Exhibit (d)(16)
INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT, made this 2nd day of July, 2001 is by and among U.S.
Bancorp Xxxxx Xxxxxxx Asset Management, Inc. (as successor to Firstar Investment
Research & Management Company, LLC) a Delaware corporation registered as an
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act") (the "Adviser"), Conning Asset Management Company, a Missouri
corporation registered as an investment adviser under the Advisers Act (the
"Sub-Adviser"), and Firstar Funds, Inc. (the "Company"), an open-end diversified
management investment company of the series type registered under the Investment
Company Act of 1940, as amended (the "1940 Act").
WHEREAS, the Adviser is the investment adviser to the Firstar Conning Money
Market Fund (the "Fund") of the Company;
WHEREAS, the Adviser previously has retained the Sub-Adviser to furnish it
with portfolio selection and related research and statistical services in
connection with the Adviser's investment advisory activities on behalf of the
Fund pursuant to an agreement dated June 29, 2001; and
WHEREAS, the Sub-Adviser desires to furnish such services to the Adviser
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:
1. Appointment of Sub-Adviser
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In accordance with and subject to the investment advisory agreement (the
"Investment Advisory Agreement") between the Company and the Adviser, the
Adviser hereby appoints the Sub-Adviser to perform portfolio selection and
related research and statistical services described herein for investment and
reinvestment of the Fund's investment assets, subject to the control and
direction of the Company'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.
The Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized. have no
authority to act for or represent the Company or the Adviser in any way or
otherwise be deemed an agent of the Company or the Adviser.
2. Obligations of and Services to be Provided by the Sub-Adviser
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(a) The Sub-Adviser shall provide the following services and assume the
following obligations with respect to the Fund:
(1) The investment of the assets of the Fund shall at all times
be subject to the applicable provisions of the articles of
incorporation, the by-laws, the registration statement, the
effective prospectus and the statement of additional
information of the Company relating to the Fund (the "Fund
Documents") and shall conform to the investment objectives,
policies and restrictions of the Fund as set forth in such
documents and as interpreted from time to time by the Board
of Directors of the Company and by the Adviser. Copies of
the Fund Documents have been or will be submitted to the
Sub-Adviser. The Company agrees to provide copies of all
amendments to or restatements of the Fund Documents to the
Sub-Adviser on a timely and on-going basis but in all events
prior to such time as said amendments or restatements become
effective. The Sub-Adviser will be entitled to rely on all
such documents furnished to it by the Company, the Fund, or
the Adviser. Within the framework of the investment
objectives, policies and restrictions of the Fund, and
subject to the supervision of the Adviser, the Sub-Adviser
shall have responsibility for making and executing
investment decisions for the Fund.
(2) In carrying out its obligations to manage the investments
and reinvestments of the assets of the Fund, the Sub-Adviser
shall: (1) obtain and evaluate pertinent economic,
statistical, financial and other information affecting the
economy generally and individual companies or industries,
the securities of which are included in the Fund's
investment portfolio or are under consideration for
inclusion therein; (2) under the supervision of the Adviser,
formulate and implement a continuous investment program for
the Fund consistent with the investment objective and
related investment policies for the Fund as set forth in the
Fund Documents, as amended; and (3) take such steps as are
necessary to implement the aforementioned investment program
by purchase and sale of securities including the placing, or
directing the placement through an affiliate of the Sub-
Adviser in accordance with applicable regulatory
requirements, of orders for such purchases and sales.
(3) In connection with the purchase and sale of securities of
the Fund, the Sub-Adviser shall arrange for the transmission
to the Custodian for the Fund and, as directed by the
Adviser, any other persons retained by the Fund on a daily
basis such confirmations, trade tickets and other documents
as may be necessary to enable them to perform their
administrative responsibilities with respect to the Fund's
investment portfolio. The Sub-Adviser shall render such
reports to the Adviser and/or to the Company's Board of
Directors concerning the investment activity and portfolio
composition of the Fund in such form and at such intervals
as the Adviser or the Board may, from time to time require.
