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1.
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Appointment.
The Adviser hereby appoints the Sub-Adviser its sub-adviser with respect to
the Fund as provided for in the Investment Advisory Agreement between the
Adviser and the Fund. The Sub-Adviser accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
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2.
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Delivery of Documents. The
Adviser shall provide to the Sub-Adviser copies of the Trust's most recent
prospectus and statement of additional information (including all supplements
thereto) which relate to any class of shares representing interests in the
Fund (each such prospectus and statement of additional information as
presently in effect, and as they shall from time to time be amended and
supplemented, is herein respectively called a "Prospectus" and a "Statement
of Additional Information").
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3.
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Sub-Advisory Services to the Fund.
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(a)
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Subject to the supervision of the Adviser, the Sub-Adviser will perform the
following services: (i) provide investment research
and credit analysis concerning the Fund's investments; (ii) conduct a
continual program of investment of the Fund's assets; (iii) place orders for
all purchases and sales of the investments made for the Fund; (iv) maintain
the books and records required in connection with its duties hereunder; (v)
keep the Adviser informed of developments materially affecting the Fund; and
(vi) assist the Adviser in the Adviser's valuation of portfolio securities
held by the Fund as requested by the Adviser or the Fund.
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(b)
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The Sub-Adviser will use the same skill and care in providing such services
as it uses in providing services to other accounts for which it has
investment responsibilities; provided that, notwithstanding this Paragraph
3(b), the liability of the Sub-Adviser for actions taken and non-actions with
respect to the performance of services under this Agreement shall be subject
to the limitations set forth in Paragraph 12(a) of this Agreement.
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(c)
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The Sub-Adviser will communicate to the Adviser and to the Trust's custodian
and fund accountants as instructed by the Adviser on each day that a purchase
or sale of a security is effected for the Fund (i)
the name of the issuer, (ii) the amount of the purchase or sale, (iii) the
name of the broker or dealer, if any, through which the purchase or sale has
been effected, (iv) the CUSIP number of the security, if any, and (v) such
other information as the Adviser may reasonably require for purposes of
fulfilling its obligations to the Trust under the Investment Advisory Agreement.
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(d)
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The Sub-Adviser will provide the services rendered by it hereunder in
accordance with the Fund's investment objectives, policies and restrictions
as stated in the Prospectus and Statement of Additional Information.
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(e)
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The Sub-Adviser will maintain records of the information set forth in
Paragraph 3(c) hereof with respect to the securities transactions of the Fund
and will furnish the Trust's Board of Trustees and the Adviser with such
periodic and special reports as the Board and the Adviser may reasonably
request.
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(f)
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The Sub-Adviser will promptly review all (1) reports of current security
holdings in the Fund, (2) summary reports of transactions and pending
maturities (including the principal, cost and accrued interest on each
portfolio security in maturity date order) and (3) current cash position
reports (including cash available from portfolio sales and maturities and
sales of the Fund's shares less cash needed for redemptions and settlement of
portfolio purchases), all within a reasonable time after receipt thereof from
the Trust and will promptly report any errors or discrepancies in such
reports of which it is aware to the Trust or its designee and the Adviser.
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4.
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Brokerage.
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(a)
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The Sub-Adviser may place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with any broker or dealer. In
selecting brokers or dealers through which to place orders, the Sub-Adviser
will seek the best overall terms available. In assessing the best overall
terms available for any transaction the Sub-Adviser will consider the factors
it considers relevant, including, but not limited to 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, for the specific transaction and on a continuing
basis. In selecting brokers or dealers to execute a particular transaction,
and in evaluating the best overall terms available, the Sub-Adviser is
authorized to consider the brokerage and research services (within the
meaning of Section 28(e) of the Securities Exchange Act of 1934, as amended)
provided to the Fund and/or other accounts over which the Sub-Adviser or its
affiliates exercise investment discretion. A commission paid to such brokers
may be higher than that which another qualified broker would have charged for
effecting the same transaction, provided that the Sub-Adviser determines in
good faith that such commission paid was reasonable in relation to the
brokerage or research services provided by such broker or dealer, viewed in
terms of that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the Fund and to the other clients of the
Sub-Adviser or its affiliates as to which the Sub-Adviser or its affiliates
exercise investment discretion. In no instance will portfolio securities be
purchased from or sold, on a principal basis, to the Trust's principal
underwriter, the Adviser, the Sub-Adviser or any affiliated person thereof
(as the term "affiliated person" is defined in the 1940 Act), except to the
extent permitted by SEC exemptive order or by
applicable law.
