FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of ________, 1999 by and between
Friends Ivory & Sime, Inc., a Delaware corporation (herein referred to as the
"Adviser"), and Friends Ivory & Sime plc, a U.K. corporation, (herein
referred to as the "Sub-Adviser").
WHEREAS, Friends Ivory Funds (herein referred to as the "Trust") is
engaged in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
with the Trust dated ____ , 1999 (the "Investment Advisory Agreement"), wherein
the Adviser has agreed to provide investment management services to the various
portfolios of the Trust; and
WHEREAS, the Sub-Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as an
investment adviser; and
WHEREAS, the Adviser desires to retain the services of the Sub-Adviser
to render investment advisory services for the funds of the Trust (each a
"Fund") in the manner and on the terms and conditions hereinafter set forth in
Schedule A hereto; and
WHEREAS, the Sub-Adviser desires to be retained by the Adviser to
perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to supervision by the Adviser and the Trust's Board of
Trustees, the Sub-Adviser shall carry out the advisory services
hereunder with respect to all of the securities and other assets of the
Fund entrusted to it hereunder (the "Assets"), including the purchase,
retention and disposition of the Assets, in accordance with the Fund's
investment objectives, policies and restrictions as stated in the
Fund's prospectus and statement of additional information, as currently
in effect and as amended or supplemented from time to time (referred to
collectively as the "Prospectus"), and subject to the following:
(a) The Sub-Adviser shall determine from time to time what Assets will be
purchased, retained or sold by the Fund, and what portion of the Assets
will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement,
the Sub-Adviser shall act in conformity with the Trust's Declaration of
Trust (as defined herein) and the Prospectus and with the instructions
and directions of the Adviser and of the Board of Trustees of the Trust
and will conform to and comply with the
requirements of all applicable federal and state laws and regulations,
as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by
the Fund as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Fund's Registration Statement (as
defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal
securities laws. In executing Fund transactions and selecting brokers
or dealers, the Sub-Adviser will use its best efforts to seek on behalf
of the Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Sub-Adviser shall
consider all factors that it deems relevant, including the breadth of
the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best overall
terms available, and in selecting the broker-dealer to execute a
particular transaction, the Sub-Adviser may also consider the brokerage
and research services provided (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934). Consistent with any
guidelines established by the Board of Trustees of the Trust, the
Sub-Adviser is authorized to pay to a broker or dealer who provides
such brokerage and research services a commission for executing a
portfolio transaction for the Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting
that transaction if, but only if, the Sub-Adviser determines in good
faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer -
- viewed in terms of that particular transaction or terms of the
overall responsibilities of the Sub-Adviser to the Fund. In addition,
the Sub-Adviser is authorized to allocate purchase and sale orders for
securities to brokers or dealers (including brokers and dealers that
are affiliated with the Adviser, Sub-Adviser or the Trust's principal
underwriter) to take into account the sale of shares of the Trust if
the Sub-Adviser believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified
firms. In no instance, however, will the Fund's Assets be purchased
from or sold to the Adviser, Sub-Adviser, the Trust's principal
underwriter, or any affiliated person of either the Trust, Adviser, the
Sub-Adviser or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and
Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act. The Sub-Adviser shall provide to the Adviser or the Board of
Trustees such periodic and special reports, balance sheets or financial
information, and such other information with regard to its affairs as
the Adviser or Board of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and
shall timely furnish to the Adviser all information relating to the
Sub-Adviser's services under this Agreement needed by the Adviser to
keep the other books and records of the Fund required by Rule 31a-1
under the 1940 Act. The Sub-Adviser shall also furnish to the Adviser
any other information relating to the Assets that is required to be
filed by the Adviser or the Trust with the SEC or sent to shareholders
under the 1940 Act (including the rules adopted thereunder) or any
exemptive or other relief that the Adviser or the Trust obtains from
the SEC. The Sub-Adviser agrees that all records that it maintains on
behalf of the Fund are property of the Fund and the Sub-Adviser will
surrender promptly to the Fund any of such records upon the Fund's
request; provided, however, that the Sub-Adviser may retain a copy of
such records. In addition, for the duration of this Agreement, the
Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any such records as are required to be maintained by
it pursuant to this Agreement, and shall transfer said records to any
successor sub-adviser upon the termination of this Agreement (or, if
there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Fund's custodian on each business day
with information relating to all transactions concerning the Fund's
Assets and shall provide the Adviser with such information upon request
of the Adviser.
(f) The Adviser acknowledges that the Sub-Adviser performs investment
advisory services for various other clients and may give advice, and
take action, with respect to any of those other clients which may
differ from the advice given, or the timing or nature of action taken,
with respect to the Fund, provided that over a period of time the
Sub-Adviser, to the extent practical, will allocate investment
opportunities to the Fund on a fair and equitable basis relative to
other similarly-situated accounts and will attempt to minimize any
dispersion of returns between the Fund and such accounts.
