SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of October, 1993 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 XXXXXXXXXXX
MANAGEMENT CORPORATION, a Colorado 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;
WHEREAS, the Company has retained the Adviser to render investment
management and administrative services to the Funds;
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
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, as may be
amended in writing from time to time by the parties hereto. 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,
as may be amended in writing from time to time by the parties hereto.
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.
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 such other information 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.
2
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 state of Colorado.
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.
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
3
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, including investment
management, with respect to all investments, cash and cash equivalents in the
portfolio. The Subadviser 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 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.
4
B. Nothing in this Agreement shall in any way limit or restrict
the Subadviser or any of its directors, officers, stockholders or employees from
buying, selling or trading any securities for its or their own account or the
account of others for whom it or they may be acting, provided that such
activities will not adversely affect or otherwise impair the performance by the
Subadviser of its duties and obligations under this Agreement.
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. In placing orders, the Subadviser may place
portfolio transactions with brokers on a commission basis or with primary market
makers on a net basis. It is understood that transactions with market makers
reflect the spread between the bid and asked prices. The Subadviser may make
purchases of underwritten issues which include an underwriting fee paid to the
underwriter.
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
qualified to obtain best execution
5
of such transactions 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. 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 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"
6
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.
D. 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 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.
7
E. 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, 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); 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 Schedule attached to this Agreement as
Appendix B. The "aggregate daily net assets" is defined as the aggregate of the
values placed
8
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
9
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 obligations and
duties under this Agreement, or
10
(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
(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
11
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 date (which shall occur on or before December 31, 1993) the
SEC declares effective the 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 (except that in the case of the Atlas Growth and Income Fund, such
shareholders meeting may be held prior to the date the SEC declares effective
the applicable Registration Statement), 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
12
(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 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). 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 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
"Xxxxxxxxxxx Management Corporation" 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
13
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 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
thereunder.
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.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxx,
Vice President
and Chief Legal Counsel
14
If to the Subadviser: Xxxxxxxxxxx Management Corporation
Two World Trade Center, 34th Floor
New York, New York 10048
Attention: Xxxxxx X. Xxxxxxx,
Executive Vice President
and 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.
By:
-------------------------------------
Xxxxx X. XxXxxxx
Its Group Senior Vice President and
Chief Operating Officer
ATLAS ASSETS, INC.
By:
-------------------------------------
Xxxxx X. XxXxxxx
Its Group Senior Vice President and
Chief Operating Officer
XXXXXXXXXXX MANAGEMENT CORPORATION
By:
-------------------------------------
Xxxxxx X. Xxxxxxx
Its Executive Vice President and
General Counsel
15
APPENDIX A
SUBADVISORY AGREEMENT
XXXXXXXXXXX MANAGEMENT CORPORATION
DATED: OCTOBER 1, 1993
AS AMENDED , 1996
------------
The provisions of the Subadvisory Agreement among ATLAS ADVISERS,
INC., ATLAS ASSETS, INC. (the "Company") and OPPENHEIMERFUNDS, INC. (formerly
Xxxxxxxxxxx Management Corporation) apply to the following series of the
Company:
1. Atlas Growth and Income Fund
2. Atlas Balanced Fund
3. Atlas Strategic Growth Fund
IN WITNESS WHEREOF, the parties hereto have caused this Appendix A to
the Subadvisory Agreement to be amended as of _________, 1996 to add the
following series of the Company:
4. Atlas Global Growth Fund
5. Atlas Strategic Income Fund
ATLAS ADVISERS, INC. OPPENHEIMERFUNDS, INC.
By: By:
--------------------------- --------------------------
Xxxxx X. XxXxxxx Xxxxxx X. Xxxxxxx
Its Group Senior Vice President Its Executive Vice President
and Chief Operating Officer and General Counsel
ATLAS ASSETS, INC.
By:
--------------------------
Xxxxx X. XxXxxxx
Its Group Senior Vice President
and Chief Operating Officer
A-1
APPENDIX B
SUBADVISORY AGREEMENT
XXXXXXXXXXX MANAGEMENT CORPORATION
FEE SCHEDULE
DATED: OCTOBER 1, 1993
AS AMENDED , 1996
------------
For all Funds identified in Appendix A
ANNUAL FEE - GROWTH AND INCOME,
BALANCED, AND STRATEGIC GROWTH FUNDS
The subadvisory fee payable monthly to OppenheimerFunds, Inc.
("Xxxxxxxxxxx," formerly Xxxxxxxxxxx Management Corporation) for services
rendered to the Atlas Growth and Income Fund, the Atlas Balanced Fund and the
Atlas Strategic Growth Fund is computed on the aggregate net assets of those
Funds, as of the close of business each day, at the annual rate of 0.30% of the
first $50 million of net assets and 0.25% of net assets in excess of $50
million.
If the average annual net assets of any of those three Funds is less
than $8,333,333 (as calculated in 12 month intervals), then an additional
subadvisory fee shall be paid equal to 0.30% multiplied by the amount by which
$8,333,333 exceeds the Fund's average annual net assets for such 12 month
period. However, no such additional subadvisory fee will be paid on assets of
the Atlas Growth and Income Fund, the Atlas Balanced Fund or the Atlas Strategic
Growth Fund through the end of 15 calendar months from its commencement of
operations.
ANNUAL FEE - GLOBAL GROWTH FUND
The subadvisory fee payable monthly to Xxxxxxxxxxx for services
rendered to the Atlas [Global] Fund is computed on the net assets of the Fund as
of the close of business each day, at the annual rate of 0.35% of the first $50
million of net assets, 0.30% of net assets above $50 million up to $100 million
and 0.25% of net assets in excess of $100 million.
The subadvisory fee will be no less than $25,000 annually, commencing
with the twelve month billing period that begins on January 1, 1997. The
monthly billing amount will be calculated by applying the appropriate percentage
to the average daily net assets for the month, without regard to any minimum.
At the end of each twelve month billing period beginning with the period ending
December 31, 1997, and corresponding with the end of each calendar year
thereafter, if the prior twelve monthly payments do not equal or exceed $25,000,
Xxxxxxxxxxx will be paid the amount necessary to satisfy the minimum annual fee.
B-1
ANNUAL FEE - STRATEGIC INCOME FUND
The subadvisory fee payable to Xxxxxxxxxxx Funds, Inc. for services
rendered to the Atlas [Strategic Income] Fund is computed on the net assets of
the Fund as of the close of business each day, at the annual rate of 0.30% of
the first $100 million of net assets and 0.25% of net assets in excess of $100
million.
The subadvisory fee will be no less than $25,000 annually. The
monthly billing amount will be calculated by applying the appropriate percentage
to the average daily net assets for the month, without regard to any minimum.
At the end of each twelve month billing period (commencing with the end of the
first full twelve month period following the commencement of operations of the
Fund, and annually thereafter), if the prior twelve monthly payments do not
equal or exceed $25,000, Xxxxxxxxxxx will be paid the amount necessary to
satisfy the minimum annual fee.
IN WITNESS WHEREOF, the parties hereto have caused this Appendix B to
the Subadvisory Agreement to be amended as of , 1996.
---------------
ATLAS ADVISERS, INC. XXXXXXXXXXX MANAGEMENT CORPORATION
By: By:
--------------------------- --------------------------
Xxxxx X. XxXxxxx Xxxxxx X. Xxxxxxx
Its Group Senior Vice President Its Executive Vice President
and Chief Operating Officer and General Counsel
ATLAS ASSETS, INC.
By:
--------------------------
Xxxxx X. XxXxxxx
Its Group Senior Vice President
and Chief Operating Officer
B-2
