1
EXHIBIT (d.26)
THE XXXXXX & RYGEL INVESTMENT GROUP
SUB-ADVISORY AGREEMENT BY AND BETWEEN
XXXXXX & RYGEL AND XXXXXXX-XXXXXX, LLC
This Sub-advisory Agreement is made as of March __, 2000 by and between
Xxxxxx & Rygel, a California corporation (the "Adviser"), and Xxxxxxx-Xxxxxx,
LLC, a limited liability company organized under the laws of Delaware (the
"Sub-adviser").
WHEREAS, the Adviser has by separate contract agreed to serve as the
investment adviser to the Xxxxxx & Rygel World Target Twenty Fund (the "Fund"),
an investment portfolio of The Xxxxxx & Rygel Investment Group (the "Trust"),
which is a Massachusetts business trust registered under the Investment Company
Act of 1940, as amended ("1940 Act"), as an open-end management investment
company consisting of one or more investment series of shares, each having its
own assets and investment policies;
WHEREAS, the Adviser's contract with the Trust allows it to delegate
certain investment advisory services for the Trust with respect to each of the
Funds to other parties; and
WHEREAS, the Adviser desires to retain the Sub-adviser to perform certain
investment advisory services for the Trust with respect to the Fund, and the
Sub-adviser is willing to perform such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. SERVICES TO BE RENDERED BY THE SUB-ADVISER TO THE TRUST.
(a) Investment Program. Subject to the control and supervision of the
Board of Trustees of the Trust (the "Board") and the Adviser, the
Sub-adviser will, at its expense, continuously furnish to the Fund an
investment program for such portion, if any, of Fund assets that is
allocated to it by the Adviser from time to time. With respect to such
assets, the Sub-adviser will make investment decisions and will place all
orders for the purchase and sale of portfolio securities. In the
performance of its duties, the Sub-adviser will act in the best interests
of the Fund and will comply with (i) applicable laws and regulations,
including, but not limited to, the 1940 Act, (ii) the terms of this
Agreement, (iii) the investment objective, policies, and restrictions of
the Fund as stated in the then-current Registration Statement of the Trust,
and (iv) such other guidelines as the Trustees or Adviser may establish.
The Adviser shall be responsible for providing the Sub-adviser with current
copies of the materials specified in Subsections (a)(iii) and (iv) of this
Section 1. At such times as may be reasonably requested by the Board or the
Adviser, the Sub-adviser will provide them with economic and investment
analysis and reports, and make available to the Board any economical,
statistical, or investment services, normally available to similar
investment company clients of the Sub-adviser.
(b) Availability of Personnel. The Sub-adviser, at its expense, will
make available to the Trustees and the Adviser at reasonable times its
portfolio managers and other appropriate personnel in order to review
investment policies of the Fund and to consult with the Trustees and the
Adviser regarding the investment affairs of the Fund, including economic,
statistical, and investment matters relevant to the Sub-adviser's duties
hereunder, and will provide periodic reports to the Trustees and the
Adviser relating to the portfolio strategies it employs.
2
(c) Salaries and Facilities. The Sub-adviser, at its expense, will pay
for all salaries of personnel and facilities required for it to execute its
duties under this Agreement.
(d) Compliance Reports. The Sub-adviser, at its expense, will provide
the Adviser with reasonable compliance reports relating to its duties under
this Agreement as may be agreed to upon by such parties from time to time.
(e) Valuation. The Sub-adviser, at its expense, will provide the
Trust's custodian with market price information relating to the assets of
the Fund at such times as the parties hereto may agree upon from time to
time.
(f) Executing Portfolio Transactions. The Sub-adviser will place
orders pursuant to its investment determinations for the Fund either
directly with the issuer or through other brokers. In the selection of
brokers and the placement of orders for the purchase and sale of portfolio
investments for the Fund, the Sub-adviser shall use its best efforts to
obtain for the Fund the most favorable price and execution available. In
using its best efforts to obtain the most favorable price and execution
available, the Sub-adviser, bearing in mind the Fund's best interests as
all times, shall consider all factors it deems relevant, including by way
of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker involved and the quality
of service rendered by the broker in other transactions. In no instance
will portfolio securities of the Fund be purchased from or sold to the
Sub-adviser or any affiliated person of the Sub-adviser. The Trust agrees
that any entity or person associated with the Adviser or the Sub-adviser
which is a member of a national securities exchange is authorized to effect
any transaction on such exchange for the account of the Trust which is
permitted by Section 11(a) of the Securities Exchange Act of 1934, as
amended, and the Trust consents to the retention of compensation for such
transactions.
(g) Expenses. The Sub-adviser shall not be obligated to pay any
expenses of or for the Trust or for the Fund not expressly assumed by the
Sub-adviser pursuant to this Agreement.
2. BOOKS AND RECORDS. Pursuant to Rule 31a-3 under the 1940 Act, the
Sub-adviser agrees that: (a) all records it maintains for the Trust are the
property of the Trust; (b) it will surrender promptly to the Trust or the
Adviser any such records upon the Trust's or Adviser's request; (c) it will
maintain for the Trust the records that the Trust is required to maintain
pursuant to Rule 31a-1 insofar as such records relate to the investment affairs
of the Fund; and (d) it will preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records it maintains for the Trust.
3. OTHER AGREEMENTS. The Sub-adviser and persons controlled by or under
common control with the Sub-adviser have and may have advisory, management
service or other agreements with other organizations and persons, and may have
other interests and businesses. Nothing in this Agreement is intended to
preclude such other business relationships.
