XXXX XXXXXXX ADVISERS, INC.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
____ __, 199_
XXXX XXXXXXX DECLARATION TRUST
-- Xxxx Xxxxxxx V.A. Sovereign Investors Fund
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
SOVEREIGN ASSET MANAGEMENT CORP.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Sub-Investment Management Contract
Dear Sirs:
Xxxx Xxxxxxx Declaration Trust (the "Trust"), of which Xxxx Xxxxxxx V.A.
Sovereign Investors Fund (the "Fund") is a series, has been organized as a
business trust under the laws of The Commonwealth of Massachusetts to engage in
the business of an investment company. The Trust's shares of beneficial interest
are currently divided into ten series (including the Fund), each series
representing the entire undivided interest in a separate portfolio of assets.
This contract relates solely to the Fund.
The Board of Trustees of the Trust (the "Trustees") has selected Xxxx
Xxxxxxx Advisers, Inc. (the "Adviser") to provide overall investment advice and
management for the Fund and to provide certain other services, under the terms
and conditions provided in the investment management contract, dated as of the
date hereof, between the Trust, on behalf of the Fund, and the Adviser (the
"Investment Management Contract").
The Adviser and the Trustees have selected Sovereign Asset Management
Corp. (the "Sub-Adviser") to provide the Adviser and the Fund with the advice
and services set forth below, and the Sub-Adviser is willing to provide such
advice and services, subject to the review of the Trustees and overall
supervision of the Adviser, under the terms and conditions hereinafter set
forth. The Sub-Adviser hereby represents and warrants that it is registered as
an investment adviser under the Investment Advisers Act of 1940, as amended (the
"1940 Act"). Accordingly, the Trust, on behalf of the Fund, and the Adviser
agree with the Sub-Adviser as follows:
1. Delivery of Documents. The Trust has furnished the Sub-Adviser with
copies, properly certified or otherwise authenticated, of each of the following:
(a) Declaration of Trust of the Trust, dated November 15, 1995 (the
"Declaration of Trust");
(b) By-Laws of the Trust as in effect on the date hereof;
(c) Resolutions of the Trustees selecting the Sub-Adviser as the
investment sub-adviser to the Fund and approving the form of this
Sub-Investment Management Contract (the "Contract") and the
resolution approving the Contract, adopted by the initial sole
shareholder of the Fund;
(d) Resolutions of the Trustees selecting the Adviser as investment
adviser to the Fund and approving the form of the Investment
Management Contract and resolutions adopted by the initial
shareholder of the Fund approving the form of the Investment
Management Contract;
(e) The Adviser's Investment Management Contract;
(f) Commitments, limitations and undertakings made by the Trust to
state "blue sky" authorities for the purpose of qualifying shares
of the Fund for sale in such states;
(g) The Fund's prospectus and statement of additional information; and
(h) The Trust's Code of Ethics.
The Adviser will furnish the Sub-Adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment Services. The Sub-Adviser will use its best efforts to provide to
the Fund continuing and suitable investment advice with respect to investments,
in conformity with the investment policies, objectives and restrictions of the
Fund as set forth in the Fund's Prospectus and Statement of Additional
Information. The Sub-Adviser will perform its duties in compliance with the
Investment Compant Act, the Internal Revenue Code and all other applicable
federal and state law. In the performance of the Sub-Adviser's duties hereunder,
subject always to the provisions contained in the documents delivered to the
Sub-Adviser pursuant to Section 1 above, as each of the same may from time to
time be amended or supplemented, the Sub-Adviser will have investment discretion
with respect to the Fund and will, at its own expense:
(a) furnish the Adviser and the Fund with advice and recommendations,
consistent with the investment policies, objectives and
restrictions of the Fund as set forth in the Fund's prospectus and
statement of additional information, with respect to the purchase,
holding and disposition of portfolio securities and other permitted
investments;
(b) furnish the Adviser and the Fund with advice as to the manner in
which voting rights, subscription rights, rights to consent to
corporate action and any other rights pertaining to the Fund's
assets shall be exercised, the Fund having the responsibility to
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exercise such voting and other rights; and, as requested, furnish
the Fund with research, economic and statistical data in connection
with the Fund's investments and investment policies;
(c) submit such reports relating to the valuation of the Fund's
securities as the Adviser may reasonably request;
(d) subject to prior consultation with the Adviser, engage in
negotiations relating to the Fund's investments with issuers,
investment banking firms, securities brokers or dealers and other
institutions or investors;
(e) consistent with the provisions of Section 7 of this Contract, place
orders for the purchase, sale or exchange of portfolio securities
for the Fund's account with brokers or dealers selected by the
Adviser or the Sub-Adviser, provided that in connection with the
placing of such orders and the selection of such brokers or dealers
the Sub-Adviser shall seek to obtain execution and pricing within
the policy guidelines determined by the Trustees and set forth in
the prospectus and statement of additional information of the Fund
as in effect and furnished to the Sub-Adviser from time to time;
(f) from time to time or at any time requested by the Adviser or the
Trustees, make reports to the Adviser or the Trust, as requested,
of the Sub-Adviser's performance of the foregoing services;
(g) subject to the supervision of the Adviser, maintain and preserve
the records required by the 1940 Act to be maintained by the
Sub-Adviser (the Sub-Adviser agrees that such records are the
property of the Trust and copies will be surrendered to the Trust
promptly upon request therefor);
(h) give instructions to the custodian (including any subcustodian) of
the Fund as to deliveries of securities to and from such custodian
and payments of cash for the account of the Fund, and advise the
Adviser on the same day such instructions are given;
(i) cooperate generally with the Fund and the Adviser to provide
information necessary for the preparation of registration
statements and periodic reports to be filed with the Securities and
Exchange Commission, including Form N-1A, semi-annual reports on
Form N-SAR, shareholder reports, periodic statements, shareholder
communications and proxy materials furnished to holders of shares
of the Fund, filings with state "blue sky" authorities and with
United States agencies responsible for tax matters, and other
reports and filings of like nature; and
3. Expenses Paid by the Sub-Adviser. The Sub-Adviser will pay the cost of
maintaining the staff and personnel necessary for it to perform its obligations
under this Contract, the expenses of office rent, telephone, telecommunications
and other facilities it is obligated to provide in order to perform the services
specified in Section 2, and any other expenses incurred by it in connection with
the performance of its duties hereunder.
