SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the "Agreement") made as of this 2nd day of
March, 2016 by and between Xxxxxx Associates Inc., a California corporation
with its principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, XX 00000-0000 (the "Adviser"), and Credit Suisse Asset Management,
LLC a limited liability company organized under the laws of the State of
Delaware, with its principal place of business at Xxx Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (the "Sub-Adviser").
W I T N E S S E T H
WHEREAS, pursuant to authority granted to the Adviser by the Board of
Trustees (the "Board") of THE KP FUNDS (the "Trust") on behalf of the series
set forth on Schedule A to this Agreement (the "Fund") and pursuant to the
provisions of the Investment Advisory Agreement dated as of December 18, 2013
between the Adviser and the Fund (the "Management Agreement"), the Adviser has
selected the Sub-Adviser to act as investment sub-adviser of the Fund and to
provide certain related services, as more fully set forth below, and to perform
such services under the terms and conditions hereinafter set forth, and the
Sub-Adviser desires to furnish such services; and
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Adviser and the Sub-Adviser do hereby agree as follows:
1. APPOINTMENT OF SUB-ADVISER
(a) In accordance with and subject to the Management Agreement, the
Adviser hereby appoints the Sub-Adviser to perform the services described in
Section 2 below for investment and reinvestment of the securities and other
assets of the Fund, subject to the control and direction of the Adviser and the
Fund's Board of Directors, for the period and on the terms hereinafter set
forth. The Sub-Adviser accepts such appointment and agrees to furnish the
services hereinafter set forth for the compensation herein provided.
2. THE SUB-ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Sub-Adviser
shall act as investment sub-adviser with respect to the Fund. In such capacity,
the Sub-Adviser shall, subject to the supervision of the Adviser and the Board,
regularly provide the Fund with investment research, advice and supervision and
shall furnish continuously an investment program for such Fund assets as may be
allocated by the Adviser to the Sub-Adviser (the "Assets"), consistent with the
investment objectives and policies of the Fund and any investment guidelines
established and modified from time to time by the Adviser and communicated in
writing to the Sub-Adviser. The Sub-Adviser shall determine, from time to time,
which investments shall be purchased for the Fund and which such
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securities shall be held or sold by the Fund, subject always to the provisions
of the Trust's Agreement and Declaration of Trust, By-Laws and its registration
statement on Form N-1A (the "Registration Statement") under the Investment
Company Act of 1940, as amended (the "1940 Act"), and under the Securities Act
of 1933, as amended (the "1933 Act"), covering Fund shares, as filed with the
Securities and Exchange Commission (the "Commission"), and to the investment
objectives, policies and restrictions of the Fund, as each of the same shall be
from time to time in effect, and to any investment guidelines established by
the Adviser as referred to above and provided to the Sub-Adviser in writing. To
carry out such obligations, the Sub-Adviser shall, without prior consultation
with the Adviser, exercise full discretion and act for the Fund in the same
manner and with the same force and effect as the Fund itself might or could do
with respect to purchases, sales or other transactions, as well as with respect
to all other such things necessary or incidental to the furtherance or conduct
of such purchases, sales or other transactions. Notwithstanding the foregoing,
the Sub-Adviser shall, upon written instructions from the Adviser, effect such
portfolio transactions for the Fund as the Adviser may from time to time
direct; provided however, that the Sub-Adviser shall not be responsible for any
such portfolio transactions effected upon written instructions from the
Adviser. No reference in this Agreement to the Sub-Adviser having full
discretionary authority over the Fund's investments shall in any way limit the
right of the Adviser, in its sole discretion, to establish or revise policies
in connection with the management of the Fund's assets or to otherwise exercise
its right to control the overall management of the Fund's assets.
(b) COMPLIANCE. The Sub-Adviser agrees to comply with the
requirements of the 1940 Act, the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the Commodity Exchange Act and the respective rules
and regulations thereunder, as applicable, as well as with all other applicable
federal and state laws, rules, regulations and case law that relate to the
services and relationships described hereunder and to the conduct of its
business as a registered investment adviser. With respect to the Fund Assets
as defined in Section 1(a) herein, the Sub-Adviser also agrees to comply with
the objectives, policies and restrictions set forth in the Registration
Statement, as amended or supplemented, of the Fund, and with any policies,
guidelines, instructions relating to the management of the Assets hereunder,
and procedures approved by the Board or the Adviser and provided to the
Sub-Adviser. The Adviser will use its best efforts to provide the Sub-Adviser
with advance notice of any (i) change in a Fund's investment objective,
policies or restrictions and (ii) any change to the Trust's Agreement and
Declaration of Trust or By-Laws. Notwithstanding the above notice provision,
with respect to any change that is required by law or initiated by the
Trustees, the Adviser will use its best efforts to provide the Sub-Adviser with
as much advance notice as is possible under the circumstances or will notify
the Sub-Adviser as soon as practicable after such changes have been approved or
effectuated. The Sub-Adviser shall be responsible for compliance with any of
the aforementioned changes following notice of such change, provided that with
respect to any Assets acquired by the Sub-Adviser prior to notification of
such
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change, subject to any time limits specified in the investment guidelines, the
Sub-Advisor will use commercially reasonable efforts to sell such Assets within
such time as the Sub-Adviser in good faith determines is advisable, taking into
account market conditions and consultation with the Adviser. In selecting the
Fund's portfolio securities and performing the Sub-Adviser's obligations
hereunder, the Sub-Adviser shall cause the Fund to comply with the
diversification and source of income requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), with respect to the
Assets of the Fund managed by the Sub-Adviser consistent with the investment
guidelines provided by the Adviser, for qualification by the Fund as a
regulated investment company. For avoidance of doubt, the Sub-Adviser shall
only be responsible for compliance with the diversification and source of
income requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), with respect to the Assets of the Fund managed by the
Sub-Adviser. The Sub-Adviser shall maintain compliance procedures that it
reasonably believes are adequate to ensure the compliance with the foregoing.
