EXHIBIT 5(g)
SUB-INVESTMENT ADVISORY AGREEMENT
(Tax-Exempt Fund)
AGREEMENT made as of April 22, 1992 between XXXXXXX XXXXX TRUST
COMPANY, N.A., a national banking association (herein called the "Adviser"), and
XXXXXX SQUARE MANAGEMENT CORPORATION, a Delaware corporation (herein called the
"Sub-Adviser").
WHEREAS, EMERALD FUNDS, a Massachusetts business trust (herein called
the "Trust"), is registered as an open-end, management investment company under
the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, pursuant to an Amended Investment Advisory Agreement by and
between the Trust and the Adviser (herein called the "Investment Advisory
Agreement"), the Adviser has agreed to furnish investment advisory services to
the Trust with respect to its Tax-Exempt Fund investment portfolio (the "Fund");
and
WHEREAS, the Investment Advisory Agreement authorizes the Adviser to
sub-contract investment advisory services with respect to the Fund to the Sub-
Adviser pursuant to a sub-advisory agreement agreeable to the Trust and approved
in accordance with the provisions of the 1940 Act; and
WHEREAS, the Board of Trustees of the Trust and the Fund's
shareholders have approved this Agreement, and the Sub-Adviser is willing to
furnish sub-advisory services to the Fund upon the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
The Adviser hereby appoints the Sub-Adviser to act as sub-investment
adviser to the Trust's Tax-Exempt Fund for the period and on the terms set forth
in this Agreement. The Sub-Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. SERVICES OF SUB-ADVISER.
Subject to the oversight and supervision of the Adviser and the
Trust's Board of Trustees, the Sub-Adviser will provide a continuous investment
program for the Fund, including investment research and management with respect
to all securities, investments, cash and cash equivalents in the Fund. The Sub-
Adviser will determine from time to time what securities and
other investments will be purchased, retained or sold by the Fund. The Sub-
Adviser will provide the services rendered by it under this Agreement in
accordance with the investment criteria and policies established from time to
time for the Fund by the Adviser, the Fund's investment objective, policies and
restrictions as stated in the Trust's Prospectus and Statement of Additional
Information for the Fund, and resolutions of the Trust's Board of Trustees.
The Sub-Adviser further agrees that it will:
(a) Provide information to the Fund's accountant for the purpose of
updating the Fund's cash availability throughout the day as required;
(b) Maintain historical tax lots for each portfolio security held by
the Fund;
(c) Transmit trades to the Trust's custodian for proper settlement;
(d) Maintain all books and records with respect to the Fund that are
required to be maintained under Rule 31a-1(f) under the 1940 Act;
(e) Supply the Trust and its Board of Trustees with reports,
statistical data and economic information as requested; and
(f) Prepare a quarterly broker security transaction summary and, if
requested in advance, monthly security transaction listing for the Fund.
3. OTHER COVENANTS.
The Sub-Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its activities
under this Agreement in accordance with other applicable law;
(b) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has investment
responsibilities;
(c) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer. In
executing portfolio transactions and selecting brokers or dealers, the Sub-
Adviser will use its best efforts to seek on behalf of the Fund the best overall
terms available. In assessing the best overall terms available for any
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transaction, the Sub-Adviser shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis. In evaluating the best overall terms available, and
in selecting the broker-dealer to execute a particular transaction, the Sub-
Adviser 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 or other accounts over which the Sub-Adviser or an affiliate of the
Sub-Adviser exercises investment discretion. The Sub-Adviser is authorized,
subject to the prior approval of the Adviser and the Trust's Board of Trustees,
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-Adviser 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 the overall responsibilities
of the Sub-Adviser to the Fund. In addition, the Sub-Adviser is authorized to
take into account the sale of shares of the Trust in allocating purchase and
sale orders for portfolio securities to brokers or dealers (including brokers
and dealers that are affiliated with the Adviser, Sub-Adviser or the Trust's
principal underwriter), provided that the Sub-Adviser believes that the quality
of the transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will portfolio securities be
purchased from or sold to the Adviser, Sub-Adviser, the Trust's principal
underwriter or any affiliated person of either the Trust, the Adviser, Sub-
Adviser, or the principal underwriter, acting as principal in the transaction,
except to the extent permitted by the Securities and Exchange Commission; and
(d) will maintain a policy and practice of conducting its sub-
investment advisory services hereunder independently of its, and any of its
affiliates', commercial banking operations. When the Sub-Adviser makes
investment recommendations for the Fund, its investment advisory personnel will
not inquire or take into consideration whether the issuers of securities
proposed for purchase or sale for the Fund's account are customers of its, or
any of its affiliates', commercial department. In dealing with commercial
customers, the commercial department of the Sub-Adviser, or any of its
affiliates, will not inquire or take into consideration whether securities of
those customers are held by the Fund.
