FIRST FOCUS FUNDS, INC. INVESTMENT SUB-ADVISORY AGREEMENT
Exhibit
(d)(3)
FIRST FOCUS FUNDS, INC.
AGREEMENT dated this 15th day of April, 2002, by and between the First National
Bank of Omaha, a national banking association, (the “Adviser”) and KBC Asset Management
International Limited, an Irish registered company (the “Sub-Adviser”).
WHEREAS, the Adviser is the investment adviser for the First Focus Funds, Inc., an open-end
management investment company registered under the Investment Company Act of 1940, as amended (the
“1940 Act”) (the “Company”); and
WHEREAS, the Adviser desires to retain the Sub-Adviser as its agent to furnish investment
advisory services for the First Focus International Equity Fund, a diversified investment portfolio
of the Company (the “Fund”).
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto
agree as follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser to provide certain
sub-investment advisory services to the Adviser on behalf of the 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. Delivery of Documents. The Adviser has furnished the Sub-Adviser with copies
properly certified or authenticated of each of the following:
(a) The Company’s Articles of Incorporation, as filed with the Secretary of State of Nebraska
on October 12, 1994, and all amendments thereto or restatements thereof (such documents as
presently in effect and as it shall from time to time be amended or restated, is herein called the
“Articles of Incorporation”);
(b) The Company’s By-Laws and amendments thereto;
(c) Resolutions of the Company’s Board of Directors authorizing the appointment of the
Sub-Adviser and approving this Agreement;
(d) The Company’s Notification of Registration on Form N-8A under the 1940 Act as filed with
the Securities and Exchange Commission (the “SEC”) and all amendments thereto;
(e) The Company’s Registration Statement on Form N-1A under the Securities Act of 1933, as
amended (the “1933 Act”) (File No. 33-85982) and under the 1940 Act as filed with the SEC and all
amendments thereto insofar as such Registration Statement and such amendments relate to the Fund;
and
(f) The Company’s most recent prospectus and Statement of Additional Information for the Fund
(such prospectus and Statement of Additional Information, as presently in effect, and all
amendments and supplements thereto are herein collectively called the “Prospectus”).
The Adviser will promptly furnish the Sub-Adviser from time to time with copies of all
amendments of or supplements to the foregoing.
3. Management. Subject always to the supervision of the Company’s Board of Directors
and the Adviser, the Sub-Adviser will furnish an investment program in respect of, and make
investment decisions for, all assets of the Fund on behalf of the Adviser and place all orders for
the purchase and sale of securities, all for the Adviser on behalf of the Fund. In the performance
of its duties, the Sub-Adviser will satisfy its fiduciary duties to the Fund (as set forth in
Section 8, below), and will monitor the Fund’s’ investments, and will comply with the provisions of
the Company’s Articles of Incorporation and By-Laws, as amended from time to time, and the stated
investment objectives, policies and restrictions of the Fund as set forth in the documents listed
in Section 2, above, as may be amended from time to time. The Sub-Adviser and Adviser will each
make its officers and employees available to the other from time to time at reasonable times to
review investment policies of the Fund and to consult with each other regarding the investment
affairs of the Fund. The Sub-Adviser shall also make itself reasonably available to the Board of
Directors at such times as the Board of Directors shall request.
The Sub-Adviser’s authority and discretion hereunder shall include, without limitation, the
power to lend any securities held by the Fund to such persons, for such purposes and upon such
terms and conditions as the Sub-Adviser may deem advisable, provided that any such lending shall be
in conformity with the Fund’s current investment objective and policies, as stated in its current
Prospectus and Statement of Additional Information, and any guidelines adopted from time to time by
the Company’s Board of Directors.
The Sub-Adviser represents and warrants that it is registered as an investment adviser with
the SEC and is in compliance with all applicable rules and regulations of the SEC pertaining to its
investment advisory activities, and agrees that it will:
(a) 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;
(b) Conform with all applicable rules and regulations of the SEC pertaining to its investment
advisory activities;
(c) Place orders pursuant to its investment determinations for the Fund on behalf of the
Adviser either directly with the issuer or with any broker or dealer. In placing orders with
brokers or dealers, the Sub-Adviser will attempt to obtain the best combination of prompt execution
of orders in an effective manner and at the most favorable price. Consistent with this obligation,
when the execution and price offered by two or more brokers or dealers are comparable, the
Sub-Adviser may, in its discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide the Sub-Adviser with research advice and other services. The Sub-Adviser may
pay a commission in excess of the commission another broker-dealer would have charged if the
Sub-Adviser determines in good faith that such commission is reasonable in relation to the value of
the brokerage and research services provided by such broker-dealer, viewed either in terms of that
particular transaction or the Sub-Adviser’s overall responsibilities to the accounts it manages.