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(b)
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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, to the extent permitted by applicable laws and regulations,
may, but shall be under no obligation to, aggregate the securities to be
purchased or sold. In such event, allocation of the securities so purchased
or sold, as well as the expenses incurred in the transaction, will be made by
the Sub-Adviser in accordance with a methodology the Sub-Adviser believes to
be equitable to each entity. The Adviser recognizes that, in some cases, this
procedure may limit the size of the position that may be acquired or sold for
the Fund.
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5.
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Compliance with Laws;
Confidentiality; Conflicts of Interest.
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(a)
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The Sub-Adviser agrees that it will comply in all material respects with all
applicable laws, rules and regulations of all federal and state regulatory
agencies having jurisdiction over the Sub-Adviser in performance of its
duties hereunder (herein called the "Rules").
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(b)
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The Sub-Adviser will treat confidentially and as proprietary information of
the Trust and the Adviser all records and information relative to the Trust
and the Adviser and prior, present or potential shareholders (other than
information that has been made public by the performance of its responsibilities
and duties hereunder), except after prior notification to and approval in
writing by the Trust or Adviser as appropriate, which approval shall not be
unreasonably withheld and may not be withheld where the Sub-Adviser may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by applicable regulatory authorities,
or when so requested by the Trust. Notwithstanding the foregoing, to the extent that any market
counterparty with whom the Sub-Adviser deals requires information relating to
the Fund (including but not limited to the identity of the Fund and the
market value of the Fund), the Sub-Adviser shall be permitted to disclose
such information to the extent necessary to effect transactions on behalf of
the Fund in accordance with the terms of this Agreement. The terms of this Paragraph 5(b) shall survive the
termination of this Agreement.
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6.
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Confidential
Treatment. It is understood that
any information or recommendation supplied by, or produced by, the
Sub-Adviser in connection with the performance of its obligations hereunder
is to be regarded by the Fund and the Adviser as confidential and for use
only by the Adviser and the Fund. Furthermore, except as required by law (including,
but not limited to semi-annual, annual or other filings made under the 1940
Act, or responses to subpoenas, court orders or other regulatory demands made
by applicable authorities) or as agreed to by the Adviser and the
Sub-Adviser, the Adviser and the Fund will not disclose, in any manner
whatsoever except as expressly authorized in this Agreement, any list of
securities held by the Fund, except that the Fund's top 10 holdings may be
disclosed. In addition, the Adviser or the Fund may disclose a list of the
securities held by the Fund to certain third parties who have entered into a
Use and Nondisclosure agreement with the Fund.
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7.
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Control by Trust's Board of
Trustees. Any recommendations concerning the Fund's investment
program proposed by the Sub-Adviser to the Fund and the Adviser pursuant to
this Agreement, as well as any other activities undertaken by the Sub-Adviser
on behalf of the Fund pursuant thereto shall at all times be subject to any
applicable directives of the Board of Trustees of the Trust as long as such
directives are consistent with the Fund's investment objectives, policies and
restrictions as stated in the Prospectus and Statement of Additional
Information, the Rules and the Sub-Adviser's policies.
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8.
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Books and Records. The
Sub-Adviser shall maintain and preserve such records related to the Fund's
portfolio transactions as required under the 1940 Act. The Adviser shall
maintain and preserve all books and other records not related to the Fund's
portfolio transactions as required under the 1940 Act. The Sub-Adviser agrees
that all records that it maintains for the Fund are the property of the Trust
and further agrees to surrender copies of such records to the Trust promptly
upon the Trust's request. The terms of this Section 8 shall survive the
termination of this Agreement.
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9.
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Expenses. During the term
of this Agreement, the Sub-Adviser will bear all expenses incurred by it in
connection with the performance of its services under this Agreement other
than the cost of securities, brokerage commissions, custodian fees, auditors'
fees, taxes, interest, extraordinary expense items, and other expenses
related to the operation of the Trust or the Fund.
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10.
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Cooperation.
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(a)
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The Sub-Adviser will cooperate with reasonable requests from the Adviser and
the Trust for information on its policies and procedures that the Adviser and
the Trust believe they require to ensure compliance with the terms of this
Agreement and the Rules.
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(b)
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The Sub-Adviser will provide reasonable access to the Adviser and the Trust,
during normal business hours, to the Sub-Adviser's facilities for the purpose
of conducting pre-arranged on-site compliance related due diligence meetings
with personnel of the Sub-Adviser.