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4. Expenses of the Fund Not Paid by the Sub-Adviser. The Sub-Adviser will not be
required to pay any expenses which this Contract does not expressly state shall
be payable by the Sub-Adviser. In particular, and without limiting the
generality of the foregoing but subject to the provisions of Section 3, the
Sub-Adviser will not be required to pay under this contract:
(a) the compensation and expenses of Trustees and of independent
advisers, independent contractors, consultants, managers and other
agents employed by the Trust or the Fund other than through the
Sub-Adviser;
(b) legal, accounting and auditing fees and expenses of the Trust or
the Fund;
(c) the fees and disbursements of custodians and depositories of the
Trust or the Fund's assets, transfer agents, disbursing agents,
plan agents and registrars;
(d) taxes and governmental fees assessed against the Trust or the
Fund's assets and payable by the Trust or the Fund;
(e) the cost of preparing and mailing dividends, distributions,
reports, notices and proxy materials to shareholders of the Trust
or the Fund except that the Sub-Adviser shall bear the costs of
providing the information referred to in Section 2(i) to the
Adviser;
(f) brokers' commissions and underwriting fees; and;
(g) the expense of periodic calculations of the net asset value of the
shares of the Fund.
5. Compensation of the Sub-Adviser. For all services to be rendered, facilities
furnished and expenses paid or assumed by the Sub-Adviser as herein provided for
the Fund, the Adviser will pay the Sub-Adviser quarterly, for each of the
preceding 3 months, in arrears a fee at the annual rate of 40% of the investment
advisory fee payable to the Adviser. The "average daily net assets" of the Fund
shall be determined on the basis set forth in the Fund's prospectus or otherwise
consistent with the 1940 Act and the regulations promulgated thereunder. The
Sub-Adviser will receive a pro rata portion of such monthly fee for any periods
in which the Sub-Adviser advises the Fund less than a full month. The
Sub-Adviser understands and agrees that neither the Trust nor the Fund has any
liability for the Sub-Adviser's fee hereunder. Calculations of the Sub-Adviser's
fee will be based on average net asset values as provided by the Adviser.
In addition, the Sub-Adviser may agree not to impose all or a portion of
its fee (in advance of the time its fee would otherwise accrue) and/or undertake
to make any other payments or arrangements necessary to limit the fund's
expenses to any level the Sub-Adviser may specify. Any fee reduction or
undertaking shall constitute a binding modification of this agreement while it
is in effect but may be discontinued or modified prospectively by the Sub-
Adviser at any time.
6. Other Activities of the Sub-Adviser and Its Affiliates. Nothing herein
contained shall prevent the Sub-Adviser or any of its affiliates or associates
from engaging in any other business or from acting as investment adviser or
investment manager for any other person or entity, whether or not having
investment policies or a portfolio similar to the Fund. It is specifically
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understood that officers, directors and employees of the Sub-Adviser and those
of its affiliates may engage in providing portfolio management services and
advice to other investment advisory clients of the Sub-Adviser or of its
affiliates.
7. Avoidance of Inconsistent Position. In connection with purchases or sales of
portfolio securities for the account of the Fund, neither the Sub-Adviser nor
any of its directors, officers or employees will act as principal or agent or
receive any commission , except as permitted by the 1940 Act and the rules and
regulations promulgated thereunder. The Sub-Adviser shall not knowingly
recommend that the Fund purchase, sell or retain securities of any issuer in
which the Sub-Adviser has a financial interest without obtaining prior approval
of the Adviser prior to the execution of any such transaction.
