SUB-ADVISORY AGREEMENT
This Agreement (the “Agreement”) is made this 1st day of June, 2021, by and between Victory Capital Management Inc., a New York corporation (“Adviser”), and SailingStone Capital Partners LLC, a Delaware limited liability company (“Sub-adviser”). The Adviser and the Sub-adviser are each referred to herein as a “Party” to this Agreement.
WHEREAS, the Adviser serves as investment adviser to Victory Global Energy Transition Fund (“Fund”), a series of shares of beneficial interest of Victory Portfolios, a Delaware statutory trust (“Trust”), pursuant to the Investment Advisory Agreement made as of the 29th day of July 2016, 2016 (“Investment Advisory Agreement”); and
WHEREAS, Section 1(c) of the Investment Advisory Agreement provides that the Adviser may, from time to time, delegate certain responsibilities under the Investment Advisory Agreement; and
WHEREAS, the Adviser desires to avail itself of the services, advice, and assistance of the Sub-adviser in providing investment advisory services to the Fund; and
WHEREAS, the Sub-adviser is registered under the Investment Advisers Act of 1940, as amended (“Advisers Act”), and is engaged in the business of rendering investment advisory services to investment companies and other institutional clients and desires to provide such services to the Adviser;
NOW, THEREFORE, in consideration of the terms and conditions hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follow:
1. |
Employment of the Sub-adviser. Pursuant to Section 1(c) of the Investment Advisory Agreement, the Adviser hereby employs the Sub-adviser to manage the investment and reinvestment of the Fund’s assets as specified from time to time by the Adviser (“Managed Assets”), subject to the control and direction of the Trust’s Board of Trustees (“Board”) and the general oversight of the Adviser, for the period and on the terms hereinafter set forth. The Sub adviser hereby accepts such employment and agrees during such period to render the services and to assume the obligations herein set forth for the compensation specified herein. |
2. |
Services to be provided by the Sub-adviser. The Sub-adviser undertakes to provide the following services and to assume the following obligations: |
Subject to the supervision of the Board and the Adviser, the Sub-adviser agrees to furnish investment advice, research, and recommendations to the Fund, in the preparation of reports and information, and in the management of the Managed Assets, all pursuant to this Agreement, and for this purpose the Sub-adviser shall, at its own expense, maintain such staff and employ or retain such personnel and consult with such other persons as shall from time to time be necessary to the performance of its obligations under this Agreement.
Unless the Board or the Adviser gives the Sub-adviser written instructions to the contrary, the Sub-adviser shall, in good faith and in a manner which it reasonably believes best serves the interests of the Fund’s shareholders and in a manner consistent with the Procedures in effect at the time, direct the Fund’s custodian as to how to vote all proxies in connection with any matters submitted to a vote of shareholders of securities in which the Managed Assets may be invested. The Sub-adviser shall provide disclosure regarding its proxy voting policies and procedures in accordance with the requirements of Form N-l A for inclusion in the Registration Statement (as defined below) of the Trust. To the extent that the Sub-adviser votes proxies for the Fund, the Sub-adviser shall report to the Adviser in a timely manner a record of all proxies voted, in such form and format as permits the Fund to comply with the requirements of Form N-PX with respect to the Managed Assets. During any annual period in which the Sub-adviser has voted proxies for the Fund, the Sub-adviser shall certify as to its compliance with its proxy voting policies and procedures and applicable federal statutes and regulations.
In addition, at the request of the Adviser or any of the Fund’s service providers, the Sub-adviser shall be responsible for and provide reasonable assistance with the filing of claims (or otherwise causing the Fund to participate) in class action settlements or similar proceedings in which shareholders may participate related to securities currently or previously associated with the Managed Assets.
On an ongoing basis, at such times as the Adviser or the Board shall request, the Sub-adviser will provide a written report to the Adviser and the Board, in a form reasonably agreed between the Sub-adviser and the Adviser or in such other form as the Board may request, summarizing the Adviser’s trading and brokerage activities with respect to the Fund, including without limitation information regarding (i) any “soft dollar” arrangements that the Sub-adviser maintains with brokers or dealers that execute transactions for the Managed Assets, and (ii) all research and other services provided to the Sub-adviser by a broker or dealer (whether prepared by such broker or dealer or by a third party) as a result, in whole or in part, of the direction of Fund transactions to the broker or dealer.