No supervisory activity undertaken by the Adviser shall limit the Sub-Adviser's
full responsibility for any of the foregoing. The Adviser acknowledges that the
Sub-Adviser is not the compliance agent for the Trust and that the
Sub-Adviser's responsibilities are limited to those related to the management
of the Assets, and that the Sub-Adviser is not responsible for compliance,
qualification or other matters related to those portions of the Fund which are
not subject to this Agreement.
(c) PROXY VOTING. Pursuant to Board authority, the Adviser has the
authority to determine how proxies with respect to securities that are held by
the Fund shall be voted, and the Adviser may delegate the authority and
responsibility to vote proxies for the Fund's securities to the Sub-Adviser. So
long as proxy voting authority for the Fund has been delegated to the
Sub-Adviser, the Adviser shall provide such assistance to the Sub-Adviser with
respect to the voting of proxies for the Fund as the Sub-Adviser may from time
to time reasonably request, and the Adviser shall promptly forward to the
Sub-Adviser any information or documents necessary for the Sub-Adviser to
exercise its proxy voting responsibilities. The Sub-Adviser shall carry out
such responsibility in accordance with any instructions that the Board or the
Adviser shall provide from time to time, and at all times in a manner
consistent with Rule 206(4)-6 under the Advisers Act and its fiduciary
responsibilities to the Trust. The Sub-Adviser shall provide the Adviser with a
copy of its written proxy voting policies and procedures and as such may be
amended from time to time. The Sub-Adviser shall provide periodic reports and
keep such records relating to proxy voting as the Adviser and the Board may
reasonably request or as may be necessary for the Fund to comply with the 1940
Act and other applicable law. Any such delegation of proxy voting
responsibility to the Sub-Adviser may be revoked or modified by the Board or
the Adviser at any time upon notice.
Unless and until otherwise directed by the Adviser or the Board, the
Sub-Adviser shall be responsible for voting the Fund's proxies with respect to
the Assets and exercising all other applicable rights of the Fund as a security
holder in connection with corporate actions or other transactions relating to
the Fund's portfolio holdings. The Sub-Adviser is
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authorized to instruct the Fund's custodian and/or broker(s) to forward
promptly to the Sub-Adviser or designated service provider copies of all
proxies and shareholder communications relating to securities held in the
portfolio of a Fund (other than materials relating to legal proceedings against
the Fund). The Sub-Adviser may also instruct the Fund's custodian and/or
broker(s) to provide reports of holdings in the portfolio of the Fund. The
Sub-Adviser has the authority to engage a service provider to assist with
administrative functions related to voting Fund proxies. The Trust shall direct
the Fund's custodian and/or broker(s) to provide any assistance requested by
the Sub-Adviser in facilitating the use of a service provider. In no event
shall the Sub-Adviser have any responsibility to vote proxies that are not
received on a timely basis. The Trust acknowledges that the Sub-Adviser,
consistent with the Sub-Adviser's written proxy voting policies and procedures,
may refrain from voting a proxy if, in the Sub-Adviser's discretion, refraining
from voting would be in the best interests of the Fund and its shareholders.
(d) RECORDKEEPING. The Sub-Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the Fund,
except as otherwise provided herein or as may be necessary for the Sub-Adviser
to supply to the Adviser, the Trust or its Board the information required to be
supplied under this Agreement.
The Sub-Adviser shall maintain separate books and detailed records of
all matters pertaining to the Fund's assets advised by the Sub-Adviser required
by Rule 31a-1 under the 1940 Act (other than those records being maintained by
the Adviser, or any administrator custodian or transfer agent appointed by the
Fund) relating to its responsibilities provided hereunder with respect to the
Fund, and shall preserve such records for the periods and in a manner
prescribed therefore by Rule 31a-2 under the 1940 Act (the "Fund Books and
Records"). The Fund Books and Records shall be available to the Adviser and
the Board at any time upon request and shall be delivered to the Trust in a
form requested by the Adviser, which may include an electronic format, upon the
termination of this Agreement and shall be available without delay during any
day the Trust is open for business. Nothing herein shall prevent the
Sub-Adviser from maintaining its own records as required by law, which may be a
duplication of the Fund's records.
