SUBADVISORY AGREEMENT
Exhibit D(2)
AGREEMENT made as of the 10th day of November, 2005, between XXXXX CAPITAL
MANAGEMENT, INC., 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000 (hereinafter
called the “Manager”), and DELRAY FINANCIAL CORPORATION, 0000 XXX Xxxx, Xxxxx 000, Xxxx Xxxxx
Xxxxxxx, XX 00000 (hereinafter called the “Sub-adviser”).
WHEREAS, The Xxxxx Fund (the “Trust”) is a Massachusetts business trust organized with one or
more series of shares, and is registered as an investment company under the Investment Company Act
of 1940, as amended (the “1940 Act”); and
WHEREAS, the Manager has entered into Investment Advisory Agreement(s) (the “Advisory
Agreement”) with the Trust, pursuant to which the Manager acts as investment adviser to the
portfolio assets of certain listed on Schedule A hereto, as amended from time to time (each a
“Fund” and, collectively, the “Funds”); and
WHEREAS, the Manager desires to utilize the services of the Sub-adviser as investment
sub-adviser with respect to each Fund; and
WHEREAS, the Sub-adviser is willing to perform such services on the terms and conditions
hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto
agree as follows:
I. Duties of the Sub-adviser. The Sub-adviser will serve the Manager as investment
sub-adviser with respect to each Fund.
A. As investment sub-adviser to the Fund(s), the Sub-adviser is hereby authorized and directed
and hereby agrees, in accordance with the Sub-adviser’s best judgment and subject to the stated
investment objectives, policies and restrictions of the Fund(s) as set forth in the current
prospectuses and statements of additional information of the Trust (including amendments) and in
accordance with the Trust’s Declaration of Trust, as amended, and By-laws governing the offering of
its shares (collectively, the “Trust Documents”), the 1940 Act and the provisions of the Internal
Revenue Code of 1986, as amended (the “Internal Revenue Code”), relating to regulated investment
companies, and subject to such resolutions as from time to time may be adopted by the Trust’s Board
of Trustees, to render continuous investment advice to the Manager as to the investment of the
Fund’s assets, provide supervision of the Funds’ assets, and furnish a continuous investment
program for the Funds, as may be most appropriate to the achievement of the investment objectives
of the Fund(s) as stated in the aforesaid prospectuses, and to provide research and analysis
relative to the investment program and investments of the Fund(s) and to monitor on a continuing
basis the performance of the portfolio securities of the Fund(s). The Sub-adviser shall have no
discretion regarding nor responsibility for the implementation or execution of transactions which
it recommends to the Manager for any Fund, such discretion and responsibility being solely with the
Manager in the exercise of its independent judgement regarding the appropriateness of the
Sub-adviser’s investment recommendations for the Fund in light of its investment objectives,
policies and restrictions. The Manager will make available to the Sub-adviser certain research
services.
B. The Sub-adviser shall (i) comply with all reasonable requests of the Trust, or the
independent auditors of the Trust, for information, including information required in connection
with the Trust’s annual audit and filings with the Securities and Exchange Commission (the “SEC”)
and state securities commissions, and (ii) provide such other services as the Sub-adviser shall
from time to time determine to be necessary or useful to the administration of the Funds,
including, but not limited to, cooperation with the Manager in connection with any examination of
the Trust by the SEC or any other regulatory agency.
C. The Sub-adviser shall furnish to the Trust’s Board of Trustees periodic reports on the
performance of its obligations under this Agreement and shall supply such additional reports and
information as the Trust’s officers or Board of Trustees shall reasonably request.
D. The investment advisory services provided by the Sub-adviser under this Agreement are not
to be deemed exclusive and the Sub-adviser shall be free to render similar services to others, as
long as such services do not impair the services rendered to the Manager or the Trust.
II. Delivery of Documents to the Manager. The Sub-adviser has furnished the Manager with
copies of each of the following documents:
A. The Sub-adviser’s current Form ADV and any amendments thereto; and
B. The Code of Ethics of the Sub-adviser as currently in effect.
The Sub-adviser will furnish the Manager from time to time with copies, properly certified or
otherwise authenticated, of all material amendments of or supplements to the foregoing, if any.
