SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT, dated this 1st day of November, 2001, by and
between XXXXX XXX & XXXXXXX INCORPORATED, a Delaware corporation (the "Adviser")
and XXXXX XXX INVESTMENT COUNSEL LLC, a Delaware limited liability company (the
"Sub-Adviser").
WITNESSETH:
WHEREAS, the Adviser provides Liberty Tax-Managed Growth Fund (the
"Fund"), a series of Liberty Funds Trust I (the "Trust"), an open-end investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), business services pursuant to the terms and conditions of an
investment advisory agreement dated November 1, 2001 (the "Agreement") between
the Adviser and the Trust, on behalf of the Fund; and
WHEREAS, the Sub-Adviser is willing to provide services to the Adviser
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of the Sub-Adviser. Subject to the supervision of the
Trustees of the Trust and the Adviser, the Sub-Adviser will: (a) manage the
investment of the assets of the Fund in accordance with the Fund's investment
objectives, policies and limitations as stated in the Fund's then current
Prospectus (the "Prospectus") and Statement of Additional Information (the
"Statement") as provided by the Adviser to the Sub-Adviser and in compliance
with the 1940 Act and the rules, regulations and orders thereunder; (b) place
purchase and sale orders for portfolio transactions for the Fund; (c) evaluate
such economic, statistical and financial information and undertake such
investment research as it shall believe advisable; (d) employ professional
portfolio managers to provide research services to the Fund; and (e) report
results to the Board of Trustees of the Trust. The Adviser agrees to provide the
Sub-Adviser with such assistance as may be reasonably requested by the
Sub-Adviser in connection with its activities under this Agreement, including,
without limitation, information concerning the Fund, its funds available, or to
become available, for investment and generally as to the conditions of the
Fund's affairs.
Should the Trustees of the Trust or the Adviser at any time make any
determination as to investment policy and notify the Sub-Adviser thereof in
writing, the Sub-Adviser shall be bound by such determination for the period, if
any, specified in such notice or until notified that such determination has been
revoked. Further, the Adviser or the Trustees of the Trust may at any time, upon
written notice to the Sub-Adviser, suspend or restrict the right of the
Sub-Adviser to determine what assets of the Fund shall be purchased or sold and
what portion, if any, of the Fund's assets shall be held uninvested. It is
understood that the Adviser undertakes to discuss with the Sub-Adviser any such
determinations of investment policy and any such suspension or restrictions on
the right of the Sub-Adviser to determine what assets of the Fund shall be
purchased or sold or held uninvested, prior to the implementation thereof.
2. Certain Information to the Sub-Adviser. Copies of the Prospectus,
the Statement, and the Trust's Declaration of Trust have been or will be
delivered to the Sub-Adviser. The Adviser agrees to notify the Sub-Adviser of
each change in the investment policies of the Fund and to provide to the
Sub-Adviser as promptly as practicable copies of all amendments and supplements
to the Prospectus, the Statement, and the Trust's Declaration of Trust. In
addition, the Adviser will promptly provide the Sub-Adviser with any procedures
applicable to the Sub-Adviser adopted from time to time by the Trustees of the
Trust and agrees to provide promptly to the Sub-Adviser copies of all amendments
thereto. The Sub-Adviser will be entitled to rely on all documents furnished to
it by the Adviser.
3. Execution of Certain Documents. Subject to any other written
instructions of the Adviser and the Trustees of the Trust, the Sub-Adviser is
hereby appointed the Adviser's and the Trust's agent and attorney-in-fact to
execute account documentation, agreements, contracts and other documents as the
Sub-Adviser shall be requested to execute by brokers, dealers, counterparties
and other persons in connection with its management of the assets of the Fund.
4. Reports. The Sub-Adviser shall furnish to the Trustees of the Trust
or the Adviser, or both, as may be appropriate, quarterly reports of its
activities on behalf of the Fund, as required by applicable law or as otherwise
reasonably requested from time to time by the Trustees of the Trust or the
Adviser, and such additional information, reports, evaluations, analyses and
opinions as the Trustees of the Trust or the Adviser, as appropriate, may
reasonably request from time to time.