(4) The Sub-Adviser shall, in the name of the Fund, place or
direct the placement of orders for the execution of
portfolio transactions in
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accordance with the policies of the Fund, as set forth in
the Fund Documents, as amended from time to time, and under
the Securities Act of 1933, as amended (the "1933 Act"), and
the 1940 Act. In connection with the placement of orders for
the execution of the Fund's portfolio transactions, the Sub-
Adviser shall create and maintain all necessary brokerage
records of the Fund in accordance with all applicable laws,
rules and regulations, including but not limited to, records
required by Section 31(a) of the 1940 Act. All records shall
be the property of the Company and shall be available for
inspection and use by the Securities and Exchange Commission
("SEC"), the Company, the Adviser, or any other person
retained by the Company. The Sub-Adviser agrees to surrender
promptly to the Company any of such records upon the
Company's request. Where applicable, such records shall be
maintained by the Sub-Adviser for the period and in the
place required by the 1940 Act. The Sub-Adviser shall, in
the name of the Fund, vote all proxies solicited by or with
respect to the issuers of securities in which the Fund may
be invested from time to time.
(5) In placing orders or directing the placement of orders for
the execution of portfolio transactions, the Sub-Adviser
shall select brokers and dealers for the execution of the
Fund's transactions. In selecting brokers or dealers to
execute such orders, the Sub-Adviser will use its best
efforts to seek on behalf of the Fund the best overall
terms available. In assessing the best overall terms
available for any transaction, the Sub-Adviser shall
consider all factors that it deems relevant, including 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, both for the specific transaction and on
a continuing basis. In evaluating the best overall terms
available, and in selecting the broker-dealer to execute a
particular transaction, the Sub-Adviser is expressly
authorized to consider the fact that a broker or dealer has
furnished statistical, research or other information or
services which enhance the Sub-Adviser's investment research
and portfolio management capability generally. Subject to
the initial approval of the Sub-Adviser's soft dollar policy
by the Company's Board of Directors and further subject to
the review of the Company's Board of Directors from time to
time with respect to the extent and continuation of such
policy, the Sub-Adviser may, in accordance with Section
28(e) of the Securities Exchange Act of 1934, as amended,
negotiate with and assign to a broker a commission which may
exceed the commission which another broker would have
charged for effecting the transaction if the Sub-Adviser
determines in good faith that the amount of commission
charged was reasonable in relation to the value of brokerage
and/or research services (as defined in Section 28(e))
provided by such broker viewed in terms either of the Fund
or the Sub-Adviser's overall responsibilities to the Sub-
Adviser's discretionary accounts. In addition, the Sub-
Adviser is authorized to take into account
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the sale of shares of the Company in allocating purchase and
sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the
Adviser, Sub-Adviser or the Company's principal
underwriter), provided that the Sub-Adviser believes that
the quality of the transaction and the commission are
comparable to what they would be with other qualified firms.
In no instance, however, will portfolio securities be
purchased from or sold to the Sub-Adviser, the Adviser, the
Company's principal underwriter, or any affiliated person of
either the Company, the Adviser, Sub-Adviser or the
principal underwriter, acting as principal in the
transaction, except to the extent permitted by the SEC
through rules, regulations, decisions and no-action letters.
(b) The Sub-Adviser shall use the same skill and care in providing
services to the Fund as it uses in providing services to fiduciary
accounts for which it has investment responsibility. The Sub-Adviser
will conform with all applicable federal and state laws, rules and
regulations.
(c) The Sub-Adviser will treat confidentially and as proprietary
information of the Fund all records and other information relative to
the Fund and prior, present or potential shareholders, and will not
use such records and information for any purpose other than
performance of its responsibilities and duties hereunder (except after
prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld
and will be deemed granted where Sub-Adviser may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested
to divulge such information by duly constituted authorities, or when
so requested by the Fund).
3. Expenses
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The Fund (or the Adviser) will bear certain expenses to be incurred in the
Fund's operation, including but not limited to: organizational expenses, taxes,
interest. brokerage fees and commissions, if any; SEC fees and state blue sky
qualification fees; expenses of custodians, transfer and dividend disbursing
agents and the Fund's co-administrators; insurance premiums; outside auditing
and legal expenses; costs of maintenance of the Fund's existence; costs
attributable to investor services, including without limitation, telephone and
personnel expenses; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings of the
shareholders of the Fund and of the officers or Board of Directors of the Fund;
and any extraordinary expenses.
