SUB-ADVISORY AGREEMENT
AGREEMENT made as of the ...... day of .............., 199...... among U.S.
GLOBAL INVESTORS, INC., a corporation organized under the laws of the State of
Texas (the "Advisor"), ACCOLADE FUNDS, a Massachusetts business trust having its
principal place of business in San Antonio, Texas (the "Trust"), on behalf of
the Xxxxxx Xxx Global Opportunity Fund (the "Fund"), a series of shares of the
Trust, and GLOBAL STRATEGIC MANAGEMENT, INC. , a corporation organized under the
laws of the State of Maryland (the "Sub-Advisor"), of Annapolis, Maryland.
WHEREAS, the Advisor is engaged in the business of rendering investment
management services to the Trust; and
WHEREAS, the Trust is an open-end management investment company and is so
registered under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust is operated as a "series company" within the meaning of
Rule 18f-2 under the 1940 Act and has four separate series of shares of
beneficial interest, one of which series is the Fund.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-ADVISOR.
The Sub-Advisor is hereby appointed to provide investment advisory
services to the Fund for the period and on the terms herein set forth.
The Sub-Advisor accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided. To
enable Sub-Advisor to exercise fully its discretion and authority as
provided in this Section 1, the Trust hereby constitutes and appoints
Sub- Advisor as the Trust's agent and attorney-in-fact with full power
and authority for the Trust and on the Trust's behalf to buy, sell and
otherwise deal in securities and contracts relating to same for the
Fund.
2. DUTIES OF SUB-ADVISOR.
(a) The Sub-Advisor is hereby authorized and directed and hereby
agrees, subject to the stated investment objectives and policies
of the Fund as set forth in the Fund's Prospectus (as defined
below) and subject to the supervision of the Advisor and the
Board of Trustees of the Trust, (i) to develop, recommend and
implement such investment program and strategy for the Fund as
may from time to time under the circumstances appears most
appropriate to the achievement of the investment objective of the
Fund as stated in the aforesaid Prospectus, (ii) to provide
research and analysis relative to the investment program and
investments of the Fund, (iii) to determine which securities
should be purchased and sold and what portion of the assets of
the Fund should be held in cash or cash equivalents, and (iv) to
monitor on a continuing basis the performance of the portfolio
securities of the Fund. The Sub-Advisor will advise the Trust's
custodian and the Advisor on a prompt basis of each purchase and
sale of a portfolio security specifying the name of the issuer,
the description and amount or number of shares of the security
purchased, the market price, commission and gross or net price,
trade date, settlement date and identity of the effecting broker
or dealer; and will review the accuracy of the pricing of
portfolio securities in accordance with Trust procedures. From
time to time, as the Trustees of the Trust or the Advisor may
reasonably request, the Sub-Advisor will furnish to the Trust's
officers and to each of its Trustees reports on portfolio
transactions and reports on issues of securities held in the
portfolio, all in such detail as the Trust or the Advisor may
reasonably request. The Sub- Advisor will also inform the Trust's
officers and Trustees on a current basis of changes in investment
strategy or tactics. The Sub-Advisor will make its officers and
employees available to meet with the Trust's officers and
Trustees on due notice to review the investments and investment
program of the Fund in the light of current and prospective
economic and market conditions.
The Sub-Advisor shall place all orders for the purchase and sale
of portfolio securities for the account of the Fund with brokers
or dealers selected by the Sub-Advisor, although the Trust will
pay the actual brokerage commissions and any transfer taxes with
respect to transactions in the
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portfolio securities of the Trust. The Sub-Advisor is authorized
to submit any such order collectively with orders on behalf of
other accounts under its management, provided that the
Sub-Advisor shall have determined that such action is in the best
interest of the Fund and is in accordance with applicable law,
including, without limitation, Rule 17d-1 under the 1940 Act. In
executing portfolio transactions and selecting brokers or
dealers, the Sub-Advisor 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-Advisor shall consider all factors 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 (for the specific transaction and on a continuing basis).
In evaluating the best overall terms available, and in selecting
the broker or dealer to execute a particular transaction, the
Sub-Advisor may also consider the brokerage and research services
[as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934] provided to the Fund and/or other accounts
over which the Sub-Advisor or an affiliate of the Sub-Advisor
exercises investment discretion. The Sub-Advisor is authorized to
pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Sub-Advisor
determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of that
particular transaction or in terms of all of the accounts over
which investment discretion is so exercised. An affiliated person
of the Sub-Advisor may provide brokerage services to the Fund
provided that the Sub- Advisor shall have determined that such
action is consistent with its obligation to seek the best overall
terms available and is in accordance with applicable law,
including, without limitation, Section 17(e) of the 0000 Xxx. The
foregoing shall not be deemed to authorize an affiliated person
of the Sub-Advisor to enter into transactions with the Fund as
principal.
In the performance of its duties hereunder, the Sub-Advisor is
and shall be an independent contractor and unless otherwise
expressly provided or authorized shall have no authority to act
for or represent the Trust in any way or otherwise be deemed to
be an agent of the Trust or of the Advisor.