Additionally, the Sub-adviser will provide to the Manager such other documents relating to its
services under this Agreement as the Manager may reasonably request on a periodic basis. Such
amendments or supplements as to items A and B above will be provided within 30 days of the time
such materials became available to the Sub-adviser.
III. Expenses.
The Sub-adviser shall pay all of its expenses arising from the performance of its obligations
under Section I.
IV. Compensation.
The Manager shall pay to the Sub-adviser for its services hereunder, and the Sub-adviser
agrees to accept as full compensation therefor, a fee with respect to each Fund as set forth on
Schedule B. If the Sub-adviser shall serve hereunder for less than the whole of any payment
period, the fee hereunder shall be prorated accordingly.
V. Independent Contractor.
In the performance of its duties hereunder, the Sub-adviser is and shall be an independent
contractor and, except as expressly provided herein or otherwise authorized in writing, shall have
no authority to act for or represent the Trust, the Funds, any other series of the Trust or the
Manager in any
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way or otherwise be deemed to be an agent of the Trust, the Fund(s), any other series of the Trust
or the Manager.
VI. Term of Agreement.
This Agreement shall continue in full force and effect for one year from the date of
execution, and from year to year thereafter if such continuance is approved in the manner required
by the 1940 Act if the Sub-adviser shall not have notified the Manager in writing at least 60 days
prior to such date or prior to such date of any year thereafter that it does not desire such
continuance. This Agreement may be terminated at any time, without payment of penalty by a Fund,
by vote of the Trust’s Board of Trustees or a majority of the outstanding voting securities of the
applicable Fund (as defined by the 1940 Act), or by the Manager or by the Sub-adviser upon 60 days’
written notice. This Agreement will automatically terminate in the event of its assignment (as
defined by the 0000 Xxx) or upon the termination of the Advisory Agreement.
VII. Amendments.
This Agreement may be amended by consent of the parties hereto provided that the consent of
the applicable Fund is obtained in accordance with the requirements of the 1940 Act.
VIII. Confidential Treatment.
It is understood that any information or recommendation supplied by the Sub-adviser in
connection with the performance of its obligations hereunder is to be regarded as confidential and
for use only by the Manager, the Trust or such persons as the Manager may designate in connection
with the Fund(s). It is also understood that any information supplied to the Sub-adviser in
connection with the performance of its obligations hereunder, particularly, but not limited to, any
list of securities which, on a temporary basis, may or may not be bought or sold for the Fund(s),
and any nonpublic personal information of Fund shareholders, as such information is defined under
Regulation S-P, or any list derived from such information, is to be regarded as confidential and
for use only by the Sub-adviser in connection with its obligation to provide investment advice and
other services to the Fund(s), and may not be disclosed to any third parties.
IX. Representations and Warranties. The Sub-adviser hereby represents and warrants as follows:
A. The Sub-adviser is registered with the SEC as an investment adviser under the Investment
Advisers Act of 1940, as amended (the “Advisers Act”), and such registration is current, complete
and in full compliance with all material applicable provisions of the Advisers Act and the rules
and regulations thereunder;
B. The Sub-adviser has all requisite authority to enter into, execute, deliver and perform the
Sub-adviser’s obligations under this Agreement;
C. The Sub-adviser’s performance of its obligations under this Agreement does not conflict
with any law, regulation or order to which the Sub-adviser is subject; and
D. The Sub-adviser has reviewed the portion of (i) the registration statement filed with the
SEC, as amended from time to time, for the Fund(s) (“Registration Statement”), and (ii) each Fund’s
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prospectuses and statements of additional information (including amendments) thereto, in each
case in the form received from the Manager with respect to the disclosure about the Sub-adviser and
the Fund(s) of which the Sub-adviser has knowledge (“Sub-adviser and Fund Information”) and except
as advised in writing to the Manager such Registration Statement, prospectuses and statements of
additional information (including amendments) contain, as of their respective dates, no untrue
statement of any material fact of which the Sub-adviser has knowledge and do not omit any statement
of a material fact of which the Sub-adviser has knowledge that was required to be stated therein or
necessary to make the statements contained therein not misleading.
