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SUB-ADVISORY AGREEMENT
Agreement made as of July 18, 1997, between XXXXXXXX & CO.
("Xxxxxxxx"), an Ohio corporation, and LOMBARD ODIER INTERNATIONAL PORTFOLIO
MANAGEMENT LIMITED ("Sub-Adviser"), a corporation organized under the laws of
England and Wales (the "Agreement").
RECITALS
(1) Xxxxxxxx has entered into an Investment Management and
Administration Agreement dated July 18, 1997 ("Management Agreement"), with
Xxxxxxxx Capital Trust ("Trust"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act"),
with respect to the Xxxxxxxx Europe Fund series of the Trust ("Fund"); and
(2) Xxxxxxxx wishes to retain the Sub-Adviser to furnish certain
investment advisory services to Xxxxxxxx and the Fund, and the Sub-Adviser is
willing to furnish those services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. Xxxxxxxx hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the Fund's assets for the period and on
the terms set forth in this Agreement. The Sub-Adviser accepts that appointment
and agrees to render the services herein set forth, for the compensation herein
provided.
2. Duties as Sub-Adviser.
(a) Subject to the supervision of and any guidelines adopted by
the Trust's Board of Trustees (the "Board") and by Xxxxxxxx, the Sub-Adviser
will provide a continuous investment program for the Fund's assets, including
investment research and management. The Sub-Adviser will determine from time to
time what investments will be purchased, retained or sold by the Fund. The
Sub-Adviser will be responsible for placing purchase and sell orders for the
securities investments and for other related transactions. The Sub-Adviser
will provide services under this Agreement in accordance with the Fund's
investment objective, policies and restrictions as stated in the
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Fund's currently effective registration statement under the Securities Act of
1933, as amended, and the 1940 Act ("Registration Statement"), and any
amendments or supplements thereto.
(b) The Sub-Adviser agrees that, in placing orders with brokers or
dealers, it will attempt to obtain the best net result in terms of price and
execution; provided that, on behalf of the Fund, the Sub-Adviser may, in its
discretion, purchase or sell portfolio securities through brokers who provide
the Fund with research, analysis, advice and similar services, and the
Sub-Adviser may pay to those brokers, in return for brokerage and research
services a higher commission than may be charged by other brokers, subject to
the Sub-Adviser's determining in good faith that such commission is reasonable
in terms either of the particular transaction or of the overall responsibility
of the Sub-Adviser to the Fund and its other clients and that the total
commissions paid by the Fund will be reasonable in relation to the benefits to
the Fund over the long term. In no instance will portfolio securities be
purchased from or sold to the Sub-Adviser or Xxxxxxxx, or any affiliated person
of either of them, except in accordance with the federal securities laws and
the rules and regulations thereunder. The Sub-Adviser, or any affiliated
person thereof or of Xxxxxxxx, may act as broker in connection with
transactions in portfolio securities on behalf of the Fund, provided that such
actions are in compliance with the federal securities laws and the rules and
regulations thereunder, including Section 17(e) of the 1940 Act and Rule 17e-1
thereunder. Whenever the Sub-Adviser simultaneously places orders to purchase
or sell the same security on behalf of the Fund and one or more other accounts
advised by the Sub-Adviser, the orders will be allocated as to price and amount
among all such accounts in a manner believed to be equitable by the Sub-Adviser
over time to each account. Xxxxxxxx recognizes that in some cases this
procedure may adversely affect the results obtained for the Fund.
(c) The Sub-Adviser will maintain all books and records related to
its activities hereunder required to be maintained by the Sub-Adviser pursuant
to the 1940 Act and the rules and regulations promulgated thereunder with
respect to transactions on behalf of the Fund, and will furnish the Trust and
Xxxxxxxx with such periodic and special reports as the Board or Xxxxxxxx
reasonably may request. In compliance with the requirements of Rule 31a-3 under
the 1940 Act,
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the Sub-Adviser hereby agrees that all records which it maintains for the Fund
are the property of the Trust, agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records which it maintains for the Trust and
which are required to be maintained by Rule 31a-1 under the 1940 Act, and
further agrees to surrender promptly to the Trust any records which it
maintains for the Trust (or copies thereof) upon request by the Trust.
(d) At such times as shall be reasonably requested by the Board or
Xxxxxxxx, the Sub-Adviser will provide the Board and Xxxxxxxx with economic and
investment analyses and reports as well as quarterly reports setting forth the
Fund's performance and make available to the Board and Xxxxxxxx any economic,
statistical and investment services normally available to institutional or
other customers of the Sub-Adviser.
