Exhibit 5.7
LKCM FUNDS SUBADVISORY AGREEMENT
This Subadvisory Agreement is made as of December 30, 1997, between
Xxxxxx Xxxx Capital Management Corporation, a Delaware corporation (the
"Adviser"), and TT International Investment Management, a partnership organized
under the laws of England (the "Subadviser").
WHEREAS, the Adviser has agreed by separate contract to serve as the
investment adviser to the LKCM International Fund ("Fund"), an investment
portfolio of LKCM Funds ("Trust"), a Delaware business trust registered under
the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end
diversified management investment company consisting of one or more investment
series of shares, each having its own assets and investment policies;
WHEREAS, the Adviser's contract with the Fund allows the Adviser to
delegate certain investment advisory services on behalf of the Fund to other
parties; and
WHEREAS, the Adviser desires to retain the Subadviser to perform certain
investment subadvisory services for the Trust with respect to the Fund, and the
Subadviser is willing to perform such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
(a) INVESTMENT PROGRAM. Subject to the control and supervision
of the Adviser and the Board of Trustees of the Trust, the Subadviser shall, at
its expense, continuously furnish to the Fund an investment program for such
portion, if any, of Fund assets that is allocated to it by the Adviser from time
to time. With respect to such assets, the Subadviser will make investment
decisions and will place all orders for the purchase and sale of portfolio
securities. In the performance of its duties, the Subadviser will act in the
best interests of the Fund and will comply with (i) applicable laws and
regulations, including, but not limited to, the 1940 Act, (ii) the terms of this
Agreement, (iii) the stated investment objectives, policies and restrictions of
the Fund, as stated in the then-current Registration Statement of the Trust, and
(iv) such other guidelines as the Trustees or Adviser may establish. The Adviser
shall be responsible for providing the Subadviser with current copies of the
materials and guidelines specified in Subsections (a) (iii) and (iv) of this
Section 1.
(b) AVAILABILITY OF PERSONNEL. The Subadviser, at its expense,
will make available to the Trustees and the Adviser at reasonable times its
portfolio managers and other appropriate personnel in order to review investment
policies of the Fund and to consult with the Trustees and the Adviser regarding
the investment affairs of the Fund, including economic, statistical and
investment matters relevant to the Subadviser's duties hereunder, and will
provide periodic reports to the Adviser relating to the portfolio strategies it
employs.
(c) SALARIES AND FACILITIES. The Subadviser, at its expense,
will pay for all salaries of personnel and facilities required for it to execute
its duties under this Agreement.
(d) COMPLIANCE REPORTS. The Subadviser, at its expense, will
provide the Adviser with such compliance reports relating to its duties under
this Agreement as may reasonably be necessary for the Adviser to fulfill its
compliance obligations.
(e) VALUATION. The Subadviser, at its expense, will provide the
Trust with market price information which may be reasonably requested by the
Adviser relating to the assets of the Fund.
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(f) EXECUTING PORTFOLIO TRANSACTIONS. The Subadviser will place
all orders pursuant to its investment determinations for the Fund either
directly with the issuer or through broker-dealers selected by Subadviser; and,
in connection therewith, the Subadviser is authorized as the agent of the Fund
to give instructions to the Custodian of the Fund as to the deliveries of
securities and payments of cash for the account of the Fund. In the selection of
broker-dealers and the placement of orders for the purchase and sale of
portfolio investments for the Fund, the Subadviser shall use its best efforts to
obtain for the Fund the most favorable price and execution available, except to
the extent it may be permitted to pay higher brokerage commissions for brokerage
and research services as described below. In using its best efforts to obtain
the most favorable price and execution available, the Subadviser, bearing in
mind the Fund's best interests at all times, shall consider all factors it deems
relevant, including by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission and
dealer's spread or xxxx-up, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial stability of
the broker-dealer involved, the general execution and operational facilities of
the broker-dealer and the quality of service rendered by the broker-dealer in
other transactions. Subject to such policies as the Board of Trustees may
determine, the Subadviser shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by reason
of its having caused the Fund to pay a broker-dealer that provides brokerage and
research services to the Subadviser an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction if the
Subadviser 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-dealer, viewed in terms of either that particular
transaction or the Subadviser's overall responsibilities with respect to the
Trust and to other clients of the Subadviser as to which the Subadviser
exercises investment discretion. The Adviser recognizes that all research
services and research that the Subadviser receives or generates are available
for all clients of the Subadviser and its affiliates, and that the Fund and
other clients of the Subadviser and its affiliates may benefit thereby. In no
instance will portfolio securities of the Fund be purchased from or sold to the
Subadviser or any affiliated person of the Subadviser.
