SUBADVISORY AGREEMENT
AGREEMENT made as of the 4th day of September 2003 between U.S. GLOBAL
INVESTORS, INC., a corporation organized under the laws of the State of Texas
("Adviser"), U.S. GLOBAL ACCOLADE FUNDS, a Massachusetts business trust having
its principal place of business in San Antonio, Texas ("Trust"), on behalf of
the Eastern European Fund ("Fund"), a series of shares of the Trust, and
CHARLEMAGNE CAPITAL (IOM) LIMITED ("Subadviser"), a corporation organized under
the laws of the Isle of Man.
WHEREAS, the Adviser is engaged in the business of rendering investment
management services to the Trust; and
WHEREAS, the Trust is an open-end management investment company and is so
registered under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, the Trust is operated as a "series company" within the meaning of
Rule 18f-2 under the 1940 Act and has separate series of shares of beneficial
interest, one of which series is the Fund.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser is hereby appointed to provide investment advisory
services to the Fund for the period and on the terms herein set forth.
The Subadviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided. To
enable the Subadviser to exercise fully its discretion and authority
as provided in this Section 1, the Trust hereby constitutes and
appoints the Subadviser as the Trust's agent and attorney-in-fact with
full power and authority for the Trust and on the Trust's behalf to
buy, sell, and otherwise deal in securities and contracts relating to
same for the Fund.
2. DUTIES OF SUBADVISER
(a) The Subadviser is hereby authorized and directed and hereby
agrees, subject to the stated investment objectives and policies
of the Fund as set forth in the Fund's Prospectus (as defined
below) and subject to the supervision of the Adviser and the
Board of Trustees of the Trust, (i) to develop, recommend and
implement such investment program and strategy for the Fund as
may from time to time under the circumstances appears most
appropriate to the achievement of the investment objective of the
Fund as stated in the aforesaid Prospectus, (ii) to provide
research and analysis relative to the investment program and
investments of the Fund, (iii) to determine which securities
should be purchased and sold and what portion of the assets of
the Fund should be held in cash or cash equivalents, and (iv) to
monitor on a continuing basis the performance of the portfolio
securities of the Fund. The Subadviser will advise the Trust's
custodian and the Adviser on a prompt basis of each purchase and
sale of a portfolio security specifying the name of the issuer,
the description and amount or number of shares of the security
purchased, the market price, commission and gross or net price,
trade date, settlement date and identity of the effecting broker
or dealer; and will review the accuracy of the pricing of
portfolio securities in accordance with Trust procedures. From
time to time, as the Trustees of the Trust or the Adviser may
reasonably request, the Subadviser will furnish to the Trust's
officers and to each of its Trustees reports on portfolio
transactions and reports on issues of securities held in the
portfolio, all in such detail as the Trust or the Adviser may
reasonably request. The Subadviser will also inform the Trust's
officers and Trustees on a current basis of changes in investment
strategy or tactics. The Subadviser will make its officers and
employees available to meet with the Trust's officers and
Trustees on due notice to review the investments and investment
program of the Fund in the light of current and prospective
economic and market conditions.
The Subadviser shall place all orders for the purchase and sale
of portfolio securities for the account of the Fund with brokers
or dealers selected by the Subadviser, although the Trust will
pay the actual brokerage commissions and any transfer taxes with
respect to transactions in the portfolio securities of the Trust.
The Subadviser is authorized to submit any such order
collectively with orders on behalf of other accounts under its
management, provided that the Subadviser shall have determined
that such action is in the best interest of the Fund and is in
accordance with applicable law, including, without limitation,
Rule 17d-1 under the 1940 Act. In executing portfolio
transactions and selecting brokers or dealers, the Subadviser
will use its best efforts to seek on behalf of the Fund the best
overall terms available. In assessing the best overall terms
available for any transaction, the Subadviser shall consider all
factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the
reasonableness of the commission, if any (for the specific
transaction and on a continuing basis). In evaluating the best
overall terms available, and in selecting the broker or dealer to
execute a particular transaction, the Subadviser may also
consider the brokerage and research services [as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934]
provided to the Fund and/or other accounts over which the
Subadviser or an affiliate of the Subadviser exercises investment
discretion. The Subadviser is authorized to pay to a broker or
dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund
which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but
only if, the Subadviser determines in good faith that such
commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or
dealer, viewed in terms of that particular transaction or in
terms of all of the accounts over which investment discretion is
so exercised. An affiliated person of the Subadviser may provide
brokerage services to the Fund provided that the Subadviser shall
have determined that such action is consistent with its
obligation to seek the best overall terms available and is in
accordance with applicable law, including, without limitation,
Section 17(e) of the 0000 Xxx. The foregoing shall not be deemed
to authorize an affiliated person of the Subadviser to enter into
transactions with the Fund as principal.
