund have
the right to use such name (or derivative or logo) in offering and sales
materials so long as the Sub adviser is portfolio manager to such Fund and
provided the Sub adviser shall have reviewed and approved in writing such
use, which approval may not be unreasonably withheld. Upon termination of
this Agreement, the Company shall promptly cease to use such name.
15. MISCELLANEOUS.
A. This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
there under.
B. The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
C. If any provision of this Agreement shall be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby and the provisions of this Agreement shall be deemed to be
severable.
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D. Any notice under this Agreement shall be in writing addressed and
delivered or mailed, postage prepaid, to the other party at the address below or
at such other address as such other party may designate hereunder for the
receipt of such notice:
If to the Adviser or the Company:
Atlas Advisers, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: X. Xxxxxxxx Key, Group Senior Vice President
If to the Sub adviser: With Copies to:
Madison Investment Advisors, Inc. Madison Investment Advisors, Inc.
000 Xxxxxxx Xxxxx 0000 X. Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000 Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, President Attention: W. Xxxxxxx Xxxxx, General Counsel
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ATLAS ADVISERS, INC. MADISON INVESTMENT ADVISORS, INC.
/s/ X. Xxxxxxxx Key /s/ Xxxxx X. Xxxxxxx
-------------------- --------------------
By: X. Xxxxxxxx Key By: Xxxxx X. Xxxxxxx
Group Senior Vice President & President
Chief Operating Officer
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APPENDIX A
SUB ADVISORY AGREEMENT; MADISON INVESTMENT ADVISORS, INC.
DATED: SEPTEMBER 1, 2002
The provisions of the attached Sub advisory Agreement apply to the
following separate series of shares of the Company:
1. Atlas Strategic Growth Fund
2. Atlas Balanced Fund
APPENDIX B - FEE SCHEDULE
DATED: SEPTEMBER 1, 2002
The attached AGREEMENT requires that the Sub adviser be paid a fee each
month at the annual rate of:
0.35% of the first $75,000,000 of net assets
0.25% of net assets in excess of $75,000,000
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