X. Covenants. The Sub-adviser hereby covenants and agrees that, so long as this Agreement shall remain in effect:
A. The Sub-adviser shall maintain the Sub-adviser’s registration as an investment adviser
under the Advisers Act, and such registration shall at all times remain current, complete and in
full compliance with all material applicable provisions of the Advisers Act and the rules and
regulations thereunder;
B. The Sub-adviser’s performance of its obligations under this Agreement shall not conflict
with any law, regulation or order to which the Sub-adviser is then subject;
C. The Sub-adviser shall at all times comply with the Advisers Act and the 1940 Act, and all
rules and regulations thereunder, and all other applicable laws and regulations, and the
Registration Statement, prospectuses and statements of additional information (including
amendments) and with any applicable procedures adopted by the Trust’s Board of Trustees, provided
that such procedures are identified in writing to the Sub-adviser;
D. The Sub-adviser shall promptly notify the Manager and the Fund(s) upon the occurrence of
any event that might disqualify or prevent the Sub-adviser from performing its duties under this
Agreement. The Sub-adviser shall promptly notify the Manager and the Funds if there are any changes
to its organizational structure or the Sub-adviser has become the subject of any adverse regulatory
action imposed by any regulatory body or self-regulatory organization. The Sub-adviser further
agrees to notify the Manager of any changes relating to it or the provision of services by it that
would cause the Registration Statement, prospectuses or statements of additional information
(including amendments) for the Funds to contain any untrue statement of a material fact or to omit
to state a material fact that is required to be stated therein or is necessary to make the
statements contained therein not misleading, in each case relating to Sub-adviser and Fund
Information; and
E. The Sub-adviser will render advice to the Manager regarding the investment of each Fund’s
assets that is consistent with maintaining the Fund’s status as a regulated investment company
under Subchapter M of the Internal Revenue Code.
F. The Sub-adviser shall provide to the Trust’s Board of Trustees a copy of the Sub-adviser’s
Code of Ethics adopted pursuant to Rule 17j-1 under the 1940 Act and any amendments thereto, and
all certifications required under that rule.
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XI. Use of Names.
A. The Sub-adviser acknowledges and agrees that the names “The Xxxxx Fund” and “Xxxxx Capital
Management, Inc.,” and abbreviations or logos associated with those names, are the valuable
property of the Manager and its affiliates; that the Fund(s), the Manager and their affiliates have
the right to use such names, abbreviations and logos; and that the Sub-adviser shall use the names
“The Xxxxx Fund” and “Xxxxx Capital Management, Inc.,” and associated abbreviations and logos, only
in connection with the Sub-adviser’s performance of its duties hereunder. Further, in any
communication with the public and in any marketing communications of any sort, Sub-adviser agrees
to obtain prior written approval from Manager before using or referring to “The Xxxxx Fund” and
“Xxxxx Capital Management, Inc.,” or the Fund(s) or any abbreviations or logos associated with
those names.
B. The Manager acknowledges that “Delray” and “Delray Financial” and abbreviations or logos
associated with those names are valuable property of Delray Financial Corporation and are
distinctive in connection with investment advisory and related services provided by the
Sub-adviser, the “Delray” name is a property right of the Sub-adviser, and the “Delray” and “Delray
Financial” names are understood to be used by each Fund upon the conditions hereinafter set forth;
provided that each Fund may use such names only so long as the Sub-adviser shall be retained as the
investment sub-adviser of the Fund pursuant to the terms of this Agreement.
