INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT is made and entered this 17th day of November, 2011, by and
between Tributary Capital Management, LLC, a Colorado limited liability company
(the "Adviser") and First National Bank (Omaha), a national banking association
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having its principal place of business in Omaha, Nebraska and doing business as
First National Fund Advisers ("Sub-Adviser").
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RECITALS
WHEREAS, Adviser is the investment adviser for Tributary Funds, Inc.
("Tributary Funds"), an open-end management investment company registered under
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the Investment Company Act of 1940, as amended (the "1940 Act"), pursuant to an
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Investment Advisory Agreement dated May 3, 2010, by and between the Adviser and
Tributary Funds (the "Advisory Agreement"); and
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WHEREAS, Adviser desires to retain the Sub-Adviser as its agent to furnish
investment advisory services to the Tributary Short-Intermediate Bond Fund and
Tributary Income Fund, diversified investment portfolios of Tributary Funds
(each a "Fund," and collectively, the "Funds").
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NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
AGREEMENT
1. Appointment. Adviser hereby appoints the Sub-Adviser to provide
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certain sub-investment advisory services to the Funds in furtherance of the
Advisory Agreement 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. Management. Subject always to the supervision of Tributary Funds'
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Board of Directors (the "Board") and the Adviser, in addition to the terms of
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the Advisory Agreement, the Sub-Adviser will furnish an investment program
including investment research, advice, and supervision in respect of, and make
investment decisions for, all assets of the Funds on behalf of the Adviser and
place all orders for the purchase and sale of securities, for Adviser on behalf
of the Funds. In the performance of its duties, the Sub-Adviser will satisfy
its fiduciary duties to each Fund (as set forth in Section 8, below) and will
monitor the Fund's investments. The Sub-Adviser and Adviser will each make its
respective officers and employees available to the other from time to time at
reasonable times to review investment policies of the Funds and to consult with
each other regarding the investment affairs of the Funds. The Sub-Adviser shall
also make itself reasonably available to the Board at such times as the Board
shall request.
The Sub-Adviser 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) Place orders pursuant to its investment determinations for the
Funds 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 and any policies adopted by
the Board, and to the extent permitted by the 1940 Act, the Investment Advisers
Act of 1940, as amended (the "Advisers Act") and Section 28(e) of the Securities
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Exchange Act of 1934, as amended, 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.
(c) 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, the management of the Funds, including, without
limitation, review of the general investment strategies of the Funds, the
performance of the Funds 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;
(d) Maintain books and records with respect to Tributary Funds'
securities transactions and will furnish the Adviser and the Board such periodic
and special reports as the Board or the Adviser may request, including economic,
operational, and investment data and reports, including, without limitation, all
information and materials reasonably requested by or requested to be delivered
to the Board pursuant to Section 15(c) of the 1940 Act;
(e) Act upon instructions from the Adviser not inconsistent with the
fiduciary duties hereunder;
(f) Submit such reports relating to the valuation of each Fund's assets and
otherwise assist in the calculation of the net asset value of shares of the
Funds as may reasonably be requested;
(g) Provide to Adviser for regulatory filings and other appropriate
uses information relating to Sub-Adviser as may be reasonably requested by
Adviser from time-to-time;
(h) Treat confidentially and as proprietary information of Tributary
Funds all such records and other information relative to Tributary Funds
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 Tributary Funds,
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 Tributary Funds; and
(i) Conduct its activities under this Agreement in accordance with any
applicable regulations of any governmental authority pertaining to the
investment advisory activities of the Sub-Adviser, including (i) the 1940 Act
and the rules adopted by the SEC thereunder, (ii) the Advisers Act and the rules
adopted by the SEC thereunder, (iii) the most recent Prospectus and Statement of
Additional Information of the Funds filed in connection with the Funds'
Registration Statement on Form N-lA filed under the Securities Act of 1933, as
amended, (File No. 33-85982), and under the 1940 Act (such Prospectus and
Statement of Additional Information, as presently in effect, and all amendments
and supplements thereto, collectively the "Prospectus"), (iv) the Tributary
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Fund's articles of incorporation and by-laws, and (v) the policies
and procedures adopted by the Board.
