11
FORM OF INTERIM
INVESTMENT SUB-ADVISORY AGREEMENT
AMONG [STRONG ENTITY], XXXXX FARGO FUNDS MANAGEMENT, LLC AND
XXXXX CAPITAL MANAGEMENT INCORPORATED
This AGREEMENT is made as of this [____] day of [__________], between
[Strong Entity] (the "[Corporation/Trust]"), Xxxxx Fargo Funds Management, LLC
(the "Adviser"), a limited liability company organized under the laws of the
State of Delaware with its principal place of business at 000 Xxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, and Xxxxx Capital Management
Incorporated, a corporation organized under the laws of the State of California,
with its principal place of business at 000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Sub-Adviser").
WHEREAS, the Adviser desires that the Sub-Adviser perform investment
advisory services for each of the series (each a "Fund" and collectively the
"Funds") of the corporations/trusts (each a ["Corporation/Trust"]) listed in
Appendix A hereto as it may be amended from time to time, and the Sub-Adviser is
willing to perform those services on the terms and conditions set forth in this
Agreement;
NOW THEREFORE, the Trust, the Adviser and Sub-Adviser agree as follows:
SECTION 1. THE [CORPORATION/TRUST]; DELIVERY OF DOCUMENTS. The
[Corporation/Trust] is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its [Articles of Incorporations/Trust Instrument], as amended or
supplemented from time to time, By-Laws (if any) and Registration Statement
filed with the Securities and Exchange Commission (the "Commission") under the
Investment Company Act of 1940, as amended (the "1940 Act") and the Securities
Act of 1933 (the "Securities Act"), including any representations made in the
prospectus and statement of additional information relating to the Funds
contained therein and as may be supplemented from time to time, all in such
manner and to such extent as may from time to time be authorized by the
[Corporation's/Trust's] Board of [Directors/Trustees] (the "Board"). The Board
is authorized to issue any unissued shares in any number of additional classes
or series. The Adviser has delivered copies of the documents listed in this
Section to the Sub-Adviser and will from time to time furnish the Sub-Adviser
with any amendments thereof.
SECTION 2. APPOINTMENT OF SUB-ADVISER. Subject to the direction and control
of the Board, the Adviser manages the investment and reinvestment of the assets
of the Funds and provides for certain management and services as specified in
the Interim Investment Advisory Agreement between the Trust and the Adviser with
respect to the Funds.
Subject to the direction and control of the Board, the Sub-Adviser shall
manage the investment and reinvestment of the assets of the Funds, and without
limiting the generality of the foregoing, shall provide the management and other
services specified below, all in such manner and to such extent as may be
directed from time to time by the Adviser.
SECTION 3. DUTIES OF THE SUB-ADVISER.
(a) The Sub-Adviser shall make decisions with respect to all purchases and
sales of securities and other investment assets for the Funds. To carry out such
decisions, the Sub-Adviser is hereby authorized, as agent and attorney-in-fact
for the [Corporation/Trust], for the account of, at the risk of and in the name
of the [Corporation/Trust], to place orders and issue instructions with respect
to those transactions of the Funds. In all purchases, sales and other
transactions in securities for the Funds, the Sub-Adviser is authorized to
exercise full discretion and act for the [Corporation/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.
(b) The Sub-Adviser will report to the Board at each regular meeting
thereof all material changes in the Funds since the prior report, and will also
keep the Board informed of important developments affecting the
[Corporation/Trust], the Funds and the Sub-Adviser, and on its own initiative
will furnish the Board from time to time with such information as the
Sub-Adviser may believe appropriate, whether concerning the individual companies
whose securities are held by a Fund, the industries in which they engage, or the
economic, social or political conditions prevailing in each country in which the
Fund maintains investments. The Sub-Adviser will also furnish the Board with
such statistical and analytical information with respect to securities in the
Funds as the Sub-Adviser may believe appropriate or as the Board reasonably may
request. In making purchases and sales of securities for the Funds, the
Sub-Adviser will comply with the policies set from time to time by the Board as
well as the limitations imposed by the [Corporation's/Trust's] [Articles of
Incorporation/Trust Instrument], as amended from time to time, By-Laws (if any),
Registration Statement under the Act and the Securities Act, the limitations in
the Act and in the Internal Revenue Code of 1986, as amended applicable to the
[Corporation/Trust] and the investment objectives, policies and restrictions of
the Funds.