(b) Delivery of Documents. The Advisor will furnish upon request or
has previously furnished the Sub-Advisor with true copies of each
of the following:
(i) The Trust's Master Trust Agreement dated April 15, 1993 as
filed with the Secretary of State of the Commonwealth of
Massachusetts and all amendments thereto (such Master Trust
Agreement, as presently in effect and as it shall from time
to time be amended, is herein called the "Master Trust
Agreement");
(ii) The Trust's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as it shall from time to time be
amended, are herein called the "By-Laws");
(iii)Resolutions of the Trust's Board of Trustees authorizing
the appointment of the Advisor and Sub-Advisor and approving
the Advisory Agreement and this Agreement;
(iv) The most recent Post-Effective Amendment to the Trust's
Registration Statement on Form N-1A under the Securities Act
of 1933 as amended ("1933 Act") and the 1940 Act as filed
with the Securities and Exchange Commission;
(v) The Fund's most recent prospectus (such prospectus, as
presently in effect and all amendments and supplements
thereto being referred to herein as the "Prospectus"); and
(vi) All resolutions of the Board of Trustees of the Trust
pertaining to the management of the assets of the Fund.
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During the term of this Agreement, the Advisor shall not use or
implement any amendment or supplement that relates to or affects the
obligations of the Sub-Advisor hereunder if the Sub-Advisor reasonably
objects in writing within five business days after delivery thereof
(or such shorter period of time as the Advisor shall specify upon
delivery, if such shorter period of time is reasonable under the
circumstances).
3. ADVISORY FEE.
(a) For the services to be provided to the Fund by the Sub-Advisor as
provided in Paragraph 2 hereof, the Advisor will pay the
Sub-Advisor in accordance with the following:
(i) Subject to shareholder approval the initial term of the
advisory agreement will be for two years, and the Fund will
pay a one and one quarter percent (1.25%) annual management
fee to the Advisor;
(ii) The Advisor will pay to the Sub-Advisor 50 percent of the
management fee received reduced by: 1) the Advisor's
incurred costs and expenses of marketing the Fund that
exceed the .25% 12b-1 fee charged to the Fund for such
marketing purposes; 2) for any monies advanced by the
Advisor on behalf of the Sub-Advisor; 3) the unrecovered
costs of organizing the Fund up to $40,000 (the Advisor will
be responsible for bearing costs of organization of the Fund
in excess of $40,000); and 4) if a decision is made with
respect to placing a cap on expenses, to the extend that
actual expenses of the Fund exceed the cap, and the Advisor
is required to pay or absorb any of the excess expenses, by
the amount of the excess expenses paid or absorbed by the
Advisor through such downward adjustments.
(iii)To the extent that the Sub-Advisor has advanced monies to
the Advisor to pay for Fund distribution or organizational
expenses, such advances shall serve to offset the reductions
enumerated above.
(iv) The Fund is not responsible for paying any portion of the
Sub-Advisor's fees.
(v) The fee is payable in monthly installments in arrears. The
"Management Fee" means the management fee paid by the Trust
to the Advisor under the Addendum to the Advisory Agreement,
dated as of .............., 1996, between the Trust and the
Advisor with respect to the management of the Fund.
(b) In the case of termination of the Agreement during any calendar
month, the fee with respect to that month shall be reduced
proportionately based upon the number of calendar days during
which it is in effect and the fee shall be computed upon the
average net assets of the Fund for the days during which it is so
in effect.
(c) The "Monthly Average Net Assets" of the Fund for any calendar
month shall be equal to the quotient produced by dividing (i) the
sum of the net assets of the Fund, determined in accordance with
procedures established from time to time by or under the
direction of the Board of Trustees of the Trust in accordance
with the Master Trust Agreement, as of the close of business on
each day during such month that the Fund was open for business,
by (ii) the number of such days.
4. EXPENSES.
During the term of this Agreement, the Sub-Advisor will bear all
expenses incurred by it in the performance of its duties hereunder.
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5. FUND TRANSACTIONS.
The Sub-Advisor agrees that neither it nor any of its employees,
officers or directors will take any long- or short-term position in
the shares of the Fund or portfolio securities of the Fund for trading
purposes; provided, however, that such prohibition shall not prevent
the purchase of shares of the Fund by any of the persons above
described for their account and for investment at the price at which
such shares are available to the public at the time of purchase.
6. REPRESENTATION AND WARRANTY.
The Sub-Advisor hereby represents and warrants to the Advisor that it
is duly registered as an investment Advisor, or is exempt from
registration, under the Investment Advisor's Act of 1940, as amended,
and that it shall maintain such registration or exemption at all times
during which this Agreement is in effect.
