Exhibit (d)(xxii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SUB-ADVISORY CONTRACT
Agreement made as of December 15, 2000 ("Contract") between Wachovia Bank,
N.A., a national banking association ("Adviser") and Xxxxx Capital Management,
Inc., a Sub Chapter S corporation ("Sub-Adviser").
RECITALS
(1) The Adviser has entered into an Investment Advisory Agreement
("Advisory Agreement"), with The Wachovia Funds ("Trust"), an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act");
(2) The Trust offers for public sale the series of shares of beneficial
interest, as set forth in Schedule A hereto ("Fund");
(3) Under the Advisory Agreement, the Adviser has agreed to provide certain
investment advisory services to the Fund;
(4) The Advisory Agreement permits the Adviser to delegate certain of its
duties as investment adviser thereunder to a sub-adviser;
(5) The Sub-Adviser is willing to furnish such services on behalf of the
Fund;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Adviser and the Sub-Adviser agree as follows:
1. APPOINTMENT. The Adviser hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the investments of the Fund or Funds set
forth in Schedule A hereto for the period and on the terms set forth in this
Contract. The Sub-Adviser accepts that appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. DUTIES AS SUB-ADVISER.
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(a) Subject to the supervision and direction of the Trust's Board of
Trustees ("Board") and review by the Adviser, and any written guidelines adopted
by the Board or the Adviser, the Sub-Adviser will provide a continuous
investment program with respect to the Fund's investments, including investment
research and management to all securities and investments and cash equivalents
in the Fund. The Sub-Adviser will determine from time to time what investments
will be purchased, retained or sold by the Fund. The Sub-Adviser will be
responsible for placing purchase and sell orders for investments and for other
related transactions with respect to the Fund's investments. The Sub-Adviser
will provide services under this Contract in accordance with the each Fund's
investment objective, policies and restrictions as stated in the Trust's
currently effective registration statement under the 1940 Act, and any
amendments or supplements thereto ("Registration Statement").
(b) The Sub-Adviser agrees that, in placing orders with brokers, it will
obtain the best net result in terms of price and execution; provided that, on
behalf of the Fund, the Sub-Adviser may, in its discretion, use brokers who
provide the Sub-Adviser with research, analysis, advice and similar services to
execute portfolio transactions, and the Sub-Adviser may pay to those brokers in
return for brokerage and research services a higher commission than may be
charged by other brokers, subject to the Sub-Adviser's determining in good faith
that such commission is reasonable in terms either of the particular transaction
or of the overall responsibility of the Sub-Adviser 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. In no instance will
portfolio securities be purchased from or sold to the Sub-Adviser, or any
affiliated person thereof, except in accordance with the federal securities laws
and the rules and regulations thereunder. Whenever the Sub-Adviser
simultaneously places orders to purchase or sell the same security on behalf of
the Fund and one or more other accounts advised by the Sub-Adviser, the orders
will be allocated as to price and amount among all such accounts in a manner
believed to be equitable over time to each account. The Adviser recognizes that
in some cases this procedure may adversely affect the results obtained for the
Fund.
(c) The Sub-Adviser will maintain all books and records required to be
maintained pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to actions by the Sub-Adviser on behalf of the Fund, and
will furnish the Board and the Adviser with such periodic and special reports as
the Board or the Adviser reasonably may request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees
that all records that it maintains for the Fund are the property of the Trust,
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any records that it maintains for the Trust and that are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Trust any records that it maintains for the Fund upon request by
the Trust. For legal and regulatory compliance purposes, the Sub-Adviser may
retain at its offices copies of records that it maintained for the Fund.
(d) At such times as shall be reasonably requested by the Board or the
Adviser, the Sub-Adviser will provide the Board and the Adviser with economic
and investment analyses and reports as well as quarterly reports setting forth
the performance of the Fund's investments and make available to the Board and
the Adviser any economic, statistical and investment services that the
Sub-Adviser normally makes available to its institutional or other customers.
3. FURTHER DUTIES. In all matters relating to the performance of this
Contract, the Sub-Adviser will act in conformity with the Trust's Trust
Instrument, By-Laws and Registration Statement and with the written instructions
and written directions of the Board and the Adviser; and will comply with the
requirements of the 1940 Act and the rules thereunder, as amended, and all other
federal and state laws and regulations applicable to the Trust and the Fund. The
Adviser agrees to provide to the Sub-Adviser copies of the Trust's Trust
Instrument, By-Laws, Registration Statement, written instructions and directions
of the Board and the Adviser, and any amendments or supplements to any of these
materials as soon as practicable after such materials become available; and
further agrees to identify to the Sub-Adviser in writing any broker-dealers that
are affiliated with the Adviser.
