AmeriPrime Funds
INTERIM INVESTMENT SUB-ADVISORY AGREEMENT
This INTERIM INVESTMENT SUB-ADVISORY AGREEMENT, is executed as of
January 25, 2001, between Shepherd Advisory Services, Inc., a Tennessee
corporation (the "Adviser"), and Xxxxxxxx-Xxxxxxxxx Capital Management, a
California Limited Partnership (the "Sub-Adviser").
W I T N E S E T H:
WHEREAS, the Adviser acts as the investment adviser to the Shepherd
Values Small-Cap Fund (the "Fund"), a series of AmeriPrime Funds, an Ohio
business trust (the "Trust"), pursuant to a Management Agreement for the Fund
effective as of September 30, 1999 (the "Advisory Agreement");
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, pursuant to an investment sub-advisory agreement dated
September 30, 1999 (the "Sub-Advisory Agreement"), the Sub-Adviser was selected
by the Adviser as the sub-adviser to the Fund, the Sub-Advisory Agreement having
been acknowledged and approved by the Trust;
WHEREAS, pursuant to an agreement dated October 17, 2000, Allianz of
America, Inc. has agreed to acquire all of the outstanding interests in the
Sub-Adviser (the "Acquisition"). The Acquisition will result in the automatic
termination of the Sub-Advisory Agreement; and
WHEREAS, the Adviser and Sub-Adviser desire to enter into this Interim
Investment Sub-Advisory Agreement pursuant to the terms of Rule 15a-4 of the
Investment Company Act of 1940, as amended ("1940 Act") pending approval of a
final sub-advisory agreement by a majority of the Fund's outstanding voting
securities designating Sub-Adviser as the sub-adviser of the Fund.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
Section 1. Appointment and Status of Sub-Adviser. The Adviser hereby
appoints the Sub-Adviser to act as its agent to provide investment advisory
service to each class of shares of beneficial interest of the Trust set forth on
an executed Exhibit to this Agreement (each a "Fund"), for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided. Although the Sub-Adviser shall be an agent of the Adviser, the
Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor of the Adviser and the Trust and shall, unless otherwise expressly
provided herein or authorized by the Adviser or the Board of Trustees of the
Trust from time to time, have no authority to act for or represent the Adviser
or the Trust in any way or otherwise be deemed an agent of the Trust.
Section 2. Sub-Adviser's Duties. Subject to the general supervision of
the Trust's Board of Trustees (the "Board") and the Adviser, the Sub-Adviser
shall, employing its discretion, manage the investment operations of each Fund
and the composition of the portfolio of securities and investments (including
cash) belonging to each Fund, including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with the
Fund's investment objective, policies and restrictions as stated in the Trust's
then-current Prospectus and Statement of Additional Information (together, the
"Prospectus") and subject to the following understandings:
(a) The Sub-Adviser shall furnish a continuous investment program for
each Fund and determine from time to time what investments or securities will be
purchased, retained or sold by each Fund and what portion of the assets
belonging to each Fund will be invested or held uninvested as cash;
(b) The Sub-Adviser shall use its best judgment in the performance of its
duties under this Agreement;
(c) The Sub-Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Trust's Declaration of
Trust, its By-Laws and its Prospectus and with the instructions and directions
of the Trust's Board of Trustees and the Adviser and will conform to and comply
with the requirements of the 1940 Act and all other applicable federal and state
laws and regulations;
(d) The Sub-Adviser shall determine the securities to be purchased or
sold by each Fund and as agent for the Trust will effect portfolio transactions
pursuant to its determinations either directly with the issuer or with any
broker and/or dealer in such securities, subject to Section 3 below;
(e) The Sub-Adviser shall maintain books and records with respect to
the securities transactions of each Fund and shall render to the Adviser and the
Trust's Board of Trustees such periodic and special reports as the Adviser or
the Board may request; and
(f) The Sub-Adviser shall provide the Trust's custodian with such
information relating to the Trust as may be required under the terms of the
then-current custody agreement between the Trust and the custodian.
