EXHIBIT D-3
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the "Agreement") made as of this ____th day
of , 2013 by and between Xxxxxx Associates Inc., a California corporation with
its principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, XX 00000-0000 (the "Adviser"), and Acadian Asset Management LLC, a
limited liability company with its principal place of business at 000 Xxxxxxxx
Xxxxxx, Xxxxxx, XX 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 _________ __, 2013
between the Adviser and the Fund (the "Management Agreement"), the Adviser has
selected the Sub-Adviser to act as sub-investment 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;
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. THE SUB-ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Sub-Adviser
shall act as sub-investment 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, what investments shall be
purchased for the Fund and what such 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 exercise full discretion
and act for the Fund in the same manner and with the same force and effect
as the Fund itself
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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 and procedures approved by the
Board or the Adviser and provided to the Sub-Adviser. In selecting the
Fund's portfolio securities and performing the Sub-Adviser's obligations
hereunder, the Sub-Adviser shall cause the Assets, as defined above in
Section 1(a), to comply with the diversification and source of income
requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") to allow for the Fund's qualification as a regulated
investment company. 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'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
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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.
Unless and until otherwise directed by the Adviser or the Board the
Sub-Adviser shall be responsible for voting 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 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
including class action claims which would not be the responsibility of the
Sub-Adviser). 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
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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. The
Sub-Adviser is permitted to retain copies of any Fund Books and Records
required to meet a law or regulatory requirement.
(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 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 open as the source for the official valuation of
any positions held by the Fund.
(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.
2. 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
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(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. The
Sub-Adviser shall promptly notify the Adviser and the Trust of any material
violation of the Code, whether or not such violation relates to a security held
by any Fund.
3. 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 the 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 the Fund's assets; or (ii) any changes to the senior
investment management personnel primarily responsible for the investment or
servicing of the Fund's assets which include portfolio managers and
relationship managers. In addition, the Sub-Adviser shall provide a
quarterly report regarding the Assets' compliance with the Fund's
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-
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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,
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.
4. 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
6
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
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
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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.
(e) 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 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, so that
to the extent practical, such opportunities will be allocated among clients
over a period of time on a fair and equitable basis
5. CUSTODY. Nothing in this Agreement shall permit the Sub-Adviser
to take or receive physical possession of cash, securities or other investments
of a Fund.
6. 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 .
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUB-ADVISER.
(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
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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) ADV DISCLOSURE. The Sub-Adviser has provided the Trust and the
Adviser acknowledges receipt on behalf of the Trust, with a copy of Part I
of its Form ADV as most recently filed with the Commission and its Part 2A
and 2B for its core equity investment process as most recently updated and
will, promptly after filing any amendment to its Form ADV with the
Commission or updating its Part 2A and 2B, furnish a copy of such
amendments or updates to the Trust. The Adviser consents to electronic
delivery of all future amendments to Form ADV and other disclosure
documents. The information contained in the Sub-Adviser's Form ADV is
accurate and complete in all material respects at the time it was delivered
and does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made,
not misleading.
(c) 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) (collectively the "Disclosure Documents").
The Sub-Adviser represents and warrants that such portions of the
Disclosure Documents relating to the Sub-Adviser contain or will contain no
untrue statement of any material fact at the time they are reviewed and
approved by the Sub-Adviser 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.
(d) USE OF THE NAMES "KP" AND "XXXXXX." The Sub-Adviser has the right
to use the names "KP" and "Xxxxxx" in connection with its services to the
Trust and the Trust and the Adviser have the right to use the name
"Acadian" 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 "Acadian." The
Sub-Adviser retains all rights in and to any investment models used by or
on behalf of the Fund and any models based upon or derived from them. In
addition, the Adviser acknowledges and agrees that it has no rights in or
to the name "Acadian" beyond what is contemplated by this clause.
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(e) INSURANCE. The Sub-Adviser maintains errors and omissions
insurance coverage in an appropriate amount and shall provide prompt
written notice to the Trust (i) 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 copies of certificates
confirming insurance.
(f) 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 influence the decision of the Sub-Adviser with respect to
its selection of securities for a Fund, and that all selections shall be
done in accordance with what is in the best interest of the Fund.
(g) 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.
(h) REPRESENTATIONS. The representations and warranties in this
Section 7 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 3(a), whether or not specifically referenced in such report.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ADVISER.