4. COMPENSATION. The Fund pays to the Adviser a monthly fee (the "Advisory
Fee") at the annual rate of 0.80% of the first $1 billion of average daily net
assets of the portfolio, and 0.60% thereafter. The Adviser will pay to the
Sub-adviser as compensation for the Sub-adviser's services rendered pursuant to
this Agreement a sub-advisory fee for the Fund equal to 100% of the Advisory Fee
2
3
earned and received by the Adviser for the Fund. Such fees shall be paid by the
Adviser (and not by the Trust) and shall be correspondingly reduced on a pro
rata basis by any reduction in the fees paid to the Adviser as a result of any
voluntary, statutory or regulatory limitation on investment company expenses.
Such fees shall be paid within 15 business days of the end of each month. If the
Sub-adviser shall serve for less than the whole of a month, the compensation as
specified shall be prorated.
5. AMENDMENT OF AGREEMENT. This Agreement shall not be materially amended
unless the Adviser and Sub-adviser mutually agree to such amendment, and such
amendment is approved by the affirmative vote of a majority of the outstanding
shares of the Fund, if required by the 1940 Act, and by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a majority of
the members of the Board who are not interested persons of the Trust, the
Adviser or the Sub-adviser (the "Independent Trustees"). The Sub-adviser agrees
to notify the Adviser of any anticipated change in control of the Sub-adviser
within a reasonable time prior to such change.
6. DURATION AND TERMINATION OF THE AGREEMENT. This Agreement shall become
effective with respect to the Fund upon its execution; provided, however, that
this Agreement shall not become effective unless it first has been approved by a
vote of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on such approval. This Agreement shall remain in full force
and effect with respect to the Fund continuously thereafter as follows:
(a) By vote of a majority of the (i) Independent Trustees, or (ii)
outstanding voting shares of the Fund, the Trust may at any time terminate
this Agreement with respect to the Fund without the payment of penalty, by
providing not more than 60 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Adviser and the Sub-adviser.
(b) This Agreement will terminate automatically with respect to the
Fund without payment of any penalty, unless, within two years after its
initial effectiveness and at least annually thereafter, the continuance of
the Agreement is specifically approved by (i) the Board of Trustees or the
shareholders of the Fund by the affirmative vote of a majority of the
outstanding shares of the Fund, and (ii) a majority of the Independent
Trustees, by vote cast in person at a meeting called for the purpose of
voting on such approval. If the continuance of this Agreement is submitted
to the shareholders of the Fund for their approval and such shareholders
fail to approve such continuance as provided herein, the Sub-adviser may
continue to serve hereunder in a manner consistent with the 1940 Act and
the rules and regulations thereunder.
(c) The Adviser may at any time terminate this Agreement with respect
to the Fund without the payment of any penalty by not less than 60 days'
written notice delivered or mailed by registered mail, postage prepaid, to
the Sub-adviser and the Trust, and the Sub-adviser may at any time without
the payment of any penalty, terminate this Agreement with respect to the
Fund by not less than 90 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Adviser and the Trust.
(d) This Agreement shall terminate automatically and immediately with
respect to the Fund without the payment of any penalty, in the event of its
assignment or if the Investment Management Agreement between the Adviser
and the Trust with respect to the Fund shall terminate for any reason.
3
4
(e) This Agreement shall terminate automatically and immediately with
respect to the Fund unless approved by an affirmative vote of a majority of
the outstanding Shares of the Fund within 120 days after the date first set
forth above.
Upon termination of this Agreement, the duties of the Adviser delegated to the
Sub-adviser under this Agreement automatically shall revert to the Adviser.
7. NOTIFICATION OF THE ADVISER. The Sub-adviser promptly shall notify the
Adviser in writing of the occurrence of any of the following events:
(a) the Sub-adviser shall fail to be registered as an investment
adviser under the Investment Advisers Act of 1940, as amended, and under
the laws of any jurisdiction in which the Sub-adviser is required to be
registered as an investment adviser in order to perform its obligations
under this Agreement.
(b) the Sub-adviser shall have been served or otherwise have notice of
any action, suit, or proceeding, inquiry, or investigation at law or in
equity, before or by any court, public board or body, involving the affairs
of the Trust or the Fund; or
(c) any other occurrence that might affect the ability of the
Sub-adviser to provide the services provided for under this Agreement.
8. DEFINITIONS. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding shares," "affiliated person," "control," "interested
person," and "assignment" shall have their respective meanings as defined in the
1940 Act and the rules and regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act; and references to annual approvals by the Board of Trustees shall be
construed in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
9. LIABILITY OF THE SUB-ADVISER. In the absence of its willful misfeasance,
bad faith, negligence, or disregard of its obligations and duties hereunder, the
Sub-adviser shall not be subject to any liability to the Adviser, the Trust or
their directors, Trustees, officers, or shareholders, for any act or omission in
the course of, or connected with, rendering services hereunder. However, the
Sub-adviser shall indemnify and hold harmless such parties from any and all
claims, losses, expenses, obligations and liabilities (including reasonable
attorneys fees) which arise or result from Sub-adviser's willful misfeasance,
bad faith, negligence, or disregard of its obligations and duties hereunder.
10. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of California, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of California conflict with the applicable
provisions of the 1940 Act, the latter shall control.
11. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors.
12. MISCELLANEOUS. The captions 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
4
5
construction or effect. Where the effect of a requirement of the 1940 Act
reflected in any provision of this agreement is made less restrictive by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
IN WITNESS WHEREOF, Xxxxxx & Rygel, and Xxxxxxx-Xxxxxx, LLC have each
caused this instrument to be signed in duplicate on its behalf by its duly
authorized representative, all as of the day and year first above written.
Attest: XXXXXX & RYGEL
By: By:
---------------------------------- ----------------------------------
Secretary President
Attest: XXXXXXX-XXXXXX, LLC
By: By:
---------------------------------- ----------------------------------
Secretary President
5
