XXXX XXXXXXX EQUITY TRUST
SUB-INVESTMENT MANAGEMENT CONTRACT
AGREEMENT made this 4th day of August, 2006, among Xxxx Xxxxxxx Advisers,
LLC, a Delaware limited liability company (the "Adviser"), Independence
Investments, LLC a Delaware limited liability company (the "Sub-adviser") and
Xxxx Xxxxxxx Equity Trust, a business trust under the laws of the Commonwealth
of Massachusetts (the "Trust") on behalf of the Xxxx Xxxxxxx Small Cap Fund (the
"Fund"), a series of the Trust. In consideration of the mutual covenants
contained herein, the parties agree as follows:
1. APPOINTMENT OF SUB-ADVISER
The Sub-adviser undertakes to act as investment sub-adviser to the Fund
and, subject to the supervision and control of the Trustees of the Trust and the
terms of this Agreement, to manage the investment and reinvestment of the assets
of the Fund. The Sub-adviser will be an independent contractor and will have no
authority to act for or represent the Trust, the Fund or the Adviser in any way
except as expressly authorized in this Agreement or another writing by the Trust
or the Adviser.
2. SERVICES TO BE RENDERED BY THE SUB-ADVISER TO THE TRUST AND THE FUND
a. Subject always to the direction and control of the Trustees of the Trust,
the Sub-adviser shall have investment discretion over the assets of the
Fund and will manage the investments and determine the composition of these
assets in accordance with the Trust's registration statement, as amended.
In fulfilling its obligations to manage the investments and reinvestments
of the assets of the Fund, the Sub-adviser will:
i. obtain and evaluate pertinent economic, statistical, financial and
other information affecting the economy generally and individual
companies or industries the securities of which are included in the
Fund's portfolio or are under consideration for inclusion in the
Fund's portfolio;
ii. formulate and implement a continuous investment program for the Fund
that is consistent with the investment objectives and related
investment policies for the Fund as described in the Trust's
registration statement, as amended, copies of which shall be furnished
to the Sub-adviser promptly upon amendment;
iii. take whatever steps are necessary to implement the investment program
by the purchase and sale of securities, including the placing of
orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust and to the Adviser with
respect to the implementation of the investment program; and
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v. provide assistance to the Trust's custodian regarding the fair value
of securities held by the Fund for which market quotations are not
readily available.
b. The Sub-adviser, at its expense, will furnish all necessary investment and
management facilities, including salaries of personnel required for it to
execute its duties faithfully.
c. The Sub-adviser will select brokers and dealers to effect all transactions
subject to the following conditions: The Sub-adviser will place all
necessary orders with brokers, dealers, or issuers and will negotiate
brokerage commissions, if applicable. The Sub-adviser is directed at all
times to seek to execute brokerage transactions for the Fund in accordance
with such policies or practices as may be established by the Trustees and
described in the Trust's registration statement, as amended, and consistent
with its fiduciary obligation to seek best execution. Subject to policies
established from time to time by the Board of Trustees of the Trust, the
Sub-adviser may pay a broker-dealer which provides research and brokerage
services a higher spread or commission for a particular transaction than
otherwise might have been charged by another broker-dealer if the
Sub-adviser determines that the higher spread or commission is reasonable
in relation to the value of the brokerage and research services that such
broker-dealer provides, viewed in terms of either the particular
transaction or the Sub-adviser's overall responsibilities with respect to
accounts managed by the Sub-adviser. The Sub-adviser may use for the
benefit of the Sub-adviser's other clients, or make available to companies
affiliated with the Sub-adviser or to its directors for the benefit of
their clients, any such brokerage and research services that the
Sub-adviser obtains from brokers or dealers.
d. On occasions when the Sub-adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients of the
Sub-adviser, the Sub-adviser, to the extent permitted by applicable laws
and regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold to attempt to obtain a more favorable
price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Sub-adviser in
the manner the Sub-adviser considers to be the equitable and consistent
with its fiduciary obligations to the Fund and to its other clients.
e. The Sub-adviser will maintain all accounts, books and records with respect
to the Fund as are required of an investment sub-adviser of a registered
investment company pursuant to the Investment Company Act of 1940, as
amended (the "Investment Company Act") and Investment Advisers Act of 1940,
as amended (the "Investment Advisers Act") and the rules thereunder.
f. The Sub-adviser shall furnish the Adviser with advice as to the manner of
voting proxies relating to the Fund's investment securities in accordance
with the Trust's proxy voting policies and procedures, which provide that
the Adviser shall vote all proxies relating to securities held by the Fund
and, subject to the Trust's policies and procedures, shall use proxy voting
policies and procedures adopted by the Adviser in conformance with Rule
206(4)-6 under the Investment Advisers Act. The Adviser shall review its
proxy voting activities on a periodic basis with the Trustees.
