SUB ADVISORY AGREEMENT
AGREEMENT made this 1st day of March, 2003 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 XXXXXX INVESTMENT
PARTNERS, INC., a Pennsylvania Corporation (the "Subadviser").
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 Subadviser to
furnish portfolio management services to the Funds in connection with the
Adviser's investment management activities on behalf of the Funds, and the
Subadviser 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 Subadviser and the Company as
follows:
1. APPOINTMENT. The Adviser and the Company hereby appoint the Subadviser
to act as portfolio manager to each Fund listed in Appendix A (collectively, the
"Funds") on the terms set forth in this Agreement. The Subadviser 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 Subadviser have been duly appointed by the Board of
Directors of the Company including a majority of its Independent Directors.
C. The Company will deliver to the Subadviser 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
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such other information or documents as is necessary for the Subadviser 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 SUBADVISER. The Subadviser represents, warrants,
and agrees that:
A. The Subadviser is a Corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania.
B. The Subadviser 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
Subadviser by the Advisers Act and applicable state laws and has provided
its current Form ADV to the Adviser the receipt of which is hereby
acknowledged.
C. The Subadviser 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 Subadviser.
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.
5. PORTFOLIO MANAGEMENT DUTIES.
A. Subject to the supervision of the Adviser and the Company's Board
of Directors, the Subadviser will provide a continuous investment program
for the portfolio of each Fund listed in Appendix A. The Subadviser will
determine from time to time
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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 Subadviser 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 Subadviser, 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 Subadviser 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 Subadviser'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 Subadviser 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. The Company and the Adviser acknowledge and
agree that the Subadviser may place orders through its affiliates and that
such affiliates may receive compensation therefore.
D. The primary objective of the Subadviser 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 Subadviser 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 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 Subadviser 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
Subadviser 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 Subadviser's overall responsibilities with respect to
the Fund and/or its other clients. In reaching such determination, the
Subadviser will not be required to place or attempt to place a specific
dollar value on the brokerage and/or research services provided or being
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provided by such broker/dealer. The Subadviser 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, prior notice of which shall be provided to the
Subadviser by the Company or the Adviser, 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 Subadviser shall not have possession or custody
thereof or any responsibility or liability with respect thereto. The
Subadviser 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 Subadviser and the Company. The Subadviser 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 Subadviser, shall
issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the
Subadviser. 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 Subadviser shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the
Custodian.
F. The Custodian shall, on a daily basis pursuant to procedures and in
a format agreed upon by the Subadviser and the Company, provide portfolio
reports to the Subadviser 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 Subadviser 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, or their
Agents 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 Subadviser, in which case such expenses
shall be borne as the Parties may agree); 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
Subadviser a fee, payable monthly based on the aggregate daily net assets of the
Funds, as provided in the Fee
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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
Subadviser'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 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 Subadviser 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 Subadviser 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 Subadviser 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
Subadviser 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
Subadviser 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 Subadviser's (a) gross negligence, willful
misconduct or bad faith in the performance of its duties, or reckless
disregard of its
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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 Subadviser
for inclusion in such regulatory filings.
B. Absent the Subadviser'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 Subadviser and its officers and
employees against any and all costs and liabilities (including legal and
other expenses) which the Subadviser 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
Subadviser for inclusion in such regulatory filings.
10. SERVICES NOT EXCLUSIVE. It is understood that the services of the
Subadviser are not exclusive, and nothing in this Agreement shall prevent the
Subadviser from providing similar services to other investment companies or
investment accounts (whether or not their investment objectives and policies are
similar to those of a Fund) or from engaging in other activities. When the
Subadviser recommends the purchase or sale of a security for other investment
companies and other clients, and at the same time the Subadviser 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 Subadviser 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 Subadviser and the Company (which notice may be waived by the Subadviser
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' written
notice to the Adviser and the Subadviser, or (c) the Subadviser, upon sixty (60)
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
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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 Subadviser 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 material 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 Xxxxxx Investment Partners,
Inc. or any derivative thereof or logo associated with that name is the valuable
property of the Subadviser 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 Subadviser is portfolio manager to such Fund and
provided the Subadviser shall have reviewed and approved in writing such use,
which approval may not be unreasonably withheld. Upon termination of this
Agreement, the Company and the Adviser 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.
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
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If to the Subadviser:
Xxxxxx Investment Partners, Inc.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx 00000-0000
ATTENTION: Xxxx X. Xxxxx, Chief Operating Officer
E. Each party agrees that it will treat confidentially all
information provided by another party regarding the other party's
business and operations, including without limitation the investment
activities or holdings of a Fund. All confidential information provided
by a party hereto shall not be disclosed to any unaffiliated third party
without the prior consent of the providing party. The foregoing shall
not apply to any information that is public when provided or thereafter
becomes public or which is required to be disclosed by any regulatory
authority in the lawful and appropriate exercise of its jurisdiction, by
any auditor of a party, pursuant to judicial or administrative process
or otherwise in accordance with applicable law or regulation.
F. This Agreement may be executed in counterparts, each of which
shall be deemed an original.
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 XXXXXX INVESTMENT PARTNERS, INC.
/s/ X. Xxxxxxxx Key /s/ Xxxxxxx X. Xxxxxxx
---------------------------------- ----------------------------------
By: X. Xxxxxxxx Key By: Xxxxxxx X. Xxxxxxx
Its Group Senior Vice President Its President
ATLAS ASSETS, INC.
/s/ X. Xxxxxxxx Key
----------------------------------
By: X. Xxxxxxxx Key
Its Group Senior Vice President
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APPENDIX A
SUB ADVISORY AGREEMENT; XXXXXX INVESTMENT PARTNERS, INC.
DATED: MARCH 1, 2003
The provisions of the attached Sub advisory Agreement apply to the
following separate series of shares of the Company:
1. Atlas Emerging Growth Fund
APPENDIX B - FEE SCHEDULE
DATED: MARCH 1, 2003
The attached AGREEMENT requires that the Subadviser be paid a fee by the
Company or the Adviser, computed daily and paid each month at the annual rate
of:
.45% of the first $100,000,000 of average daily net assets
.40% of average daily net assets in excess of $100,000,000