4. Compensation
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(a) In payment for the investment sub-advisory services to be rendered by
the Sub-Adviser in respect of the Fund hereunder, the Adviser shall
pay to the Sub-Adviser as full compensation for all services hereunder
the Sub-Adviser's costs in performing this Agreement. In no event
will payment to the Sub-Adviser under
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the previous sentence for any period exceed the amount which would
have been paid to the Sub-Adviser for that period if the Sub-Adviser
were being paid at the compensation rate in effect under the Sub-
Advisory Agreement with respect to the Mercantile Conning Money Market
Portfolio dated January 6, 2000.
(b) The fees payable by the Adviser under this Section 4 will be
maintained in an interest-bearing escrow account on behalf of the Fund
pursuant to an Escrow Agreement by and among the Company, the Adviser,
Sub-Adviser and the Company's custodian dated as of the date hereof.
If the shareholders of the Fund approve a sub-advisory agreement
between the Adviser and Sub-Adviser within 150 days of the date of
this Agreement, the Company, the Adviser and Sub-Adviser shall give
mutual written directions to the Escrow Agent to disburse the full
amount held in the escrow account, including interest earned, on
behalf of the Fund to the Sub-Adviser. If shareholders of the Fund do
not approve a sub-advisory agreement between the Adviser and Sub-
Adviser within 150 days of the date of this Agreement, then the Escrow
Agent shall disburse to the Sub-Adviser out of the escrow account the
lesser of: (a) the Sub Adviser's costs incurred in performing this
Agreement, plus interest earned on such amount while in escrow, or (b)
the total amount in the escrow account, plus interest earned.
5. Effective Date and Termination
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This Agreement shall become effective as of the date first above written
and, unless sooner terminated as provided herein, shall continue for not more
than 150 days. This Agreement is terminable at any time without payment of any
penalty, on not more than 10 days' written notice to the Sub-Adviser, by the
Fund's Board of Directors or by a vote of the lesser of (a) 67% of the shares of
the Fund represented at a meeting if holders of more than 50% of the outstanding
shares of the Fund are present in person or by proxy or (b) more than 50% of the
outstanding shares of the Fund. This Agreement will terminate automatically in
the event of its assignment (as defined in the 1940 Act).
6. Representations of the Company, Adviser and the Sub-Adviser
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The Company and Fund represent that (i) a copy of the Company's Articles of
Incorporation, dated February 15, 1988, together with all amendments thereto, is
on file in the office of the Wisconsin Department of Financial Institutions,
(ii) the appointment of the Adviser has been duly authorized, (iii) the
appointment of the Sub-Adviser has been duly authorized, and (iv) they have
acted and will continue to act in conformity with the 1940 Act, and other
applicable laws.
The Adviser represents that (i) it is authorized to perform the services
herein, (ii) the appointment of the Sub-Adviser has been duly authorized, and
(iii) it will act in conformity with the 1940 Act, and other applicable laws.
The Sub-Adviser represents that it is authorized to perform the services
described herein.
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7. Materials
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Neither the Adviser, the Company, or the Fund shall publish or distribute
any information including but not limited to, registration statements,
advertising or promotional material regarding the provision of investment
advisory services by the Sub-Adviser pursuant to this Agreement, without the
prior written consent of the Sub-Adviser, which consent shall not be
unreasonably withheld or delayed. If the Sub-Adviser has not notified the
Adviser of its disapproval of sample materials within five (5) days after its
receipt thereof, such materials shall be deemed approved. Materials
substantially similar to materials approved on an earlier occasion, with the
exception of any regulatory filings, shall also be deemed approved.
Notwithstanding the foregoing, the Adviser may distribute information regarding
the provision of investment advisory services by the Sub-Adviser to the
Company's Board of Directors ("Board Materials") without the prior written
consent of the Sub-Adviser. The Adviser shall provide copies of the Board
Materials to the Sub-Adviser within a reasonable time following distribution to
the Company's Board of Directors.