In the performance of its duties hereunder, the Subadviser is and
shall be an independent contractor and unless otherwise expressly
provided or authorized shall have no authority to act for or
represent the Trust in any way or otherwise be deemed to be an
agent of the Trust or of the Adviser.
(b) DELIVERY OF DOCUMENTS. The Adviser will furnish upon request or
has previously furnished the Subadviser with true copies of each
of the following:
(i) The Trust's Master Trust Agreement dated April 15, 1993 as
filed with the Secretary of State of the Commonwealth of
Massachusetts and all amendments thereto (such Master Trust
Agreement, as presently in effect and as it shall from time
to time be amended, is herein called the "Master Trust
Agreement");
(ii) The Trust's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as it shall from time to time be
amended, are herein called the "By-Laws");
(iii)Resolutions of the Trust's Board of Trustees authorizing
the appointment of the Adviser and Subadviser and approving
the Advisory Agreement and this Agreement;
(iv) The most recent Post-Effective Amendment to the Trust's
Registration Statement on Form N-1A under the Securities Act
of 1933 as amended ("1933 Act") and the 1940 Act as filed
with the Securities and Exchange Commission;
(v) The Fund's most recent prospectus (such prospectus, as
presently in effect and all amendments and supplements
thereto being referred to herein as the "Prospectus"); and
(vi) All resolutions of the Board of Trustees of the Trust
pertaining to the management of the assets of the Fund.
During the term of this Agreement, the Adviser shall not use or implement
any amendment or supplement that relates to or affects the obligations of
the Subadviser hereunder if the Subadviser reasonably objects in writing
within five business days after delivery thereof (or such shorter period of
time as the Adviser shall specify upon delivery, if such shorter period of
time is reasonable under the circumstances).
3. ADVISORY FEE
(a) For the services to be provided to the Fund by the Subadviser as
provided in Paragraph 2 hereof, the Adviser will pay the
Subadviser in accordance with the following:
(i) The Fund will pay a one and one quarter percent (1.25%)
annual management fee to the Adviser.
The Adviser will pay to the Subadviser fifty percent (50%)
of the management fee received net of all waivers and
reimbursements.
(ii)The Fund is not responsible for paying any portion of the
Subadviser's fees.
(iii)The fee is payable in monthly installments in arrears. The
"Management Fee" means the management fee paid by the Trust
to the Adviser under the Addendum to the Advisory Agreement,
dated as of February 28, 1997, between the Trust and the
Adviser with respect to the management of the Fund.
(b) In the case of termination of the Agreement during any calendar
month, the fee with respect to that month shall be reduced
proportionately based upon the number of calendar days during
which it is in effect and the fee shall be computed upon the
average net assets of the Fund for the days during which it is so
in effect.
(c) The "Monthly Average Net Assets" of the Fund for any calendar
month shall be equal to the quotient produced by dividing (i) the
sum of the net assets of the Fund, determined in accordance with
procedures established from time to time by or under the
direction of the Board of Trustees of the Trust in accordance
with the Master Trust Agreement, as of the close of business on
each day during such month that the Fund was open for business,
by (ii) the number of such days.
4. EXPENSES
During the term of this Agreement, the Subadviser will bear all
expenses incurred by it in the performance of its duties hereunder.
5. FUND TRANSACTIONS
The Subadviser agrees that neither it nor any of its employees,
officers, or directors will take any short-term position in the shares
of the Fund for trading purposes provided, however, that such
prohibition shall not prevent the purchase of shares of the Fund by
any of the persons above described for their account and for
investment at the price at which such shares are available to the
public at the time of purchase.
6. REPRESENTATION aND WARRANTY
The Subadviser hereby represents and warrants to the Adviser that it
is duly registered as an investment Adviser, or is exempt from
registration, under the Investment Adviser's Act of 1940, as amended,
and that it shall maintain such registration or exemption at all times
during which this Agreement is in effect.
7. LIABILITY OF SUBADVISER
In the performance of its duties under this Agreement, the Subadviser
shall act in conformity with and in compliance with the requirements
of the 1940 Act and all other applicable U.S. Federal and state laws
and regulations and shall not cause the Fund to take any action that
would require the Fund or any affiliated person thereof to register as
a commodity pool operator under the terms of the U.S. Commodity
Exchange Act, as amended (it being understood by the Subadviser that a
notice of eligibility may be filed on behalf of the Trust pursuant to
Rule 4.5 promulgated under said Act). The Subadviser shall be
responsible for maintaining such procedures as may be reasonably
necessary to ensure that the investment and reinvestment of the Fund's
assets are made in compliance with its investment objectives and
policies and with all applicable statutes and regulations and that the
Fund qualifies as a regulated investment company under Subchapter M of
the Internal Revenue Code. No provision of this Agreement shall be
deemed to protect the Subadviser against any liability to the Trust or
its shareholders to which it might otherwise be subject by reason of
any willful misfeasance, bad faith, or gross negligence in the
performance of its duties or the reckless disregard of its obligations
and duties under this Agreement.
