SUB-ADVISORY AGREEMENT
AGREEMENT made this 1st day of May, 2002 among ATLAS ADVISERS, INC.,
a California corporation (the "Adviser"), ATLAS ASSETS, INC., a Maryland
corporation (the "Company"), on behalf of each series of the Company listed
in Appendix A hereto, as amended from time to time (hereinafter referred to
individually as a "Fund" and collectively as the "Funds") and PILGRIM XXXXXX
& ASSOCIATES, LTD. a (state and type of organization) (the "Sub-Adviser").
WHEREAS, the Company is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end management company and is authorized to issue
separate series, each of which offers a separate class of shares of capital
stock and each of which has its own investment objectives, policies and
limitations; and
WHEREAS, the Company has retained the Adviser to render investment
management and administrative services to the Funds; and
WHEREAS, the Adviser and the Company desire to retain the
Sub-Adviser to furnish portfolio management services to the Funds in
connection with the Adviser's investment management activities on behalf of
the Funds, and the Sub-Adviser is willing to furnish such services to the
Adviser and the Company;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Adviser, the Sub-Adviser and the
Company as follows:
1. APPOINTMENT. The Adviser and the Company hereby appoint the
Sub-Adviser to act as portfolio manager to each Fund listed in Appendix A
(collectively, the "Funds") on the terms set forth in this Agreement. The
Sub-Adviser accepts such appointment and agrees to furnish the services
described herein, for the compensation provided in the Fee Schedule attached
hereto as Appendix B.
2. REPRESENTATIONS OF THE COMPANY. The Company represents, warrants,
and agrees that:
A. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of Maryland.
B. The Adviser and Sub-Adviser have been duly appointed by the
Board of Directors of the Company.
C. The Company will deliver to the Sub-Adviser a true and
complete copy of its Registration Statement filed with the SEC, as
effective from time to time, and such other documents or instruments
governing the investment objectives of the Funds and such other
information as is necessary for the Sub-Adviser to carry out its
obligations under this Agreement.
D. The Company is currently in compliance and shall at all
times use its best efforts to ensure continued compliance with the
requirements imposed upon the Company by the 1940 Act and applicable
state laws.
3. REPRESENTATIONS OF THE SUB-ADVISER. The Sub-Adviser represents,
warrants, and agrees that:
A. The Sub-Adviser is a Corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware.
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B. The Sub-Adviser is registered as an "Investment Adviser"
under the Investment Advisers Act of 1940 ("Advisers Act") and under
applicable state laws and is currently in compliance and shall at all
times use its best efforts to ensure compliance with the requirements
imposed upon the Sub-Adviser by the Advisers Act and applicable state
laws and has provided its current Form ADV to the Adviser.
C. The Sub-Adviser has adopted a written code of ethics
complying with the requirements of Rule 17j under the 1940 Act, will
provide the Company with a copy of the code of ethics and evidence of
its adoption, and will make such reports to the Company as are required
by Rule 17j-1 under the 1940 Act.
4. REPRESENTATIONS OF THE ADVISER. The Adviser represents, warrants,
and agrees that:
A. The Adviser is a corporation duly organized, validly
existing and in good standing under the laws of the state of
California.
B. The Adviser is registered as an "Investment Adviser" under
the Advisers Act and under applicable state laws and is currently in
compliance and shall at all times use its best efforts to ensure
compliance with the requirements imposed upon the Adviser by the
Advisers Act and applicable state laws and has provided its current
Form ADV to the Sub-Adviser.
C. The Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j under the 1940 Act, has provided the
Company with a copy of the code of ethics and evidence of its adoption,
and will make such reports to the Company as are required by Rule 17j-1
under the 1940 Act.
5. PORTFOLIO MANAGEMENT DUTIES.
A. Subject to the supervision of the Adviser and the Company's
Board of Directors, the Sub-Adviser will provide a continuous
investment program for the portfolio of each Fund listed in Appendix A.
The Sub-Adviser will determine from time to time what securities and
other investments will be purchased, retained or sold by a Fund and
will place orders for execution of such portfolio transactions in
accordance with paragraph C below to effect the investment decisions
made. The Sub-Adviser will provide the services identified in this
Agreement in accordance with each respective Fund's investment
objectives, policies and restrictions as stated in the Company's
Registration Statement filed with the SEC, as effective from time to
time, and as interpreted by the Adviser and communicated to the
Sub-Adviser, on behalf of the Company, from time to time. The Adviser
will be responsible for all other services to be provided to each Fund
that is identified in Appendix A hereto.