(c) The Sub-Adviser may from time to time employ or associate with such
persons as the Sub-Adviser believes to be appropriate or necessary to assist in
the execution of the Sub-Adviser's duties hereunder, the cost of performance of
such duties to be borne and paid by the Sub-Adviser. No obligation may be
imposed on the [Corporation/Trust] in any such respect.
(d) The Sub-Adviser shall maintain records relating to portfolio
transactions and the placing and allocation of brokerage orders as are required
to be maintained by the [Corporation/Trust] under the 1940 Act. The Sub-Adviser
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
Sub-Adviser pursuant to this Agreement required to be prepared and maintained by
the [Corporation/Trust] pursuant to the rules and regulations of any national,
state, or local government entity with jurisdiction over the
[Corporation/Trust], including the Securities and Exchange Commission and the
Internal Revenue Service. The books and records pertaining to the
[Corporation/Trust] that are in possession of the Sub-Adviser shall be the
property of the [Corporation/Trust]. The [Corporation/Trust], or the
[Corporation's/Trust's] authorized representatives (including the Adviser),
shall have access to such books and records at all times during the
Sub-Adviser's normal business hours. Upon the reasonable request of the
[Corporation/Trust], copies of any such books and records shall be provided
promptly by the Sub-Adviser to the [Corporation/Trust] or the
[Corporation's/Trust's] authorized representatives.
SECTION 4. CONTROL BY BOARD. As is the case with respect to the Adviser
under the Interim Investment Advisory Agreement, any investment activities
undertaken by the Sub-Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Sub-Adviser on behalf of the Funds, shall at all
times be subject to the direction and control of the Board.
SECTION 5. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times comply
with:
(a) all applicable provisions of the 1940 Act, and any rules and
regulations adopted thereunder;
(b) the provisions of the registration statement of the Fund, as it may be
amended or supplemented from time to time, under the Securities Act and the 1940
Act;
(c) the provisions of the [Articles of Incorporation/Trust Instrument] of
the [Corporation/Trust], as it may be amended or supplemented from time to time;
(d) the provisions of any By-laws of the [Corporation/Trust], if adopted
and as it may be amended from time to time, or resolutions of the Board as may
be adopted from time to time;
(e) the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the [Corporation/Trust] or the Funds;
(f) any other applicable provisions of state or federal law; and
In addition, any code of ethics adopted by the Sub-Adviser must comply with
Rule 17j-1 under the 1940 Act, as it may be amended from time to time, and any
broadly accepted industry practices, if requested by the [Corporation/Trust] or
the Adviser.
SECTION 6. BROKER-DEALER RELATIONSHIPS. The Sub-Adviser is responsible for
the purchase and sale of securities for the Funds, broker-dealer selection, and
negotiation of brokerage commission rates. The Sub-Adviser's primary
consideration in effecting a security transaction will be to obtain the best
execution and price. In selecting a broker-dealer to execute each particular
transaction for a Fund, the Sub-Adviser will take the following into
consideration: the best net price available, the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the Fund on a continuing basis. Accordingly, the price to the
Fund in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Board may
from time to time determine, the Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of having caused a Fund to pay a broker or dealer that provides
brokerage and research services to the Sub-Adviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Sub-Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Sub-Adviser with
respect to the Fund and to other clients of the Sub-Adviser. The Sub-Adviser is
further authorized to allocate the orders placed by it on behalf of the Funds to
brokers and dealers who also provide research or statistical material, or other
services to the Funds or to the Sub-Adviser. Such allocation shall be in such
amounts and proportions as the Sub-Adviser shall determine and the Sub-Adviser
will report on said allocations regularly to the Board indicating the brokers to
whom such allocations have been made and the basis therefor.
SECTION 7. EXPENSES OF THE FUND. All of the ordinary business expenses
incurred in the operations of the Funds and the offering of their shares shall
be borne by the Funds unless specifically provided otherwise in this Agreement.
