EXHIBIT (d)(xv)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this ___ day of January 2002, by and between, Xxxxxxx
Xxxxxx Investment Management, Inc. ("CSIM"), and Tocqueville Asset Management,
L.P. ("Sub-Adviser").
WHEREAS, Schwab Capital Trust, a Massachusetts business trust ("Company"),
is an open-end, management investment company registered under the Investment
Company Act of 1940 ("1940 Act"), consisting of several series, each having its
own investment objective and policies; and
WHEREAS, Company has entered into an Investment Advisory and
Administration Agreement with CSIM pursuant to which CSIM acts as investment
manager to Company ("Management Agreement"); and
WHEREAS, CSIM, acting with the approval of Company, wishes to retain
Sub-Adviser to provide discretionary investment advisory services ("Services")
with respect to a portion of each series identified on Schedule A hereto, as may
be amended from time to time, (each a "Fund") that may be allocated by CSIM for
management by the Sub-Adviser from time to time, together with all income earned
on those assets and all realized and unrealized capital appreciation related to
those assets (for each Fund, the "Managed Assets"), and Sub-Adviser is willing
to render the Services.
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties agree as follows:
1. APPOINTMENT. CSIM appoints Sub-Adviser to provide the Services for the period
and term set forth in this Investment Sub-Advisory Agreement ("Agreement").
Sub-Adviser accepts such appointment and agrees to render the Services as
provided herein.
2. DUTIES OF SUB-ADVISER.
(a) Subject to supervision by the Company, its Board of Trustees
("Trustees") and CSIM (collectively "Fund Parties"), Sub-Adviser will manage the
investment and reinvestment of the Managed Assets and determine in its
discretion, the securities and other property to be purchased or sold and the
portion of the Managed Assets to be retained in cash. Sub-Adviser will use the
same skill and care in providing the Services to each Fund as it utilizes in
providing investment advisory services to other fiduciary accounts for which it
has investment responsibilities. Sub-Adviser will provide Fund Parties with
records concerning Sub-Adviser's activities that Fund Parties are required to
maintain, and regular reports concerning Sub-Adviser's performance of the
Services.
(b) Unless CSIM provides written instructions to the contrary,
Sub-Adviser will review all proxy solicitation materials and will exercise any
voting rights associated with securities comprising the Managed Assets in the
best interests of each Fund and its shareholders.
(c) Sub-Adviser will provide assistance to Company, Xxxxxxx Xxxxxx &
Co, Inc. ("Distributor") and CSIM (collectively "Schwab Parties"), as may be
reasonably requested by such parties, in connection with the offering, sale and
marketing of Fund shares. Such assistance will include: (i) review of offering,
marketing and sales materials; (ii) attendance and participation at internal and
external conferences (including in-person, telephonic and video), conventions,
road shows and other sales or educational meetings; and (iii) provision of
discussion, analysis and commentary and market and performance data for filings
with the Securities and Exchange Commission ("SEC") and web and other medium
based marketing and advertising. Schwab parties may use the names, trade names,
trademarks, service marks, artwork, designs, or other copyrighted materials of
Sub-Adviser in connection with the
offering, sale and marketing of Fund shares, subject to the prior written
approval of Sub-Adviser, which will not be unreasonably withheld.
(d) Unless CSIM provides written instructions to the contrary,
Sub-Adviser will be responsible for determining, in good faith, the fair value
of any securities of the Managed Assets for which market quotations are not
readily available in accordance with guidelines and procedures adopted by the
Trustees copies of which will be provided to Sub-Adviser prior to the
commencement of the Services. In addition, Sub-Adviser will arrange for the
provision of market values from at least two parties independent of Sub-Adviser
with respect to any securities of the Managed Assets for which the Company's
pricing agent does not obtain prices in the ordinary course of business from an
automated pricing service.
(e) Sub-Adviser will discharge the foregoing responsibilities
subject to the supervision of Fund Parties, and in compliance with the
following: (i) such policies as Fund Parties may from time to time establish;
(ii) Company's Prospectus and Statement of Additional Information ("Prospectus
and SAI"); (iii) Company's Declaration of Trust and By-Laws; (iv) 1940 Act; (v)
the Investment Advisers Act of 1940 ("Advisers Act"); (vi) any exemptive or
other relief granted by the SEC; (vii) the Internal Revenue Code of 1986
("Code"); (viii) the Commodities and Exchange Act ("CEA"); and (ix) any other
applicable laws. If a conflict in policies referenced herein occurs, the
Prospectus and SAI will control.