Nothing herein contained shall limit or restrict the Sub-Adviser or any
of its officers, affiliates or employees from buying, selling or trading in any
securities for its or their own account or accounts. The Trust and Fund
acknowledge the Sub-Adviser and its officers, affiliates and employees, and its
other clients may at any time have, acquire, increase, decrease or dispose of
positions in investments which are at the same time being acquired or disposed
of by the Fund. The Sub-Adviser shall have no obligation to acquire with respect
to the Fund, a position in any investment which the Sub-Adviser, its officers,
affiliates or employees may acquire for its or their own accounts or for the
account of another client if, in the sole discretion of the Sub-Adviser, it is
not feasible or desirable to acquire a position in such investment on behalf of
the Fund. Nothing herein contained shall prevent the Sub-Adviser from purchasing
or recommending the purchase of a particular security for one or more funds or
clients while other funds or clients may be selling the same security.
8. No Partnership or Joint Venture. The Trust, the Fund, the Adviser and the
Sub-Adviser are not partners of or joint venturers with each other and nothing
herein shall be construed so as to make them such partners or joint venturers or
impose any liability as such on any of them.
9. Limitation of Liability of the Sub-Adviser. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust, the Fund or the Adviser in connection with the matters to which this
Contract relates, except a loss resulting from willful misfeasance, bad faith or
gross negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this Contract.
Any person, even though also employed by the Sub-Adviser, who may be or become
an employee of and paid by the Trust or the Fund shall be deemed, when acting
within the scope of his employment by the Trust or the Fund, to be acting in
such employment solely for the Trust or the Fund and not as the Sub-Adviser's
employee or agent.
10. Duration and Termination of this Contract. This Contract shall remain in
force until the second anniversary of the date upon which this Contract was
executed by the parties hereto, and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually by (a) a
majority of the Trustees who are not interested persons of the Adviser, of the
Sub-Adviser or (other than as Board members) of the Trust or the Fund, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
either (i) the Trustees or (ii) a majority of the outstanding voting securities
of the Fund. This Contract may, on 60 days' written notice, be terminated at any
time without the payment of any penalty by the Trust on
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behalf of the Fund by vote of a majority of the outstanding voting securities of
the Fund or by the Board of Trustees or by the Adviser or by the Sub-Adviser.
Termination of this Contract with respect to the Fund shall not be deemed to
terminate or otherwise invalidate any provisions of any contract between you and
any other series of the Trust. This Contract shall automatically terminate in
the event of its assignment or upon the termination of the Adviser's Investment
Management Contract. In interpreting the provisions of this Section 10, the
definitions contained in Section 2(a) of the 1940 Act (including the definitions
of "assignment," "interested person" and "voting security") shall be applied.
11. Amendment of This Contract. No provision of this Contract may be changed,
discharged, terminated or waived orally, but only by an instrument in writing
signed by the party against which enforcement of the change discharge,
termination or waiver is sought, and no amendment, transfer, assignment, sale,
hypothecation or pledge of this Contract shall be effective until approved by
(a) the Trustees, including a majority of the Trustees who are not interested
persons of the Adviser, the Sub-Adviser or (other than as Board members) the
Trust or the Fund, cast in person at a meeting called for the purpose of voting
on such approval, and (b) a majority of the outstanding voting securities of the
Fund, as defined in the 1940 Act.
12. Miscellaneous.
(a) The captions in this Contract are included for convenience of
reference only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect. This
Contract may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The
name Xxxx Xxxxxxx Declaration Trust is the designation of the
Trustees under the Declaration of Trust, dated November 15, 1995 as
amended from time to time. The Declaration of Trust has been filed
with the Secretary of State of The Commonwealth of Massachusetts.
The obligations of the Trust and the Fund are not personally
binding upon, nor shall resort be had to the private property of,
any of the Trustees, shareholders, officers, employees or agents of
the Trust or the Fund, but only the Fund's property shall be bound.
The Trust or the Fund shall not be liable for the obligations of
any other series of the Trust.
(b) Any information supplied by the Sub-Adviser, which is not otherwise
in the public domain, in connection with the performance of its
duties hereunder is to be regarded as confidential and for use only
by the Fund and/or its agents, and only in connection with the Fund
and its investments.
13. Governing Law. This Contract shall be construed in accordance with the laws
of The Commonwealth of Massachusetts and the applicable provisions of the 1940
Act.
14. Severability. The provisions of this contract are independent of and
separable from each other and no provision shall be affected or rendered invalid
or unenforceable by virtue of the fact that for any reason any other or others
of them may be deemed invalid or unenforceable in whole or in part.
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Yours very truly,
XXXX XXXXXXX ADVISERS, INC.
By:
Its: President
The foregoing Contract is hereby agreed to as of the date thereof.
XXXX XXXXXXX DECLARATION TRUST
on behalf of Xxxx Xxxxxxx V.A. Sovereign Investors Fund
By:
Its: President
SOVEREIGN ASSET MANAGEMENT CORP.
By:
Its: President
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