In no instance will portfolio securities be purchased from or sold to the Adviser, the Sub-Adviser,
SEI Investments Distribution Co. or any affiliated person of either the Company, Adviser, SEI
Investments Distribution Co. or the Sub-Adviser, except as may be permitted under the 1940 Act;
(d) Report regularly to the Adviser and will make appropriate persons available for the
purpose of reviewing at reasonable times with representatives of the Adviser and the Board of
Directors the management of the Fund, including, without limitation, review of the general
investment strategies of the Fund, respectively, the performance of the Fund in relation to
standard industry indices, interest rate considerations and general conditions affecting the
marketplace and will provide various other reports from time to time as reasonably requested by the
Adviser;
(e) Maintain books and records with respect to the Company’s securities transactions and will
furnish the Adviser and the Company’s
3
Board of Directors such periodic and special reports as the Board of Directors or the Adviser may
request;
(f) Act upon instructions from the Adviser not inconsistent with the fiduciary duties
hereunder; and
(g) Treat confidentially and as proprietary information of the Company all such records and
other information relative to the Company maintained by the Sub-Adviser, and will not use such
records and information for any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the Company, which
approval shall not be unreasonably withheld and may not be withheld where the Sub-Adviser may be
exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by the Company.
The Sub-Adviser shall have the right to execute and deliver, or cause its nominee to execute
and deliver, all proxies and notices of meetings and other notices affecting or relating to the
securities of the Fund.
4. 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, on behalf
of the Company are the property of the Company and further agrees to surrender promptly to the
Company any of such records upon the Company’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 Rule 31a-1 under the 1940 Act.
5. 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, but excluding the cost of
securities (including commission, issue and transfer taxes, if any) purchased for or on behalf of
the Fund. The Sub-Adviser shall not be responsible for the following expenses relating to the
operations of the Funds: organizational expenses, taxes, interest, any brokerage fees and
commissions, fees of the Directors of the Company, SEC fees, state securities registration fees and
expenses, costs of preparing and printing prospectuses for regulatory purposes and for distribution
to the Fund’s current shareholders, outside auditing and legal expenses, advisory and
administration fees, fees and out-of-pocket expenses of the custodian and transfer agent, costs of
Fund accounting services, certain insurance premiums, costs of maintenance of the Company’s and the
Fund’s
4
existence, costs of shareholders’ and Directors’ reports and meetings, distribution expenses
incurred pursuant to the Company’s Distribution and Shareholder Service Plan, any extraordinary
expenses incurred in the Funds’ operation and other operating expenses not assumed by the Company’s
service providers.
6. Compensation. For the services to be provided by the Sub-Adviser pursuant to this
Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to accept as full
compensation therefor, a sub-advisory fee at an annual rate of 0.50% on the average daily net
assets of each Fund. This fee will be computed daily and paid to the Sub-Adviser quarterly.
7. Services to Others. The Adviser understands, and has advised the Company’s Board
of Directors, that the Sub-Adviser now acts, and may in the future act, as an investment adviser to
fiduciary and other managed accounts, and as investment adviser, sub-investment adviser, and/or
administrator to other investment companies. The Adviser has no objection to the Sub-Adviser’s
acting in such capacities, provided that whenever the Fund and one or more other investment
companies advised by the Sub-Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula believed by the Sub-Adviser to
be equitable to each company. In addition, the Adviser understands that the persons employed by the
Sub-Adviser to assist in the Sub-Adviser’s duties under this Agreement will not devote their full
time to such service and nothing contained in this Agreement will be deemed to limit or restrict
the right of the Sub-Adviser or any of its affiliates to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
8. Standard of Care. The Sub-Adviser shall discharge its duties under this Agreement
with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. The federal securities laws impose liabilities
under certain circumstances on persons who act in good faith, and therefore nothing herein shall in
any way constitute a waiver or limitation of any rights which the Adviser may have against
Sub-Adviser under any federal securities laws based on negligence and which cannot be modified in
advance by contract.
9. Limitation of Liability. The Sub-Adviser shall not be liable for any error of
judgment or mistake of law or for any act or omission in carrying out its duties hereunder, except
a loss resulting from willful
5
misfeasance, bad faith or negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties hereunder. Each of the Adviser and Sub-Adviser agrees to
indemnify the other and hold it harmless from and against any and all actions, suits and claims,
whether groundless or otherwise, and from and against any and all losses, damages, costs, charges,
reasonable counsel fees and disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of the indemnifying party’s willful
misfeasance, bad faith or negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties hereunder.
10. Duration and Termination. This Agreement will become effective as of the date
hereof provided that it has been approved by vote of a majority of the outstanding voting
securities of the Fund in accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, will continue in effect until June 30, 2003.