(f) Sub-Adviser agrees to perform such duties at its own expense and
to provide the office space, furnishings and equipment and the personnel
required by it to perform the Services on the terms and for the compensation
provided herein. Sub-Adviser will not, however, pay for the cost of securities,
commodities, and other investments (including brokerage commissions and other
transaction charges, if any) purchased or sold for a Fund.
3. DUTIES OF CSIM. CSIM will continue to have responsibility for all services to
be provided to a Fund pursuant to the Management Agreement and will oversee and
review Sub-Adviser's performance of the Services. CSIM will furnish to
Sub-Adviser current and complete copies of the Declaration of Trust and By-laws
of Company, and the current Prospectus and SAI as those documents may be amended
from time to time.
4. CUSTODY. Company will designate one or more custodians to hold the Managed
Assets ("Custodian") in the name of each Fund. Each custodian will be
responsible for the custody, receipt and delivery of securities and other assets
of a Fund including the Managed Assets, and Sub-Adviser will have no authority,
responsibility or obligation with respect to the custody, receipt or delivery of
securities or other assets of a Fund. In the event that any cash or securities
of a Fund are delivered to Sub-Adviser, Sub-Adviser will promptly deliver the
same to the Custodian for the benefit of and in the name of Fund. Sub-Adviser
will provide to the Custodian and Fund Accountant on each business day,
information relating to all transactions in the Managed Assets and will provide
such information to Fund Parties upon request. Sub-Adviser will make all
reasonable efforts to notify Custodian and Fund Accountant of all orders to
brokers for the Managed Assets by 9:00 am EST on the day following the trade
date.
5. PORTFOLIO TRANSACTIONS.
(a) Sub-Adviser is authorized to select brokers or dealers that will
execute the purchases and sales of portfolio securities and other property for a
Fund in a manner that implements the policy with respect to brokerage set forth
in the Prospectus and SAI, or as Fund Parties may direct from time to time, and
in conformity with the federal securities laws.
(b) In effecting transactions for a Fund and selecting brokers or
dealers, Sub-Adviser will use its best efforts to seek on behalf of the Fund the
best overall terms available. In assessing the best
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overall terms for any transaction, Sub-Adviser will consider any factors that it
deems relevant, including price paid for the security, commission paid for the
transaction, clearance, settlement, reputation, financial strength and
stability, efficiency of execution and error resolution, block trading and block
positioning capabilities, willingness to execute related or unrelated difficult
transactions and order of call.
(c) Consistent with any policies established by Fund Parties and in
compliance with the Prospectus and SAI and 1940 Act, Sub-Adviser is authorized,
in its discretion, to utilize the services of a broker or dealer that provides
brokerage or research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934).
(d) In no instance will Sub-Adviser cause Managed Assets to be
purchased from or sold to Distributor, CSIM, Sub-Adviser or any affiliated
person of either Company, Distributor, CSIM, or Sub-Adviser (collectively
"Related Parties"), except to the extent permitted by the 1940 Act or any
exemptive or other relief granted by the SEC. Sub-adviser will not execute any
transactions with brokers or dealers that are Related Parties without the prior
written approval of CSIM.
(e) Consistent with any policies established by Fund Parties,
Sub-Adviser may aggregate orders for purchase or sale of Managed Assets with
similar orders being made concurrently for other accounts managed by
Sub-Adviser, if, in Sub-Adviser's reasonable judgment, such aggregation will
result in an overall economic benefit to Fund, taking into consideration the
transaction price, brokerage commission and other expenses. In any single
transaction in which purchases or sales of securities of any issuer for the
account of a Fund are aggregated with other accounts managed by Sub-Adviser, the
actual prices applicable to the transaction will be averaged among the accounts
for which the transaction is effected, including the account of the Fund.
6. COMPENSATION OF SUB-ADVISER. For the Services provided and expenses assumed
by Sub-Adviser under this Agreement, CSIM will pay to Sub-Adviser compensation
at the rate specified in Schedule B, as may be amended from time to time. Such
compensation will be paid at the times and on the terms set forth in Schedule B.
All rights of compensation under this Agreement for Services performed as of the
termination date will survive the termination of this Agreement. Except as
otherwise prohibited by law or regulation, Sub-Adviser may, in its discretion,
from time to time, waive a portion of its compensation.
7. REPORTS.
(a) Sub-Adviser will provide written quarterly reports as may be
reasonably requested by Fund Parties regarding the Managed Assets. CSIM will
specify the information to be included in such quarterly reports. Sub-Adviser
will make available to Fund Parties any economic, statistical and investment
services that Sub-Adviser makes available to its other institutional clients.