5. Compensation of the Sub-Adviser. For the services to be rendered by
the Sub-Adviser under this Agreement, the Adviser shall pay to the Sub-Adviser a
monthly fee, payable within 10 business days after the last day of each month,
composed of a basic fee and a performance adjustment. The basic fee shall be
calculated at the end of each month by applying one-twelfth of the basic fee
rate (0.20%) to the average of the net assets of the Fund (computed in the
manner set forth in the Prospectus or Statement) determined as of the close of
business on each business day throughout the month. The performance adjustment
shall be determined by multiplying the basic fee by the performance adjustment
rates set forth below. The resulting calculation is the total monthly fee paid
by the Adviser to the Sub-Adviser. The performance adjustment rate shall be
readjusted at the end of each calendar quarter based on the Fund's ranking in
Morningstar, Inc.'s Large Blend category for domestic equity funds. The rates
applicable to each ranking are as follows:
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Morningstar Ranking Performance Adjustment Rate
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Quartile 1 1.25
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Quartile 2 1.00
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Below Median 0.75
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For the calendar quarter beginning October 1, 2001, and for each calendar
quarter thereafter until April 1, 2003, the performance adjustment rate shall be
the rate applicable to the Fund's Morningstar ranking for the three-year period
ending on the last day of the prior calendar quarter. In the event this
Agreement is terminated during any month, the basic fee rate and performance
adjustment rate shall be applied to net assets averaged over that month ending
on the last business day on which this Agreement is in effect. Notwithstanding
the above, the annual compensation payable to the Sub-Adviser under this
Agreement and the Sub-Advisory Agreement between the parties, dated November 1,
2001, with respect to Liberty Tax-Managed Growth Fund II (collectively, the
"Sub-Advisory Agreements") shall not be less than $350,000 in the aggregate. If
the compensation paid to the Sub-Adviser under the Sub-Advisory Agreements for
any calendar year is less than $350,000 in the aggregate, the Adviser, as soon
as practicable after the end of the year, shall pay the Sub-Adviser the
difference between $350,000 and the amount the Adviser has paid the Sub-Adviser
under the Sub-Advisory Agreements for that year. The Sub-Adviser will pay its
expenses incurred in performing its duties under this Agreement. Neither the
Trust nor the Fund shall be liable to the Sub-Adviser for the compensation of
the Sub-Adviser.
6. Limitation of Liability of the Sub-Adviser. The Sub-Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution and
management of the Fund, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties and obligations hereunder. The
Trust, on behalf of the Fund, may enforce any obligations of the Sub-Adviser
under this Agreement and may recover directly from the Sub-Adviser for any
liability it may have to the Fund.
7. Covenants of the Sub-Adviser. The Sub-Adviser agrees that it (a)
will not deal with itself, "affiliated persons" of the Sub-Adviser, the Trustees
of the Trust or the Fund's distributor, as principals, agents, brokers or
dealers in making purchases or sales of securities or other property for the
account of the Fund, except as permitted by the 1940 Act and the rules,
regulations and orders thereunder and subject to the prior written approval of
the Adviser, and except in accordance with Rule 17e-1 procedures as approved by
the Trustees from time to time and (b) will comply with all other provisions of
the then-current Prospectus and Statement as provided by the Adviser to the
Sub-Adviser relative to the Sub-Adviser and its trustees, officers, employees
and affiliates.
8. Representations, Warranties and Additional Agreements of the
Sub-Adviser. The Sub-Adviser represents, warrants and agrees that:
(a) It: (i) is registered as an investment adviser under the U.S.
Investment Advisers Act of 1940, as amended (the "Advisers Act") and is
registered under the laws of any jurisdiction in which the Sub-Adviser is
required to be registered as an investment adviser in order to perform its
obligations under this Agreement, and will continue to be so registered for so
long as this Agreement remains in effect; (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 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 regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; (v) will immediately notify the Adviser in writing of the occurrence
of any event that would disqualify the Sub-Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise; and (vi) will immediately notify the Adviser in writing of any change
of control of the Sub-Adviser or any parent of the Sub-Adviser resulting in an
"assignment" of this Agreement.