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(c)
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The Sub-Adviser shall cooperate fully with the Adviser and the Trust in
regards to any inquiry, examination or request for information with respect
to the Fund or the Sub-Adviser from any federal or state regulatory agencies
having authority over the Trust, the Adviser or the Fund.
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11.
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Compensation.
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(a)
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For the services provided and the expenses borne by the Sub-Adviser pursuant
to this Agreement, at the end of each calendar month, the Adviser will pay
the Sub-Adviser the advisory fee as determined by this Agreement. Payment of
this compensation shall be the sole responsibility of the Adviser and shall
in no way be an obligation of the Fund or of the Trust.
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(b)
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The fee payable to the Sub-Adviser shall be computed monthly at an annual
rate equal to 0.35% of the Fund's "average daily net assets." The "average
daily net assets" of the Fund shall mean the average of the values placed on
the Fund's net assets as of 4:00 p.m. (Eastern time) on each day on which the
net asset value of the Fund is determined consistent with the provisions of
Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as of such
other time. The value of net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Declaration of Trust and the
Trust's registration statement. If, pursuant to such provisions, the
determination of net asset value is suspended for any particular business
day, then for the purposes of this Paragraph 11(b), the value of the net
assets of the Fund as last determined shall be deemed to be the value of its
net assets as of the close of the New York Stock Exchange, or as of such
other time as the value of the net assets of the Fund's portfolio may lawfully
be determined, on that day. If the determination of the net asset value of
the shares of the Fund has been so suspended for a period including any month
end when the Sub-Adviser's compensation is payable pursuant to this section,
then the Sub-Adviser's compensation payable at the end of such month shall be
computed on the basis of the value of the net assets of the Fund as last
determined (whether during or prior to such month). If the Fund determines
the value of the net assets of its portfolio more than once on any day, then
the last such determination thereof on that day shall be deemed to be the
sole determination thereof on that day for the purposes of this Paragraph
11(b).
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12.
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Limitation of Liability.
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(a)
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The Sub-Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Adviser, the Trust or the Fund in
connection with the matters to which this Agreement relates, except that the
Sub-Adviser shall be liable to the Adviser and the Fund for a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Sub-Adviser in the performance of its duties or from reckless disregard by it
of its obligations or duties under this Agreement.
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(b)
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The Sub-Adviser does not guarantee the future performance of the Fund or any
specific level of performance, the success of any investment decision or
strategy that the Sub-Adviser may use or the success of the Sub-Adviser's
overall management of the Fund. The Trust and the Adviser understand that
investment decisions made for the Fund by the Sub-Adviser are subject to
various market, currency, economic, political,
business and structural risks, and that those investment decisions will not
always be profitable.
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(c)
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The Adviser shall be responsible at all times for supervising the
Sub-Adviser, and this Agreement does not in any way limit the duties and
responsibilities that the Adviser has agreed to under the Investment Advisory
Agreement.
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13.
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Indemnification.
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(a)
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The Sub-Adviser shall indemnify and hold harmless the Adviser and each of its
officers, directors, employees and controlling persons from and against any
losses, expenses, (including reasonable attorneys' fees and court costs),
damages or liabilities to which the Adviser becomes subject in so much as
such losses, expenses, damages or liabilities (or actions in respect thereof)
result directly from the willful misfeasance, bad faith, recklessness or
gross negligence by the Sub-Adviser. The terms of this Section 13 shall survive
the termination of this Agreement.
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(b)
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The Adviser shall indemnify and hold harmless the Sub-Adviser and each of its
officers, directors, employees and controlling persons from and against any
losses, expenses (including reasonable attorneys' fees and court costs),
damages or liabilities to which the Sub-Adviser becomes subject in so much as
such losses, expenses, damages or liabilities (or actions in respect thereof)
result directly from this Agreement or the Sub-Adviser's performance of its duties
hereunder; provided, however, that that nothing contained herein shall
require that the Sub-Adviser be indemnified for any losses, expenses
(including reasonable attorneys' fees and court costs), damages or
liabilities that resulted from Sub-Adviser's willful misfeasance, bad faith,
recklessness, gross negligence or negligence in the performance of its duties
under this Agreement or the Sub-Adviser's breach of a term of this Agreement.
The terms of this Section 13 shall survive the termination of this Agreement.
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(c)
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Under no circumstances shall the Adviser or the Sub-Adviser be liable for any
special, consequential or indirect damages.
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14.