(e) HOLDINGS INFORMATION AND PRICING. The Sub-Adviser shall provide
regular reports regarding the Fund's holdings, and may, on its own initiative,
furnish the Adviser, the Trust and its Board from time to time with whatever
information the Sub-Adviser believes is appropriate for this purpose. The
Sub-Adviser agrees to notify the Adviser and the Board promptly if the
Sub-Adviser reasonably believes that the value of any security held by a Fund
may not reflect fair value. The Sub-Adviser agrees to provide upon request any
pricing information of which the Sub-Adviser is aware to the Adviser, Trust,
its Board and/or any Fund pricing agent to assist in the determination of the
fair value of any Fund holdings for which market quotations are not readily
available or as
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otherwise required in accordance with the 1940 Act or the Fund valuation
procedures for the purpose of calculating the Trust's net asset value in
accordance with procedures and methods established by the Board. It is
understood that any pricing information requested by the Adviser from time to
time and provided by the Sub-Adviser may be based upon or derived from the
Sub-Adviser's own valuation procedures. Additionally, the Sub-Adviser is not a
pricing source and should not be relied upon as the source for the official
valuation of any positions held by the Fund. The Adviser acknowledges that the
Sub-Adviser is not responsible for determining the value of any Asset.
(f) COOPERATION WITH AGENTS OF THE ADVISER AND THE TRUST. The
Sub-Adviser agrees to cooperate with and provide reasonable assistance to the
Adviser, the Trust and any Trust custodian or foreign sub-custodians, any Trust
pricing agents and all other agents and representatives of the Adviser and the
Trust with respect to such information regarding the Fund as such entities may
reasonably request from time to time in the performance of their obligations,
provide prompt responses to reasonable requests made by such persons and
establish appropriate interfaces with each so as to promote the efficient
exchange of information and compliance with applicable laws and regulations.
The Sub-Adviser shall make its officers and employees available to the Adviser
from time to time to review any current or proposed investment guidelines for
the Fund and to consult with the Adviser with respect to the Fund's investment
matters.
(g) CONSULTATION WITH OTHER SUB-ADVISERS. In performance of its
duties and obligations under this Agreement, the Sub-Adviser shall not consult
with any other sub-adviser to the Fund or a sub-adviser to a portfolio that is
under common control with the Fund concerning transactions for the Fund, except
as permitted by the policies and procedures of the Fund. The Sub-Adviser shall
not provide investment advice to any assets of the Fund other than the assets
managed by the Sub-Adviser. For the avoidance of doubt, the foregoing shall not
apply to any investment advice provided by the Sub-Adviser to any third party
funds that own the same assets as any assets of the Fund.
3. CODE OF ETHICS. The Sub-Adviser has adopted a written code of ethics that
it reasonably believes complies with the requirements of Rule 17j-1 under the
1940 Act, which it has provided to the Adviser and the Trust. The Sub-Adviser
shall ensure that its Access Persons (as defined in the Sub-Adviser's Code of
Ethics) comply in all material respects with the Sub-Adviser's Code of Ethics,
as in effect from time to time. Upon request, the Sub-Adviser shall provide the
Trust with (i) a copy of the Sub-Adviser's current Code of Ethics, as in effect
from time to time, and (ii) a certification that it has adopted procedures
reasonably necessary to prevent Access Persons from engaging in any conduct
prohibited by the Sub-Adviser's Code of Ethics. Annually, the Sub-Adviser shall
furnish a written report, which complies with the requirements of Rule 17j-1,
concerning the Sub-Adviser's Code of Ethics to the Adviser and the Trust's
Board. The Sub-Adviser shall respond to requests for information from the
Adviser and the Trust as to violations of the Code by Access Persons and the
sanctions imposed by the Sub-Adviser on such Access Persons. The Sub-Adviser
shall promptly notify the Adviser and
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the Trust of any material violation of the Code, whether or not such violation
relates to a security held by any Fund.
4. INFORMATION AND REPORTING. The Sub-Adviser shall provide the Adviser, the
Trust, and their respective officers with such periodic reports concerning the
obligations the Sub-Adviser has assumed under this Agreement as the Adviser and
the Trust may from time to time reasonably request.
(a) NOTIFICATION OF BREACH OR SIGNIFICANT CHANGES / COMPLIANCE
REPORTS. The Sub-Adviser shall notify the Trust's Chief Compliance Officer and
Adviser as soon as reasonably practicable upon detection of (i) any material
failure to manage any Fund in accordance with its investment objectives and
policies or any applicable law; or (ii) any material breach of any of the
Fund's or the Adviser's policies, guidelines or procedures that directly relate
to management of Fund Assets or to the sub-advisory services provided by the
Sub-Adviser to the Fund hereunder. The Sub-Adviser shall notify the Adviser as
soon as possible of (i) any significant changes in its investment strategy,
asset allocation or other matters affecting its management of Fund Assets; or
(ii) any changes to the senior investment management personnel primarily
responsible for the investment or servicing of Fund Assets which include
portfolio managers and relationship managers. In addition, the Sub-Adviser
shall provide a quarterly report regarding the Fund's compliance with its
investment objectives and policies, applicable law, including, but not limited
to the 1940 Act and Subchapter M of the Code, and the Fund's and the Adviser's
policies, guidelines or procedures as applicable to the Sub-Adviser's
obligations under this Agreement. The Sub-Adviser acknowledges and agrees that
the Adviser may, in its discretion, provide such quarterly compliance
certifications to the Board. The Sub-Adviser agrees to correct any such
failure promptly and to take any action that the Board and/or the Adviser may
reasonably request in connection with any such breach. Upon request, the
Sub-Adviser shall also provide the officers of the Trust with supporting
certifications in connection with such certifications of Fund financial
statements and disclosure controls pursuant to the Xxxxxxxx-Xxxxx Act. The
Sub-Adviser will promptly notify the Trust in the event (i) the Sub-Adviser is
served or otherwise receives notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board, or
body, involving the affairs of the Trust (excluding class action suits in which
a Fund is a member of the plaintiff class by reason of the Fund's ownership of
shares in the defendant) or the compliance by the Sub-Adviser with the federal
or state securities laws or (ii) an actual change in control of the Sub-Adviser
resulting in an "assignment" (as defined in the 1940 Act) has occurred or is
otherwise proposed to occur.