(b) Sub-Adviser will promptly communicate to Fund Parties any
information relating to transactions in the Managed Assets, as Fund Parties may
reasonably request.
(c) Sub-Adviser will promptly notify Fund Parties of any financial
or regulatory condition that is likely to impair the ability of Sub-Adviser to
perform the Services. In addition, Sub-Adviser will promptly notify Fund Parties
of any intended change in control of Sub-Adviser and of any intended change in
the Managed Assets' portfolio managers or senior management, as far in advance
of such change as possible.
(d) Sub-Adviser will make its officers and employees available to
meet with Fund Parties at such times and places, as Fund Parties may reasonably
request, including at quarterly and special meetings of the Trustees in San
Francisco, California; provided that in the absence of extraordinary
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circumstances, the portfolio manager will not be required to participate in such
proceedings more frequently than once annually.
8. STATUS OF SUB-ADVISER. Sub-Adviser is and will continue to be registered
under the Advisers Act. The Services of Sub-Adviser to Company for each Fund are
not to be deemed exclusive, and Sub-Adviser is free to render similar services
to others so long as its Services to the Fund are not impaired thereby.
Sub-Adviser is and will continue to be an independent contractor and, unless
otherwise expressly provided or authorized, has no authority to act for or
represent Company in any way or otherwise act as agent of Company.
9. CODE OF ETHICS. Sub-Adviser will furnish to Fund Parties a current copy of
its code of ethics that complies with the requirements of Rule 17j-1 under the
1940 Act. Upon written request of CSIM, Sub-Adviser will permit Fund Parties to
examine the reports made by Sub-Adviser pursuant to Rule 17j-1 and other records
relevant to Sub-Adviser's code of ethics. Sub-Adviser will provide an annual
certification to Fund Parties certifying that there have been no material
violations of Sub-Adviser's code of ethics or, if such violations have occurred,
that appropriate actions have been taken in response to such violations.
10. CERTAIN RECORDS.
(a) Sub-Adviser will maintain all books and records with respect to
transactions involving the Managed Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
Sub-Adviser will provide to Fund Parties periodic and special reports, balance
sheets, profitability analyses, financial information, and such other
information with regard to Sub-Adviser's affairs, as Fund Parties may reasonably
request, including any information requested by Fund Parties to assist the
Trustees in evaluating the terms of this Agreement and any renewal thereof under
Section 15(c) of the 0000 Xxx.
(b) Sub-Adviser will keep the books and records relating to the
Managed Assets required to be maintained by Sub-Adviser under this Agreement and
will timely furnish to Fund Parties all information relating to Sub-Adviser's
Services under this Agreement needed by Fund Parties to keep the other books and
records of the Company required by Rule 31a-1 under the 1940 Act. Sub-Adviser
will also furnish to Fund Parties any other information relating to the Managed
Assets that must be filed by Company with the SEC or sent to shareholders under
the 1940 Act, and any exemptive or other relief granted by the SEC. Sub-Adviser
agrees that all records that it maintains on behalf of Company are property of
Company and Sub-Adviser will surrender promptly to Company any of such records
upon Fund Parties' request; provided, however, Sub-Adviser may retain a copy of
such records. In addition, Sub-Adviser will preserve for the periods prescribed
by Rule 31a-2 under 1940 Act any such records as are required to be maintained
by it pursuant to this Agreement, and will transfer said records to any
successor sub-adviser upon the termination of this Agreement (or, if there is no
successor sub-adviser, to CSIM).
11. LIMITATION OF LIABILITY OF SUB-ADVISER. Sub-Adviser will not be liable for
any claims, liabilities, damages, costs or losses ("collectively" claims)
arising out of this Agreement, except to the extent such claims arise out of:
(a) Sub-Adviser's negligence, bad faith or willful misfeasance; or (b)
Sub-Adviser's breach of this Agreement. Nothing in this Section 11 will be
deemed a waiver or limitation of any obligation or duty that may not by law be
waived or limited.
12. INDEMNIFICATION.
(a) Sub-Adviser will indemnify and hold harmless Fund Parties, their affiliates
and their respective employees, officers and directors from and against all
claims arising out of this Agreement to the extent such
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claims arise out of: (i) Sub-Adviser's negligence, bad faith or willful
misfeasance; or (ii) Sub-Adviser's breach of this Agreement.
(b) CSIM will indemnify and hold harmless Sub-Adviser, its affiliates, and their
respective employees, officers and directors from and against all claims arising
out of this Agreement, except to the extent such claims arise out of: (i)
Sub-Adviser's negligence, bad faith or willful misfeasance; or (ii)
Sub-Adviser's breach of this Agreement.