These expenses borne by the Funds include, but are not limited to, banking,
brokerage commissions, taxes, legal, auditing or governmental fees, the cost of
preparing share certificates, custodian, transfer agent and shareholder service
agent costs, expense of issue, sale, redemption and repurchase of shares,
expenses of registering and qualifying shares for sale, expenses relating to
[directors/trustees] and shareholder meetings, the cost of preparing and
distributing reports and notices to shareholders, the fees and other expenses
incurred by the Funds in connection with membership in investment company
organizations and the cost of printing copies of prospectuses and statements of
additional information distributed to the Funds' shareholders.
SECTION 8. COMPENSATION. As compensation for the sub-advisory services
provided under this Agreement, the Adviser shall pay the Sub-Adviser fees,
payable monthly, the annual rates indicated on Schedule A hereto, as such
Schedule may be amended or supplemented from time to time. It is understood that
the Adviser shall be responsible for the Sub-Adviser's fee for its services
hereunder, and the Sub-Adviser agrees that it shall have no claim against the
[Corporation/Trust] or the Funds with respect to compensation under this
Agreement.
SECTION 9. STANDARD OF CARE. The Trust and Adviser shall expect of the
Sub-Adviser, and the Sub-Adviser will give the [Corporation/Trust] and the
Adviser the benefit of, the Sub-Adviser's best judgment and efforts in rendering
its services to the [Corporation/Trust], and as an inducement to the
Sub-Adviser's undertaking these services at the compensation level specified,
the Sub-Adviser shall not be liable hereunder for any mistake in judgment. In
the absence of willful misfeasance, bad faith, negligence or reckless disregard
of obligations or duties hereunder on the part of the Sub-Adviser or any of its
officers, directors, employees or agents, the Sub-Adviser shall not be subject
to liability to the [Corporation/Trust] or to any shareholders in the
[Corporation/Trust] for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.
SECTION 10. NON-EXCLUSIVITY. The services of the Sub-Adviser to the Adviser
and the Funds are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to render investment advisory and administrative or other services to
others (including other investment companies) and to engage in other activities.
It is understood and agreed that officers or directors of the Sub-Adviser are
not prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies.
SECTION 11. RECORDS. The Sub-Adviser shall, with respect to orders the
Sub-Adviser places for the purchase and sale of portfolio securities of the
Funds, maintain or arrange for the maintenance of the documents and records
required pursuant to Rule 31a-1 under the 1940 Act as well as trade tickets and
confirmations of portfolio trades and such other records as the Adviser or the
Funds' administrator reasonably requests to be maintained. All such records
shall be maintained in a form acceptable to the Funds and in compliance with the
provisions of Rule 31a-1 or any successor rule. All such records will be the
property of the Funds, and will be available for inspection and use by the Funds
and their authorized representatives (including the Adviser). The Sub-Adviser
shall promptly, upon the Fund's request, surrender to the Funds those records
that are the property of the Fund. The Sub-Adviser will promptly notify the
Funds' administrator if it experiences any difficulty in maintaining the records
in an accurate and complete manner.
SECTION 12. TERM AND APPROVAL. This Agreement shall become effective with
respect to a Fund after it is approved in accordance with the express
requirements of the 1940 Act, and executed by the [Corporation/Trust], Adviser
and Sub-Adviser and shall thereafter continue from year to year, provided that
the continuation of the Agreement is approved in accordance with the
requirements of the 1940 Act, which currently requires that the continuation be
approved at least annually:
(a) (i) by the Board or (ii) by the vote of "a majority of the outstanding
voting securities" of the Fund (as defined in Section 2(a)(42) of the 1940 Act),
and
(b) by the affirmative vote of a majority of the [Corporation's/Trust's]
[Directors/Trustees] who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of a party to this Agreement (other than
as [Directors/Trustees] of the [Corporation/Trust]), by votes cast in person at
a meeting specifically called for such purpose.
SECTION 13. TERMINATION. As required under the 1940 Act, this Agreement may
be terminated with respect to a Fund at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of a Fund's outstanding
voting securities, or by the Adviser or Sub-Adviser, on sixty (60) days written
notice to the other party. The notice provided for herein may be waived by the
party entitled to receipt thereof. This Agreement shall automatically terminate
in the event of its assignment, the term "assignment" for purposes of this
paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act, as it
may be interpreted by the Commission or its staff in interpretive releases, or
applied by the Commission staff in no-action letters, issued under the 1940 Act.