(g) EXPENSES. The Subadviser shall not be obligated to pay any
expenses of or for the Trust or the Fund not expressly assumed by the Subadviser
pursuant to this Agreement.
(h) LIMITATION OF SERVICES. Except as otherwise agreed between
the parties and as provided in this Agreement, the Subadviser shall not be
responsible for compliance monitoring, reporting or testing or for preparing or
maintaining books and records for the Fund or the Trust or otherwise providing
accounting services to the Fund or the Trust (including portfolio pricing
services) and such services shall be provided by others retained by the Trust.
However, nothing herein shall be construed to limit the Subadviser's duty to
ensure that it complies with (1) applicable laws and regulations, including the
1940 Act, (2) the terms of this Agreement, (3) the investment objectives,
policies and restrictions of the Fund, as stated in the then current
registration statement of the Trust, and (4) such other reasonable guidelines as
the Trustees or Adviser may establish with respect to the Subadviser's service
hereunder. The Subadviser shall have access to such reports and records to
assist it in performing its services hereunder.
2. BOOKS AND RECORDS. Pursuant to Rule 31a-3 under the 1940 Act, the
Subadviser agrees that: (a) all records it maintains for the Trust are the
property of the Trust; (b) it will surrender promptly to the Trust or the
Adviser any such records upon the Trust's or Adviser's request; (c) it will
maintain for the Trust the records that the Trust is required to maintain
pursuant to Rule 31a-1 insofar as such records relate to the investment affairs
of the Fund; and (d) it will preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records it maintains for the Trust.
3. OTHER AGREEMENTS. The Adviser understands that Subadviser now acts,
or may in the future act, as an investment adviser to fiduciary and other
managed accounts, and as investment adviser or Subadviser to other investment
companies. Adviser has no objection to Subadviser acting in such capacities,
provided that whenever the Fund and one or more other investment advisory
clients of Subadviser have available funds for investment, investments suitable
and appropriate for each will be allocated in a manner believed by Subadviser to
be equitable to each, but Subadviser cannot assure, and assumes no
responsibility for equality among all accounts and customers. Subadviser shall
be permitted to bunch or aggregate orders for the Fund with orders for other
funds and accounts in a manner
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deemed equitable to all. Adviser recognizes that in some cases this procedure
may adversely affect the size of the position or price that the participating
Fund may obtain in a particular security. In addition, Adviser understands that
the persons employed by Subadviser to assist in Subadviser'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 Subadviser 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.
4. COMPENSATION. The Adviser will pay to the Subadviser as compensation
for the Subadviser's services rendered pursuant to this Agreement a subadvisory
fee equal to an annual rate of 0.50% of the average daily net assets of the Fund
allocated to the Subadviser's management by the Adviser, which fee is to be
calculated daily and paid quarterly. However, if the Adviser's fee is reduced
due to fee waivers by the Adviser in order to comply with expense limitations
described in the Fund's prospectus, the Subadviser's compensation shall be
reduced by a proportionate amount; provided that in no event shall the
Subadviser be obligated to reimburse the Fund in order to satisfy such expense
limitations. If the Subadviser shall serve for less than the whole of a calendar
quarter, the compensation as specified herein shall be prorated.