3. Fund Securities. The Sub-Adviser shall have the right to execute and
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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 Funds. The Sub-Adviser shall provide the Adviser with such
assistance and advice as Adviser may reasonably request as to the manner in
which to exercise, on behalf of the Funds, such voting rights, subscription
rights, rights to consent to corporate action, and any other rights pertaining
to the Funds' assets that may be exercised, in accordance with any policy
pertaining to the same that may be adopted or agreed to by the Funds, so that
Adviser may exercise such rights, or, in the event that the Funds retains the
right to exercise such rights, to furnish the Funds with advice as may
reasonably be requested as to the manner in which such rights should be
exercised.
4. Books and Records. In compliance with the requirements of Rule
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31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which
it maintains for the Funds, on behalf of Tributary Funds, are the property of
Tributary Funds and further agrees to surrender promptly to Tributary Funds any
of such records upon Tributary Funds' request. The Sub-Adviser further agrees
to preserve for the periods prescribed by the 1940 Act, the records required to
be maintained under the 1940 Act.
5. Expenses. During the term of this Agreement, the Sub-Adviser will
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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 Funds.
6. Compensation. For the services to be provided by the Sub-Adviser
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pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation thereof, a sub-advisory fee at
an annual rate of 0.25% of the average daily net assets of the Tributary
Short-Intermediate Income Fund and 0.30% of the average daily net assets of the
Tributary Income Fund, paid at the same time and in the same manner as the Funds
pays the Adviser its advisory fee pursuant to the Advisory Agreement. This fee
will be computed daily and paid to the Sub-Adviser monthly. The Sub-Adviser may
agree to waive a portion of its fee. Any fee waiver for the Sub-Adviser is
voluntary and will be mutually agreed upon with the Adviser. For any month
during which this Agreement becomes effective and the month during which it
terminates, however, there shall be an appropriate proration of the fee payable
for such month based on the number of calendar days of such month during which
this Agreement is effective.
7. Services to Others. Adviser understands that the Sub-Adviser now
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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. Adviser has no objection to the
Sub-Adviser's acting in such capacities, provided that whenever the Funds 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, 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
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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
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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 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 each other and hold each other 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) (collectively, "Damages") arising
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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.
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(a) This Agreement will become effective as of the date hereof,
provided that it is approved by vote of a majority of the outstanding voting
securities of the Funds in accordance with the requirements under the 1940 Act,
and, unless sooner terminated as provided herein, will continue in effect until
June 30, 2013. This Agreement, which shall become effective upon its execution,
shall supersede any agreement between the parties having an earlier date.
Thereafter if not terminated, this Agreement will continue in effect for
successive periods of twelve (12) months, provided that such continuation is
specifically approved at least annually (x) by the vote of a majority of those
members of the Board who are not parties to this Agreement or interested persons
(as set forth in the 0000 Xxx) of Tributary Funds, the Sub-Adviser, or the
Adviser, cast in person at a meeting called for the purpose of voting on such
approval, and (y) by the vote of a majority of the Board or by the vote of a
majority of all votes attributable to the outstanding shares of the Funds (as
set forth in the 1940 Act).
(b) Notwithstanding the foregoing, this Agreement may be terminated as
to the Funds 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 Board
or the shareholders of the Funds (acting by a vote of at least a majority of the
outstanding voting securities (as set forth in the 1940 Act)), the Adviser, or
by the Sub-Adviser. This Agreement will immediately terminate in the event of
its assignment (as set forth in the 1940 Act).
(c) Notwithstanding the foregoing, this Agreement may also be
terminated by Adviser or the Funds: (i) upon a material breach by Sub-Adviser of
any of the representations and warranties set forth in Section 15, if such
breach shall not have been cured within a twenty (20) day period after notice of
such breach, or (ii) if Sub-Adviser becomes unable to discharge its duties and
obligations under this Agreement.
(d) Notwithstanding the foregoing, this Agreement may also be
terminated by Sub-Adviser upon a material breach by Adviser or its assigns, if
such breach shall not have been cured within a twenty (20) day period after
notice of such breach.
(e) Notwithstanding the foregoing, this Agreement will terminate
automatically if the Advisory Agreement is terminated.