13. CONFIDENTIALITY. The Mutual Confidentiality and Non-Disclosure Agreement
("Confidentiality Agreement") previously entered into between the parties is
attached hereto as Schedule C and incorporated herein by reference. The
Confidentiality Agreement will remain in effect throughout the term of this
Agreement, and each party will abide by all of the provisions set forth therein.
Upon termination of this Agreement, each party will continue to hold any
Confidential Information (as that term is defined in the Confidentiality
Agreement) in strict confidence for ten years from the date of termination,
except with regard to: (a) trade secrets of either party which will be held in
confidence for as long as such information remains a trade secret; and (b)
Schwab Customer Information (as that term is defined in the Confidentiality
Agreement) which will be held by Sub-Adviser in strict confidence in perpetuity
and which will be used by Sub-Adviser only to perform the Services or as
required by law. In the event any of the provisions of the Confidentiality
Agreement conflict with any of the provisions of this Agreement, the latter will
control.
14. PUBLICITY. During and after the term of this Agreement, Sub-Adviser will not
make any media release or other public announcement relating to this Agreement
without Schwab Parties' prior written consent. Sub-Adviser will acquire no right
to use, and will not use, without Schwab Parties' prior written consent, with
respect to each use, the terms or existence of this Agreement, the names, trade
names, trademarks, service marks, artwork, designs, or copyrighted materials of
Schwab Parties or their affiliates in any sales or advertising materials, press
releases, client lists, presentations, promotions or other publicity related
materials or media; provided that Sub-Adviser may, during the term of this
Agreement, include the name of Company and its performance in client lists
provided to Sub-Adviser's current and potential clients.
15. DURATION AND TERMINATION.
(a) This Agreement will become effective for each Fund upon its
approval by the Trustees and by a vote of the majority of the outstanding voting
securities of each Fund; provided, however, if CSIM obtains exemptive relief
from the SEC permitting it to engage a Sub-Adviser without first obtaining
approval of the Agreement from a majority of the outstanding voting securities
of the Fund involved, the Agreement will become effective upon its approval by
the Trustees, without approval by the shareholders. This Agreement will remain
in effect until two years from date of each effectiveness, and thereafter, for
periods of one year so long as such continuance thereafter is specifically
approved at least annually (i) by the vote of a majority of those Trustees who
are not parties to this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Trustees, or by the vote of a majority of the outstanding voting
securities of the Fund; provided, however, that if the shareholders of a Fund
fail to approve the Agreement as provided herein, Sub-Adviser may continue to
serve hereunder in the manner and to the extent permitted by the 0000 Xxx. The
foregoing requirement that continuance of this Agreement be "specifically
approved at least annually" will be construed in a manner consistent with the
1940 Act.
(b) This Agreement may be terminated at any time, without cause and
without payment of any penalty by Fund Parties, by vote of a majority of the
Trustees or by vote of a majority of the outstanding voting securities of a Fund
on not more than 60 days' written notice to the Sub-Adviser, or by CSIM upon 90
days' written notice to Sub-Adviser. In addition, this Agreement may be
terminated, with cause, by CSIM at any time, without payment of any penalty by
Fund Parties, upon written notice to Sub-
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Adviser. As used herein, "with cause" means: (i) any material breach of the
Agreement by Sub-Adviser; (ii) any federal or state regulatory violation by
Sub-Adviser; and (iii) any material financial or other impairment that in the
reasonable judgment of CSIM impairs Sub-Adviser's ability to perform the
Services.
(c) This Agreement may not be terminated by the Sub-Adviser prior to
January 1, 2003. Thereafter, this Agreement may be terminated by the Sub-Adviser
at any time, without cause and without payment of any penalty, upon 90 days'
written notice to CSIM.
(d) This Agreement will automatically and immediately terminate in
the event of its assignment or in the event of the termination of the Management
Agreement.
(e) Any termination of this Agreement in accordance with the terms
hereof will not affect the obligations or liabilities accrued prior to
termination. As used in this Section 15, the terms "assignment", "interested
persons," and a "vote of a majority of the outstanding voting securities" will
have the respective meanings set forth in the 1940 Act; subject to such
exceptions and other relief as may be granted by the SEC.
16. NOTICE. All notices required or permitted hereunder will be deemed
sufficient upon receipt if sent by: (a) hand; (b) registered or certified mail,
postage prepaid; (c) overnight courier; or (d) facsimile transmission to the
last address furnished by the other party to the party giving notice. At the
outset, such notices will be delivered to the following addresses:
CSIM: Xxxxxxx Xxxxxx Investment Management, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Sub-Adviser: Tocqueville Asset Management, L.P.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
17. SEVERABILITY. If any provision of this Agreement will be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement will not be affected thereby.