(b) INSPECTION. Upon reasonable request, the Sub-Adviser agrees to
make its records and premises (including the availability of the Sub-Adviser's
employees for interviews) to the extent that they relate to the conduct of
services provided to the Fund or the Sub-Adviser's conduct of its business as
an investment adviser reasonably available for compliance audits by the Adviser
or the Trust's officers, employees,
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accountants or counsel; in this regard, the Trust and the Adviser acknowledge
that the Sub-Adviser shall have no obligation to make available proprietary
information unrelated to the services provided to the Fund or any information
related to other clients of the Sub-Adviser, except to the extent necessary for
the Adviser to confirm the absence of any conflict of interest and compliance
with any laws, rules or regulations in the management of the Fund. Each party
will be responsible for their own expenses related to such inspections.
(c) BOARD AND FILINGS INFORMATION. The Sub-Adviser will also provide
the Adviser and Trust with any information reasonably requested regarding its
management of the Fund required for any meeting of the Board, or for any
shareholder report, Form N-CSR, Form N-Q, Form N-PX, Form N-SAR, amended
registration statement, proxy statement, or prospectus supplement to be filed
by the Trust with the Commission. The Sub-Adviser will make its officers and
employees available to meet with the Board from time to time on due notice to
review its investment management services to the Fund in light of current and
prospective economic and market conditions and shall furnish to the Board such
information as may reasonably be necessary in order for the Board to evaluate
this Agreement or any proposed amendments thereto.
(d) TRANSACTION INFORMATION. The Sub-Adviser shall furnish to the
Adviser and the Trust such information concerning portfolio transactions as may
be necessary to enable the Adviser, Trust or their designated agents to perform
such compliance testing on the Fund and the Sub-Adviser's services as the
Adviser and the Trust may, in their sole discretion, determine to be
appropriate. The provision of such information by the Sub-Adviser to the
Adviser, Trust or their designated agents in no way relieves the Sub-Adviser of
its own responsibilities under this Agreement.
5. BROKERAGE.
(a) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of a Fund, neither the Sub-Adviser nor any of its
directors, officers or employees will act as a principal or agent or receive any
commission except as permitted by the 1940 Act.
(b) PLACEMENT OF ORDERS. The Sub-Adviser shall arrange for the
placing of all orders for the purchase and sale of securities for a Fund's
account with brokers or dealers selected by the Sub-Adviser. In the selection
of such brokers or dealers and the placing of such orders, subject to the other
provisions of this paragraph, the Sub-Adviser is directed at all times to seek
for a Fund the best execution available under the circumstances, taking into
account factors such as price, size of order and type of transaction,
difficulty of execution, scope and quality of brokerage services provided and
the financial responsibility and operations of the broker. It is expected that
the Sub-Adviser will seek competitive commission rates generally although it is
understood that the Sub-Adviser will not necessarily pay the lowest commission
rate available on each
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transaction. It is also understood that it may be desirable for the Fund that
the Sub-Adviser have access to brokerage and research services provided by
brokers who may execute brokerage transactions at a higher cost to the Fund
than may result when allocating brokerage to other brokers, consistent with
section 28(e) of the 1934 Act and any Commission staff interpretations thereof.
Therefore, the Sub-Adviser is authorized to place orders for the purchase and
sale of securities for the Fund with such brokers if the Sub-Adviser
determines, in good faith, that such amount of commissions is reasonable in
relation to the value of such brokerage or research services provided in terms
of a particular Fund transaction or the Sub-Adviser's overall responsibilities
to the Fund and its other clients, and that the total commissions paid by the
Fund will be reasonable in relation to the benefits to the Fund over the
long-term. This practice is subject to review by the Adviser and the Board 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
Sub-Adviser in connection with its or its affiliates' services to other
clients.
(c) AGGREGATED TRANSACTIONS. On occasions when the Sub-Adviser deems
the purchase or sale of a security to be in the best interest of a Fund as well
as other clients of the Sub-Adviser, the Sub-Adviser may, to the extent
permitted by applicable law and regulations, aggregate the order for securities
to be sold or purchased. In such event, the Sub-Adviser will allocate
securities or futures contracts so purchased or sold, as well as the expenses
incurred in the transaction, in the manner the Sub-Adviser reasonably considers
to be equitable and consistent with its fiduciary obligations to a Fund and to
such other clients under the circumstances.