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Duration and Termination. This
Agreement shall become effective as of the date hereof provided that it shall
have been approved by vote of a majority of the outstanding voting securities
of the Fund and, unless sooner terminated as provided herein, shall continue
with respect to the Fund until September 9, 2010. Thereafter, if not
terminated, this Agreement shall continue in effect for successive 12-month
periods ending on September 9th of each year, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Trustees of the Trust who are not
parties to this Agreement or interested persons of the Trust or of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Fund; provided,
however, that this Agreement may be terminated with respect to the Fund (i) by the Trust at any time upon 60 days' prior notice
without the payment of any penalty by the Board of Trustees of the Trust or
by a vote of a majority of the outstanding voting securities of the Fund;
(ii) by the Adviser on 60 days written notice to the Sub-Adviser; or
(iii) by the Sub-Adviser on 180 days written notice to the Adviser. This
Agreement will also automatically terminate in the event of its assignment.
(As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meaning
as such terms have in the 1940 Act.)
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15.
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Delegation To Third Parties. The Sub-Adviser may employ an affiliate
or a third party to perform any accounting, administrative, reporting and
ancillary services required to enable the Sub-Adviser to perform its
functions under this Agreement. Notwithstanding any other provision of the Agreement,
the Sub-Adviser may provide information about the Fund to any such affiliate
or other third party for the purpose of providing the services contemplated
under this clause, provided such parties have executed a confidentiality
agreement with the Sub-Adviser. The Sub-Adviser will act in good faith in the
selection, use and monitoring of affiliates and other third parties, and any
delegation or appointment hereunder shall not relieve the Sub-Adviser of any
of its obligations under this Agreement.
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16.
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Trademarks. The Adviser
acknowledges that the names "JPMorgan Chase & Co." or "X.X. Xxxxxx
Investment Management Inc." or any derivative thereof or logo associated with
those names (collectively, the "Marks") are the valuable property of the
Sub-Adviser. The Sub-Adviser hereby grants the Trust and the Adviser a
limited, non-exclusive, non-transferable license without the right of
sublicense to use the Marks in its sales literature and advertising
pertaining to the Fund and/or the Trust, subject in each case to prior
written approval by the Sub-Adviser. Such prior written approval shall not be
unreasonably withheld. The Adviser acknowledges that the Marks are and at all
times will remain the property of the Sub-Adviser, and the Adviser agrees
that the Trust and the Adviser will cease all use of the Marks immediately
upon termination of this Agreement.
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The Sub-Adviser agrees to submit any proposed sales literature for the Trust
or for itself or its affiliates which mentions the Trust or Fund to the Trust's
distributor and the Adviser for review and approval or disapproval, and the
Sub-Adviser agrees not to use any such sales literature that has not been
approved by the Trust's distributor and the Adviser.
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The Adviser agrees to submit any proposed sales literature for the Trust or
for itself or its affiliates which mentions the Sub-Adviser to the
Sub-Adviser for review and approval or disapproval, and the Adviser agrees
not to use any such sales literature that has not been approved by the
Sub-Adviser.
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17.
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Amendment of this Agreement.
No provision of this Agreement may be changed, discharged or terminated
orally, but only by an instrument in writing signed by both parties.
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18.
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Governing Law. This
Agreement shall be governed by the internal laws of the State of Delaware,
without regard to conflict of law principles; provided, however, that nothing
herein shall be construed as being inconsistent with the 1940 Act.
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19.
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Compliance Certification. From
time to time the Sub-Adviser shall provide such certifications with respect
to Rule 38a-1 under the Investment Company Act of 1940, as amended, as are
reasonably requested by the Fund or Manager. In addition, the Sub-Adviser
will, from time to time, provide a written assessment of its compliance
program in conformity with current industry standards that is reasonably
acceptable to the Fund to enable the Fund to fulfill its obligations under
Rule 38a-1 under the Investment Company Act of 1940, as amended.
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20.
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Notice. Any notice under this Agreement shall be sufficient in all
respects if given in writing and delivered by commercial courier providing
proof of delivery and addressed to such other person at an address designated
by such party for receipt of such notice.
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21.
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Severability. Each
provision of this Agreement is intended to be severable from the others so
that if any provision or term hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of
the remaining provisions and term hereof; provided, however, that the
provisions governing payment of the sub-advisory fee described in Section 11
are not severable.
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22.
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Miscellaneous. The captions
in this Agreement are included for convenience of reference only and in no
way define or delimit any of the provisions hereof or otherwise affect their
construction or effect.
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23.
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Entire Agreement. This
Agreement constitutes the sole and entire agreement of the parties hereto
with respect to the subject matter expressly set forth herein.
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