(e) In accordance with procedures adopted by the Board, as amended
from time to time, the Sub-Adviser is responsible for assisting in the fair
valuation of any illiquid Fund securities and will assist in providing
independent sources of market value for all other portfolio securities.
3. Further Duties. In all matters relating to the performance of
this Agreement, the Sub-Adviser will act in conformity with the Trust's
Declaration of Trust, By-Laws and currently effective Registration Statement
and any amendments or supplements thereto and with the written instructions and
directions of the Board and Xxxxxxxx and will comply with the requirements of
the 1940 Act, the Investment Advisers Act of 1940, as amended ("Advisers Act"),
the rules under each, and Subchapter M of the Internal Revenue Code as
applicable to regulated investment companies. In addition, the Sub-Adviser
will act in conformity with all other applicable federal and state laws and
regulations either as reflected in the Registration Statement or otherwise
provided in writing to the Sub-Adviser by Xxxxxxxx. Xxxxxxxx agrees to provide
to the Sub-Adviser copies of the Trust's Declaration of Trust, By-Laws,
Registration Statement, written instructions and directions of the Board and
Xxxxxxxx, and any amendments or supplements to any of these materials as soon
as practicable after such materials become available.
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4. Notice of Appointment. During the term of this Agreement,
the Sub-Adviser agrees to provide Xxxxxxxx and the Board with prior notice in
the event that the Sub-Adviser agrees to provide investment advice on a
discretionary basis for any other registered investment company investing
primarily in European equity securities.
5. Expenses. During the term of this Agreement, the Sub-Adviser
will bear all expenses incurred by it in connection with its investment
sub-advisory services under this Agreement.
6. Compensation.
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, Xxxxxxxx, not the Fund, will pay to the
Sub-Adviser a fee, computed daily and payable monthly, as computed in the
manner set forth in Schedule A, together with a schedule showing the manner in
which the fee was computed.
(b) The fee shall be computed daily and payable monthly to the
Sub-Adviser on or before the fifteenth business day of the next succeeding
calendar month.
(c) If this Agreement becomes effective or terminates before the
end of any month, the fee for the period from the effective date to the end of
the month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such
period bears to the full month in which such effectiveness or termination
occurs.
7. Limitation Of Liability. The Sub-Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund, the Trust or its shareholders or by Xxxxxxxx in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations and duties under
this Agreement.
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8. Indemnification.
(a) The Sub-Adviser agrees to indemnify and hold Xxxxxxxx harmless
against any losses, expenses, claims, damages or liabilities (or actions or
proceedings in respect thereof, including attorneys' fees and costs of
settlement), to which Xxxxxxxx may become subject arising out of or based on
the breach by the Sub-Adviser of any provision of this Agreement other than a
breach caused in any way by Xxxxxxxx; provided, however, that the Sub-Adviser
shall not be liable under this paragraph in respect of any loss, expense,
claim, damage or liability to the extent that a court having jurisdiction shall
have determined by a final judgment, or independent counsel agreed upon by
Xxxxxxxx and the Sub-Adviser shall have concluded in a written opinion, that
such loss, expense, claim, damage or liability resulted primarily from
Xxxxxxxx'x willful misfeasance, bad faith or gross negligence or by reason of
the reckless disregard by Xxxxxxxx of its duties. The foregoing
indemnification shall be in addition to any rights that Xxxxxxxx may have at
common law or otherwise. The Sub-Adviser's agreements in this paragraph shall,
upon the same terms and conditions, extend to and inure to the benefit of each
person who may be deemed to control Xxxxxxxx, be controlled by Xxxxxxxx or be
under common control with Xxxxxxxx and its affiliates, directors, officers,
employees and agents. The Sub-Adviser's agreements in this paragraph shall
also extend to any of Xxxxxxxx'x successors or the successors of the
aforementioned affiliates, directors, officers, employees or agents.