On occasions when the Sub-adviser deems the purchase or sale of a security to be in the best interest of the Fund as well as other clients of the Sub-adviser, the Sub-adviser may, in accordance with applicable law and any relevant Procedures, aggregate the securities to be so purchased or sold with orders for other clients of the Sub-adviser in order to obtain best execution. In such event, allocation of the securities so purchased or sold, as well as of the fees and expenses incurred in the transaction, will be made by the Sub-adviser consistent with the Sub-adviser’s procedures (which will for this purpose be substantially identical to the corresponding Procedures) and in a manner that is fair and equitable over
time and consistent with the Sub-adviser’s fiduciary obligations to the Fund and to such other clients.
The Sub-adviser will provide the Adviser and the Fund with a copy of its Form ADV Part 2A and promptly furnish a copy of all amendments thereto to the Adviser and the Fund. |
The Sub-adviser will promptly notify the Adviser of any changes in its officers, directors, or managing members or persons acting in a similar capacity or in the portfolio management team responsible for the Fund, or if there is otherwise an actual or expected change in control or management of the Sub-adviser. |
3. |
Compensation of the Sub-adviser. In full consideration of services rendered and the expenses incurred by the Sub-adviser in the performance of such services, the Adviser will pay the Sub-adviser a fee, at the annual rate set forth in Schedule A hereto, based on the average daily net Managed Assets (“Sub-advisory Fee”) (except as such Sub-advisory Fee may be reduced as set forth below). Such Sub-advisory Fee shall be accrued daily and paid monthly no later than 10 days after the end of each month for which the Sub-advisory Fee is earned. If the Sub-adviser shall serve for less than the whole of any month, the Sub-advisory Fee shall be prorated. For the purpose of determining the Sub-advisory Fee payable to the Sub-adviser, the value of the average daily net Managed Assets shall be computed at the times and in the same manner as the Fund’s average daily net assets are computed for purposes of calculating the advisory fee paid by the Fund to the Adviser (“Advisory Fee”) as determined by the Board and set forth in the Governing Documents. |
In the event that the Adviser implements any Advisory Fee waiver, Advisory Fee reduction or expense limitation in respect of the Fund (“Fee Modification”) for any period, the Sub-advisory Fee, as set forth above, shall be reduced for any such period by (i) the dollar value of such Fee Modification multiplied by (ii) the proportion that (A) the Sub-advisory Fee bears to (B) the Advisory Fee (absent such Fee Modification).
4. |
Conflicts. Without limiting any fiduciary duty or other obligation of the Sub- adviser to the Fund, the Sub-adviser will implement, establish, maintain, and comply with reasonable compliance policies and procedures that are (i) acceptable to the Board and the Adviser and (ii) intended to address conflicts of interest associated with the side by side management of the Managed Assets and the investment portfolios of other clients it advises. |
5. |
. Absent willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties hereunder on the part of the Sub-adviser or any of its partners, members, officers, agents, employees, or shareholders or the breach by the Sub-adviser of any representation or warranty hereunder, neither the Sub-adviser nor any of its partners, members, officers, employees and shareholders shall be liable for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding, or sale of any security. Nothing herein shall constitute a waiver of any rights or remedies that the Fund may have under any federal or state securities laws whose applicability is not permitted to be contractually waived. |
6. |
Indemnification by the Sub-adviser. The Sub-adviser hereby agrees to indemnify and hold harmless the Fund and the Adviser and their respective Trustees, members, officers, directors, employees, shareholders, affiliates, and agents and each person, if any, who controls the Fund or the Adviser within the meaning of Section 15 of the Securities Act, against any and all direct losses, damages, costs, charges, reasonable counsel fees, payments, expenses, liability, claims, actions, suits, or proceedings at law or in equity whether brought by a private party or a governmental department, commission, board, bureau, agency, or instrumentality of any kind, arising out of or attributable to the willful misconduct, bad faith, gross negligence, or reckless disregard of obligations or duties in the performance of the Sub-adviser’s duties (on the part of the Sub-adviser or any of its partners, members, officer, agents, employees, shareholders, affiliates, or controlling persons) under this Agreement or the material breach of any representation or warranty hereunder. The rights of indemnification provided in this section shall not be exclusive of or affect any other rights to which any person may be entitled by contract or otherwise by law.