The Adviser also acknowledges that the Sub-Adviser, its principals,
employees and affiliates, and other clients of the Sub-Adviser may
have, acquire, increase, decrease, or dispose of securities or
interests therein at or about the same time that the Sub-Adviser is
purchasing or selling securities or interests therein for the Fund
which are or may be deemed to be inconsistent with the actions taken by
such persons. The Sub-Adviser shall not have any obligations to
purchase or sell, or recommend the purchase or sale, for the Fund any
securities transactions that the Sub-Adviser, its principals, employees
or affiliates, or other clients undertake.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill
its commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and shall
provide the Fund's custodian with instructions for voting all proxies
in relation to the securities held in the Fund. The Adviser shall
instruct the custodian and other parties
providing services to the Fund to promptly forward misdirected proxies
to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners,
officers or employees.
2. The Sub-Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as
it shall from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without limiting
the generality of the foregoing, the staff and personnel of the
Sub-Adviser shall be deemed to include persons employed or otherwise
retained by the Sub-Adviser to furnish statistical and other factual
data, advice regarding economic factors and trends, information with
respect to technical and scientific developments, and such other
information, advice and assistance as the Adviser may desire. The
Sub-Adviser shall maintain whatever records as may be required to be
maintained by it under the 0000 Xxx. All such records so maintained
shall be made available to the Trust, upon the request of the Adviser
or the Trust.
3. The Trust will, from time to time, furnish or otherwise make available
to the Sub-Adviser such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the
Sub-Adviser may reasonably require in order to discharge its duties and
obligations hereunder or to comply with any applicable law and
regulations and the investment objectives, policies and restrictions
from time to time prescribed by the Directors of the Trust.
4. The Sub-Adviser shall bear the cost of rendering the investment
advisory services to be performed by it under this Agreement, and
shall, at its own expense, pay the compensation of the officers and
employees, if any, of the Trust, employed by the Sub-Adviser, and such
clerical help and bookkeeping services as the Sub-Adviser shall
reasonably require in performing its duties hereunder.
5. For the services to be provided by the Sub-Adviser pursuant to this
Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser
agrees to accept as full compensation therefor, a sub-advisory fee at
the rate specified in the Schedules which are attached hereto and made
part of this Agreement. The fee will be calculated based on the average
daily net assets under the Sub-Adviser's management and will be paid to
the Sub-Adviser monthly. Except as may otherwise be prohibited by law
or regulation (including any then current SEC staff interpretation),
the Sub-Adviser may, in its discretion and from time to time, waive a
portion of its fee.
6. The Sub-Adviser will use its best efforts in the performance of
investment activities on behalf of the Trust, but in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations hereunder, the Sub-Adviser shall not be liable to
the Adviser or the Trust or any of its investors for any
error of judgment or mistake of law or for any act or omission by the
Sub-Adviser or for any losses sustained by the Trust or its investors.
7. 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 interest in, the Sub-Adviser, and in any
person controlled by or under common control with the Sub-Adviser, and
that the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser may have an interest in the Trust. It is
also understood that the Sub-Adviser and any affiliated persons thereof
or any persons controlled by or under common control with the
Sub-Adviser have and may have advisory, management service or other
contracts with other organizations and persons, and may have other
interests and businesses, and further may purchase, sell or trade any
securities or commodities for their own accounts or for the account of
others for whom they may be acting.
8. This Agreement, unless sooner terminated as provided herein, shall
remain in effect until two years from date of execution, and
thereafter, for periods of one year so long as such continuance
thereafter is specifically approved at least annually (a) by the vote
of a majority of those Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval, and (b)
by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of each Fund; provided, however, that if
the shareholders of any Fund fail to approve the Agreement as provided
herein, the Adviser may continue to serve hereunder in the manner and
to the extent permitted by the 1940 Act and rules and regulations
thereunder. The foregoing requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated as to any Fund at any time, without
the payment of any penalty by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of
the Fund on not less than 30 days nor more than 60 days written notice
to the Adviser, or by the Adviser at any time without the payment of
any penalty, on 90 days written notice to the Trust. This Agreement
will automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any
office of such party.
As used in this Section 12, the terms "assignment," "interested
persons," and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the 1940
Act and the rules and regulations thereunder; subject to such
exemptions as may be granted by the SEC under said Act.
9. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund to supply any omission, to
cure, correct or supplement any ambiguous, defective or inconsistent
provision hereof, or if they deem it
necessary to conform this Agreement to the requirements of applicable
federal laws or regulations, but neither the Trust, the Adviser nor the
Sub-Adviser shall be liable for failing to do so.
10. This Agreement shall be construed in accordance with the law of the
State of Delaware and the applicable provisions of the 1940 Act. To the
extent the applicable law of the State of Delaware, or any of the
provisions herein, conflict with the applicable provisions of the 1940
Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in _________, _____________.
FRIENDS IVORY & SIME, Inc.
By:
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Name:
---------------------------------
Attest:
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FRIENDS IVORY & SIME plc
By:
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Name:
---------------------------------
Attest:
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Accepted and agreed to as of the day and year first above written:
FRIENDS IVORY FUNDS
By:
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Name:
---------------------------------
Attest:
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SCHEDULE A DATED________ ____, 1999
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT DATED________ ____, 1999
BETWEEN
FRIENDS IVORY & SIME, INC.
AND
FRIENDS IVORY & SIME PLC
Pursuant to Article 5, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
FUND ANNUAL FEE
Friends Ivory European Social Awareness Fund 0.85% (85 basis points)