(a) Properly Registered. The Adviser is registered as an investment
adviser under the Advisers Act, and will remain so registered for the
duration of this Agreement. The 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 Adviser, there is no proceeding
or investigation that is reasonably likely to result in the Adviser being
prohibited from performing the services contemplated by this Agreement. The
Adviser agrees to promptly notify the Sub-Adviser of the occurrence of any
event that would disqualify the Adviser from serving as an investment
adviser to the Trust. The Adviser is in compliance in all material respects
with all applicable federal and state law requirements in connection with
its investment management operations.
(b) Representations. The representations and warranties contained in
this Section 8 shall be deemed to be made on the date this Agreement is
executed.
9. 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.
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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.
10. 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.
11. 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.
12. 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(c) and unless terminated automatically as set forth in Section 11
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
11
(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.
13. 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.
(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.
14. LIABILITY OF THE SUB-ADVISER AND THE ADVISER.
(a) The Sub-Adviser shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of 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 provided
the Sub-Adviser was first granted the opportunity to review the content of
the Fund's Disclosure Document and the content was approved for use by the
Sub-Adviser. The Sub-Adviser will not be responsible for any content that
it
12
does not review and approve that is related to it or its activities under
this Agreement.
(b) 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 written investment policy,
guideline or restriction set forth in the Registration Statement or as
approved by the Board from time to time and provided to the Sub-Adviser; 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 and source of income requirements of Subchapter M of the
Code as a result of the Sub-Adviser's management of the Assets) (the
investments described in this subsection (b) collectively are referred to
as "Improper Investments").
(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 material 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 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 the Sub-Adviser was first
granted the opportunity to review the content of the Fund's Disclosure
Document and the content was approved for use by the Sub-Adviser; or (iv)
the Sub-Adviser's willful misfeasance, bad faith, or gross negligence in
the performance of its duties or the reckless disregard of its obligations
under this Agreement; 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.
(d) The Adviser shall indemnify and hold harmless the Sub-Adviser,
each affiliated person of the Sub-Adviser within the meaning of Section
2(a)(3) of the 1940 Act, and each person who controls the Sub-Adviser
within the meaning of Section 15 of the 1933 Act (collectively the
"Sub-Adviser Indemnitees" against any and all losses, claims, damages,
expenses or liabilities (including the reasonable cost of investigating
13
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
material breach by the Adviser of this Agreement or of the representations
and warranties made by the Adviser herein; or (ii) the Adviser's willful
misfeasance, bad faith or gross negligence in the performance of its
obligations and duties under this Agreement, or by reason of its reckless
disregard of its obligations and duties under this Agreement; provided
however, that the Adviser's obligations hereunder shall be reduced to the
extent that such claim against, or the losses, damages or liabilities
experienced by the Sub-Adviser, is caused by or is otherwise directly
related to the Sub-Adviser's own willful misfeasance, bad faith or gross
negligence, or to the reckless disregard of its duties under this
Agreement.
15. 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.
16. 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.
17. CHANGE IN THE ADVISER'S OWNERSHIP. 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.
18. 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 or
federal, in Massachusetts, with respect to any dispute under this Agreement.
19. 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.
14
20. 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.
21. Notice. Any notice under this Agreement 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
(return receipt requested) or by reputable overnight delivery service (with
evidence of receipt to the parties) at the primary office address of such party
and contact set forth below, or at such other address, number or electronic
address as shall be specified or designated by like notice.
To the Trust:
(Please insert contact information)
To the Adviser:
Xxxxxx Associates Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx, Vice President, Trust Advisory Group
Facsimile: 303.832.8230
Email: XXXX@XXXXXX.XXX
Telephone: 000.000.0000
To the Sub-Adviser:
Xxxx Xxxx
Acadian Asset Management LLC
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Email: xxxxx@xxxxxxx-xxxxx.xxx
Phone: (000) 000-0000
Fax: (000) 000-0000
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their duly authorized officers as of the date first above
written.
15
XXXXXX ASSOCIATES INC.
By:______________________________________
Name:
Title:
ACADIAN ASSET MANAGEMENT LLC
By:______________________________________
Name:
Title:
16
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
DATED , 2013 BETWEEN
XXXXXX ASSOCIATES INC.
AND
ACADIAN 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 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 International Equity Fund - Emerging Markets [____]%
Equity Sub-strategy
17