(d) AFFILIATED BROKERS. The Sub-Adviser or any of its affiliates may
act as broker in connection with the purchase or sale of securities or other
investments for a Fund, subject to: (a) the requirement that the Sub-Adviser
seek to obtain best execution and price within the policy guidelines determined
by the Board and set forth in a Fund's current Registration Statement; (b) the
provisions of the 1940 Act; (c) the provisions of the Advisers Act; (d) the
provisions of the 1934 Act; and (e) other provisions of applicable law. These
brokerage services are not within the scope of the duties of the Sub-Adviser
under this Agreement. Subject to the requirements of applicable law and any
procedures adopted by the Board, the Sub-Adviser or its affiliates may receive
brokerage commissions, fees or other remuneration from a Fund for these
services in addition to the Sub-Adviser's fees for services under this
Agreement.
6. SERVICE OF OTHERS. The Sub-Adviser and its officers may act and continue to
act as investment managers for others, and nothing in this Sub-Advisory
Agreement shall in any way be deemed to restrict the right of the Sub-Adviser
or any of such officers to perform investment management or other services for
any other person or entity, and the performance of such services for others
shall not be deemed to violate or give rise to any duty or obligation to the
Fund. Nothing in this Sub-Advisory Agreement, and subject to all applicable
regulations and the Sub-Adviser's Code of Ethics, shall limit or restrict the
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Sub-Adviser or any of its officers, directors, stockholders, affiliates or
employees from buying, selling or trading in any securities for its or their
own account. The Fund acknowledges that the Sub-Adviser and its officers,
directors, stockholders, affiliates, employees and other clients may, at any
time, have, acquire, increase, decrease, or dispose of positions in investments
which are at the same time being acquired or disposed of for the Fund. The
Sub-Adviser shall have no obligation to acquire for the Fund a position in any
investment which the Sub-Adviser, its officers, directors, stockholders,
affiliates or employees may acquire for its or their own accounts or for the
account of another client, so long as it continues to be the policy and
practice of the Sub-Adviser not to favor or disfavor consistently or
consciously any client or class of clients in the allocation of investment
opportunities, such opportunities will be allocated among clients over a period
of time on a fair and equitable basis. With respect to 'cross transactions'
i.e. transactions where the Sub-Adviser or an affiliate acts as agent on behalf
of the Assets of the Fund and the other party to the transaction with the Fund
is a fund or accounts advised by the Sub-Adviser or an affiliate thereof, the
Sub-Adviser shall effect such transactions in accordance with the Fund's
policies and procedures.
7. CUSTODY. Nothing in this Agreement shall permit or require the Sub-Adviser
to take or receive physical possession of cash, securities or other investments
of a Fund.
8. ALLOCATION OF CHARGES AND EXPENSES. The Sub-Adviser will bear its own costs
of providing services hereunder. Other than as herein specifically indicated,
the Sub-Adviser shall not be responsible for a Fund's or the Adviser's
expenses, including, but not limited to, brokerage and other expenses incurred
in placing orders for the purchase and sale of securities and other investment
instruments.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) PROPERLY REGISTERED. The Sub-Adviser is registered as an
investment adviser under the Advisers Act, and will remain so registered for the
duration of this Agreement. The Sub-Adviser is not prohibited by the Advisers
Act or the 1940 Act from performing the services contemplated by this Agreement,
and to the best knowledge of the Sub-Adviser, there is no proceeding or
investigation that is reasonably likely to result in the Sub-Adviser being
prohibited from performing the services contemplated by this Agreement. The
Sub-Adviser agrees to promptly notify the Trust of the occurrence of any event
that would disqualify the Sub-Adviser from serving as an investment adviser to
an investment company. The Sub-Adviser is in compliance in all material respects
with all applicable federal and state law in connection with its investment
management operations.
(b) REPRESENTATIONS. The representations contained in this Section 9
shall be deemed to be made on the date this Agreement is executed.
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(c) ADV DISCLOSURE. The Sub-Adviser has provided the Trust with a
copy of Part I of its Form ADV as most recently filed with the Commission and
its Part II as most recently updated and will furnish a copy of such material
amendments or updates to the Trust. The information contained in the
Sub-Adviser's Form ADV is true and correct as of the date of the Form ADV. The
Adviser consents to electronic delivery of all future material amendments to
Form ADV and other disclosure documents. The Adviser acknowledges receipt of
Part II of the Sub-Adviser's Form ADV prior to the date of execution of this
Agreement. The Sub-Adviser will provide the Adviser, at no expense to the
Adviser, annually with a copy of its Form ADV, Part II within seven (7) days of
receipt of a written request therefor from the Adviser.
(d) FUND DISCLOSURE DOCUMENTS. The Sub-Adviser has reviewed and will
in the future review, the portions of the following documents that pertain to
the Sub-Adviser and the services provided by the Sub-Adviser hereunder: the
Registration Statement, summary prospectus, prospectus, statement of additional
information, periodic reports to shareholders, reports and schedules filed with
the Commission (including any amendment, supplement or sticker to any of the
foregoing) and advertising and sales material relating to the Fund which have
been provided to the Sub-Adviser (collectively the "Disclosure Documents"). The
Sub-Adviser shall be granted an opportunity to review and approve the content
of the Fund's Disclosure Document pertaining to the Sub-Adviser prior to filing
such disclosure with the Commission. The Sub-Adviser represents and warrants
solely with respect to disclosure in such Disclosure Documents about the
Sub-Adviser, the manner in which the Sub-Adviser manages the Assets and
information relating directly or indirectly to the Sub-Adviser in each case,
which have been provided by the Sub-Adviser in writing expressly for inclusion
in the Disclosure Documents (the "Sub-Adviser Disclosure"), that, as of the
date of each such Disclosure Documents, the Sub-Adviser Disclosure does not
contain or will not contain any untrue statement of any material fact and do
not and will not omit any statement of material fact required to be stated
therein or necessary to make the statements therein not misleading.