Indemnification by the Adviser. The Adviser shall indemnify and hold harmless the Sub-adviser and each of its partners, members, officers, agents, employees and shareholders, and each person, if any, who controls the Sub-adviser within the meaning of Section 15 of the Securities Act, against any and all direct losses, damages, costs, charges, reasonable counsel fees, payments, expenses, liability, claims, actions, suits, or proceedings at law or in equity whether brought by a private party or a governmental department, commission, board, bureau, agency, or instrumentality of any kind, arising out of or attributable to (i) any action or inaction by the Sub-adviser that the Sub-adviser has taken or refrained from taking, as applicable, in good faith pursuant to and consistent with the Adviser’s written instructions to the Sub-adviser; or (ii) the willful misconduct, bad faith, gross negligence or reckless disregard of obligations or duties in the performance of the Adviser’s duties (on the part of the Adviser or any of its officers, directors, partners, agents, employees, affiliates, or controlling persons) under this Agreement or the material breach of any representation or warranty hereunder. The rights of indemnification provided in this section shall not be exclusive of or affect any other rights to which any person may be entitled by contract or otherwise by law.
7. |
Limitation of Fund’s Liability. The Sub-adviser acknowledges that it has received notice of and accepts the limitations upon the Fund’s liability set forth in the Trust’s Trust Instrument, as amended. |
8. |
. This Agreement shall continue in effect, unless sooner terminated as hereinafter provided, until the second anniversary of the date set forth above, and shall continue in full force and effect for successive periods of one year thereafter, but only so long as each such continuance is specifically approved at least annually by (i) the Trustees of the Trust or (ii) a vote of the holders of a majority of the outstanding voting securities of the Fund and, in either event, by vote of a majority of the Trustees who are not parties to this Agreement or interested persons of any such party, cast in accordance with the provisions of the 1940 Act. |
This Agreement may be terminated at any time without payment of any penalty, by the Adviser, the Board, or by a vote of a majority of the outstanding voting securities of the Fund upon 60 days’ prior written notice to the Sub-adviser, or upon such shorter notice as may be mutually agreed upon. This Agreement may also be terminated immediately, without the payment of any penalty, by (i) either Party upon material breach by the other Party of any agreement, obligation, representation, or warranty set forth in this Agreement, or (ii) by the Adviser if, in the reasonable judgment of the Adviser, the Sub-adviser becomes unable to discharge its duties and obligations under this Agreement, including circumstances such as the insolvency of the Sub-adviser, the termination, resignation, or other loss of a portfolio manager, or other circumstances that the Adviser determines could adversely affect the Fund. This Agreement may also be terminated immediately, without the payment of any penalty, by the Adviser if the Sub-adviser becomes subject to any enforcement actions or administrative proceedings that the Adviser reasonably expects to have a material and adverse effect on the Sub-adviser’s ability to perform under the Agreement. This Agreement shall terminate automatically and immediately (i) upon termination of the Advisory Agreement between the Adviser and the Fund and (ii) in the event of its assignment. The Sub-adviser shall promptly notify the Adviser of any transaction or other event that results in an assignment of this Agreement within the meaning of the 1940 Act.
In the event of a termination of this Agreement, those paragraphs of this Agreement which govern the conduct of the Parties’ future interactions with respect to the Sub-adviser having provided investment advisory services to the Fund for the duration of the Agreement, including, but not limited to, paragraphs 2(k), (1), and (m), 6, 7, 9, 11 and 12, shall survive the termination of the Agreement.
This Agreement may be amended at any time by the Sub-adviser and the Adviser, subject to approval by a majority of those Trustees of the Trust who are not interested persons of any Party and, if required by applicable law or SEC rules and regulations, a vote of a majority of the Fund’s outstanding voting securities.
9. |
The Sub-adviser shall not use the name of the Fund or the Adviser in any manner not approved prior thereto by the Adviser; provided, however, that the Sub adviser may use the name of the Adviser or the Fund in any material that merely refers in accurate terms to the Sub-adviser’s provision of the sub-advisory services to the Fund and related performance information.
The Sub-adviser hereby grants to the Adviser and the Trust during the term of this Agreement the right and license to use the Sub-adviser’s name and registered and unregistered trademarks, service marks and logos on websites, marketing literature, Prospectuses, Statements of Additional Information, shareholder reports, proxies, and in other materials solely for the purpose of disclosing and promoting the relationship between the parties to this Agreement. In accordance with the license rights granted in the preceding sentence, the Adviser agrees to furnish
to the Sub-adviser copies of such documents that refer to the Sub-adviser prior to the use thereof, and not to use such material if the Sub-adviser reasonably objects in writing within three (3) business days (or such other time as may be mutually agreed) after receipt thereof.