11. Amendment of this Agreement. This Agreement may be amended by the
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parties only in a written instrument signed by the parties to the Agreement and
only if such amendment is specifically approved (a) by a majority of the Board,
including a majority of its directors who are not parties to this Agreement or
interested persons of the Funds or the Adviser, Sub-Adviser, or any of their
respective affiliates (as set forth in the 1940 Act), and (b) if required by
applicable law, by the affirmative vote of a majority of the outstanding voting
securities of the Funds.
12. Multiple Originals. This Agreement may be executed in two or more
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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 Funds shall be
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maintained with a custodian designated by the Adviser. Sub-Adviser shall have
no responsibility or liability with respect to any custodial function.
14. Adviser Representations and Warranties. The Adviser represents and
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warrants to Sub-Adviser that (a) the Adviser's entry into this Agreement on
behalf of the Funds and the performance of it and the Funds of their respective
obligations hereunder has been duly authorized by the Adviser, and to the best
of the Adviser's knowledge, by the Funds and Tributary Funds and will not cause
the Adviser, to the best of the Adviser's knowledge, the Funds or Tributary
Funds to be in violation of the 1940 Act or any other applicable law or
regulation, (b) the Adviser is registered as an investment adviser with the SEC
under the Advisers Act 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, Tributary Funds 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.
15. Sub-Adviser Representations and Warranties. The Sub-Adviser
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represents and warrants to Adviser that it (a) is registered as an investment
adviser under the Advisers Act and will continue to be so registered for so long
as this Agreement remains in effect, (b) is not prohibited by either the 1940
Act or the Advisers Act from performing the services contemplated by this
Agreement, (c) has met, and will continue to meet for so long as this Agreement
remains effective, any other applicable federal or state requirements, or the
applicable requirements of any regulatory or industry self-regulatory
organization necessary to be met in order to perform the services contemplated
by this Agreement, including its adoption and implementation of written policies
and procedures reasonably designed to prevent violation of the federal
securities laws (as that term is used in Rule 38a-1 adopted under the 0000 Xxx)
by the Sub-Adviser and its supervised persons, (d) 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, and (e) will immediately notify Adviser
of the occurrence of any event that would disqualify it from serving as an
investment adviser to an investment company pursuant to Section 9(a) of the 1940
Act or otherwise, and of the institution of any administrative, regulatory, or
judicial proceeding against it that could have a material advise effect upon its
ability to fulfill its obligations under this Agreement.
16. Reliance on Proper Instructions. The Sub-Adviser shall be fully
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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 Funds, and the Sub-Adviser shall be under no duty to make any
investigation or inquiry regarding any proper instructions of the Adviser or the
Funds, as the case may be.
17. No Conflict. Unless the Sub-Adviser is otherwise informed in writing,
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it shall be entitled to assume that any action taken by it under
the terms of this Agreement, upon instructions of the Funds or the Adviser
consistent with Section 16, 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 Funds by law,
by any such document, or by contract or otherwise.
18. Notices. Any notice or other communication required to be given
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pursuant to this Agreement shall be deemed duly given if delivered personally or
by overnight delivery service or mailed by certified or registered mail, return
receipt requested and postage prepaid, or sent by facsimile addressed to the
parties at their respective addresses set forth below, or at such other address
as shall be designated by any party in a written notice to the other party.
(a) To Adviser at:
Tributary Capital Management, LLC
Attention: President
0000 Xxxxx Xxxxxx, Xxxx 0000
Xxxxx, XX 00000
(b) To Sub-Adviser at:
First National Bank
Attention: First National Fund Advisers
0000 Xxxxx Xxxxxx, Xxxx 0000
Xxxxx, XX 00000
19. Miscellaneous. The captions in this Agreement are included for
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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
Colorado without giving effect to such state's conflicts of laws provisions, and
the 1940 Act. To the extent that the applicable laws of the state of Colorado
conflict with the applicable provisions of the 1940 Act, the latter shall
control. Sub-Adviser shall notify Adviser of any changes in its members or
managers within a reasonable time.
Signature Page Follows
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
d/b/a FIRST NATIONAL FUND ADVISERS
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Managing Director
TRIBUTARY CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
