SUBADVISORY CONTRACT
AGREEMENT made as of the 16th day of April, 1999, by and among
CLEARWATER INVESTMENT TRUST, a Massachusetts business trust (the "Trust"),
CLEARWATER MANAGEMENT CO., INC., a Minnesota corporation (the "Manager"), and
▇▇▇▇▇▇▇ CAPITAL MANAGEMENT, a Missouri corporation (the "Subadviser").
W I T N E S S E T H:
WHEREAS, the Manager desires to utilize the services of the Subadviser
as financial counsel with respect to Clearwater Small Cap Fund (the "Fund"), a
separate series of the Trust; and
WHEREAS, the Subadviser is willing to perform such services on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits
herein contained, it is agreed as follows:
1. The Subadviser's Services. The Subadviser will serve the
Manager as financial counsel with respect to the Fund which is under the
management of the Manager pursuant to the Management Contract dated March 1,
1998 between the Manager and the Trust. Subject to the supervision of the
Manager, the investment policies and restrictions applicable to the Fund as set
forth in the registration statement of the Trust filed with the Securities and
Exchange Commission and such resolutions as from time to time may be adopted by
the Trust's Trustees and furnished to the Subadviser, the Subadviser is hereby
authorized and directed and hereby agrees to develop, recommend and implement
such investment program and strategy for the Fund as may from time to time in
the circumstances appear most appropriate to the achievement of the investment
objectives of the Fund as stated in the aforesaid registration statement, to
provide research and analysis relative to the investment program and investments
of the Fund, to determine what securities should be purchased and sold and what
portion of the assets of the Fund should be held in cash or cash equivalents or
other assets and to monitor on a continuing basis the performance of the
portfolio securities of the Fund. In addition, the Subadviser will place orders
for the purchase and sale of portfolio securities and will advise the Manager
and the custodian for the Fund on a prompt basis of each purchase and sale of a
portfolio security specifying the name of the issuer, the description and amount
or number of shares of the security purchased, the market price, commission and
gross or net price, trade date, settlement date and identity of the effecting
broker or dealer. From time to time as the Trustees of the Trust or the Manager
may reasonably request, the Subadviser will furnish to the Trust's officers and
to each of its Trustees reports on portfolio transactions and reports on issues
of securities held by the Fund, all in such detail as any such Trustee or the
Manager may reasonably request. The Subadviser also will inform the Trust's
officers and Trustees on a current basis of changes in
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investment strategy or tactics. The Subadviser will make its officers and
employees available to meet with the Trust's officers and Trustees and the
Manager's officers and Directors at least quarterly on due notice to review the
investments and investment program of the Fund in the light of current and
prospective economic and market conditions.
2. Avoidance of Inconsistent Position.
(a) In connection with purchases and sales of portfolio
securities for the account of the Fund, the Subadviser will not act as a
principal or agent or receive any commission except as permitted by the
Investment Company Act of 1940, as amended (the "1940 Act"). The Subadviser
shall arrange for the placing of all orders for the purchase and sale of
portfolio securities for the Fund's account with brokers or dealers selected by
the Subadviser. In the selection of such brokers or dealers and the placing of
such orders, the Subadviser is directed at all times to seek for the Fund the
most favorable execution and net price available except as otherwise described
herein. It is understood that it is desirable for the Fund that the Subadviser
have access to supplemental investment and market research and security and
economic analyses provided by brokers who may execute brokerage transactions at
a higher cost to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Subadviser is authorized to place orders for the
purchase and sale of securities for the Fund with such brokers consistent with
the requirements of Section 28(e) of the Securities Exchange Act of 1934,
subject to review by the Trust's Trustees from time to time with respect to the
extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful to the Subadviser in connection with its
services (and the services of the Subadviser's affiliates) to other clients.
(b) On occasions when the Subadviser deems the purchase or sale
of a security to be in the best interest of the Fund as well as other clients,
the Subadviser, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be sold or purchased in order to obtain the best
execution and lower brokerage commissions, if any. 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 Subadviser in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Fund and to
such clients.
3. Other Agreements, etc. It is understood that any of the
shareholders, Trustees, officers and employees of the Trust may be a
shareholder, director, officer or employee of, or be otherwise interested in,
the Subadviser, any interested person (as defined in the ▇▇▇▇ ▇▇▇) of the
Subadviser, any organization in which the Subadviser may have an interest or any
organization which may have an interest in the Subadviser and that the
Subadviser, any such interested person or any such organization may have an
interest in the Trust. It is also understood that the Subadviser, the Manager
and the Trust may have advisory, management, service or other contracts with
other individuals or entities, and may have other interests and businesses. When
a security proposed to be purchased or sold for the Trust is also to be
purchased or sold for other accounts managed by the Subadviser at the same time,
the Subadviser shall make such purchases or sales on a pro rata, rotating or
other equitable basis so as to avoid any one account being preferred over any
other account.