SECTION 14. INDEMNIFICATION BY THE SUB-ADVISER. The [Corporation/Trust]
shall not be responsible for, and the Sub-Adviser shall indemnify and hold the
[Corporation/Trust] or any Fund harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to the willful misfeasance, bad faith, negligent acts or
reckless disregard of obligations or duties of the Sub-Adviser or any of its
officers, directors, employees or agents.
SECTION 15. INDEMNIFICATION BY THE TRUST. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of duties hereunder on
the part of the Sub-Adviser or any of its officers, directors, employees or
agents, the [Corporation/Trust] on behalf of the Fund hereby agrees to indemnify
and hold harmless the Sub-Adviser against all claims, actions, suits or
proceedings at law or in equity whether brought by a private party or a
governmental department, commission, board, bureau, agency or instrumentality of
any kind, arising from the advertising, solicitation, sale, purchase or pledge
of securities, whether of the Funds or other securities, undertaken by the
Funds, their officers, directors, employees or affiliates, resulting from any
violations of the securities laws, rules, regulations, statutes and codes,
whether federal or of any state, by the Funds, their officers, directors,
employees or affiliates. Federal and state securities laws impose liabilities
under certain circumstances on persons who act in good faith, and nothing herein
shall constitute a waiver or limitation of any rights which a Fund may have and
which may not be waived under any applicable federal and state securities laws.
SECTION 16. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the
[Corporation/Trust] shall be 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxx Xxxxx, XX 00000.
SECTION 17. QUESTIONS OF INTERPRETATION. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such terms or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Commission, or
interpretations of the Commission or its staff, or Commission staff no-action
letters, issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
this Agreement is revised by rule, regulation or order of the Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order. The duties and obligations of the parties under this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware.
SECTION 18. AMENDMENT. 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. If shareholder approval of an amendment is required
under the 1940 Act, no such amendment shall become effective until approved by a
vote of the majority of the outstanding shares of the affected Funds. Otherwise,
a written amendment of this Agreement is effective upon the approval of the
Board, the Adviser and the Sub-Adviser.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
[STRONG ENTITY]
on behalf of the Funds
By: __________________________
XXXXX FARGO FUNDS MANAGEMENT, LLC
By: __________________________
XXXXX CAPITAL MANAGEMENT INCORPORATED
By: __________________________
Appendix A
SCHEDULE A
INTERIM INVESTMENT SUB-ADVISORY AGREEMENT
FEE AGREEMENT
This fee agreement is made as of the [____] day of [__________], by and
between Xxxxx Fargo Funds Management, LLC (the "Adviser") and Xxxxx Capital
Management Incorporated (the "Sub-Adviser"); and
WHEREAS, the parties and [Strong Entity] (the "Trust") have entered into an
Investment Sub-Advisory Agreement ("Sub-Advisory Agreement") whereby the
Sub-Adviser provides investment management advice to each series of the
[Corporation/Trust] as listed in Schedule A to the Sub-Advisory Agreement (each
a "Fund" and collectively the "Funds").
WHEREAS, the Sub-Advisory Agreement provides that the fees to be paid to
the Sub-Adviser are to be as agreed upon in writing by the parties.
NOW THEREFORE, the parties agree that the fees to be paid to the
Sub-Adviser under the Sub-Advisory Agreement shall be calculated as follows on a
monthly basis by applying the following annual rates listed for each Fund listed
in Appendix A:
[FEE SCHEDULE]
The net assets under management against which the foregoing fees are to be
applied are the net assets as of the first business day of the month. If this
fee agreement becomes effective subsequent to the first day of a month or shall
terminate before the last day of a month, compensation for that part of the
month this agreement is in effect shall be 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. If the determination of the net asset value
is suspended as of the first business day of the month, the net asset value for
the last day prior to such suspension shall for this purpose be deemed to be the
net asset value on the first business day of the month.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
written above.
XXXXX FARGO FUNDS MANAGEMENT, LLC
By:
XXXXX CAPITAL MANAGEMENT INCORPORATED
By:
APPENDIX A TO SCHEDULE A
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FEE AS % OF AVG. DAILY
STRONG FUNDS NET ASSETS
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