B. The Sub-Adviser shall use its best efforts to furnish to
the Adviser or any company supplying investment company accounting or
security pricing, timely notice of significant events which come to the
Sub-Adviser's attention concerning securities in which it has caused
the Fund to invest which could require the Fund to fairly value such
securities in the daily calculation of the Fund's net asset value per
share.
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C. Subject to any applicable regulatory restriction or
prohibition, the Sub-Adviser shall have authority and discretion to
select brokers and dealers (hereinafter "broker-dealers") to execute
portfolio transactions for the Funds and for the selection of the
markets on or in which the transactions will be executed.
The primary objective of the Sub-Adviser in placing
orders for the purchase and sale of securities for a Fund shall be to
obtain the "best execution" (prompt and reliable execution at the most
favorable security price obtainable) taking into account such factors
as price, commission, if any, size of order, difficulty of execution
and skill required of the executing broker or dealer. The Sub-Adviser
shall have discretion, in the interests of each Fund, to allocate
brokerage on each Fund's portfolio transactions to broker-dealers who
provide brokerage and/or research services (as such services are
defined Section 28(e)(3) of the Securities Exchange Act of 1934) for
any of the Funds. The term "research" includes advice as to the value
of securities; the advisability of investing in, purchasing or selling
securities; the availability of securities or purchasers or sellers of
securities; and furnishing analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts. Subject to such policies as the
Adviser and the Company's Board of Directors may determine, the
Sub-Adviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by
reason of its having caused a Fund to pay a broker for effecting a
portfolio investment transaction in excess of the amount of commission
another broker-dealer would have charged for effecting that transaction
if the Sub-Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer, viewed in terms of
either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the Fund and/or its other clients. In
reaching such determination, the Sub-Adviser will not be required to
place or attempt to place a specific dollar value on the brokerage
and/or research services provided or being provided by such
broker/dealer. The Sub-Adviser shall have no duty or obligation to seek
advance competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to select any
broker-dealer on the basis of its purported or "posted" commission rate
but will, to the best of its ability, endeavor to be aware of the
current level of the charges of eligible broker-dealers and to minimize
the expense incurred by the Funds for effecting their portfolio
transactions.
D. All transactions will be consummated by payment to or
delivery by the Company's Custodian, or such depositories or agents as
may be designated by the Custodian, of all cash and/or securities due
to or from a Fund, and the Sub-Adviser shall not have possession or
custody thereof or any responsibility or liability with respect
thereto. The Sub-Adviser shall advise the Custodian and the Company
daily of all investment orders placed by it with broker-dealers
pursuant to procedures agreed upon by the Sub-Adviser and the Company.
The Sub-Adviser shall not be responsible for obtaining prices for any
such investment order, but will use its best efforts to direct the
Custodian to pricing sources and assist the Custodian in obtaining
dealer quotes if so requested by the Custodian. The Company or its
authorized agents, the Adviser and Sub-Adviser, shall issue to the
Custodian such instructions as may be appropriate in connection with
the settlement of any transaction initiated by the Sub-Adviser. The
Company shall be responsible for all custodial arrangements and the
payment of all custodial charges and fees,
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and, upon transmitting to the Custodian the investment orders placed by
it with broker-dealers, the Sub-Adviser shall have no responsibility or
liability with respect to custodial arrangements or the acts, omissions
or other conduct of the Custodian.
E. The Custodian shall, on a daily basis pursuant to
procedures and in a format agreed upon by the Sub-Adviser and the
Company, provide portfolio reports to the Sub-Adviser that shall
include a listing of all portfolio investments of each Fund and its
cash position.
6. EXPENSES. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it or its staff in connection with rendering
portfolio management services under this Agreement. This does not include
expenses and costs of the Funds' operations payable by the Company or the
Adviser, including, but not limited to, those for: interest and taxes;
brokerage commissions; custody, transfer agency, dividend disbursement,
accounting, pricing, legal and auditing services; insurance premiums for
fidelity and other coverage required for their operations; filing and
registration of shares; shareholder reports; meetings of the Company's
shareholders or directors (except those called solely to accommodate the
Sub-Adviser); printing and postage; office facilities, stationery and
supplies; the clerical, executive and administrative costs incurred by the
Adviser in overseeing or administering all of the above; other direct
administrative and service costs; and such extraordinary non-recurring
expenses as may arise, including litigation, affecting any of the Funds.