(b) It will maintain, keep current and preserve on behalf of the Fund,
in the manner and for the periods of time required or permitted by the 1940 Act
and the rules, regulations and orders thereunder and the Advisers Act and the
rules, regulations and orders thereunder, records relating to investment
transactions made by the Sub-Adviser for the Fund as may be reasonably requested
by the Adviser or the Fund from time to time. The Sub-Adviser agrees that such
records are the property of the Trust, and will be surrendered to the Trust
promptly upon request.
(c) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and, if it has not already
done so, will provide the Adviser and the Trust with a copy of such code of
ethics, and upon any amendment to such code of ethics, promptly provide such
amendment. At least annually the Sub-Adviser will provide the Trust and the
Adviser with a certificate signed by the chief compliance officer (or the person
performing such function) of the Sub-Adviser certifying, to the best of his or
her knowledge, compliance with the code of ethics during the immediately
preceding twelve (12) month period, including any material violations of or
amendments to the code of ethics or the administration thereof.
(d) It has provided the Adviser and the Trust with a copy of its Form
ADV as most recently filed with the Securities and Exchange Commission (the
"SEC") and will, promptly after filing any amendment to its Form ADV with the
SEC, furnish a copy of such amendment to the Adviser and the Trust.
9. Representation of the Adviser. 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 Advisers Act.
10. Non-Exclusivity. The Adviser understands 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, and the Adviser
has no objection to the Sub-Adviser so acting, provided that the Sub-Adviser
duly performs all obligations under this Agreement. The Adviser also understands
the Sub-Adviser may give advice and take action with respect to any of its other
clients 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.
11. Further Assurances. Each party agrees to perform such further acts and
execute such further ------------------- documents as are necessary to
effectuate the purposes hereof.
12. Duration and Termination of this Agreement. This Agreement shall become
effective on the date first above written and shall govern the relations between
the parties hereto thereafter, and shall remain in force until July 31, 2003 and
from year to year thereafter but only so long as its continuance is
"specifically approved at least annually" by the Board of Trustees of the Trust
or by "vote of a majority of the outstanding voting securities" of the Fund.
This Agreement may be terminated at any time without penalty on sixty days'
written notice to the Sub-Adviser by vote of the Board of Trustees of the Trust,
by "vote of a majority of the outstanding voting securities" of the Fund, or by
the Adviser. This Agreement also may be terminated at any time without penalty
by the Sub-Adviser on ninety days' written notice to the Adviser and Trust. This
Agreement shall automatically terminate in the event of its "assignment" or in
the event that the Advisory Agreement shall have terminated for any reason.
13. Amendments to this Agreement. This Agreement may be amended in
accordance with the 1940 Act.
14. Certain Definitions. The terms "specifically approved at least
annually", "vote of a majority of the outstanding voting securities,"
"assignment," "control," "affiliated persons" and "interested person," when used
in this Agreement, shall have the respective meanings specified, and shall be
construed in a manner consistent with, the 1940 Act and the rules, regulations
and orders thereunder, subject, however, to such exemptions as may be granted by
the SEC under the 1940 Act.
15. Survival of Representations and Warranties; Duty to Update Information.
All representations and warranties made by the Adviser or Sub-Adviser pursuant
to Sections 8 and 9 hereof shall survive for the duration of this Agreement and
the representing party shall immediately notify, but in no event later than five
(5) business days, the other party in writing upon becoming aware that any of
the foregoing representations and warranties are no longer true.
16. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the internal laws of The Commonwealth of Massachusetts. All
notices provided for by this Agreement shall be in writing and shall be deemed
given when received, against appropriate receipt, by the Sub-Adviser's Secretary
in the case of the Sub-Adviser, the Adviser's General Counsel in the case of the
Adviser, and the Trust's Secretary in the case of the Fund, or such other person
as a party shall designate by notice to the other parties. This Agreement
constitutes the entire agreement among the parties hereto and supersedes any
prior agreement among the parties relating to the subject matter hereof. The
section headings of this Agreement are for convenience of reference and do not
constitute a part hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first written above.
XXXXX XXX & XXXXXXX INCORPORATED
By: /s/Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Assistant Secretary
XXXXX XXX INVESTMENT COUNSEL LLC
By: /s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
S:/Advisory Agreements/SRIC sub TaxManaged