The Sub-Adviser shall not publish or distribute any information including
but not limited to, registration statements, advertising or promotional material
regarding the provision of investment advisory services by the Sub-Adviser
pursuant to this Agreement, without the prior written consent of the Adviser and
the Company, which consent shall not be unreasonably withheld or delayed. If the
Adviser or Company has not notified the Sub-Adviser of its disapproval of sample
materials within five (5) days after its receipt thereof, such materials shall
be deemed approved. Materials substantially similar to materials approved on an
earlier occasion, with the exception of any regulatory filings, shall also be
deemed approved.
8. General Provisions
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(a) The Sub-Adviser may rely on information reasonably believed by it to
be accurate and reliable. Except as may otherwise be provided by the
1940 Act, neither the Sub-Adviser nor its officers, directors,
employees or agents shall be subject to any liability for any error of
judgment or mistake of law or for any loss arising out of any
investment or other act or omission in the performance by the Sub-
Adviser of its duties under this Agreement or for any loss or damage
resulting from the imposition by any government or exchange control
restrictions which might affect the liquidity of the Fund's assets, or
from acts or omissions of custodians or securities depositories or
from any war or political act of any foreign government to which such
assets might be exposed, provided that nothing herein shall be deemed
to protect or purport to protect, the Sub-Adviser against any
liability to the Adviser or the Company or to its shareholders to
which the Sub-Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties hereunder, or by reason of the Sub-Adviser's reckless disregard
of its obligations and duties hereunder or a breach of its fiduciary
duty.
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(b) The Adviser and the Fund understand that the Sub-Adviser now acts,
will continue to act, or may act in the future, as investment adviser
or investment sub-adviser to fiduciary and other managed accounts,
including other investment companies and the Adviser and the Fund have
no objection to the Sub-Adviser so acting, provided that the Sub-
Adviser duly performs all obligations under this Agreement. The
Adviser and the Fund also understand that the Sub-Adviser may give
advice and take action with respect to any of its other clients or for
its own account which may differ from the timing or nature of action
taken by the Sub-Adviser. with respect to the Fund. Nothing in this
Agreement shall impose upon the Sub-Adviser any obligation to purchase
or sell or to recommend for purchase or sale, with respect to the
Fund, any security which the Sub-Adviser or its shareholders,
directors, officers, employees or affiliates may purchase or sell for
its or their own account(s) or for the account of any other client.
(c) Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the right of the
Sub-Adviser, or the right of any of its officers. directors or
employees who may also be an officer, director or employee of the
Company, or person other-wise affiliated with the Company (within the
meaning of the 0000 Xxx) 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 trust corporation, firm, individual
or association.
(d) Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Wisconsin. The captions in this
Agreement are included for convenience only and in no way define or
delimit any of the provisions hereof or otherwise affect their
construction or effect.
(e) Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage pre-paid to the appropriate party at the
following address: The Adviser, the Company and the Fund at Drinker
Xxxxxx & Xxxxx LLP, One Xxxxx Square, 00xx & Xxxxxx Xxxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx, 00000, Attention: W. Xxxxx XxXxxxxx, Esq.,
and the Sub-Adviser at 000 Xxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000,
Attention: General Counsel.
(f) Sub-Adviser agrees to notify Adviser of any change in Sub-Adviser's
senior officers, portfolio managers, and directors within a reasonable
time after such change. Sub-Adviser further agrees to provide Adviser
with any amendments to Parts I and II of its ADV within a reasonable
time after such amendments and notify Adviser of any regulatory, civil
or criminal proceedings, actions or complaints involving the Sub-
Adviser or its affiliates within a reasonable time.
(g) This Agreement may be amended in accordance with the 1940 Act.
(h) This Agreement constitutes the entire agreement among the parties
hereto.
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(i) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
CONNING ASSET MANAGEMENT COMPANY
Cityplace II
000 Xxxxxx Xx.
Xxxxxxxx, XX 00000
By:/s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
U.S. BANCORP XXXXX XXXXXXX ASSET MANAGEMENT, INC.
By:/s/ Xxxxxx Xxxxxxxxx
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Name: Xxxxxx Xxxxxxxxx
Title: Executive Vice President
FIRSTAR FUNDS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
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Name: Xxxxxx Xxxxxxxxx
Title: President
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