7. COMPENSATION. For the services provided, the Adviser will pay the
Sub-Adviser a fee, payable monthly based on the aggregate daily net assets of
the Funds, as provided in the Fee Schedule attached to this Agreement as
Appendix B. The "aggregate daily net assets" is defined as the aggregate of
the values placed on the net assets of all Funds as of 4:00 p.m. (New York
time), on each day on which the net asset value of the Funds' portfolios is
determined consistent with the provisions of Rule 22c-1 under the 1940 Act
or, if the Company lawfully determines the net asset value of a Fund's
portfolio as of some other time on each business day, as of such time. The
net asset value of each Fund's portfolio shall be determined pursuant to the
applicable provisions of the Company's current Registration Statement and the
1940 Act. If the determination of net asset value for a Fund is suspended in
conformity with the 1940 Act for any particular business day, then the value
of the net assets of such Fund's portfolio as last determined shall be deemed
to be the value of the net assets as of the close of the New York Stock
Exchange, or such other time as the net asset value of the portfolio may
lawfully be determined, on that day. If the Company has suspended the
determination of the net asset value of a Fund's portfolio pursuant to the
Registration Statement and the 1940 Act for a period including such month,
the Sub-Adviser's compensation payable at the end of such month shall be
computed on the basis of the value of the net assets of the Fund as last
determined (whether during or prior to such month). If the Company determines
the value of the net assets of a Fund's portfolio more than once on any day,
the last such determination on that day shall be deemed to be the sole
determination on that day for the purposes of this Section 7.
8. BOOKS AND RECORDS.
A. The Sub-Adviser will make available to the Adviser and the
Company promptly upon request its records and ledgers with respect to
and relating to each Fund's securities transactions to assist the
Adviser and the Company in compliance with the 1940 Act and the
Advisers Act, and
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other applicable laws. The Sub-Adviser will furnish the Company's
Board of Directors such periodic and special reports on each Fund as
the Adviser and the Directors may reasonably request.
B. In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Funds are the property of the Company and further
agrees to surrender promptly to the Company any of such records upon
the Company's request. The Sub-Adviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-1 under the 1940 Act and to
preserve the records required by Rule 204-2 under the Advisers Act to
the extent necessary or appropriate to comply with the period specified
in the Rule.
9. INDEMNIFICATION.
A. Absent the Adviser's or the Company's gross negligence,
willful misconduct or bad faith in the performance of its duties, or
reckless disregard of its obligations and duties under this Agreement,
the Sub-Adviser agrees to indemnify and hold harmless the Adviser, the
Company and their officers and employees against any and all costs and
liabilities (including legal and other expenses) which the Adviser or
the Company may incur, arising out of the Sub-Adviser's (a) gross
negligence, willful misconduct or bad faith in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, or (b) untrue statement or omission of a material fact
required in the Registration or Proxy Statements or other regulatory
filing, if such statement or omission was made in reliance upon
information furnished in writing by the Sub-Adviser for inclusion in
such regulatory filings.
B. Absent the Sub-Adviser's gross negligence, willful
misconduct or bad faith in the performance of its duties, or reckless
disregard of its obligations and duties under this Agreement, the
Adviser and the Company agree to indemnify and hold harmless the
Sub-Adviser and its officers and employees against any and all costs
and liabilities (including legal and other expenses) which the
Sub-Adviser may incur, arising out of the Adviser's or the Company's
(a) gross negligence, willful misconduct or bad faith in the
performance of its duties, or reckless disregard of its obligations and
duties under this Agreement, or (b) untrue statement or omission of a
material fact required in the Registration or Proxy Statements or other
regulatory filing, unless such statement or omission was made in
reliance upon information furnished in writing by the Sub-Adviser for
inclusion in such regulatory filings.
10. SERVICES NOT EXCLUSIVE. It is understood that the services of
the Sub-Adviser are not exclusive, and nothing in this Agreement shall
prevent the Sub-Adviser from providing similar services to other investment
companies (whether or not their investment objectives and policies are
similar to those of a Fund) or from engaging in other activities. When the
Sub-Adviser recommends the purchase or sale of a security for other
investment companies and other clients, and at the same time the Sub-Adviser
recommends the purchase or sale of the same security for one or more Funds,
it is understood that such transactions will be executed on a basis that is
fair and equitable to each Fund.