18. GOVERNING LAW. This Agreement will be construed in accordance with the laws
of the State of California and the applicable provisions of the 1940 Act. To the
extent that the applicable laws of the State of California, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter will control. Any legal action or proceeding arising out of this
Agreement will be brought only in the courts of the State of California located
in the City and County of San Francisco or in the United States District Court
for the Northern District of California. Each party will submit to the
jurisdiction of such courts and venue in such courts and will waive any claims
that such courts lack jurisdiction or are inconvenient forums.
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19. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement and
understanding between the parties relating to the Services. Any prior
agreements, promises or representations not expressly set forth in this
Agreement are of no force and effect. No waiver or modification of this
Agreement will be effective unless reduced to writing and signed by the party to
be charged. No failure to exercise and no delay in exercising on the part of any
party hereto of any right, remedy, power or privilege hereunder will operate as
a waiver thereof.
(b) This Agreement is entered into on behalf of each Fund severally,
and not jointly, with the express intention that the provisions contained herein
will apply separately with respect to each Fund, as if contained in separate
agreements.
(c) Except as set forth in Section 15, this Agreement binds and
inures to the benefit of parties, their successors and assigns. This Agreement
may be executed in more than one counterpart each of which will be deemed an
original and both of which, taken together, will be deemed to constitute one and
the same instrument.
(d) Company refers to Schwab Capital Trust and its Trustees, as
Trustees but not individually or personally, acting under a Declaration of Trust
dated May 7, 1993. A copy of the Certificate of Trust of Company is on file with
the Secretary of State of the State of Massachusetts. Notice is hereby given
that the obligations of Company entered into in the name of or on behalf of
Company by any of its Trustees, representatives or agents are made not
individually, but in such Company capacities. Such obligations are not binding
upon any of the Trustees, shareholders or representatives of Company personally,
but bind only the assets of Company belonging to such Fund for the enforcement
of any claims against Company.
(e) As used in this Agreement, any references to any laws
(including, without limitation, the 1940 Act, Advisers Act, Code and CEA)
incorporate the effects of: (i) any amendments to such laws; (ii) any rules or
regulations promulgated under such laws; and (iii) any interpretations of such
laws, rules or regulations by the applicable regulatory authorities.
NOW THEREFORE, the parties hereto have caused this Agreement to be executed as
of the day and year first written above.
Xxxxxxx Xxxxxx Investment Management, Inc.
By: __________________________
Name:
Title:
Tocqueville Asset Management, L.P.
By: __________________________
Name:
Title:
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SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
XXXXXXX XXXXXX INVESTMENT MANAGEMENT, INC.
AND
TOCQUEVILLE ASSET MANAGEMENT, L.P.
FUND(S)
Schwab Multi-Manager Small-Cap Fund
Effective Date of this Schedule A: January __, 2002
8
SCHEDULE B
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
XXXXXXX XXXXXX INVESTMENT MANAGEMENT, INC.
AND
TOCQUEVILLE ASSET MANAGEMENT, L.P.
FEES
Fees will be accrued each day by applying to the Net Asset Value of the Managed
Assets at the end of that day, the daily rate, using a 365-day year, equivalent
to the applicable fee percentage set forth below ("Company Percentage").
Sub-Adviser represents and warrants that the Company Percentage now is and in
the future will be equal to or less than the applicable fee percentage payable
to Sub-Adviser under any other similar sub-advisory agreement for comparable
investment advisory services (each a "Third Party Percentage"). If at any times,
the Company Percentage is greater than any Third Party Percentage, the
Sub-Adviser will notify CSIM, and if Sub-Adviser does not reduce the Company
Percentage to the lowest Third Party Percentage, CSIM may terminate this
Agreement upon twenty days' notice to the Sub-Adviser. Fees will be paid within
30 days following the end of each calendar quarter.
COMPANY PERCENTAGE
60 Basis Points for all Managed Assets.
Effective Date of this Schedule B: January __, 2002.
9
SCHEDULE C
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
XXXXXXX XXXXXX INVESTMENT MANAGEMENT, INC.
AND
TOCQUEVILLE ASSET MANAGEMENT, L.P.
MUTUAL CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
A true and correct copy of the MUTUAL CONFIDENTIALITY AND NON-DISCLOSURE
AGREEMENT is attached hereto.
Effective Date of this Schedule C: January __, 2002.
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