C. The Sub-adviser acknowledges that each Fund and its agents may use the “Delray” and “Delray
Financial” names in connection with accurately describing the activities of the Fund, including use
with marketing and other promotional and informational material relating to the Fund with the prior
written approval always of the Sub-adviser. In the event that the Sub-adviser shall cease to be
the investment sub-adviser of a Fund, then the Fund at its own or the Manager’s expense, upon the
Sub-adviser’s written request: (i) shall cease to use the Sub-adviser’s name for any commercial
purpose; and (ii) shall use its best efforts to cause the Fund’s officers and trustees to take any
and all actions that may be necessary or desirable to effect the foregoing and to reconvey to the
Sub-adviser all rights which a Fund may have to such name. The Manager agrees to take any and all
reasonable actions as may be necessary or desirable to effect the foregoing and the Sub-adviser
agrees to allow the Funds and their agents a reasonable time to effectuate the foregoing.
D. The Sub-adviser hereby agrees and consents to the use of the Sub-adviser’s name upon the
foregoing terms and conditions.
XII. Reports by the Sub-adviser and Records of the Funds.
The Sub-adviser shall furnish the Manager information and reports necessary to the operation
of the Fund(s), including information required to be disclosed in the Trust’s Registration
Statement, in such form as may be mutually agreed. The Sub-adviser shall immediately notify and
forward to both the Manager and legal counsel for the Trust any legal process served upon it on
behalf of the Manager or the Trust.
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Sub-adviser agrees
that all records it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust or the Manager any such records upon the Trust’s or the Manager’s
request. The Sub-adviser further agrees to maintain for the Trust the records the Trust is required
to maintain under Rule 31a-1(b) insofar as such records relate to the investment affairs of each
Fund. The Sub-adviser
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further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records it maintains for the Trust.
XIII. Indemnification.
The Sub-adviser agrees to indemnify and hold harmless the Manager, any affiliated person
within the meaning of Section 2(a)(3) of the 1940 Act (“affiliated person”) of the Manager and each
person, if any, who, within the meaning of Section 15 of the Securities Act of 1933, as amended
(the “1933 Act”), controls (“controlling person”) the Manager, against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other expenses) to which the
Manager, the Trust or such affiliated person or controlling person may become subject under the
1933 Act, the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise,
arising out of Sub-adviser’s responsibilities as sub-adviser of the Funds (1) to the extent of and
as a result of the willful misconduct, bad faith, or gross negligence of the Sub-adviser, any of
the Sub-adviser’s employees or representatives or any affiliate of or any person acting on behalf
of the Sub-adviser, or (2) as a result of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, prospectuses or statements of additional
information covering the Fund(s) or the Trust or any amendment thereof or any supplement thereto or
the omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, if such a statement or omission was made in
reliance upon written information furnished by the Sub-adviser to the Manager, the Trust or any
affiliated person of the Manager or the Trust expressly for use in the Trust’s Registration
Statement, or upon verbal information confirmed by the Sub-adviser in writing expressly for use in
the Trust’s Registration Statement; provided, however, that in no case is the Sub-adviser’s
indemnity in favor of the Manager or any affiliated person or controlling person of the Manager
deemed to protect such person against any liability to which any such person would otherwise be
subject by reason of willful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties under this Agreement.
The Manager agrees to indemnify and hold harmless the Sub-adviser, any affiliated person of
the Sub-adviser and each controlling person of the Sub-adviser, against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and other expenses) to which the
Sub-adviser or such affiliated person or controlling person may become subject under the 1933 Act,
the 1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of
the Manager’s responsibilities as investment manager of the Fund(s) (1) to the extent of and as a
result of the willful misconduct, bad faith, or gross negligence of the Manager, any of the
Manager’s employees or representatives or any affiliate of or any person acting on behalf of the
Manager, or (2) as a result of any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, prospectuses or statements of additional information
covering the Fund(s) or the Trust or any amendment thereof or any supplement thereto or the
omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, if such a statement or omission was made by
the Trust other than in reliance upon written information furnished by the Sub-adviser, or any
affiliated person of the Sub-adviser, expressly for use in the Trust’s Registration Statement or
other than upon verbal information confirmed by the Sub-adviser in writing expressly for use in the
Trust’s Registration Statement; provided, however, that in no case is the Manager’s indemnity in
favor of the Sub-adviser or any affiliated person or controlling person of the Sub-adviser deemed
to protect such person against any liability to which any such person would otherwise be subject by
reason of willful misconduct, bad faith or gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties under this Agreement.