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4. SERVICES NOT EXCLUSIVE.
The services furnished by the Sub-Adviser hereunder are deemed not to
be exclusive, and the Sub-Adviser shall be free to furnish similar services to
others so long as its services under this Agreement are not impaired thereby.
To the extent that the purchase or sale of securities or other investments of
the same issuer may be deemed by the Sub-Adviser to be suitable for two or more
accounts managed by the Sub-Adviser, the available securities or investments may
be allocated in a manner believed by the Sub-Adviser to be equitable to each
account. It is recognized that in some cases this procedure may adversely
affect the price paid or received by the Fund or the size of the position
obtainable for or disposed of by the Fund.
5. BOOKS AND RECORDS.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Sub-Adviser hereby agrees that all records which it maintains for the Fund
are the property of the Trust and further agrees to surrender promptly to the
Trust any of such records upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by it under this Agreement.
6. EXPENSES.
During the term of this Agreement, the Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction costs, if any) purchased or sold for
the Fund. In addition, if in any fiscal year the aggregate expenses of the Fund
(as defined under the securities regulations of any.state having jurisdiction
over the Fund) exceed the expense limitations of any such state, the Sub-Adviser
will reimburse the Trust, to the extent required by state law, for 50% of such
excess expenses of the Fund; PROVIDED that to the extent the Adviser reimburses
the Trust for such expenses, then the Sub-Adviser will make its reimbursement
hereunder to the Adviser instead; and PROVIDED FURTHER that such reimbursement
will not be required to the extent that the Sub-Adviser's fee has been reduced
pursuant to Section 7 hereof as a result of reimbursements made by the Adviser
to the Trust. The Sub-Adviser's obligation with respect to the Fund is limited
to the amount of its fees hereunder from the Fund. Such reimbursement, if any,
will be estimated and accrued daily and paid on a monthly basis.
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7. COMPENSATION.
For the services provided and the expenses assumed pursuant to this
Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser will accept
as full compensation therefor, a fee, computed daily and payable monthly, at the
annual rate of .15% of the average daily net assets of the Fund minus such
amount, if any, that the Adviser has reimbursed the Trust in the event the
aggregate expenses of the Fund exceed the expense limitations of any state
having jurisdiction over the Fund. Such fee shall be a separate charge to the
Fund and shall be the several (and not joint or joint and several) obligation of
the Fund. The Sub-Adviser acknowledges that it shall not be entitled to any
further compensation from either the Adviser or the Trust in respect of the
services provided and expenses assumed by it under this Agreement.
8. LIMITATION OF LIABILITY.
The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
performance of this Agreement, except that the Sub-Adviser shall be liable to
the Trust for any loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services or any loss resulting from willful
misfeasance, bad faith or negligence on the part of the Sub-Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
9. DURATION AND TERMINATION.
This Agreement will become effective as of the date first above
written. Unless sooner terminated as provided herein, this Agreement shall
continue in effect until November 30, 1992. Thereafter, if not terminated, this
Agreement shall automatically continue in effect for successive annual periods
ending on November 30, PROVIDED such continuance is specifically approved at
least annually (a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund. Notwithstanding the foregoing, this
Agreement may be terminated as to the Fund at any time, without the payment of
any penalty, by the Adviser or by the Trust (by vote of the Trust's Board of
Trustees or by vote of a majority of the outstanding voting securities of the
Fund) on sixty days' written notice to the Sub-Adviser, or by the Sub-Adviser,
on sixty days' written notice to the Trust, provided that in each such case
notice shall be given simultaneously to the Adviser. In addition,
notwithstanding anything herein to
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the contrary, in the event of the termination of the Investment Advisory
Agreement with respect to the Fund for any reason (whether by the Trust, by the
Adviser or by operation of law) this Agreement shall terminate upon the
effective date of such termination of the Investment Advisory Agreement. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meaning
as such terms have in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. No amendment of this Agreement shall be effective until approved by
vote of a majority of the outstanding voting securities of the Fund.
11. MISCELLANEOUS.
The captions in the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by Delaware law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
XXXXXXX XXXXX TRUST COMPANY, N.A.
BY:/s/ XxXxxxx Xxxxx, Jr.
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TITLE: Senior Vice President
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XXXXXX SQUARE MANAGEMENT CORPORATION
BY:/s/ Xxxxxx X. Xxxxxxxx
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TITLE: President
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