7. LIABILITY OF SUB-ADVISOR.
In the performance of its duties under this Agreement, the Sub-Advisor
shall act in conformity with and in compliance with the requirements
of the 1940 Act and all other applicable U.S. Federal and state laws
and regulations and shall not cause the Fund to take any action that
would require the Fund or any affiliated person thereof to register as
a commodity pool operator under the terms of the U.S. Commodity
Exchange Act, as amended (it being understood by the Sub-Advisor that
a notice of eligibility may be filed on behalf of the Trust pursuant
to Rule 4.5 promulgated under said Act). The Sub-Advisor shall be
responsible for maintaining such procedures as may be reasonably
necessary to ensure that the investment and reinvestment of the Fund's
assets are made in compliance with its investment objectives and
policies and with all applicable statutes and regulations and that the
Fund qualifies as a regulated investment company under Subchapter M of
the Internal Revenue Code. No provision of this Agreement shall be
deemed to protect the Sub-Advisor against any liability to the Trust
or its shareholders to which it might otherwise be subject by reason
of any willful misfeasance, bad faith or gross negligence in the
performance of its duties or the reckless disregard of its obligations
and duties under this Agreement.
8. REPORTS.
The Sub-Advisor shall render to the Board of Trustees of the Trust
such periodic and special reports as the Board of Trustees may
reasonably request with respect to matters relating to duties of the
Sub-Advisor set forth herein.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. With respect to the Trust, this Agreement shall become
effective upon the date hereof and shall continue in full force
and effect for two years from the date of shareholder approval
and from year to year thereafter so long as such continuance is
approved at least annually (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Fund, and (ii) in
either event by the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on such
approval.
(b) Termination. With respect to the Trust, this Agreement may be
terminated at any time, without payment of any penalty (i) by
vote of the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund (as defined in the 0000
Xxx) on sixty (60) days' written notice to the other parties,
(ii) by the Advisor on sixty (60) days' written notice to the
other parties or (iii) by the Sub-Advisor on ninety (90) days'
written notice to the other parties.
(c) Automatic Termination. With respect to the Trust, this Agreement
shall automatically and immediately terminate in the event of its
assignment or upon expiration of the Advisory Agreement now or
hereafter in effect between the Advisor and the Trust with
respect to the Fund.
10. SERVICES NOT EXCLUSIVE.
The services of the Sub-Advisor of the Fund hereunder are not to be
deemed exclusive, and the Sub- Advisor shall be free to render similar
services to others.
11. LIMITATION OF LIABILITY.
(a) The Trust. The term "Accolade Funds" means and refers to the
Trustees from time to time serving under the Master Trust
Agreement. It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the assets and property of the
Trust, as provided in the Master Trust Agreement. The execution
and delivery of the Agreement have been authorized by the
Trustees and shareholders of the Trust and signed by an
authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such
execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the assets and
property of the Trust as provided in its Master Trust Agreement.
(b) The Advisor and Sub-Advisor. It is expressly agreed that the
obligations of the Advisor and Sub- Advisor hereunder shall not
be binding upon any of the shareholders, nominees, officers,
agents or employees of the Advisor or Sub-Advisor, personally,
but bind only the assets and property of the Advisor and
Sub-Advisor, respectively. The execution and delivery of the
Agreement have been authorized by the directors and officers of
the Advisor and Sub-Advisor and signed by an authorized officer
of the Advisor and Sub-Advisor, acting as such, and neither such
authorization by such directors and officers nor such execution
and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property of
the Advisor and Sub-Advisor, respectively. This limitation of
liability shall not be deemed to protect the shareholders,
nominees, officers, agents or employees of the Advisor and
Sub-Advisor against any liability to the Trust or its
shareholders to which they might otherwise be subject by reason
of any willful misfeasance, bad faith or gross negligence in the
performance of their duties or the reckless disregard of their
obligations and duties under this Agreement.
12. MISCELLANEOUS.
(a) Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
parties at such address as such other parties may designate in
writing for the receipt of such notices.
(b) Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
(c) Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Texas.
(d) This Agreement constitutes the entire agreement of the parties
and supersedes all prior or contemporaneous written or oral
negotiations, correspondence, agreements and understandings,
regarding the subject matter hereof.
13. STANDARD OF CARE.
To the extent permitted under applicable law (including section 36 of
the 1940 Act), the Sub-Advisor will not be liable to the Trust or the
Advisor for any losses incurred by the Trust, the Fund or the Advisor
that arise out of or are in any way connected with any recommendation
or other act or failure to act of the Sub- Advisor under this
Agreement, including, but not limited to, any error in judgment with
respect to the Fund, so long as such recommendation or other act or
failure to act does not constitute a breach of the Sub-Advisor's
fiduciary duty to the Trust, the Fund or the Advisor. Anything in this
section 13 or otherwise in this Agreement to the contrary
notwithstanding, however, nothing herein shall constitute a waiver or
limitation of any rights that the Trust, the Advisor or the Fund may
have under any Federal or state securities laws.
IN WITNESS WHEREOF, the Advisor, the Trust and the Sub-Advisor have caused this
Agreement to be executed on the day and year first above written.
U.S. GLOBAL INVESTORS, INC.
By:
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ACCOLADE FUNDS
By:
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GLOBAL STRATEGIC MANAGEMENT, INC.
By:
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