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XIV. Notices.
All notices or other communications required or permitted to be given hereunder shall be in
writing and shall be delivered or sent by pre-paid first class letter post to the following
addresses or to such other address as the relevant addressee shall hereafter specify for such
purpose to the others by notice in writing and shall be deemed to have been given at the time of
delivery.
| If to the Manager: | XXXXX CAPITAL MANAGEMENT, INC. | |||
| 0000 Xxxxxxx Xxxxx | ||||
| Xxxxx 000 | ||||
| Xxxx Xxxxx Xxxxxxx, XX 00000 | ||||
| Attention: Xxxx Xxxxxxxx | ||||
| If to the Trust: | THE XXXXX FUND | |||
| 0000 Xxxxxxx Xxxxx | ||||
| Xxxxx 000 | ||||
| Xxxx Xxxxx Xxxxxxx, XX 00000 | ||||
| Attention: Xxxx Xxxxxxxx | ||||
| If to the Sub-adviser: | DELRAY FINANCIAL CORPORATION | |||
| 0000 XXX Xxxx | ||||
| Xxxxx 000 | ||||
| Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000 | ||||
| Attention: Xxxx X. Xxxxxxxxx |
XV. Limitation of Liability of the Trust, its Trustees, and Shareholders.
It is understood and expressly stipulated that none of the trustees, officers, agents, or
shareholders of any series of the Trust shall be personally liable hereunder. It is understood and
acknowledged that all persons dealing with any series of the Trust must look solely to the property
of such series for the enforcement of any claims against that series as neither the trustees,
officers, agents or shareholders assume any personal liability for obligations entered into on
behalf of any series of the Trust. No series of the Trust shall be liable for the obligations or
liabilities of any other series of the Trust.
XVI. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts. Anything herein to the contrary notwithstanding, this Agreement
shall not be construed to require, or to impose any duty upon either of the parties, to do anything
in violation of any applicable laws or regulations.
XVII. Severability.
Should any part of this Agreement be held 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 inure to the benefit of the parties hereto and their respective successors.
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XVIII. Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, and all such counterparts shall constitute a single instrument.
IN WITNESS WHEREOF, XXXXX CAPITAL MANAGEMENT, INC. AND DELRAY FINANCIAL CORPORATION have each
caused this instrument to be signed in duplicate on its behalf by the officer designated below
thereunto duly authorized.
| XXXXX CAPITAL MANAGEMENT, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Title: President | ||||
| DELRAY FINANCIAL CORPORATION |
||||
| By: | /s/ Xxxx X. Xxxxxxxxx | |||
| Title: President | ||||
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SCHEDULE A
TO SUBADVISORY AGREEMENT BETWEEN
XXXXX CAPITAL MANAGEMENT, INC. AND DELRAY FINANCIAL CORPORATION
DATED AS OF NOVEMBER 10, 2005
TO SUBADVISORY AGREEMENT BETWEEN
XXXXX CAPITAL MANAGEMENT, INC. AND DELRAY FINANCIAL CORPORATION
DATED AS OF NOVEMBER 10, 2005
Fund(s):
Xxxxx Treasury Only Money Market Fund
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SCHEDULE B
TO SUBADVISORY AGREEMENT BETWEEN
XXXXX CAPITAL MANAGEMENT, INC. AND DELRAY FINANCIAL CORPORATION
DATED AS OF NOVEMBER 10, 2005
TO SUBADVISORY AGREEMENT BETWEEN
XXXXX CAPITAL MANAGEMENT, INC. AND DELRAY FINANCIAL CORPORATION
DATED AS OF NOVEMBER 10, 2005
Fee schedule:
Xxxxx Treasury Only Money Market Fund: The Adviser shall pay the Sub-adviser as compensation for
the Sub-adviser’s services to be rendered hereunder a quarterly fee in arrears at the rate of 10%
of all fees payable during the same quarter by the Fund to the Adviser for investment advisory
services provided pursuant to the Advisory Agreement, net of any fee waivers or expense
reimbursements made by the Adviser with respect to the Fund relating to such quarter.
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