THE MILESTONE FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this ___th day of ______, 2002, between Xxxxxxxx Capital
Management LLC (the "Adviser"), a limited partnership organized under the laws
of the State of _________ with its principal place of business at 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and Milestone Capital Management,
L.P. (the "Sub-Adviser"), a limited partnership organized under the laws of the
State of New York with its principal place of business at Xxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000 and The Milestone Funds (the "Trust"), a
business trust organized under the laws of the State of Delaware with its
principal place of business at Xxx Xxxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended, (the "Act") as an open-end management investment company and is
authorized to issue its shares of beneficial interest, no par value, in separate
series and classes;
WHEREAS, the Adviser is registered with the Securities and Exchange
Commission (the "Commission") as an investment adviser under the Investment
Advisers Act of 1940, as amended (the "Advisers Act");
WHEREAS, the Sub-Adviser is also registered with the Commission as an
investment Adviser under the Advisers Act;
WHEREAS, the Adviser and the Trust have entered into an investment advisory
agreement (the "Investment Advisory Agreement"), pursuant to which the Adviser
manages the investment operations for each series of the Trust listed in
Appendix A (each a "Portfolio" and collectively the "Portfolios") and may
delegate certain duties of the Adviser to one or more investment sub-advisers;
and
WHEREAS, the Adviser, with the approval of the Board of Trustees of the
Trust (the "Board"), including a majority of the Trustees who are not
"interested persons" of any party to this Agreement, desires to delegate to the
Sub-Adviser the duty to manage the investments of the Portfolios, and the
Sub-Adviser is willing to provide those services on the terms and conditions set
forth in this Agreement;
NOW THEREFORE, the parties agree as follows:
SECTION 1. THE TRUST; DELIVERY OF DOCUMENTS
The Trust is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Certificate of Trust, Trust Instrument, Bylaws and Registration
Statement filed with the Commission under the Act and the Securities Act of 1933
(the "Securities Act"), including any representations made in the prospectuses
and statements of additional information relating to the Portfolio contained
therein
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and as may be supplemented from time to time, all in such manner and to such
extent as may from time to time be authorized by the Board. The Trust has
delivered copies of the documents listed in this Section 1 and will from time to
time furnish to the Sub-Adviser with any amendments thereof.
SECTION 2. APPOINTMENT
The Adviser hereby appoints the Sub-Adviser, subject to the direction and
control of the Adviser and also subject to the supervision of the Adviser, to
manage the investment and reinvestment of the assets in the Portfolio and,
without limiting the generality of the foregoing, to provide other services
specified in Section 3 hereof.
SECTION 3. DUTIES OF THE SUB-ADVISER
(a) The Sub-Adviser shall provide advice to the Adviser and make decisions
on purchases and sales of securities and other investment assets in the
Portfolio. To carry out such decisions, the Sub-Adviser is hereby authorized, as
agent and attorney-in-fact for the Trust, for the account of, at the risk of and
in the name of the Trust, to place orders and issue instructions with respect to
those transactions of the Portfolio. In all purchases, sales and other
transactions in securities for the Portfolio, the Sub-Adviser is authorized to
exercise full discretion and act for the Trust in the same manner and with the
same force and effect as the Trust might or could do with respect to such
purchases, sales or other transactions, as well as with respect to all other
things necessary or incidental to the furtherance or conduct of such purchases,
sales or other transactions.
(b) The Sub-Adviser will report to the Board at each meeting thereof all
changes in the Portfolio since the prior report, and will also keep the Board
informed of important developments affecting the Trust, the Portfolio and the
Sub-Adviser, and on its own initiative, will furnish the Board from time to time
with such information as the Sub-Adviser may believe appropriate for this
purpose, whether concerning the individual companies whose securities are
included in the Portfolio's holdings, the industries in which they engage, or
the economic, social or political conditions prevailing in each country in which
the Portfolios maintain investments. The Sub-Adviser will also furnish the Board
with such statistical and analytical information with respect to securities in
the Portfolio as the Sub-Adviser may believe appropriate or as the Board
reasonably may request. In making purchases and sales of securities for the
Portfolio, the Sub-Adviser will bear in mind the policies set from time to time
by the Board as well as the limitations imposed by the Trust's Certificate of
Trust, Trust Instrument, Bylaws, Registration Statement under the Act and the
Securities Act, the limitations in the Act and in the Internal Revenue Code of
1986, as amended in respect of regulated investment companies and the investment
objectives, policies and restrictions of the Portfolio.
(c) The Sub-Adviser will from time to time employ or associate with such
persons as the Sub-Adviser believes to be particularly fitted to assist in the
execution of the Sub-Adviser's
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duties hereunder, the cost of performance of such duties to be borne and paid by
the Sub-Adviser. No obligation may be incurred on the Trust's behalf in any such
respect.
(d) The Sub-Adviser shall maintain records relating to Portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the Trust under the Act. The Sub-Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Sub-Adviser pursuant to this
Agreement required to be prepared and maintained by the Trust pursuant to the
rules and regulations of any national, state, or local government entity with
jurisdiction over the Trust, including the Commission and the Internal Revenue
Service. The books and records pertaining to the Trust which are in possession
of the Sub-Adviser shall be the property of the Trust. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Sub-Adviser's normal business hours. Upon the reasonable
request of the Trust, copies of any such books and records shall be provided
promptly by the Sub-Adviser to the Trust or the Trust's authorized
representatives.
