BLACK DIAMOND FUNDS
SUBADVISORY AGREEMENT
AGREEMENT made as of the ___ day of ________, 2002, by
and among Black Diamond Funds, a Delaware business trust, with
its principal office and place of business at 0000 Xxxxx Xxxx
Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 (the "Trust");
Black Diamond Asset Management LLC, a Delaware limited liability
company, with its principal office and place of business at 0000
Xxxxx Xxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000 (the
"Adviser") and Broadmark Asset Management, LLC, a Delaware
limited liability company, with its principal office and place of
business at 000 Xxxxx'x Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxxxx 00000 (the "Subadviser").
WHEREAS, the Adviser has entered into an investment
advisory agreement dated the __day of ________ 2002, ("Advisory
Agreement") with the Trust;
WHEREAS, the Trust is registered under the Investment
Company Act of 1940, as amended, (the "1940 Act"), as an
open-end, management investment company and may issue its shares
of beneficial interest, no par value (the "Shares"), in separate
series;
WHEREAS, pursuant to the Advisory Agreement, and subject
to the direction and control of the Board of Trustees of the
Trust (the "Board"), the Adviser acts as investment adviser for
each series of the Trust listed on Appendix A hereto (each, a
"Series" and, collectively, the "Series");
WHEREAS, the Trust and Adviser desire to retain the
Subadviser to perform investment advisory services for the Series
and the Subadviser is willing to provide those services on the
terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual
covenants and agreements contained herein, the Adviser and the
Subadviser hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust and the Adviser hereby employ Subadviser,
subject to the direction and control of the Board, to manage the
investment and reinvestment of the assets in each Series and,
without limiting the generality of the foregoing, to provide
other services as specified herein. The Subadviser accepts this
employment and agrees to render its services for the compensation
set forth herein.
(b) In connection therewith, the Trust has delivered or
will promptly deliver to the Subadviser copies of (i) the Trust's
Trust Instrument, as amended from time to time, (the "Trust
Instrument"), (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the 1940 Act (the
"Registration Statement"), (iii) the Trust's current Prospectuses
and Statements of Additional Information of each Series
(collectively, as currently in effect and as amended or
supplemented, the "Prospectus"), and (iv) all procedures adopted
by the Trust with respect to any Series and all written
instructions adopted by the Board with respect to any Series, and
shall promptly furnish the Subadviser with all amendments of or
supplements to the foregoing. The Trust shall deliver to the
Subadviser (x) a certified copy of the resolution of the Board
appointing the Subadviser and authorizing the execution and
delivery of this Agreement, (y) a copy of all proxy statements
and related materials relating to any Series, and (z) any other
documents, materials or information that the Subadviser shall
reasonably request to enable it to perform its duties pursuant to
this Agreement.
(c) The Subadviser has delivered to the Adviser and the
Trust a copy of its (i) Form ADV and (ii) code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act
(the "Code"). If in the opinion of counsel to the Trust, the code
of ethics does not satisfy the requirements of Rule 17j-1, the
Subadviser will adopt a code of ethics that does. The Subadviser
shall promptly furnish the Adviser and Trust with all amendments
of or supplements to the code at least annually.
SECTION 2. DUTIES OF THE TRUST AND ADVISER
(a) In order for the Subadviser to perform the services
required by this Agreement, the Trust and the Adviser (i) shall
cause all service providers to the Trust to furnish information
within a reasonable time relating to any Series to the Subadviser
and assist the Subadviser as may be required and (ii) shall
ensure that the Subadviser has reasonable access to all records
and documents maintained by the Trust, or any service provider to
the Trust.
(b) In order for the Subadviser to perform the services
required by this Agreement, the Adviser shall deliver within a
reasonable time to the Subadviser all material it provides to the
Board in accordance with the Advisory Agreement.