4. EXPENSES. During the term of this Contract, the Sub-Adviser will bear
all expenses incurred by it in connection with its services under this
Contract.
5. COMPENSATION.
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(a) For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Contract, the Adviser, not the Fund, will pay the Sub-Adviser a
sub-advisory fee, computed daily and paid monthly as set forth in Schedule B
attached hereto.
(b) The fee shall be accrued daily and payable monthly to the Sub-Adviser
on or before the last business day of the next succeeding calendar month.
(c) If this Contract becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of the month or
from the beginning of such month to the date of termination, as the case may be,
shall be pro-rated according to the proportion that such period bears to the
full month in which such effectiveness or termination occurs.
(d) The Adviser shall be responsible for computing the sub-advisory fee.
6. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund, the
Trust, its shareholders or by the Adviser in connection with the matters to
which this Contract relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this Contract.
Nothing in this paragraph shall be deemed a limitation or waiver of any
obligation or duty that may not by law be limited or waived.
7. REPRESENTATIONS OF SUB-ADVISER. The Sub-Adviser represents, warrants and
agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment adviser under the
Investment Advisers Act of 1940 ("Advisers Act") and will continue to be so
registered for so long as this Contract remains in effect; (ii) is not
prohibited by the 1940 Act or the Advisers Act from performing the services
contemplated by this Contract; (iii) has met and will seek to continue to meet
for so long as this Contract remains in effect, any other applicable federal or
state requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency necessary to be met in order to perform the services
contemplated by this Contract; (iv) has the authority to enter into and perform
the services contemplated by this Contract; and (v) will promptly notify the
Adviser of the occurrence of any event that would disqualify the Sub-Adviser
from serving as an investment adviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise.
(b) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide the Adviser
and the Board with a copy of such code of ethics, together with evidence of its
adoption. Within forty-five (45) days of the end of the last calendar quarter of
each year that this Contract is in effect, the president or a vice-president of
the Sub-Adviser shall must furnish to the Trust a written report that (a)
describes any issues arising under the code of ethics or procedures, including,
but not limited to, information about material violations of the code or
procedures and sanctions imposed in response to material violations; and (b)
certifies that the Sub-Adviser has adopted procedures reasonably necessary to
prevent violations of the code of ethics. Upon the written request of the
Adviser, the Sub-Adviser shall permit the Adviser, its employees or its agents
to examine the reports required to be made to the Sub-Adviser by Rule 17j-1(d)
and all other records relevant to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided the Adviser with a copy of its Form ADV,
which as of the date of this Contract is its Form ADV most recently filed with
the Securities and Exchange Commission ("SEC") and promptly will furnish a copy
of all amendments to the Adviser at least annually.
(d) The Sub-Adviser will notify the Adviser of any change of control of
the Sub-Adviser, including any change of its general partners or 25%
shareholders, as applicable, and any changes in the key personnel who are either
the portfolio manager(s) of the Fund or senior management of the Sub-Adviser, in
each case prior to, or promptly after, such change.
(e) The Sub-Adviser agrees that neither it, nor any of its affiliates,
will in any way refer directly or indirectly to its relationship with the Trust,
the Fund, the Adviser or any of their respective affiliates in offering,
marketing or other promotional materials without the express written consent of
the Adviser.
8. CONFIDENTIALITY. Subject to the duty of the Sub-Adviser, the Adviser
and the Fund to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the parties hereto shall
treat as confidential all material non public information pertaining to the Fund
and the actions of the Sub-Adviser, the Adviser and the Fund in respect thereof.
9. SERVICES NOT EXCLUSIVE. The Sub-Adviser may act as an investment
adviser to any other person, firm or corporation, and may perform management and
any other services for any other person, association, corporation, firm or other
entity pursuant to any contract or otherwise, and take any action or do anything
in connection therewith or related thereto, except as prohibited by applicable
law or agreed upon in writing between the Sub-Adviser and the Adviser and no
such performance of management or other services or taking of any such action or
doing of any such thing shall be in any manner restricted or otherwise affected
by any aspect of any relationship of the Sub-Adviser to or with the Trust, the
Fund or the Adviser or deemed to violate or give rise to any duty or obligation
of the Sub-Adviser to the Trust, the Fund or the Adviser, except as otherwise
imposed by law or agreed upon in writing between the Sub-Adviser and the
Adviser, the Trust or the Fund.