5. AMENDMENT OF AGREEMENT. This Agreement shall not be materially
amended unless such amendment is approved by the affirmative vote of a majority
of the outstanding shares of the Fund, and by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of the
members of the Board of Trustees who are not interested persons of the Trust,
the Adviser or the Subadviser (the "Independent Trustees"). The Subadviser
agrees to notify the Adviser of any anticipated change in control of the
Subadviser as soon as such change is anticipated and, in any event, prior to
such change.
6. DURATION AND TERMINATION OF THE AGREEMENT. This Agreement shall
become effective upon its execution; provided, however, that this Agreement
shall not become effective unless it has first been approved (a) by a vote of
the Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by an affirmative vote of a majority of the
outstanding voting shares of the Fund. This Agreement shall remain in full force
and effect continuously thereafter, except as follows:
(a) By vote of a majority of the (i) Independent Trustees, or
(ii) outstanding voting shares of the Fund, the Trust may at any time terminate
this Agreement, without the payment of any penalty, by providing not more than
60 days' written notice delivered or mailed by registered mail, postage prepaid,
to the Adviser and the Subadviser.
(b) This Agreement will terminate automatically, without the
payment of any penalty, unless within two years after its initial effectiveness
and at least annually thereafter, the continuance of the Agreement is
specifically approved by (i) the Board of Trustees or the shareholders of the
Fund by the affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Independent Trustees, by vote cast in person at
a meeting called for the purpose of voting on such approval. If the continuance
of this Agreement is submitted to the shareholders of the Fund for their
approval and such shareholders fail to approve such continuance as provided
herein, the Subadviser may continue to serve hereunder in a manner consistent
with the 1940 Act and the rules and regulations thereunder.
(c) The Adviser may at any time terminate this Agreement,
without the payment of any penalty, by not less than 60 days' written notice
delivered or mailed by registered mail, postage prepaid, to the Subadviser, and
the Subadviser may at any time, without the payment of any penalty, terminate
this Agreement by not less than 90 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Adviser.
(d) This Agreement automatically and immediately shall
terminate, without the payment of any penalty, in the event of its assignment or
if the investment advisory agreement between the Adviser and the Trust with
respect to the Fund shall terminate for any reason.
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(e) Any notice of termination served on the Subadviser by the
Adviser shall be without prejudice to the obligation of the Subadviser to
complete transactions already initiated or acted upon with respect to the Fund.
Upon termination of this Agreement, the duties of the Adviser delegated
to the Subadviser under this Agreement automatically shall revert to the
Adviser.
7. NOTIFICATION OF THE ADVISER. The Subadviser promptly shall notify the
Adviser in writing of the occurrence of any of the following events:
(a) the Subadviser shall fail to be registered as an investment
adviser under the Investment Advisers Act of 1940, as amended, and under the
laws of any jurisdiction in which the Subadviser is required to be registered as
an investment adviser in order to perform its obligations under this Agreement;
(b) the Subadviser shall have been served or otherwise have
notice of any action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, public board or body, involving the affairs of
the Trust or the Fund;
(c) the Subadviser shall have any change in the membership of
its partnership; or
(d) any other occurrence that might affect the ability of the
Subadviser to provide the services provided for under this Agreement.