SECTION 3. DUTIES OF THE SUBADVISER
(a) The Subadviser will make decisions with respect to
all purchases and sales of securities and other investment assets
in each Series to the extent such authority is delegated by the
Adviser. To carry out such decisions, the Subadviser is hereby
authorized, as agent and attorney-in-fact for the Trust, for the
account of, at the risk of and in the name of the Trust, to place
orders and issue instructions with respect to those transactions
of the Series. In all purchases, sales and other transactions in
securities and other investments for the Series, the Subadviser
is authorized to exercise full discretion and act for the Trust
in the same manner and with the same force and effect as the
Trust might or could do with respect to such purchases, sales or
other transactions, as well as with respect to all other things
necessary or incidental to the furtherance or conduct of such
purchases, sales or other transactions.
Consistent with Section 28(e) of the Securities
Exchange Act of 1934, as amended, the Subadviser may allocate
brokerage on behalf of the Series to broker-dealers who provide
research services. The Subadviser may aggregate sales and
purchase orders of the assets of the Series with similar orders
being made simultaneously for other accounts advised by the
Subadviser or its affiliates. Whenever the Subadviser
simultaneously places orders to purchase or sell the same asset
on behalf of a Series and one or more other accounts advised by
the Subadviser, 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.
(b) The Subadviser will report to the Board at each
meeting thereof as requested by the Adviser or the Board all
material changes in each Series since the prior report, and will
also keep the Board informed of important developments affecting
the Trust, the Series and the Subadviser, and on its own
initiative, will furnish the Board from time to time with such
information as the Subadviser may believe appropriate for this
purpose, whether concerning the individual companies whose
securities are included in the Series' holdings, the industries
in which they engage, the economic, social or political
conditions prevailing in each country in which the Series
maintain investments, or otherwise. The Subadviser will also
furnish the Board with such statistical and analytical
information with respect to investments of the Series as the
Subadviser may believe appropriate or as the Board reasonably may
request. In making purchases and sales of securities and other
investment assets for the Series, the Subadviser will bear in
mind the policies set from time to time by the Board (to the
extent such policies and limitations have been communicated to
the Subadviser), as well as the limitations imposed by the Trust
Instrument and Registration Statement, the limitations in the
1940 Act, the Securities Act, the Internal Revenue Code of 1986,
as amended, and other applicable laws, the investment objectives,
policies and restrictions of the funds.
(c) The Subadviser will from time to time employ or
associate with such persons as the Subadviser believes to be
particularly fitted to assist in the execution of the
Subadviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Subadviser. No obligation may
be incurred on the Trust's or Adviser's behalf in any such
respect.
(d) The Subadviser will report to the Board all material
matters related to the Subadviser's duties hereunder. On an
annual basis, the Subadviser shall report on compliance by the
access persons of the Series with its Code to the Adviser and to
the Board and upon the written request of the Adviser or the
Trust, the Subadviser shall permit the Adviser and the Trust, or
their respective representatives to examine the reports required
to be made to the Subadviser by the access persons of the Series
under the Code. The Subadviser will notify the Adviser and the
Trust of any change of control of the Subadviser and any changes
in the key personnel who are either the portfolio manager(s) of
the Series or senior management of the investment services group
of the Subadviser, in each case prior to or promptly after such
change.
(e) The Subadviser will maintain records relating to its
portfolio transactions and placing and allocation of brokerage
orders as are required to be maintained by the Trust under the
1940 Act. The Subadviser shall prepare and maintain, or cause to
be prepared and maintained, in such form, for such periods and in
such locations as may be required by applicable law, all
documents and records relating to the services provided by the
Subadviser pursuant to this Agreement required to be prepared and
maintained by the Subadviser or the Trust pursuant to applicable
law. To the extent required by law, the books and records
pertaining to the Trust which are in possession of the Subadviser
shall be the property of the Trust. The Adviser and the Trust, or
their respective representatives, shall have reasonable access to
such books and records at all times during the Subadviser's
normal business hours. Upon the reasonable request of the Adviser
or the Trust, copies of any such books and records shall be
provided promptly by the Subadviser to the Adviser and the Trust,
or their respective representatives.
(f) The Subadviser will cooperate with each Series'
independent public accountants and shall take reasonable action
to make all necessary information available to the accountants
for the performance of the accountants' duties.