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3. COMPENSATION OF SUB-ADVISER
The Adviser will pay the Sub-adviser with respect to the Fund the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUB-ADVISER
Neither the Sub-adviser nor any of its directors, officers or employees
shall be liable to the Adviser or the Trust or Fund for any error of judgment or
mistake of law or for any loss suffered by the Adviser, Trust or Fund in
connection with the matters to which this Agreement relates, except for losses
resulting from willful misfeasance, bad faith or gross negligence in the
performance of, or from the reckless disregard of, the duties of the Sub-adviser
or any of its directors.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents, members and shareholders
of the Trust are or may be interested in the Sub-adviser as trustees, officers,
partners, shareholders, directors, members or otherwise; that employees, agents,
shareholders, directors, members and partners of the Sub-adviser are or may be
interested in the Trust as trustees, officers, shareholders, members or
otherwise; that the Sub-adviser may be interested in the Trust; and that the
existence of any such dual interest shall not affect the validity hereof or of
any transactions hereunder, except as otherwise provided in the Agreement and
Declaration of Trust of the Trust and the limited liability company agreement of
the Sub-adviser, respectively, or by specific provision of applicable law.
6. REGULATION
The Sub-adviser shall comply with all applicable laws and regulations in
providing the services contemplated hereunder. Without limiting the foregoing,
the Sub-adviser shall provide all information reasonably requested of it by the
Board of Trustees of the Trust in accordance with its duty to do so under
Section 15(c) of the Investment Company Act and the Sub-adviser shall submit to
all regulatory and administrative bodies having jurisdiction over the services
provided pursuant to this Agreement any information, reports or other material
which any such body, by reason of this Agreement, may request or require
pursuant to applicable laws and regulations.
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to the Fund on the later
of (i) its execution, (ii) the date of the meeting of the Board of Trustees of
the Trust, at which meeting this Agreement is approved as described below and
(iii) immediately following the close of business on August 4, 2006. The
Agreement will continue in effect with respect to the Fund for a period more
than two years from its effective date only so long as such continuance is
specifically approved at least annually either by the Trustees of the Trust or
by a majority of the outstanding voting securities of the Fund, provided that in
either event such continuance shall also be approved by the vote of a majority
of the Trustees of the Trust who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval. Any required
shareholder approval of the Agreement or of any continuance of the Agreement
shall be effective with respect to the Fund if a majority of the outstanding
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voting securities of the series (as defined in Rule 18f-2(h) under the
Investment Company Act) of shares of the Fund votes to approve the Agreement or
its continuance.
If any required shareholder approval of this Agreement or any continuance
of the Agreement is not obtained, the Sub-adviser will continue to act as
investment sub-adviser with respect to the Fund pending the required approval of
the Agreement or its continuance or of a new contract with the Sub-adviser or a
different adviser or sub-adviser or other definitive action; provided, that the
compensation received by the Sub-adviser in respect of the Fund during such
period is in compliance with Rule 15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of any
penalty, as to the Fund by the Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Fund, on sixty days'
written notice to the Adviser and the Sub-adviser, or by the Adviser or
Sub-adviser on sixty days' written notice to the Trust and the other party. This
Agreement will automatically terminate, without the payment of any penalty, in
the event of its assignment (as defined in the Investment Company Act) or in the
event the advisory agreement between the Adviser and the Trust terminates for
any reason.
8. PROVISION OF CERTAIN INFORMATION BY SUB-ADVISER
The Sub-adviser will promptly notify the Adviser and the Trust in writing
of the occurrence of any of the following events:
a. the Sub-adviser fails to be registered as an investment adviser under the
Investment Advisers Act or under the laws of any jurisdiction in which the
Sub-adviser is required to be registered as an investment adviser in order
to perform its obligations under this Agreement;
b. the Sub-adviser is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, involving the affairs of the Trust; and
c. any change in actual control or management of the Sub-adviser or the
portfolio manager of the Fund.
9. SERVICES TO OTHER CLIENTS
The Adviser understands, and has advised the Trust's Board of Trustees,
that the Sub-adviser now acts, or may in the future act, as an investment
adviser to fiduciary and other managed accounts and as investment adviser or
sub-adviser to other investment companies. Further, the Adviser understands, and
has advised the Trust's Board of Trustees, that the Sub-adviser and its
affiliates may give advice and take action for other accounts, including
investment companies, which differs from advice given or the timing or nature of
action taken for the Fund. The Sub-adviser is not obligated to initiate
transactions for the Fund in any security that the Sub-adviser, its partners,
affiliates or employees may purchase or sell for their own accounts or other
clients.