8. DEFINITIONS. For the purposes of this Agreement, the terms "vote of a
majority of the outstanding shares," "affiliated person, "control," "interested
person" and "assignment" shall have their respective meanings as defined in the
1940 Act and the rules and regulations thereunder subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act; and references to annual approvals by the Board of Trustees shall be
construed in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
9. INDEMNIFICATION BY SUBADVISER. The Subadviser agrees to indemnify and
hold harmless the Adviser, the Fund, the Trust and their directors, trustees,
officers or shareholders against any losses, expenses, claims, damages or
liabilities (or actions or proceedings in respect thereof), including reasonable
attorney's fees, to which they may become subject arising out of or based on the
breach or alleged breach by the Subadviser of applicable laws or of any
provisions of this Agreement; provided, however, that the Subadviser shall not
be liable under this paragraph in respect of any loss, expense, claim, damage or
liability to the extent that a court having jurisdiction shall have determined
by a final judgment, or independent counsel agreed upon by the Adviser and the
Subadviser shall have concluded in a written opinion, that such loss, expense,
claim, damage or liability resulted primarily from the Adviser's willful
misfeasance, bad faith or gross negligence or by reason of the reckless
disregard by the Adviser of its duties. The foregoing indemnification shall be
in addition to any rights that the Adviser, the Fund, the Trust and their
directors, trustees, officers or shareholders may have at common law or
otherwise. The Subadviser's agreements in this paragraph shall, upon the same
terms and conditions, extend to and inure to the benefit of each person who may
be deemed to control the Adviser, be controlled by the Adviser or be under
common control with the Adviser and its affiliates, directors, officers,
employees and agents. The Subadviser's agreements in this paragraph shall also
extend to any of the Adviser's successors or the successors of the
aforementioned affiliates, directors, officers, employees or agents.
10. INDEMNIFICATION BY THE ADVISER. The Adviser agrees to indemnify and
hold harmless the Subadviser and its partners against any losses, expenses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
including reasonable attorney's fees, to which the Subadviser may become subject
arising out of or based on the breach or alleged breach by the Adviser of
applicable laws or of any provisions of this Agreement or the Adviser's
agreement with the Trust, or any wrongful action or alleged wrongful action by
the Adviser or its affiliates in the distribution of the Fund's shares, or any
wrongful action or alleged wrongful action by the Fund or the Trust other than
wrongful action or alleged wrongful action that was caused by the breach by the
Subadviser of the provisions of this Agreement; provided, however, that the
Adviser shall not be liable under this paragraph in respect of any loss,
expense, claim, damage or liability to the extent that a court having
jurisdiction shall have determined by a final
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judgment, or independent counsel agreed upon by the Adviser and the Subadviser
shall have concluded in a written opinion, that such loss, expense, claim,
damage or liability resulted primarily from the Subadviser's willful
misfeasance, bad faith or gross negligence or by reason of the reckless
disregard by the Subadviser of its duties. The foregoing indemnification shall
be in addition to any rights that the Subadviser or its partners may have at
common law or otherwise. The Adviser's agreements in this paragraph shall, upon
the same terms and conditions, extend to and inure to the benefit of each person
who may be deemed to control the Subadviser, be controlled by the Subadviser or
be under common control with the Subadviser and to each of the Subadviser's and
each such person's respective affiliates, directors, officers, employees and
agents. The Adviser's agreements in this paragraph shall also extend to any of
the Subadviser's successors or the successors of the aforementioned affiliates,
directors, officers, employees or agents.
11. LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any obligations of the Trust
and the Fund under this Agreement are not binding upon the Trustees or the
shareholders of the Trust or the Fund individually, but are binding only upon
the assets and property of the Fund.
12. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Texas, without giving effect to the conflicts of laws
principles thereof, and in accordance with the 1940 Act. To the extent that the
applicable laws of the State of Texas conflict with the applicable provisions of
the 1940 Act, the latter shall control.
13. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.
14. 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. Where the
effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is made less restrictive by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original.
IN WITNESS WHEREOF, Xxxxxx Xxxx Capital Management Corporation and TT
International Investment Management have each caused this instrument to be
signed in duplicate on its behalf by its duly authorized representative, all as
of the day and year first above written.
TT INTERNATIONAL INVESTMENT XXXXXX XXXX CAPITAL MANAGEMENT
MANAGEMENT CORPORATION
By: _____________________________ By: _____________________________
Attest: Attest:
By: _____________________________ By: _____________________________
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