Thereafter, if not terminated, this Agreement will continue in effect for the Fund for
successive periods of twelve (12) months, each ending June 30 of each year, provided that
such continuation is specifically approved at least annually (a) by the vote of a majority of those
members of the Company’s Board of Directors who are not interested persons of the Company, the
Sub-Adviser, or the Adviser, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the vote of a majority of the Company’s Board of Directors or by the vote of a
majority of all votes attributable to the outstanding shares of the Fund. Notwithstanding the
foregoing, this Agreement may be terminated as to the Fund at any time, without the payment of any
penalty, on not more than sixty (60) days’ and not less than thirty (30) days’ written notice by
the Adviser or by the Sub-Adviser. This Agreement will 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” have the same meaning of such terms in the 1940 Act.)
This Agreement will terminate automatically if the investment advisory agreement between the
Company and the Adviser is terminated.
11. 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.
6
12. Multiple Originals. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such counterparts shall
together constitute but one and the same document.
13. Custody. All securities and other assets of the Fund shall be maintained with a
custodian designated by the Adviser. Sub-Adviser shall have no responsibility or liability with
respect to any custodial function.
14. Reliance on Proper Instructions. The Sub-Adviser shall be fully protected in
acting upon any proper instructions reasonably believed by it in good faith to be genuine and
signed or communicated by or on behalf of the Adviser or the Fund, and the Sub-Adviser shall be
under no duty to make any investigation or inquiry regarding any proper instructions of the Adviser
or the Fund, as the case may be.
15. No Conflict. Unless the Sub-Adviser is otherwise informed in writing, it shall be
entitled to assume that any action taken by it under the terms of this Agreement, upon instructions
of the Fund or the Adviser consistent with Section 14, is not in conflict or contrary to any
provision of any document referred to in Section 2 hereof and may assume that such action is not in
conflict with any existing investment limit imposed on the Fund by law, by any such document or by
contract or otherwise.
16. Receipt of Part II of Form ADV. The Adviser acknowledges and agrees on behalf of
the Fund that either (i) the Fund has received Part II of the Sub-Adviser’s Form ADV at least
forty-eight (48) hours prior to execution of this Agreement or (ii) the Fund has received Part II
of the Sub-Adviser’s Form ADV together with this Agreement and shall have the right to cancel this
Agreement, without penalty, within five (5) business days of the execution of this Agreement.
17. Notices. Any notice required to be given by either party shall be in writing and
may be served on or delivered to the party to be served at the address given in this Agreement or
as duly notified from time to time. Notice may be delivered or sent by facsimile and shall be
deemed to arrive at the time when in the normal course of delivery it should have arrived save that
in the case of notice sent by mail it shall only be deemed to have arrived upon its actual receipt.
18. Force Majeure. In the event of any failure, interruption or delay in the
performance of the Sub-Adviser’s or the Adviser’s obligations resulting from breakdown, failure or
malfunction of any telecommunications or computer service not reasonably within the
7
control of the Sub-Adviser or the Adviser (as appropriate) or from any other event or circumstance
whatsoever not reasonably within the control of the Sub-Adviser or the Adviser (as appropriate),
the Sub-Adviser or the Adviser (as appropriate) shall not be liable or have any responsibility of
any kind for any loss or damage thereby incurred or suffered by the Adviser or the Sub-Adviser (as
appropriate).
19. Adviser Representations and Warranties. The Adviser represents and warrants that
(a) the Adviser’s entry into this Agreement on behalf of the Fund and the performance by it and the
Fund of their respective obligations hereunder has been duly authorized by the Adviser, and to the
best of the Adviser’s knowledge, by the Fund and the Company and will not cause the Adviser, and to
the best of the Adviser’s knowledge, the Fund or the Company, to be in violation of the 1940 Act or
any other applicable law or regulation, (b) a division of the Adviser is registered as an
investment adviser with the SEC and is in compliance with all applicable rules and regulations of
the SEC pertaining to its investment advisory activities, (c) to the best of the Adviser’s
knowledge, the Fund is the legal owner of all of its assets, and (d) the Adviser is empowered to
enter into this Agreement without the consent or authority of any other party or, alternatively,
has at the date hereof obtained such consents as may be necessary to permit the making of this
Agreement.
20. Miscellaneous. The captions in this 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 is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not be affected thereby.
This Agreement will be binding upon and shall inure to the benefit of the parties hereto and will
be governed by the laws of the state of Nebraska. Sub-Adviser shall notify the Adviser of any
changes in its partners within a reasonable time.
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.
| FIRST NATIONAL BANK OF OMAHA | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
8
| KBC ASSET MANAGEMENT | ||||||
| INTERNATIONAL LIMITED | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
9
