SUB-INVESTMENT ADVISER AGREEMENT
AGREEMENT, made October 15, 1996, between SBG Capital Management Inc. (the
"Fund Manager") on behalf of Xxxxxx Xxxxxx & Associates (the "Sub-Adviser"), a
California Corporation.
WHEREAS, the Fund Manager has entered into an Investment Adviser Agreement
with The Santa Xxxxxxx Group of Mutual Funds (the "Company");
WHEREAS, the Company is a Maryland Corporation authorized to issue shares
in series and is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund is
one of a series of the Company;
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act");
WHEREAS, the Fund Manager wishes to retain the Sub-Adviser to render
investment advisory services to the Fund, and the Sub-Adviser is willing to
furnish such services to the Fund;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Fund Manager and the Sub-Adviser as follows:
1. Appointment
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The Fund Manager, with the consent and approval of the Company, hereby
appoints the Sub-Adviser to act as Sub-Investment Adviser to the Fund for the
periods and on the terms set forth herein. The Sub-Adviser accepts the
appointment and agrees to furnish the services set forth herein for the
compensation provided herein.
2. Services as Sub-Investment Adviser
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Subject to the general supervision and direction of the Board of Directors
of the Company, the Sub-Adviser will (a) manage the Fund in accordance with the
Fund's investment objective and policies as stated in the Fund's Prospectus and
the Statement of Additional Information filed with the Securities and Exchange
Commission, as they may be amended from time to time; (b) make investment
decisions for the Fund; (c) place purchase and sale orders on behalf of the
Fund; and, (d) employ professional portfolio managers and securities analysts to
provide research services to the Fund. In providing those services, the Sub-
Adviser will provide the Fund with ongoing research, analysis, advice, and
judgments regarding individual investments, general economic conditions and
trends and long-range investment policy. In addition, the Sub-Adviser will
furnish the Fund with whatever statistical information the Fund may reasonably
request with respect to the securities that the Fund may hold or contemplate
purchasing.
The Sub-Adviser further agrees that, in performing its duties hereunder, it
will:
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a. comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code of 1986, as amended (the "Code") and all
other applicable federal and state laws and regulations, and with any applicable
procedures adopted by the Directors;
b. use reasonable efforts to manage the Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder;
c. maintain books and records with respect to the Fund's securities
transactions, render to the Board of Directors of the Company such periodic and
special reports as the Board may reasonably request, and keep the Directors
informed of developments materially affecting the Fund's portfolio;
d. make available to the Fund's administrator, and the Company, promptly
upon their request, such copies of its investment records and ledgers with
respect to the Fund as may be required to assist the administrator and the
Company in their compliance with applicable laws and regulations. The Sub-
Adviser will furnish the Directors with such periodic and special reports
regarding the Fund as they may reasonably request;
e. immediately notify the Company in the event that the Sub-Adviser or any
of its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Sub-Adviser from serving as sub-investment
adviser pursuant to this Agreement; or (2) becomes aware that it is the subject
of an administrative proceeding or enforcement action by the Securities and
Exchange Commission or other regulatory authority. The Sub-Adviser further
agrees to notify the Company immediately of any material fact known to the Sub-
Adviser respecting or relating to the Sub-Adviser that is not contained in the
Company's Registration Statement regarding the Fund, or any amendment or
supplement thereto, but that is required to be disclosed therein, and of any
statement contained therein that becomes untrue in any material respect.
3. Documents
---------
The Fund has delivered properly certified or authenticated copies of each
of the following documents to the Sub-Adviser and will deliver to it all future
amendments and supplements thereto, if any:
a. certified resolution of the Board of Directors of the Company
authorizing the appointment of the Sub-Adviser and approving the form of this
Agreement;
b. The Registration Statement as filed with the Securities and Exchange
Commission and any amendments thereto;
c. exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration Statement
described above.
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4. Brokerage
---------
In selecting brokers or dealers to execute transactions on behalf of the
Fund, the Sub-Adviser will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Sub-Adviser will consider all factors it deems relevant,
including, but not limited to, the breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker or dealer and the reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. In selecting brokers or dealers
to execute a particular transaction, and in evaluating the best overall terms
available, the Sub-Adviser is authorized to consider the brokerage and research
services (as those terms are defined in Section 28(e) of the securities Exchange
Act of 1934, as amended (the "1934 Act")) provided to the Fund and/or other
accounts over which the Sub-Adviser or its affiliates exercise investment
discretion. In accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T)
thereunder, and subject to any other applicable laws and regulations, the Sub-
Adviser and its affiliates are authorized to effect portfolio transactions for
the Fund and to retain brokerage commissions on such transactions.
5. Records
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The Sub-Adviser agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be maintained
by the Sub-Adviser with respect to the Fund by the 1940 Act. The Sub-Adviser
further agrees that all records which it maintains for the Fund are the property
of the Fund and it will promptly surrender any of such records upon request.
6. Standard of Care
----------------
The Sub-Adviser shall exercise its best judgment in rendering the services
under this Agreement. The Sub-Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund or the Fund's
shareholders in connection with the matters to which this Agreement relates,
provided that nothing herein shall be deemed to protect or purport to protect
the Sub-Adviser against any liability to the Fund or to its shareholders to
which the Sub-Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or by reason of the Sub-Adviser's reckless disregard of its obligations
and duties under this Agreement. As used in this Section 6, the term "Sub-
Adviser" shall include any officers, directors, employees, or other affiliates
of the Sub-Adviser performing services with respect to the Fund.