Section 3. Brokerage. In placing orders with brokers and/or dealers,
the Sub-Adviser is directed at all times to seek best price and execution for
purchases and sales on behalf of each Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. Sub-Adviser should generally seek favorable prices and commission rates
that are reasonable in relation to the benefits received. Subject to such
conditions as may be imposed by the Trust's Board of Trustees, the Sub-Adviser
may pay commissions to brokers and/or dealers that are higher than might be
charged by another qualified broker to obtain brokerage and/or research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) considered by the Sub-Adviser to be
useful or desirable in the performance of the Sub-Adviser's duties hereunder, if
the Sub-Adviser determines in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or Sub-Adviser's overall
responsibilities with respect to the Funds and to accounts over which
Sub-Adviser exercises investment discretion. The Funds and the Sub-Adviser
understands and acknowledges that, although the information may be useful to the
Funds and the Sub-Adviser, it is not possible to place a dollar value on such
information. The Board shall periodically review the commissions paid by the
Funds to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits to the Funds.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best qualitative execution
as described above, the Sub-Adviser may give consideration to sales of shares of
the Funds as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the foregoing and to such conditions as may be imposed by
the Adviser or the Trust's Board of Trustees and the provisions of the 1940 Act,
Exchange Act, and other applicable law, nothing herein shall prohibit the
Sub-Adviser from selecting brokers and/or dealers who are "affiliated persons"
of the Sub-Adviser, the Adviser or the Trust. On occasions when the Sub-Adviser
deems the purchase or sale of a security to be in the best interest of the Trust
as well as other customers, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be so 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 Sub-Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Trust and, if applicable,
to such other customers.
If any occasion should arise in which the Sub-Adviser gives any advice
to clients of Sub-Adviser concerning the shares of any Fund, Sub-Adviser will
act solely as investment counsel for such client and not in any way on behalf of
the Fund. Sub-Adviser's services to the Funds pursuant to this Agreement are not
to be deemed to be exclusive and it is understood that Sub-Adviser may render
investment advice, management and other services to others, including other
registered investment companies.
Section 4. Books and Records. The Sub-Adviser shall keep the Trust's
books and records required to be maintained by it pursuant to Section 2(e) of
this Agreement. The Sub-Adviser agrees that all records which it maintains for
the Trust are the property of the Trust and it will promptly surrender any of
such records to the Trust upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by the Sub-Adviser with
respect to the Trust by Rule 31a-1 under the 1940 Act.
Section 5. Expenses of the Sub-Adviser. During the term of this
Agreement, the Sub-Adviser will pay all expenses (including without limitation
the compensation of all trustees or officers of the Trust who are "interested
persons" of the Sub-Adviser, as defined in the 0000 Xxx) incurred by it in
connection with its activities under this Agreement other than the cost of
securities and investments purchased for each Fund (including taxes and
brokerage commissions, if any).
Section 6. Compensation of the Sub-Adviser. For the services provided
and the expenses borne pursuant to this Agreement, the Adviser will pay to the
Sub-Adviser as full compensation therefor a fee with respect to each Fund at an
annual rate as set forth on the Exhibit executed with respect to such Fund and
attached hereto. This fee for each month will be paid to the Sub-Adviser during
the succeeding month. For purposes of determining the fee payable hereunder, the
net asset value of each Fund shall be calculated in the manner specified in the
Trust's Prospectus.
The compensation earned under this Interim Investment Sub-Advisory
Agreement will be held in an interest bearing escrow account with the Fund's
custodian or a bank mutually agreed upon by the Trust and the Sub-Adviser. If a
majority of the Fund's outstanding voting securities approve a final
sub-advisory agreement with the Sub-Adviser by the end of the 150-day period
following the closing of the Acquisition, the amount in the escrow account
(including interest earned) will be paid to the Sub-Adviser.
If a majority of the Fund's outstanding voting securities do not
approve a final sub-advisory agreement with the Sub-Adviser, the Sub-Adviser
will be paid, out of the escrow account, the lesser of (1) any costs incurred by
the Sub-Adviser in performing services under this Interim Investment
Sub-Advisory Agreement (plus interest earned on that amount while in escrow), or
(2) the total amount in the escrow account (plus interest earned).
Section 7. Use of Name. The Trust, Adviser and Sub-Adviser acknowledge
that all rights to the name "Shepherd Values" belong to the Adviser, and that
the Trust is being granted a limited license to use such words in its Fund name
or in any class name. In the event the Adviser ceases to be the Adviser, the
Trust's right to the use of the name "Shepherd Values" shall automatically cease
on the ninetieth day following the termination of this Agreement. The right to
the name may also be withdrawn by the Adviser during the term of the Management
Agreement upon ninety (90) days' written notice by the Adviser to the Trust.
Nothing contained herein shall impair or diminish in any respect the Adviser's
right to use the name "Shepherd Values" in the name of, or in connection with,
any other business enterprises with which the Adviser is or may become
associated. There is no charge to the Trust for the right to use these names.
The Trust, Adviser and Sub-Adviser acknowledge that all rights to the
name "Xxxxxxxx-Xxxxxxxxx" belong to the Sub-Adviser, and that the Trust is being
granted a limited license to use such words in its Fund name or in any class
name. In the event the Sub-Adviser ceases to be the Sub-Adviser, the Trust's
right to the use of the name "Xxxxxxxx-Xxxxxxxxx" shall automatically cease on
the ninetieth day following the termination of this Agreement. The right to the
name may also be withdrawn by the Sub-Adviser during the term of the Management
Agreement upon ninety (90) days' written notice by the Adviser to the Trust.