SECTION 4. EXPENSES
Except to the extent expressly assumed by the Sub-Adviser and except to any
extent required by law to be paid or reimbursed by the Sub-Adviser, the Adviser
shall have no duty to pay any ordinary operating expenses incurred in the
organization and operation of the Portfolios.
The Trust shall be responsible and shall assume the obligation for payment
of all the Trust's operating expenses, including: (i) interest charges, taxes,
brokerage fees and commissions; (ii) certain insurance premiums; (iii) fees,
interest charges and expenses of the Trust's custodian, transfer agent and
dividend disbursing agent; (iv) telecommunications expenses; (v) auditing, legal
and compliance expenses; (vi) costs of the Trust's formation and maintaining its
existence; (vii) costs of preparing and printing the Trust's prospectuses,
statements of additional information, account application forms and shareholder
reports and delivering them to existing and prospective shareholders; (viii)
costs of maintaining books of original entry for portfolio and fund accounting
and other required books and accounts and of calculating the net asset value of
shares of the Trust; (ix) costs of reproduction, stationery and supplies; (x)
compensation of the Trust's Trustees, officers, employees and other personnel
performing services for the Trust who are not officers of the Adviser or the
Sub-Adviser, of the Distributor or of affiliated persons of either; (xi) costs
of corporate meetings; (xii) registration fees and related expenses for
registration with the Commission and the securities regulatory authorities of
other countries in which the Trust's shares are sold; (xiii) state securities
law registration fees and related expenses; (xiv) the fee payable hereunder and
fees and out-of-pocket expenses payable to the Trust's Distributor,
Administrator or Sub-Administrator under any distribution, administration or
similar agreement; and (xv) all other fees and expenses paid by the Trust
pursuant to any distribution or shareholder service plan adopted pursuant to
Rule 12b-1 under the Act or otherwise.
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SECTION 5. STANDARD OF CARE
The Trust and the Adviser shall expect of the Sub-Adviser, and the
Sub-Adviser will give the Trust and the Adviser the benefit of, the
Sub-Adviser's best judgment and efforts in rendering its services to the Trust,
and as an inducement to the Sub-Adviser's undertaking these services, the
Sub-Adviser shall not be liable hereunder for any mistake of judgment or law in
any event whatsoever, except for lack of good faith, provided that nothing
herein shall be deemed to protect, or purport to protect, the Sub-Adviser
against any liability to the Trust or to the Trust's security holders to which
the Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of the Sub-Adviser's duties
hereunder, or by reason of the Sub-Adviser's reckless disregard of its
obligations and duties hereunder.
SECTION 6. COMPENSATION
(a) In consideration of the foregoing, the Adviser shall pay the
Sub-Adviser, with respect to each Portfolio, a fee at an annual rate set forth
in Appendix A hereto. These fees shall be accrued by the Adviser daily and shall
be payable monthly in arrears on the first day of each calendar month for
services performed hereunder during the prior calendar month.
(b) For purposes of calculating the Portfolio's daily net assets in
determining the fees payable hereunder, there shall be excluded all holdings
(and liabilities related to the purchase of holdings) in any registered open-end
management investment company for which the Sub-Adviser acts as investment
adviser. No fee shall be payable hereunder with respect to the Portfolio during
any period in which the Portfolio invests all of its investment assets in a
registered, open-end management investment company, or separate series thereof,
in accordance with Section 12(d)(1)(E) under the Act.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective immediately upon approval by a
majority of the outstanding voting securities of the Portfolio.
(b) This Agreement shall remain in effect for a period of twenty four
months from the date of its execution and shall continue in effect for
successive twelve-month periods (computed from each anniversary date of
execution). This Agreement will become effective with respect to each additional
Portfolio as of the date set forth on Appendix A when each such Portfolio is
added thereto. This Agreement shall continue in effect for a Portfolio after the
second anniversary of the effective date for successive annual periods ending on
each anniversary of such date, provided that such continuance is specifically
approved at least annually (i) by the Board or by the vote of a majority of the
outstanding voting securities of the Portfolio, and, in either case, (ii) by a
majority of the Trust's Trustees who are not parties to this Agreement or
interested persons of any such party (other than as Trustees of the Trust);
provided further, however, that if this Agreement or the continuation of this
Agreement is not approved, the Sub-
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Adviser may continue to render the services described herein in the manner and
to the extent permitted by the Act and the rules and regulations thereunder.
(c) This Agreement may be terminated at any time, without the payment of
any penalty, (i) by the Board or by a vote of a majority of the outstanding
voting securities of the Portfolio on 60 days' written notice to the
Sub-Adviser. This agreement shall terminate upon assignment
SECTION 8. ACTIVITIES OF THE SUB-ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Sub-Adviser's right, or
the right of any of the Sub-Adviser's officers, directors or employees who may
also be a Trustee, officer or employee of the Trust, or persons who are
otherwise affiliated persons of the Trust to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, trust, firm, individual or association.
SECTION 9. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting securities of the Portfolio.
(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(c) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of Delaware.
(d) The terms "vote of a majority of the outstanding voting securities",
"interested person", "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE MILESTONE FUNDS
By: ________________________
Xxxxx Xxxxxxx Xxxxxx
Chair and President
XXXXXXXX CAPITAL MANAGEMENT LLC.
By:__________________________
President
MILESTONE CAPITAL MANAGEMENT L.P.
By:___________________________
Xxxxx Xxxxxxxx Xxxxxx
President
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THE MILESTONE FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
APPENDIX A
Fee as a % of
the Annual Average Daily
Portfolio of the Trust Net Assets of the Portfolio Effective Date
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Xxxxxxxx Capital Liquid Assets Fund 0.XX%
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