(g) The Subadviser will provide the Series' custodian
and fund accountant on each business day with such information
relating to all transactions concerning the Series' assets under
the Subadviser's control as the custodian and fund accountant may
reasonably require. In accordance with procedures adopted by the
Board, the Subadviser is responsible for assisting in the fair
valuation of all Series assets and will use its reasonable
efforts to arrange for the provision of prices from parties who
are not affiliated persons of the Subadviser for each asset for
which the Series' fund accountant does not obtain prices in the
ordinary course of business.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Adviser shall
pay the Subadviser, with respect to each Series, a fee at an
annual rate as listed in Appendix A hereto. [Such fees shall be
accrued by the Adviser daily and shall be payable monthly in
arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month. If fees
begin to accrue in the middle of a month or if this Agreement
terminates before the end of any month, all fees for the period
from that date to the end of that month or from the beginning of
that month to the date of termination, as the case may be, shall
be prorated according to the proportion that the period bears to
the full month in which the effectiveness or termination occurs.
Upon the termination of this Agreement with respect to a Series,
the Adviser shall pay to the Subadviser such compensation as
shall be payable prior to the effective date of termination.]
(b) The Subadviser may agree to waive all or part
of its fees by separate agreement.
SECTION 5. STANDARD OF CARE
(a) The Trust and Adviser shall expect of the
Subadviser, and the Subadviser will give the Trust and Adviser
the benefit of, the Subadviser's best judgment and efforts in
rendering its services hereunder. The Subadviser shall not be
liable to the Adviser or the Trust hereunder for any mistake of
judgment or in any event whatsoever, except for lack of good
faith, provided that nothing herein shall be deemed to protect,
or purport to protect, the Subadviser against any liability to
the Adviser or the Trust to which the Subadviser would otherwise
be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Subadviser's duties
hereunder, or by reason of the Subadviser's reckless disregard of
its obligations and duties hereunder.
(b) The Subadviser shall not be liable to the Adviser or
the Trust for any action taken or failure to act in good faith
reliance upon: (i) information, instructions or requests, whether
oral or written, with respect to a Series that the Subadviser
reasonably believes were made by a duly authorized officer of the
Adviser or the Trust, (ii) the advice of counsel to the Trust,
and (iii) any written instruction or certified copy of any
resolution of the Board.
(c) The Subadviser shall not be responsible or liable
for any failure or delay in performance of its obligations under
this Agreement arising out of or caused, directly or indirectly,
by circumstances beyond its reasonable control including, without
limitation, acts of civil or military authority, national
emergencies, labor difficulties (other than those related to the
Subadviser's employees), fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of
the mails, transportation, communication or power supply.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect
to a Series immediately upon the later of approval by a majority
of the Trust's trustees who are not parties to this Agreement or
interested persons of any such party (other than as trustees of
the Trust) and, if required by applicable law, by a vote of a
majority of the outstanding voting securities of the Series.
(b) This Agreement shall remain in effect with respect
to a Series for a period of two years from the date of its
effectiveness and shall continue in effect for successive annual
periods with respect to the Series; provided that such
continuance is specifically approved at least annually (i) by the
Board or by the vote of a majority of the outstanding voting
securities of the Series, and, in either case, (ii) by a majority
of the Trust's trustees who are not parties to this Agreement or
interested persons of any such party (other than as trustees of
the Trust); provided further, however, that if the continuation
of this Agreement is not approved as to a Series, the Subadviser
may continue to render to that Series the services described
herein in the manner and to the extent permitted by the 1940 Act
and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a
Series at any time, without the payment of any penalty, (i) by
the Board, by a vote of a majority of the outstanding voting
securities of the Series or by the Adviser on 60 days' written
notice to the Subadviser or (ii) by the Subadviser on 60 days'
written notice to the Trust. This Agreement shall terminate
immediately (x) upon its assignment or (y) upon termination of
the Advisory Agreement.
SECTION 7. ACTIVITIES OF THE SUBADVISER
Except to the extent necessary to perform its
obligations hereunder, nothing herein shall be deemed to limit or
restrict the Subadviser's right, or the right of any of the
Subadviser's directors, officers or employees to engage in any
other business or to devote time and attention to the management
or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other
corporation, trust, firm, individual or association.
SECTION 8. REPRESENTATIONS OF SUBADVISER.