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10. CONSULTATION WITH OTHER SUB-ADVISERS
As required by Rule 17a-10 under the Investment Company Act, the
Sub-adviser is prohibited from consulting with the entities listed below
concerning transactions for the Fund in securities or other assets:
1. other sub-advisers to the Fund
2. other sub-advisers to any other fund
3. other sub-advisers to a fund under common control with the Fund
provided, however, the Sub-adviser may consult with any entity listed above that
is an affiliate of the Sub-adviser.
11. AMENDMENTS TO THE AGREEMENT
This Agreement (with the exception of Appendix A, which may be amended by
the Adviser and the Sub-adviser from time to time) may be amended by the parties
hereto only if such amendment is specifically approved by the vote of a majority
of the Trustees of the Trust and by the vote of a majority of the Trustees of
the Trust 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. Any
required shareholder approval shall be effective with respect to the Fund if a
majority of the outstanding voting securities of the Fund votes to approve the
amendment. No amendment shall be effective unless it is in writing and signed by
all parties hereto.
12. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
13. HEADINGS
The headings in the sections of this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
14. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
15. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void in
law or in equity, this Agreement shall be construed, insofar as is possible, as
if such portion had never been contained herein.
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16. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
17. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust of the Trust, a copy of which,
together with all amendments thereto (the "Declaration"), is on file in the
office of the Secretary of The Commonwealth of Massachusetts, provides that the
name of the Trust refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the Trust shall be held to any personal liability,
nor shall resort be had to their private property, for the satisfaction of any
obligation or claim, in connection with the affairs of the Trust or the Fund
thereof, but only the assets belonging to the Trust, or the Fund with respect to
which such obligation or claim arose, shall be liable.
18. CONFIDENTIALITY OF FUND HOLDINGS
The Sub-adviser agrees to treat the portfolio security positions of the
Fund as confidential information in accordance with the Trust's "Policy
Regarding Disclosure of Fund Holdings," as such policy may be amended from time
to time, and to prohibit its employees from trading on any such confidential
information. The policy and any such amendment shall not be binding upon the
Sub-adviser until a copy has been provided to the Sub-adviser.
19. COMPLIANCE
Upon execution of this Agreement, the Sub-adviser shall provide the Adviser
and the Trust with the Sub-adviser's written policies and procedures
("Compliance Policies") as required by Rule 206(4)-7 under the Investment
Advisers Act. Throughout the term of this Agreement, the Sub-adviser shall
promptly submit to the Trust and the Adviser: (i) any material changes to the
Compliance Policies, (ii) notification of the commencement of any regulatory
examination of the Sub-adviser and documentation describing the results of any
such examination and of any periodic testing of the Compliance Policies, and
(iii) notification of any material compliance matter that relates to the
services provided by the Sub-adviser to the Trust, including but not limited to
any material violation of the Compliance Policies or of the Sub-adviser's code
of ethics. Throughout the term of this Agreement, the Sub-adviser shall provide
the Adviser and the Trust with any certifications, information and access to
personnel and resources (including those resources that will permit testing of
the Compliance Policies by the Adviser) that the Trust and/or the Adviser may
reasonably request to enable the Trust to comply with Rule 38a-1 under the
Investment Company Act.
(THE REMAINDER OF THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
XXXX XXXXXXX ADVISERS, LLC
By: /s/Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Assistant Vice President,
Senior Counsel and Assistant Secretary
XXXX XXXXXXX EQUITY TRUST on behalf of
Xxxx Xxxxxxx Small Cap Fund
By: /s/Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Assistant Secretary
INDEPENDENCE INVESTMENTS, LLC
By: /s/Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Chief Operating Officer
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APPENDIX A
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The Sub-adviser shall serve as investment sub-adviser for the Fund listed
below. The Adviser will pay the Sub-adviser, as full compensation for all
services provided under this Agreement with respect to the Fund, the fee
computed separately for such Fund at an annual rate as follows (the "Sub-adviser
Fee"):
Fund Percentage of Average Daily Net Assets
---- --------------------------------------
Xxxx Xxxxxxx Small Cap Fund 0.41%
The Sub-adviser Fee for the Fund shall be accrued for each calendar day,
and the sum of the daily fee accruals shall be paid monthly to the Sub-adviser.
The daily fee accruals will be computed by multiplying the fraction of one over
the number of calendar days in the year by the applicable Sub-adviser Fee, and
multiplying this product by the net assets of the Fund. The Adviser shall
provide the Sub-adviser with such information as the Sub-adviser may reasonably
request supporting the calculation of the fees paid to it hereunder. Fees shall
be paid either by wire transfer or check, as directed by the Sub-adviser.
If this Agreement becomes effective or terminates, or if the manner of
determining the applicable Sub-adviser Fee changes, before the end of any
quarter, the fee (if any) for the period from the effective date to the end of
such quarter or from the beginning of such quarter to the date of termination or
from the beginning of such quarter to the date of such change, as the case may
be, shall be pro rated according to the proportion which such period bears to
the full quarter in which such effectiveness or termination or change occurs.
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