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4. Subadviser's Compensation. The Manager shall pay to the
Subadviserfor services hereunder a fee at the annual rate provided in the
following schedule based on the Fund's net assets under the Subadviser's
management:
Percent Net Assets
-----------------------------
0.85% Up to and including $50 million
0.80% Over $50 million
Such fee shall be calculated and accrued on a monthly basis as a percentage of
the Fund's month end net assets under the Subadviser's management, and shall be
payable quarterly after the end of each calendar quarter on or before the 15th
day of January, April, July and October of each year with respect to the
preceding quarter. If this Contract shall be effective for only a portion of a
calendar quarter, the aforesaid fee shall be prorated for that portion of such
calendar quarter during which this Contract is in effect.
5. Assignment and Amendment. This Contract shall automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in the ▇▇▇▇ ▇▇▇) or in the event of the termination of the
Management Contract between the Trust and the Manager insofar as it applies to
the Fund; provided, that such termination shall not relieve either party of any
liability incurred hereunder. The terms of this Contract shall not be changed
unless such change is approved in accordance with the requirements of the 1940
Act, and as such requirements may be modified by rule, regulation or order of
the Securities and Exchange Commission ("SEC").
6. Effective Period and Termination of this Contract.
(a) This Contract shall become effective on the date hereof and
shall remain in full force and effect until two years from the date hereof and
from year to year thereafter, but only so long as its continuance is approved
annually in accordance with the requirements of the 1940 Act, and as such
requirements may be modified by rule, regulation or order of the SEC.
(b) The Trust or the Manager may at any time terminate this
Contract by not more than sixty (60) days' nor less than thirty (30) days'
written notice given to the Subadviser.
(c) The Subadviser may at any time terminate this Contract by
not less than one hundred twenty (120) days' written notice given to the Trust
and the Manager.
7. Complete Agreement. This Contract states the entire
agreement of the parties hereto, and is intended to be the complete and
exclusive statement of the terms hereof. It may not be added to or changed
orally, and may not be modified or rescinded except by a writing signed by the
parties hereto and in accordance with Section 5 hereof and the applicable
requirements of the 1940 Act.
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8. Nonliability of the Subadviser. In the absence of willful
misfeasance, bad faith or gross negligence on the part of the Subadviser, or of
reckless disregard of its obligations and duties hereunder, the Subadviser shall
not be subject to any liability to the Manager or the Trust, to any shareholder
of the Fund, or to any person, firm or organization, for any act or omission in
the course of, or connected with, rendering services hereunder. Nothing herein,
however, shall derogate from the Subadviser's obligations under applicable
federal and state securities laws.
9. Limitation of Liability of the Trustees, Officers and
Shareholders. A copy of the Declaration of Trust of the Trust is on file with
the Secretary of State of The Commonwealth of Massachusetts, and notice is
hereby given that this Contract is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations under this
Contract are not binding upon any of the Trustees, officers or shareholders of
the Trust but are binding only upon the assets and property of the Fund.
10. Notices. Any notice, instruction, request or other
communications required or contemplated by this Contract shall be in writing and
shall be duly given when deposited by first class mail, postage prepaid,
addressed to (or delivered by hand with confirmation to) the Trust, the Manager
or the Subadviser at the applicable address set forth below:
If to Subadviser:
▇▇▇▇▇▇▇ Capital Management
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Trust:
Clearwater Investment Trust
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Manager:
Clearwater Management Co., Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
11. Disclosure Statement. The Manager and the Trust acknowledge
receipt of the Subadviser's written disclosure statement required by Rule 204-3
under the Investment Advisers Act of 1940 not less than 48 hours prior to
entering into this Contract.
12. Governing Law. This Contract and all performance hereunder
shall be governed by, interpreted, construed and enforced in accordance with the
laws of the State of Minnesota.
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13. Any term or provision of this Contract which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this Contract or affecting
the validity or enforceability of any of the terms or provisions of this
Contract in any other jurisdiction.
14. This Contract may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their duly authorized officers and as of the day and year first
written above.
CLEARWATER INVESTMENT TRUST
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
CLEARWATER MANAGEMENT CO., INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
▇▇▇▇▇▇▇ CAPITAL MANAGEMENT
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Investment Officer and
Vice President
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