10. DURATION AND TERMINATION.
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(a) This Contract shall become effective upon the date first above
written, provided that this Contract shall not take effect unless it has first
been approved: (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Contract or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by vote of a majority of the Fund's outstanding securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect until March 8, 2002. Thereafter, if not terminated, this
Contract shall continue automatically for successive periods of twelve months
each, provided that such continuance is specifically approved at least annually:
(i) by a vote of a majority of those trustees of the Trust who are not parties
to this Contract or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by the Board
or by vote of a majority of the outstanding voting securities of the Fund.
(c) Notwithstanding the foregoing, this Contract may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Sub-Adviser. This Contract may also be terminated, without the
payment of any penalty, by the Adviser: (i) upon 120 days' written notice to the
Sub-Adviser; (ii) upon material breach by the Sub-Adviser of any representations
and warranties set forth in Paragraph 7 of this Contract, if such breach has not
been cured within a 20 day period after notice of such breach; or (iii)
immediately if, in the reasonable judgment of the Adviser, the Sub-Adviser
becomes unable to discharge its duties and obligations under this Contract,
including circumstances such as financial insolvency of the Sub-Adviser or other
circumstances that could adversely affect the Fund. The Sub-Adviser may
terminate this Contract at any time, without the payment of any penalty, on 120
days written notice to the Adviser. This Contract will terminate automatically
in the event of its assignment or upon termination of the Advisory Contract as
it relates to the Fund. The Sub-Adviser shall notify the Trust and the Adviser
in writing sufficiently in advance of any proposed change of control within the
meaning of the 1940 Act to enable the Trust and the Adviser to take the steps
necessary to enter into a new contract with the Sub-Adviser.
11. ADDITIONAL SERIES. If the Trust establishes additional series of
shares for which it desires that the Sub-Adviser render services under this
Contract, it shall so notify the Sub-Adviser in writing. If the Sub-Adviser
agrees in writing to provide said services, such series of shares shall become a
"Fund" hereunder upon execution of a new Schedule A and Schedule B and the
approval of the Trustees of the Trust as required by the Trust's Trust
Instrument and the 1940 Act.
12. AMENDMENT OF THIS CONTRACT. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Contract shall be
effective until approved (i) by a vote of a majority of those trustees of the
Trust who are not parties to this Contract or interested persons of any such
party, and (ii) by a vote of a majority of the Fund's outstanding voting
securities (unless in the case of (ii), the Trust receives order or no-action
letter from the SEC permitting it to modify the Contract without such vote).
13. GOVERNING LAW. This Contract shall be construed in accordance with the
1940 Act and the laws of the State of North Carolina, without giving effect to
the conflicts of laws principles thereof. To the extent that the applicable laws
of the State of North Carolina conflict with the applicable provisions of the
1940 Act, the latter shall control.
14. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. MISCELLANEOUS. The captions in this Contract 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. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "affiliated person,"
"interested person," "assignment," "broker," "investment adviser," "net assets,"
"sale," "sell" and "security" shall have the same meaning as such terms have in
the 1940 Act, subject to such exemption as may be granted by the SEC by any
rule, regulation or order. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Contract is made less
restrictive by a rule, regulation or order of the SEC, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. This Contract may be signed in counterpart.
16. NOTICES. Any notice herein required is to be in writing and is deemed
to have been given to the Sub-Adviser or the Adviser upon receipt of the same at
their respective addresses set forth below. All written notices required or
permitted to be given under this Contract will be delivered by personal service,
by postage mail - return receipt requested or by facsimile machine or a similar
means of same day delivery which provides evidence of receipt (with a confirming
copy by mail as set forth herein). All notices provided to the Adviser will be
sent to the attention of R. Xxxxxx Xxxxxxx, Senior Vice President. All notices
provided to the Sub-Adviser will be sent to the attention of Xxxxxx X. Xxxxx,
President and Chief Executive Officer.
17. ENTIRE AGREEMENT. This Agreement and the Schedules attached hereto
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embodies the entire agreement and understanding between the parties.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
WACHOVIA BANK, N.A.
By: /s/ R. Xxxxxx Xxxxxxx
Name:.R. Xxxxxx Xxxxxxx
Title: Senior Vice President
XXXXX CAPITAL MANAGEMENT, INC.
By:/s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Principal
SCHEDULE A
FUNDS SUBJECT TO AGREEMENT
Wachovia International Equity Fund
DATE: December 15, 2000
3
KL2:1276991.5
SCHEDULE B
SCHEDULE OF COMPENSATION
FUND ANNUAL FEE
(as a percentage of net
assets)
Wachovia International Equity Fund 0.50%
DATE: December 15, 2000