(e) USE OF THE NAMES "KP" AND "XXXXXX." Each of the Trust and the
Adviser represents, warrants, and agrees on behalf of itself and the Trust that
the Sub-Adviser has the right to use the names "KP" and "Xxxxxx" in connection
with its services to the Trust and the Sub-Adviser represents, warrants, and
agrees that the Trust and the Adviser have the right to use the name "Credit
Suisse Asset Management, LLC" or "CSAM" in connection with the management and
operation of a Fund. The Sub-Adviser is not aware of any threatened or existing
actions, claims, litigation or proceedings that would adversely affect or
prejudice the rights of the Sub-Adviser or the Trust to use the name "Credit
Suisse Asset Management, LLC" or "CSAM". In addition, the Adviser acknowledges
and agrees that it has no rights in or to the name "Credit Suisse Asset
Management, LLC" or "CSAM" beyond what is contemplated by this clause.
(f) INSURANCE. The Sub-Adviser maintains errors and omissions
insurance coverage in an appropriate amount and shall provide prior written
notice to the Trust (i)
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of any material changes in its insurance policies or insurance coverage; or
(ii) if any material claims will be made on its insurance policies.
Furthermore, the Sub-Adviser shall, upon reasonable request, provide the Trust
with any information it may reasonably require concerning the amount of or
scope of such insurance.
(g) NO DETRIMENTAL AGREEMENT. The Sub-Adviser represents and warrants
that it has no arrangement or understanding with any party, other than the
Trust, that would be reasonably likely to prevent the Sub-Adviser from carrying
out its obligations under this Agreement in accordance with its fiduciary
duties to the Fund.
(h) CONFLICTS. The Sub-Adviser shall act honestly, in good faith and
in the best interests of the Trust including requiring any of its personnel
with knowledge of Fund activities to place the interest of the Fund first,
ahead of their own interests, in all personal trading scenarios that may
involve a conflict of interest with the Fund, consistent with its fiduciary
duties under applicable law.
(i) REPRESENTATIONS. The representations and warranties in this
Section 9 shall be deemed to be made on the date this Agreement is executed and
at the time of delivery of the quarterly compliance report required by Section
4(a), whether or not specifically referenced in such report.
10. SUB-ADVISER'S COMPENSATION. The Adviser shall cause the Fund to pay the
Sub-Adviser, as compensation for the Sub-Adviser's services hereunder, a fee,
determined as described in Schedule A that is attached hereto and made a part
hereof. Such fee shall be computed daily and paid not less than monthly in
arrears by the Fund.
The Sub-Adviser will be compensated based on the portion of Fund assets
allocated to the Sub-Adviser by the Adviser. The method for determining net
assets of the Fund for purposes hereof shall be the same as the method for
determining net assets for purposes of establishing the offering and redemption
prices of Fund shares as described in the Fund's prospectus. In the event of
termination of this Agreement, the fee provided in this Section shall be
computed on the basis of the period ending on the last business day on which
this Agreement is in effect subject to a pro rata adjustment based on the
number of days elapsed in the current month as a percentage of the total number
of days in such month.
11. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder, the
Sub-Adviser is and shall be an independent contractor and, unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Fund, the Trust or the Adviser in any way
or otherwise be deemed to be an agent of the Fund, the Trust or the Adviser. If
any occasion should arise in which the Sub-Adviser gives any advice to its
clients concerning the shares of a Fund, the Sub-Adviser will act solely as
investment counsel for such clients and not in any way on behalf of the Fund.
The services provided by the Sub-Adviser under this Agreement are
11
not to be deemed exclusive and the Sub-Adviser shall be free to render similar
services to others (including other investment company) and to engage in other
activities, as long as such services do not impair the services rendered to the
Adviser or the Trust. It is understood and agreed that the directors,
officers, and employees of the Sub-Adviser are not prohibited from engaging in
any other business activity or from rendering services to any other person, or
from serving as partners, officers, directors, trustees, or employees of any
other firm or corporation, including other investment companies. Adviser
acknowledges that Sub-Adviser or its affiliates may give advice and take
actions in the performance of its duties to clients which differ from the
advice, or the timing and nature of actions taken, with respect to other
clients' accounts (including the Assets) or employee accounts which may invest
in some of the same securities recommended to advisory clients. In addition,
advice provided by the Sub-Adviser may differ from advice given by its
affiliates.
12. CONFIDENTIALITY. The Adviser and the Sub-Adviser shall keep confidential
any and all materials and information furnished by the other party in
connection with this Agreement or otherwise obtained in connection with the
non-disclosing party's duties hereunder and shall not disclose any such
information or advice to third parties except as otherwise contemplated herein.
The parties agree that the provisions of this Section shall not apply to any
information that is: (a) independently developed by the receiving party,
provided the receiving party can satisfactorily demonstrate such independent
development with appropriate documentation; (b) known to the receiving party
prior to disclosure by the disclosing party; (c) lawfully disclosed to the
receiving party by a third party not under a separate duty of confidentiality
with respect thereto to the disclosing party; (d) expressly required or
requested by applicable federal or state regulatory authorities; (e) required
to be disclosed under applicable law, regulatory inquiry or judicial process;
or (f) otherwise publicly available through no fault or breach by the receiving
party.
13. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically terminate,
without the payment of any penalty, (i) in the event of its assignment (as
defined in section 2(a)(4) of the 0000 Xxx) or (ii) in the event of the
termination of the Management Agreement; provided that such termination shall
not relieve the Adviser or the Sub-Adviser of any liability incurred
hereunder.
This Agreement 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 the 1940 Act, when applicable.
14. DURATION AND TERMINATION.
This Agreement shall become effective as of the date executed and shall
remain in full force and effect continually thereafter, subject to renewal as
provided in Section
12
14(d) and unless terminated automatically as set forth in Section 13 hereof or
until terminated as follows:
(a) The Trust may cause this Agreement to terminate either (i) by
vote of its Board or (ii) with respect to the Fund, upon the affirmative vote
of a majority of the outstanding voting securities of the Fund; or
(b) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice delivered
or mailed by registered mail, postage prepaid, to the Sub-Adviser; or
(c) The Sub-Adviser may at any time terminate this Agreement by not
more than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Adviser; or
(d) This Agreement shall automatically terminate two years from the
date of its execution unless its renewal is specifically approved at least
annually thereafter by (i) a majority vote of the Trustees, including a
majority vote of such Trustees who are not interested persons of the Trust, the
Adviser or the Sub-Adviser, at a meeting called for the purpose of voting on
such approval; or (ii) the vote of a majority of the outstanding voting
securities of the Fund; provided, however, that if the continuance of this
Agreement is submitted to the shareholders of the Fund for their approval and
such shareholders fail to approve such continuance of this Agreement as
provided herein, the Sub-Adviser may continue to serve hereunder as to the Fund
in a manner consistent with the 1940 Act and the rules and regulations
thereunder; and
(e) Termination of this Agreement pursuant to this Section shall be
without payment of any penalty.
In the event of termination of this Agreement for any reason, the
Sub-Adviser shall, immediately upon notice of termination or on such later date
as may be specified in such notice, cease all activity on behalf of the Fund
and with respect to any of its assets, except as expressly directed by the
Adviser or as otherwise required by any fiduciary duties of the Sub-Adviser
under applicable law. In addition, the Sub-Adviser shall deliver the Fund's
Books and Records to the Adviser by such means and in accordance with such
schedule as the Adviser shall direct and shall otherwise cooperate, as
reasonably directed by the Adviser, in the transition of portfolio asset
management to any successor of the Sub-Adviser, including the Adviser.
15. CERTAIN DEFINITIONS. For the purposes of this Agreement:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" shall have the meaning as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the Commission under
the 1940 Act or any interpretations of the Commission staff.
13
(b) "Interested persons" and "Assignment" shall have their respective
meanings as set forth in the 1940 Act, subject, however, to such exemptions as
may be granted by the Commission under the 1940 Act or any interpretations of
the Commission staff.
16. LIABILITY OF THE SUB-ADVISER.
(a) The Sub-Adviser shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of (i) statements in the
Sub-Adviser Disclosure and (ii) statements in the Fund's Disclosure Documents
that are applicable or relate to the Sub-Adviser and the services provided by
the Sub-Adviser hereunder, so long as the disclosure in the Fund's Disclosure
Documents is either based on information that has been provided by the
Sub-Adviser or has been made available to the Sub-Adviser in a manner
consistent with Section 9(d) of this Agreement.
(b) Solely with respect to the Assets, the Sub-Adviser does not
guarantee investment performance for the Fund. The Sub-Adviser shall be liable
to the Fund for any loss (including transaction costs) incurred by the Fund as
a result of any investment made by the Sub-Adviser in contravention of: (i) any
investment policy, guideline or restriction set forth in the then current
Registration Statement or as approved by the Board from time to time and
provided to the Sub-Adviser (in each case, after giving effect to any grace
periods set forth in such investment policy, guideline or restriction); or (ii)
applicable law, including but not limited to the 1940 Act and the Code
(including but not limited to the Fund's failure to satisfy the diversification
or source of income requirements of Subchapter M of the Code due to the
Sub-Adviser's failure to comply with Section 2(b) of this Agreement, and as a
result of the composition of the Assets) (the investments described in this
subsection (b) collectively are referred to as "Improper Investments"). The
Sub-Adviser shall not be liable for any loss or damage arising or resulting
solely from the acts or omissions of the Fund's custodian.