Nothing contained herein shall impair or diminish in any respect the
Sub-Adviser's right to use the name "Xxxxxxxx-Xxxxxxxxx" in the name of, or in
connection with, any other business enterprises with which the Sub-Adviser is or
may become associated. There is no charge to the Trust for the right to use
these names.
Section 8. Liability of the Sub-Adviser. Neither Sub-Adviser nor its
shareholders, members, officers, directors, employees, agents, control persons
or affiliates of any thereof, shall be liable for any error of judgment or
mistake of law or for any loss suffered by any Fund in connection with the
matters to which this Agreement relates except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 0000 Xxx) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
Any person, even though also a director, officer, employee,
shareholder, member or agent of Sub-Adviser, who may be or become an officer,
director, trustee, employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust (other
than services or business in connection with Sub-Adviser's duties hereunder), to
be rendering such services to or acting solely for the Trust and not as a
director, officer, employee, shareholder, member or agent of Sub-Adviser, or one
under Sub-Adviser's control or direction, even though paid by Sub-Adviser.
Section 9. Duration and Termination. This Agreement shall take
effect on a change in control of the Sub-Adviser in connection with the
Acquisition, and shall remain in force for a period not to exceed 150 days
thereafter. This Agreement may, on ten days written notice, be terminated with
respect to the Fund, at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the Fund,
or by you. This Agreement shall automatically terminate in the event of its
assignment. In the event of termination of this Agreement, the Fund will no
longer use the name "Xxxxxxxx-Xxxxxxxxx Capital Management" in materials
relating to the Fund except as may be required by the 1940 Act and the rules and
regulations thereunder. All rights to the name "Shepherd Values" belong to the
Adviser.
Section 10. Amendment. This Agreement may be amended by mutual consent
of the Adviser, the Sub-Adviser and the Trust, but the consent of the Trust must
be approved (a) by vote of a majority of those Trustees of the Trustee who are
not parties to this Agreement or "interested persons" (as defined in the 0000
Xxx) of any such party, cast in person at a meeting called for the purpose of
voting on such amendment, and (b) if required under then current interpretations
of the 1940 Act by the Securities and Exchange Commission, by vote of a majority
of the outstanding voting securities (as defined in the 0000 Xxx) of each Fund
affected by such amendment.
Section 11. Notices. Notices of any kind to be given in writing and
shall be duly given if mailed or delivered to the Sub-Adviser at 000 X.
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxxx, XX 00000, Attention: General Counsel, and to
the Adviser at 000 Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxx Xxxxxxx, XX 00000, or at
such other address or to such other individual as shall be specified by the
party to be given notice.
Section 12. Governing Law. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without regard to
the conflicts of laws principles thereof, and (b) any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act, shall be resolved by reference
to such term or provision of the 1940 Act and to interpretation thereof, if any,
by the United States courts or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the Act, reflected in any provision of this Agreement is revised
by rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
Section 13. Severability. In the event any provision of this Agreement is
determined to be void or unenforceable, such determination shall not affect the
remainder of this Agreement, which shall continue to be in force.
Section 14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 15. Binding Effect. Each of the undersigned expressly warrants
and represents that he has the full power and authority to sign this Agreement
on behalf of the party indicated, and that his signature will operate to bind
the party indicated to the foregoing terms.
Section 16. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereto for otherwise affect their construction or effect.
Section 17. Change in Control. Sub-Adviser undertakes to notify Adviser
and the Trust in writing sufficiently in advance of any proposed change of
control, as defined in Section 2(a)(9) of the 1940 Act, as will enable the Trust
to consider whether an assignment, as defined in Section 2(a)(4) of the 1940
Act, would occur.
Section 18. Other Business. Except as set forth above, nothing in this
Agreement shall limit or restrict the right of any of the Sub-Adviser's
partners, officers or employees who may also be a trustee, officer, partner or
employee of the Trust to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any business,
whether of a similar or a dissimilar nature, nor limit or restrict the
Sub-Adviser's right to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date and year first above
written.
Shepherd Advisory Services, Inc. Xxxxxxxx-Xxxxxxxxx Capital Management
By: /s/ By: /s/
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Name: Xxxx X. Xxxx Name: Xxxxxxx X. Field
Title: President, Shepherd Advisory Services Title: Deputy general counsel
EXHIBIT A
to
Investment Sub-Advisory Agreement
AmeriPrime Funds
For all services rendered by the Sub-Adviser hereunder, the Adviser
shall pay to the Sub-Adviser, and the Sub-Adviser agrees to accept as full
compensation, an annual fee with respect to each Fund equal to the percentage of
the average daily net assets of the Fund set forth opposite its name below:
Name of Fund Fee Percentage
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Shepherd Values Small-Cap Fund 0.65%