(b) Xxxxxxxx agrees to indemnify and hold harmless the Sub-Adviser
against any losses, expenses, claims, damages or liabilities (or actions or
proceedings in respect thereof, including attorneys' fees and costs of
settlement), to which the Sub-Adviser may become subject arising out of or
based on the breach by Xxxxxxxx of any provision of this Agreement or the
Management Agreement other than a breach that was caused in any way by the
Sub-Adviser; provided, however, that Xxxxxxxx shall not be liable under this
paragraph in respect of any loss, expense, claim, damage or liability to the
extent that a court having jurisdiction shall have determined by a final
judgment or independent counsel agreed upon by Xxxxxxxx and the Sub-Adviser
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shall have concluded in a written opinion, that such loss, expense, claim,
damage or liability resulted primarily from the Sub-Adviser's willful
misfeasance, bad faith or gross negligence or by reason of the reckless
disregard by the Sub-Adviser of its duties. The foregoing indemnification
shall be in addition to any rights that the Sub-Adviser may have at common law
or otherwise. Xxxxxxxx'x agreements in this paragraph shall, upon the same
terms and conditions, extend to and inure to the benefit of each person who may
be deemed to control the Sub-Adviser, be controlled by the Sub-Adviser or be
under common control with the Sub-Adviser and to each of the Sub-Adviser's and
each such person's respective affiliate, directors, officers, employees and
agents. Xxxxxxxx'x agreements in this paragraph shall also extend to any of
the Sub-Adviser's successors or the successors of the aforementioned
affiliates, directors, officers, employees or agents.
(c) Promptly after receipt by a party indemnified under Paragraph 8(a)
or 8(b) above of notice of the commencement of any action, proceeding or
investigation for which indemnification will be sought, such indemnified party
shall promptly notify the indemnifying party in writing; but the omission to so
notify the indemnifying party shall not relieve it from any liability which it
may otherwise have to any indemnified party unless such omission results in
actual material prejudice to the indemnifying party. In case any action or
proceeding shall be brought against any indemnified party, and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, individually or jointly with any other
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying
party to the indemnified party of its election to assume the defense of any
action or proceeding, the indemnifying party shall not be liable to the
indemnified party for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. If the indemnifying party does not elect to assume the
defense of any action or proceeding, the indemnifying party on a monthly basis
shall reimburse the indemnified party for the legal fees and expenses incurred
by the indemnified party for continuing its defense thereof. Regardless of
whether or not the indemnifying
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party shall have assumed the defense of any action or proceeding, the
indemnified party shall not settle or compromise the action or proceeding
without the prior written consent of the indemnifying party.
9. Representations of Sub-Adviser. The Sub-Adviser represents,
warrants and agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for so long as
this Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met, and will seek to continue to meet for so long as this Agreement
remains in effect, any other applicable federal or state requirements, or the
applicable requirements of any regulatory or industry self-regulatory agency,
necessary to be met in order to perform the services contemplated by this
Agreement; (iv) has the authority to enter into and perform the services
contemplated by this Agreement; and (v) will promptly notify Xxxxxxxx of the
occurrence of any event that would disqualify the Sub-Adviser from serving as
an investment adviser of an investment company pursuant to Section 9(a) of the
1940 Act or otherwise.
(b) The Sub-Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and will provide
Xxxxxxxx and the Board with a copy of that code of ethics, together with
evidence of its adoption. Within fifteen days of the end of the last calendar
quarter of each year that this Agreement is in effect, a managing director of
the Sub-Adviser shall certify to Xxxxxxxx that the Sub-Adviser has complied
with the requirements of Rule 17j-1 during the previous year and that there has
been no violation of the Sub-Adviser's code of ethics or, if such a violation
has occurred, that appropriate action was taken in response to such violation.
Upon the written request of Xxxxxxxx, the Sub-Adviser shall permit Xxxxxxxx,
its employees or its agents to examine the reports required to be made to the
Sub-Adviser by Rule 17j-1(c)(1) and all other records relevant to the
Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided Xxxxxxxx and the Trust with a
copy of its Form ADV as most recently filed with the Securities and
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Exchange Commission ("SEC") and promptly will furnish a copy of all amendments
to Xxxxxxxx and the Trust at least annually.
(d) The Sub-Adviser will notify Xxxxxxxx of any change of control
of the Sub-Adviser, including any change of its general partners or 25%
shareholders, as applicable, and any changes in the key personnel of the
Sub-Adviser, in each case prior to or at the time of such change.
10. Representations and Warranties of Xxxxxxxx. Xxxxxxxx
represents, warrants and agrees as follows:
(a) Xxxxxxxx (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act from
performing the services contemplated by the Management Agreement; (iii) has
met, and will seek to continue to meet for so long as this Agreement remains in
effect, any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by the Management
Agreement; (iv) has the authority to enter into and perform the services
contemplated by the Management Agreement; and (v) will promptly notify the
Sub-Adviser of the occurrence of any event that would disqualify Xxxxxxxx from
serving as an investment adviser of an investment company pursuant to Section
9(a) of the 1940 Act or otherwise.