(c) The Sub-Adviser shall indemnify and hold harmless the Trust, each
affiliated person of the Trust within the meaning of Section 2(a)(3) of the
1940 Act, and each person who controls the Trust within the meaning of Section
15 of the 1933 Act (any such person, an "Indemnified Party") against any and
all losses, claims, damages, expenses or liabilities (including the reasonable
cost of investigating and defending any alleged loss, claim, damage, expense or
liability and reasonable counsel fees incurred in connection therewith) to
which any such person may become subject under the 1933 Act, the 1934 Act, the
1940 Act or other federal or state statutory law or regulation, at common law
or otherwise, insofar as such losses, claims, damages, expenses or liabilities
(or actions in respect thereof) arise out of or are based upon: (i) a breach by
the Sub-Adviser of this Agreement or of the representations and warranties made
by the Sub-Adviser herein; (ii) any Improper Investment; (iii) any untrue
statement or alleged untrue statement of a material fact applicable to the
Sub-Adviser contained in any
14
Disclosure Document or the omission or alleged omission from a Disclosure
Document of a material fact applicable to the Sub-Adviser required to be stated
therein or necessary to make the statements therein not misleading, provided
such statement or omission was made in reliance upon information furnished by
the Sub-Adviser, Sub-Adviser was given a reasonable amount of time to review
the Disclosure Document prior to its filing, dissemination or use, and any
material comments to such Disclosure Document provided by the Sub-Adviser to
Adviser, the Trust or the Fund were included in such Disclosure Document
verbatim; or (iv) the Sub-Adviser's willful malfeasance, bad faith or gross
negligence in the performance or non-performance of its duties hereunder,
except that the Sub-Adviser shall cover all losses of the Fund attributable to
trade errors caused by the Sub-Adviser in effecting portfolio transactions for
the Fund; provided, however, that nothing herein shall be deemed to protect any
Indemnified Party who is a Trustee or officer of the Trust against any
liability to the Trust or to its shareholders to which such Indemnified Party
would otherwise be subject by reason or willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
person's office with the Trust.
17. ENFORCEABILITY. Any term or provision of this Agreement 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
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
18. LIMITATION OF LIABILITY. The parties to this Agreement acknowledge and
agree that all litigation arising hereunder, whether direct or indirect, and of
any and every nature whatsoever shall be satisfied solely out of the assets of
the affected Fund and that no Trustee, officer or holder of shares of
beneficial interest of the Fund shall be personally liable for any of the
foregoing liabilities. The Trust's Certificate of Trust, as amended from time
to time, is on file in the Office of the Secretary of State of the Commonwealth
of Massachusetts. Such Certificate of Trust and the Trust's Agreement and
Declaration of Trust describe in detail the respective responsibilities and
limitations on liability of the Trustees, officers, and holders of shares of
beneficial interest.
19. NOTIFICATION OF CHANGES. The Sub-Adviser agrees that it shall notify the
Trust of any anticipated or otherwise reasonably foreseeable change in the
ownership of the Sub-Adviser within a reasonable time prior to such change
being effected. The Adviser use its best efforts to notify the Sub-Adviser of
each change in the fundamental and non-fundamental investment policies and
restrictions of the Fund or of any changes or modifications to any investment
guidelines established by the Adviser, before such changes become effective,
and to provide to the Sub-Adviser as promptly as
15
practicable copies of all amendments and supplements to the Registration
Statement before filing with the Securities and Exchange Commission ("SEC").
20. JURISDICTION. This Agreement shall be governed by and construed in
accordance with the substantive laws of the Commonwealth of Massachusetts and
the Sub-Adviser consents to the jurisdiction of courts, both state and federal,
in Massachusetts, with respect to any dispute under this Agreement.
21. PARAGRAPH HEADINGS. The headings of paragraphs contained in this Agreement
are provided for convenience only, form no part of this Agreement and shall not
affect its construction.
22. COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
23. NOTICES. All notices hereunder shall be given in writing (and shall be
deemed to have been duly given) by delivery in person, by facsimile or by
electronic means (with corresponding personal, facsimile or electronic receipt
of such delivery), or by registered or certified mail (with return receipt
requested), or by reputable overnight delivery service (with evidence of
receipt to the parties), at the address of each as set forth below (or at such
other address, number or electronic address for a party as shall be specified
by like notice):
If to the Sub-Adviser, to:
Attention: Xxxxx Xxxxxxxx with a copy to Xxxx X. Xxxx
Facsimile: (000) 000-0000 Telephone: (000-000-0000
Email: xxxxx.xxxxxxxx@xxxxxx-xxxxxx.xxx Facsimile: (000) 000-000-0000
Telephone: (000) 000-0000 Email: xxxx.x.xxxx@xxxxxx-xxxxxx.xxx
If to the Adviser, to:
Xxxxxx Associates Inc.
0000 00(xx) Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx, Senior Vice President, Trust Advisory Group
Facsimile: 303.832.8230
Email: XXXX@XXXXXX.XXX
Telephone: 000.000.0000
16
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their duly authorized officers as of the 2nd day of March,
2016.
XXXXXX ASSOCIATES INC.
By: /S/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: President and Director of Research
CREDIT SUISSE ASSET MANAGEMENT, LLC
By: /S/ XXXX X. XXXX
Name: Xxxx X. Xxxx
Title: Authorized Signatory
17
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
DATED MARCH 2, 2016 BETWEEN
XXXXXX ASSOCIATES INC.
AND
CREDIT SUISSE ASSET MANAGEMENT, LLC
Each Fund will pay to the Sub-Adviser as compensation for the Sub-Adviser's
services rendered, a fee, computed daily at an annual rate based on the average
daily net assets of the respective portion of the Fund (or "Assets" as defined
in this Agreement) as may be allocated by the Adviser to the Sub-Adviser from
time to time under the following fee schedule:
FUND RATE
KP Fixed-Income Fund - Senior Floating Rate [REDACTED]
Loans
18