The Subadviser represents and warrants that (i) it is
either registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act") (and will
continue to be so registered for so long as this Agreement
remains in effect) or exempt from registration under the Advisers
Act, (ii) is not prohibited by the 1940 Act or the Advisers Act
from performing the services contemplated by this Agreement,
(iii) has met, and will seek to continue to meet for so long as
this Agreement remains in effect, any other applicable federal or
state requirements, or the applicable requirements of any
self-regulatory agency, necessary to be met in order to perform
the services contemplated by this Agreement, and (iv) will
promptly notify the Adviser and the Trust of the occurrence of
any event that would disqualify the Subadviser from serving as an
investment adviser of an investment company pursuant to Section
9(a) of the 1940 Act or otherwise.
SECTION 9. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each
Series shall not be liable for any obligations of the Trust or of
the Series under this Agreement, and the Subadviser agrees that,
in asserting any rights or claims under this Agreement, it shall
look only to the assets and property of the Trust or the Series
to which the Subadviser's rights or claims relate in settlement
of such rights or claims, and not to the Trustees of the Trust or
the shareholders of the Series.
SECTION 10. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and approved by
the Trust in the manner set forth in Section 6(b) hereof.
(b) No amendment to this Agreement or the termination of
this Agreement with respect to a Series shall effect this
Agreement as it pertains to any other Series, nor shall any such
amendment require the vote of the shareholders of any other
Series.
(c) Neither party to this Agreement shall be liable to
the other party for consequential damages under any provision of
this Agreement.
(d) This Agreement shall be governed by, and the
provisions of this Agreement shall be construed and interpreted
under and in accordance with, the laws of the State of Delaware.
(e) This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement
with respect to the subject matter hereof, whether oral or
written.
(f) This Agreement may be executed by the parties hereto
on any number of counterparts, and all of the counterparts taken
together shall be deemed to constitute one and the same
instrument.
(g) If any part, term or provision of this Agreement is
held to be illegal, in conflict with any law or otherwise
invalid, the remaining portion or portions shall be considered
severable and not be affected, and the rights and obligations of
the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be
illegal or invalid.
(h) Section headings in this Agreement are included for
convenience only and are not to be used to construe or interpret
this Agreement.
(i) Notices, requests, instructions and communications
received by the parties at their respective principal places of
business, or at such other address as a party may have designated
in writing, shall be deemed to have been properly given.
(j) Notwithstanding any other provision of this
Agreement, the parties agree that the assets and liabilities of
each Series are separate and distinct from the assets and
liabilities of any other series of the Trust and that no Series
or other series of the Trust shall be liable or shall be charged
for any debt, obligation or liability of any other Series or
series, whether arising under this Agreement or otherwise.
(k) No affiliated person, employee, agent, director,
officer or manager of the Subadviser shall be liable at law or in
equity for the Subadviser's obligations under this Agreement.
(l) The terms "vote of a majority of the outstanding
voting securities", "interested person", "affiliated person,"
"control" and "assignment" shall have the meanings ascribed
thereto in the 1940 Act.
(m) Each of the undersigned warrants and represents that
he has full power and authority to sign this Agreement on behalf
of the party indicated and that his signature will bind the party
indicated to the terms hereof and each party hereto warrants and
represents that this Agreement, when executed and delivered, will
constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting the rights and
remedies of creditors and secured parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed all as of the day and year first
above written.
BLACK DIAMOND FUNDS
By:
------------------------------------
Name:
Title:
BLACK DIAMOND ASSET MANAGEMENT LLC
By:
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Name
Title:
BROADMARK ASSET Management, LLC
By:
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Name:
Title:
APPENDIX A
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BLACK DIAMOND FUNDS
SUBADVISORY AGREEMENT
Fee as a % of the
Annual Average
Daily Net Assets
Series of the Trust of the Series
Black Diamond Principal Protected 500 Series I ____%
Black Diamond Principal Protected 100 Series I ____
Black Diamond Principal Protected 2000 Series I ____
Black Diamond Principal Protected 400 Series I ____
Black Diamond Principal Protected HT Series I ____
Black Diamond Principal Protected BT Series I ____
Black Diamond Principal Protected FS Series I ____
04088.0001 #324029