8. REPORTS
The Subadviser shall render to the Board of Trustees of the Trust such
periodic and special reports as the Board of Trustees may reasonably
request with respect to matters relating to duties of the Subadviser
set forth herein.
9. DURATION aND TERMINATION OF THIS AGREEMENT
(a) DURATION. With respect to the Trust, this Agreement shall become
effective upon the date hereof and shall continue in full force
and effect through May 31, 2004, and from year to year thereafter
so long as such continuance is approved at least annually (i) by
either the Trustees of the Trust or by vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of the
Fund, and (ii) in either event by the vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or
"interested persons" (as defined in the 0000 Xxx) of any such
party, cast in person at a meeting called for the purpose of
voting on such approval.
(b) TERMINATION. With respect to the Trust, this Agreement may be
terminated at any time, without payment of any penalty (i) by
vote of the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund (as defined in the 0000
Xxx) on sixty (60) days' written notice to the other parties,
(ii) by the Adviser on sixty (60) days' written notice to the
other parties or, (iii) by the Subadviser on ninety (90) days'
written notice to the other parties.
(c) AUTOMATIC TERMINATION. With respect to the Trust, this Agreement
shall automatically and immediately terminate in the event of its
assignment or upon expiration of the Advisory Agreement now or
hereafter in effect between the Adviser and the Trust with
respect to the Fund.
10. SERVICES NOT EXCLUSIVE
The services of the Subadviser of the Fund hereunder are not to be
deemed exclusive, and the Subadviser shall be free to render similar
services to others.
11. LIMITATION OF LIABILITY
(a) THE TRUST. The term "U.S. Global Accolade Funds" means and refers
to the Trustees from time to time serving under the Master Trust
Agreement. It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of the
Trust, personally, but bind only the assets and property of the
Trust, as provided in the Master Trust Agreement. The execution
and delivery of the Agreement have been authorized by the
Trustees and shareholders of the Trust and signed by an
authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such
execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the assets and
property of the Trust as provided in its Master Trust Agreement.
(b) THE ADVISER AND SUBADVISER. It is expressly agreed that the
obligations of the Adviser and Subadviser hereunder shall not be
binding upon any of the shareholders, nominees, officers, agents,
or employees of the Adviser or Subadviser, personally, but bind
only the assets and property of the Adviser and Subadviser,
respectively. The execution and delivery of the Agreement have
been authorized by the directors and officers of the Adviser and
Subadviser and signed by an authorized officer of the Adviser and
Subadviser, acting as such, and neither such authorization by
such directors and officers nor such execution and delivery by
such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the
Adviser and Subadviser, respectively. This limitation of
liability shall not be deemed to protect the shareholders,
nominees, officers, agents, or employees of the Adviser and
Subadviser against any liability to the Trust or its shareholders
to which they might otherwise be subject by reason of any willful
misfeasance, bad faith, or gross negligence in the performance of
their duties or the reckless disregard of their obligations and
duties under this Agreement.
12. MISCELLANEOUS.
(a) NOTICE. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
parties at such address as such other parties may designate in
writing for the receipt of such notices.
(b) SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule, or otherwise,
the remainder shall not be thereby affected.
(c) APPLICABLE LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Texas.
(d) This Agreement constitutes the entire agreement of the parties
and supersedes all prior or contemporaneous written or oral
negotiations, correspondence, agreements, and understandings,
regarding the subject matter hereof.
13. STANDARD oF CARE
To the extent permitted under applicable law (including section 36 of
the 1940 Act), the Subadviser will not be liable to the Trust or the
Adviser for any losses incurred by the Trust, the Fund or the Adviser
that arise out of or are in any way connected with any recommendation
or other act or failure to act of the Subadviser under this Agreement,
including, but not limited to, any error in judgment with respect to
the Fund, so long as such recommendation or other act or failure to
act does not constitute a breach of the Subadviser's fiduciary duty to
the Trust, the Fund, or the Adviser. Anything in this section 13 or
otherwise in this Agreement to the contrary notwithstanding, however,
nothing herein shall constitute a waiver or limitation of any rights
that the Trust, the Adviser, or the Fund may have under any Federal or
state securities laws.
IN WITNESS WHEREOF, the Adviser, the Trust, and the Subadviser have caused
this Agreement to be executed on the day and year first above written.
U.S. GLOBAL INVESTORS, INC.
By:/s/Xxxxx X. Xxxxxx
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Title:Chairman & CEO
U.S. GLOBAL ACCOLADE FUNDS
By:/s/Xxxxx X. Xxxxxx
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Title:Chairman
CHARLEMAGNE CAPITAL (IOM) LIMITED
By:/s/Xxxxxxxx Xxxxxxx
-----------------------------------
Title:Managing Director
CHARLEMAGNE CAPITAL (IOM) LIMITED
By:/s/Xxxxx Xxxxxxxxx
-----------------------------------
Title: Company Secretary