11. DURATION. The term of this Agreement, with respect to each Fund,
shall begin on the date (which shall occur on or before May 1, 2002) the SEC
declares effective the Post-Effective Amendment to the Company's Registration
Statement that discloses the Sub-Adviser as such for that Fund and shall
remain
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in effect until the first meeting of such Fund's shareholders held thereafter
(except that in the case of the Atlas Growth and Income Fund, such
shareholders meeting may be held prior to the date the SEC declares effective
the applicable Registration Statement), and, if approved at such meeting,
shall continue in effect for two years from the effective date of the
Post-Effective Amendment with respect to such Fund and continue on an annual
basis thereafter if approved for each Fund each year by (a) the vote of a
majority of the entire Board of Directors of the Company or by the vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act), and by (b) the vote of a majority of those Directors of the
Company who are not parties to this Agreement or interested persons (as such
term is defined in the 0000 Xxx) of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
12. TERMINATION. This Agreement may be terminated at any time
without payment of any penalty by (a) the Adviser, upon sixty (60) days'
written notice to the Sub-Adviser and the Company (which notice may be waived
by the Sub-Adviser and the Company), (b) the Company, on behalf of any one or
more of the Funds, upon the vote of a majority of the Company's Board of
Directors or a majority of the outstanding voting securities of such Fund,
upon sixty (60) days' written notice to the Adviser and the Sub-Adviser, or
(c) the Sub-Adviser, upon one hundred twenty (120) days' written notice to
the Adviser and the Company (which notice may be waived by the Adviser and
the Company). Termination of this Agreement with respect to a Fund shall not
effect the continuing applicability of this Agreement with respect to other
Funds. This Agreement shall automatically terminate in the event of its
assignment (as such term is defined in the 1940 Act and interpreted by the
U.S. Securities and Exchange Commission). Termination of this Agreement shall
not affect the right of the Sub-Adviser to receive payments of any unpaid
balance of the compensation described in Section 7 earned prior to such
termination.
13. AMENDMENTS. 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 with respect to a Fund until approved by a vote of a majority of
the outstanding voting securities of such Fund, if such approval is required
by applicable law.
14. USE OF NAME. It is understood that the name "Pilgrim Xxxxxx" or
any derivative thereof or logo associated with that name is the valuable
property of the Sub-Adviser and its affiliates and that the Company and each
Fund have the right to use such name (or derivative or logo) in offering and
sales materials so long as the Sub-Adviser is portfolio manager to such Fund
and provided the Sub-Adviser shall have reviewed and approved in writing such
use, which approval may not be unreasonably withheld. Upon termination of
this Agreement, the Company shall promptly cease to use such name.
15. MISCELLANEOUS.
A. This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder.
B. The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
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C. If any provision of this Agreement shall be held invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and the provisions of this Agreement shall be
deemed to be severable.
D. Any notice under this Agreement shall be in writing addressed
and delivered or mailed, postage prepaid, to the other party at the address
below or at such other address as such other party may designate hereunder
for the receipt of such notice:
If to the Adviser or the Company:
Atlas Advisers, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: X. Xxxxxxxx Key, Group Senior Vice President
If to the Sub-Adviser:
Pilgrim Xxxxxx & Associates, Ltd.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx Xxxx, General Counsel
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above written.
ATLAS ADVISERS, INC. PILGRIM XXXXXX & ASSOCIATES, LTD.
/s/ X. Xxxxxxxx Key /s/ Xxxx X. Xxxxxxxxx
By: X. Xxxxxxxx Key By: Xxxx X. Xxxxxxxxx
Its Group Senior Vice President Its Senior Vice President and CFO
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APPENDIX A
SUB-ADVISORY AGREEMENT
PILGRIM XXXXXX & ASSOCIATES, LTD.
DATED: MAY 1, 2002
The provisions of the attached Sub-Advisory Agreement apply to
the following separate series of shares of the Company:
1. Atlas Value Fund
APPENDIX B - FEE SCHEDULE
DATED: MAY 1, 2002
The attached Agreement requires that the Sub-Adviser be paid a
fee each month at the annual rate of:
0.40% of the first $49,999,999 of net assets
0.35% of net assets between $50,000,000 and $249,999,000
and 0.30% of net assets in excess of $250,000,000
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