1. |
Sub-adviser Insurance. The Sub-adviser agrees that it will maintain at its own expense (i) adequate fidelity bond insurance with respect to its activities on behalf of the Fund and (ii) an Errors and Omissions insurance policy with respect to the Sub-adviser and providing coverage for the services provided by the Sub-adviser to the Fund under this Agreement in an amount not less than $10 million and Commercial General Liability insurance in a commercially reasonable amount. The minimum required amounts set forth in this insurance provision are not to be construed as a limitation on the Sub-adviser’s liability under this Agreement. Any and all deductibles specified in the above-referenced insurance policies shall be assumed by the Sub adviser. |
2. |
Third-Party Beneficiaries. Notwithstanding Section 6 of this Agreement, no person other than the Fund, and each of the persons from time to time serving as a Trustee, officer, or agent of the Fund, and each of the persons named as entitled to indemnification under Section 6 of this Agreement, shall be entitled to any right or benefit arising under or in respect of this Agreement; there are no third-party beneficiaries of this Agreement. Without limiting the generality of the foregoing, nothing in this Agreement is intended to, or shall be read to, (i) create in any person other than the Fund any direct, indirect, derivative, or other rights against the Adviser or Sub-adviser, or (ii) create or give rise to any duty or obligation on the part of the Adviser or Sub-adviser (including without limitation any fiduciary duty) to any person other than the Fund (including without limitation any shareholder in the Fund), all of which rights, benefits, duties, and obligations are hereby expressly excluded. |
3. |
Severability. If any provision of this Agreement shall be held or made invalid by a court decision, statue, rule, or otherwise, the remainder of this Agreement shall not be affected thereby. |
4. |
Miscellaneous. Each Party agrees to perform such further actions and execute such further documents as are necessary to effectuate the purposes hereof. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York, without giving effect to conflicts of laws rules. Exclusive jurisdiction over any action, suit, or proceeding under, arising out of, or relating to this Agreement shall lie in the federal and state courts within the State of New York, and each party hereby waives any objection it may have at any time to the laying of venue of any such proceedings brought in any such courts, waives any claim that such proceedings have been brought in an inconvenient forum, and further waives the right to object, with respect to such proceedings, that any such court does not have jurisdiction over that party. The captions in this Agreement are included for convenience only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. This Agreement may be executed in several counterparts, all of which together shall for all purposes constitute one agreement, binding on the Parties. |
5. |
. The terms “vote of a majority of the outstanding voting securities,” “assignment,” “control,” and “interested persons,” when used herein, shall have the respective meanings specified in the 1940 Act. References in this Agreement to the 1940 Act and the Advisers Act shall be construed as references to such laws as now in effect or as hereafter amended, and shall be understood as inclusive of any applicable rules, interpretations and/or orders adopted or issued thereunder by the SEC. |
6. |
Independent Contractor. The Sub-adviser shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise expressly provided herein or authorized by the Board from time to time, have no authority to act for or represent a Fund in any way or otherwise be deemed an agent of a Fund. |
7. |
Notices. Notices of any kind to be given to the Adviser hereunder by the Sub-adviser or the Trust shall be in writing and shall be duly given if mailed or delivered to the Adviser at 0000 Xxxxxxxx Xxxx, 0xx Xxxxx, Xxxxxxxx, Xxxx 00000, Attention: President, with a copy to Xxxxxxxxxxx X. Xxxx, or at such other address or to such individual as shall be so specified by the Adviser to the Sub-adviser and the Trust. Notices of any kind to be given to the Sub-adviser hereunder by the Adviser or the Trust shall be in writing and shall be duly given if mailed or delivered to the Sub-adviser at SailingStone Capital Partners LLC, Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000, Attention: XxxXxxxxx Xxxxx, or at such other address or to such individual as shall be so specified by the Sub-adviser to the Adviser and the Trust. Notices of any kind to be given to the Trust hereunder by the Adviser or Sub-adviser shall be in writing and shall be duly given if mailed or delivered to 0000 Xxxxxxxx Xxxx, 0xx Xxxxx, Xxxxxxxx, Xxxx 00000, Attention: Chair of the Board; with a copy to Xxxxxxxx & Xxxxxxxx LLP, 000 X. 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Xxx X. Xxxxx, Esq., or at such other address or to such individual as shall be so specified by the Trust to the Adviser. Notices shall be effective upon delivery. |
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.
VICTORY CAPITAL MANAGEMENT INC. |
/s/ Xxxxxxx X. XxxxxxxxxName:Xxxxxxx XxxxxxxxxTitle:President, Chief Financial Officer and Chief Administrative Officer |
SAILINGSTONE CAPITAL PARTNERS LLC |
/s/ MacKenzie X. XxxxxName:XxxXxxxxx X. XxxxxTitle:Managing Partner |
Schedule A
Effective June 1, 2021
Annual rate for purposes of Section 3 of this Agreement:
0.40% of the Managed Assets up to $750 million; plus
0.50% of the Managed Assets of more than $750 million.
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