7. Compensation
------------
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay the Sub-Adviser a fee at an annual rate
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equal to 0.50% of the average daily net assets of the Fund. This fee shall be
computed and accrued daily and payable monthly. For the purpose of determining
fees payable to the Sub-Adviser, the value of the Fund's average daily net
assets shall be computed at the times and in the manner specified in the Fund's
Prospectus or Statement of Additional Information.
8. Expenses
--------
The Sub-Adviser will bear all expenses in connection with the performance
of its services under this Agreement. The Fund will bear certain other expenses
to be incurred in its operation, including: taxes, interest, brokerage fees and
commission, if any, fees of Directors of the Company who are not officers,
directors, or employees of the Sub-Adviser; Securities and Exchange Commission
fees and state blue sky qualification fees; charges of custodians and transfer
and dividend disbursing agents; the Fund's proportionate share of insurance
premiums; outside auditing and legal expenses; costs of maintenance of the
Fund's existence; costs attributable to investor services, including, without
limitation, telephone and personnel expenses; charges of an independent pricing
service; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders' costs of shareholders' reports and meetings of the shareholders of
the Fund and of the officers or Board of Directors of the Company; and any
extraordinary expenses. In addition, the Fund will pay distribution fees
pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940 Act.
9. Reduction of Fees or Reimbursement to the Fund
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If in any fiscal year the aggregate expenses of the Fund (including fees
pursuant to this Agreement and the Fund's administration agreement, but
excluding distribution fees, interest, taxes, brokerage and extraordinary
expenses) exceed the expense limitation of any state having jurisdiction over
the Fund, the Sub-Adviser will reduce its fees or reimburse the Fund for such
excess expense in the same proportion as its advisory fee bears to the Fund's
combined fee for investment advice and administration. The Sub-Adviser's
obligation to reduce its fees or reimburse the Fund will be limited to the
amount of its fees received pursuant to this Agreement. Such reduction in fees
or reimbursement, if any, will be estimated, reconciled and, in the case of
reimbursement, paid on a quarterly basis.
10. Services to Other Companies or Accounts
---------------------------------------
The investment advisory services of the Sub-Adviser to the Fund under this
Agreement are not to be deemed exclusive, and the Sub-Adviser, or any affiliate
thereof, shall be free to render similar services to other investment companies
and other clients (whether or not their investment objectives and policies are
similar to those of the Fund) and to engage in other activities, so long as it
services hereunder are not
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impaired thereby.
11. Duration and Termination
------------------------
This Agreement shall become effective on September 17, 1996, and shall
remain in effect, unless sooner terminated as provided herein, for two years
from such date and shall continue from year to year thereafter, provided each
continuance is specifically approved at least annually by (i) the vote of a
majority of the Board of Directors of the Company or (ii) a vote of a "majority"
(as defined in the 0000 Xxx) of the Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board of Directors who are not "interested persons" (as defined in the 0000
Xxx) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on sixty (60) days' written notice by the Board of Directors of
the Company or by bote of holders of a majority of the Fund's shares or upon
ninety 90) days' written notice by the Sub-Adviser. This Agreement will also
terminate automatically in the event of its "assignment" (as defined in the 1940
Act).
12. Amendment
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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 approved by
an affirmative vote of (i) a majority of the outstanding voting securities of
the Fund, and (ii) a majority of the Directors of the Company, including a
majority of Directors who are not interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law.
13. Use of Name
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It is understood that the name of Xxxxxx Xxxxxx & Associates, Inc. or nay
derivation thereof or logo associated with that name is the valuable property of
the Sub-Adviser and its affiliates, and that the Fund has the right to use such
name (or derivative or logo) only so long as this Agreement shall continue with
respect to the Fund. Upon termination of this Agreement, the Fund shall
forthwith cease to use such name (or derivative or logo) and shall promptly
amend its Articles of Incorporation to change its name to comply herewith.
14. Miscellaneous
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a. This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
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b. Titles or captions of Sections contained in this Agreement are inserted
only as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provisions
thereof.
c. This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
d. This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of California.
e. If any provision of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than those as to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
f. Notices of any kind to be given to the Sub-Adviser by the Company shall
be in writing and shall be duly given if mailed or delivered to the Sub-Adviser
at 000 Xxxxxxxxx Xxxxx Xxxxx, Xx Xxxxxx, Xxxxxxxxxx 00000, or at such other
address or to such individual as shall be specified by the Sub-Adviser to the
Company. Notices of any kind to be given to the Company by the Sub-Adviser
shall be in writing and shall be duly given if mailed or delivered to 000 X.
Xxxxx Xxx., Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such other address
or to such individual as shall be specified by the Company to the Sub-Adviser.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
SBG Capital Management Inc.
By: /s/ Xxxxxx X. Xxxxxx
_________________________________
Xxxxxx X. Xxxxxx
President
Xxxxxx Xxxxxx & Associates Inc.
By: /s/ Xxxxxx X. Xxxxxx
_________________________________
Xxxxxx X. Xxxxxx
President
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