(b) Xxxxxxxx agrees that it will notify the Sub-Adviser, to the extent
possible, within a reasonable period of time prior to any termination of this
Agreement by Xxxxxxxx pursuant to Section 11(c) (including any termination by
assignment resulting from a foreseeable change in control of Xxxxxxxx that is a
matter of public information), and that it will notify the Sub-Adviser promptly
following any other termination of this Agreement pursuant to Section 11(c).
11. Duration and Termination.
(a) This Agreement shall become effective upon the date first
above written, provided that this Agreement shall not take effect
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unless it has first been approved (i) by a vote of a majority of those trustees
of the Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by a vote of the holders of a majority of the
outstanding voting securities of the Fund.
(b) Unless sooner terminated as provided herein, this Agreement
shall continue in effect for two years from the above written date.
Thereafter, if not terminated, this Agreement will continue automatically for
successive periods of twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of those
trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose
of voting on such approval, and (ii) by the Board or by a vote of the holders
of a majority of the outstanding voting securities of the Fund.
(c) Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by vote of the
Board or by a vote of the holders of a majority of the outstanding voting
securities of the Fund on 60 days' written notice to the Sub-Adviser. This
Agreement may also be terminated, without the payment of any penalty, by
Xxxxxxxx: (i) upon 120 days' written notice to the Sub-Adviser; (ii) upon
material breach by the Sub-Adviser of any of the representations and warranties
set forth in Paragraph 9 of this Agreement; or (iii) if the Sub-Adviser becomes
unable to discharge its duties and obligations under this Agreement, including
circumstances such as financial insolvency of the Sub-Adviser or other
circumstances that could adversely affect the Fund. The Sub-Adviser may
terminate this Agreement at any time, without the payment of any penalty, on
120 days' written notice to Xxxxxxxx. This Agreement will terminate
automatically in the event of its assignment or upon termination of the
Management Agreement.
12. Amendment of this Agreement. 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 until
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approved by the Board, including a majority of its independent trustees, cast
in person at a meeting called for the purpose of voting on such approval, and,
if required by the 1940 Act, by the vote of the holders of a majority of the
Fund's outstanding voting securities.
13. Governing Law. This Agreement shall be construed in
accordance with the 1940 Act and the laws of the Commonwealth of Massachusetts.
To the extent that the applicable laws of the Commonwealth of Massachusetts
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
14. Limitation of Liability of the Trustees and Shareholders of
the Fund. The Trustees of the Trust and the shareholders of the Fund shall not
be liable for any obligations of the Fund related to this Contract, and the
Sub-Adviser agrees that, in asserting any rights or claims under this Agreement
against the Fund, it shall look only to the assets and property of the Fund in
settlement of such right or claim, and not to such Trustees or shareholders.
15. 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 construction or effect. 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. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment
adviser," "net assets," "sale," "sell" and "security" shall have the same
meaning as such terms have in the 1940 Act, subject to such exemption as may be
granted by the SEC by any rule, regulation or order. Where the effect of a
requirement of the federal securities laws reflected in any provision of this
Agreement is made less restrictive by a rule, regulation or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order. This Agreement may
be signed in counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
Attest: XXXXXXXX & CO.
By: /s/ XXXX X. XXXXXXX
-----------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Director
Attest: LOMBARD ODIER INTERNATIONAL PORTFOLIO
MANAGEMENT LIMITED
By: /s/ XXXXXX ARMIST
-----------------------------
Name: Xxxxxx Armist
Title: Director
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SCHEDULE A
FUND ANNUAL FEE RATE
---- ---------------
Xxxxxxxx Europe Fund 60% of the fees actually paid to Xxxxxxxx under the
Management Agreement with the Trust on behalf of
Xxxxxxxx Europe Fund ("Europe Fund").
(The Sub-Adviser acknowledges that, for the period
ending July 31, 1998, Xxxxxxxx & Co. has agreed to
waive some or all of its fees and/or to reimburse
other Europe Fund expenses under the Management
Agreement with the Trust to the extent that Europe
Fund's total expenses for its Class A shares exceed
1.75% of the average daily net assets of such
class.)
