CENTURION FUNDS, INC
On behalf of the
Centurion U.S. Equity Fund
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
March 15,
2000
Trainer, Xxxxxxx & Company Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Under an investment management agreement (the "Management
Agreement") between Centurion Funds, Inc., a Maryland corporation
(the "Fund"), and Centurion Trust Company (the "Manager"), the
Manager serves as investment manager to the Centurion U.S. Equity
Fund (the "Portfolio"), a series of the Fund. The Manager hereby
confirms its agreement with Trainer, Xxxxxxx & Company Inc. (the
"Sub-adviser") with respect to the Sub-adviser's serving as an
investment sub-adviser to the Portfolio, as follows:
Section 1. Investment Description; Appointment
(a) The Fund desires to employ the Portfolio's capital by
investing and reinvesting in investments of the kind and in
accordance with the investment objectives, policies and
limitations specified in the Fund's Articles of Incorporation
dated August 20, 1998, as amended from time to time (the
"Articles"), in the prospectus (the "Prospectus") and in the
statement of additional information (the "Statement of Additional
Information") filed with the Securities and Exchange Commission
(the "SEC") as part of the Fund's Registration Statement on Form
N-1A, as amended from time to time (the "Registration
Statement"), and in such manner and to such extent as may from
time to time be approved by the Fund's Board of Directors.
Copies of the Prospectus, the Statement of Additional Information
and the Articles have been or will be submitted to the Sub-
adviser.
(b) The Manager, with the approval of the Fund, hereby
appoints the Sub-adviser to act as an investment sub-adviser to
the Portfolio for the periods and on the terms set forth in this
Agreement. The Sub-adviser accepts such appointment and agrees
to furnish the services set forth below for the compensation
herein provided.
Section 2. Services as Sub-adviser
(a) Subject to the supervision and direction of the
Manager, the Sub-adviser will manage the portion of the
Portfolio's assets allocated to the Sub-adviser upon the
recommendation of the Manager and the review of the Fund's
Directors ("Allocated Assets") in accordance with: (1) the
Articles, (2) the Investment Company Act of 1940, as amended (the
"Act"), the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), all applicable rules and regulations thereunder
and all other applicable laws and regulations, (3) the
Portfolio's investment objective and policies as stated in the
Prospectus and Statement of Additional Information, and (4)
investment parameters provided by the Manager from time to time
and procedures adopted by the Fund's Directors. The Manager may,
in its absolute discretion and upon notice to the Sub-adviser,
increase or decrease the Allocated Assets. In connection
therewith, the Sub-adviser will:
(i) provide a continuous investment program
for the Allocated Assets, including investment research and
determining whether to purchase, retain or sell securities
and other investments on behalf of the Portfolio. The Sub-
adviser is hereby authorized to execute, or place orders
for the execution of, all transactions on behalf of the
Portfolio with respect to the Allocated Assets;
(ii) assist the Fund's custodians and
accounting agent in determining or confirming, consistent
with the procedures and policies stated in the Prospectus
and Statement of Additional Information, the value of any
portfolio securities or other portfolio assets represented
in the Allocated Assets for which the custodians and
accounting agent seek assistance from or identify for
review by the Sub-adviser;
(iii) monitor the execution of
transactions and the settlement and clearance of the
Portfolio's securities transactions represented in the
Allocated Assets;
(iv) exercise voting rights in respect of
portfolio securities represented in the Allocated Assets;
and
(v) provide reports to the Fund's Directors
for consideration at quarterly meetings of the Board on the
investment program for the Allocated Assets and the issuers
and securities represented in the Allocated Assets, and
furnish the Manager and the Fund's Directors with such
periodic and special reports as the Fund or the Manager may
reasonably request.
(b) In connection with the performance of the
services of the Sub-adviser provided for herein, the Sub-adviser
may contract at its own expense with third parties for the
acquisition of research, clerical services and other
administrative services that would not require such parties to be
required to register as an investment adviser under the Advisers
Act; provided that the Sub-adviser shall remain responsible and
liable for the performance of its duties hereunder.
Section 3. Execution of Transactions
(a) The Sub-adviser agrees that it will execute
transactions for the Portfolio with respect to Allocated Assets
only through brokers or dealers appearing on a list of brokers
and dealers approved by the Manager. The Sub-adviser may place
orders with respect to Allocated Assets with SSB Citi Fund
Management LLC or its affiliates in accordance with Section 11(a)
of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, Section 17(e) of the Act and Rule 17e-1 thereunder
and other applicable laws and regulations.
(b) In executing transactions for the Portfolio,
selecting brokers or dealers and negotiating any brokerage
commission rates, the Sub-adviser will use its best efforts to
seek the best overall terms available. In assessing the best
overall terms available for any portfolio transaction, the Sub-
adviser will consider all factors it deems relevant including,
but not limited to, 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 any
commission for the specific transaction and for transactions
executed through the broker or dealer in the aggregate.
(c) In selecting brokers or dealers to execute a
particular transaction and in evaluating the best overall terms
available, to the extent that the execution and price offered by
more than one broker or dealer are comparable the Sub-adviser may
consider any brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Sub-adviser or to the Manager for use on behalf
of the Portfolio and/or other accounts over which the Sub-adviser
or Manager, or an affiliate of either, exercise investment
discretion.
(d) The Sub-adviser will not effect orders for the
purchase or sale of securities on behalf of the Portfolio through
brokers or dealers as agents.
(e) In connection with the purchase and sale of
securities for the Portfolio, the Sub-adviser will provide such
information as may be reasonably necessary to enable the Fund's
custodians and administrator to perform their administrative and
recordkeeping responsibilities with respect to the Portfolio.
Section 4. Information Provided to the Manager and the
Fund; Certain Representations of the Sub-adviser
(a) The Sub-adviser agrees that it will make available to
the Manager and the Fund promptly upon their request copies of
all of its investment records and ledgers with respect to the
Portfolio, including without limitation records relating to
trading by employees of the Sub-adviser for their own accounts
and on behalf of other clients, to assist the Manager and the
Fund in monitoring compliance with the Act and the Advisers Act,
as well as other applicable laws and guidelines. The Sub-adviser
agrees to cooperate with the Fund and the Manager and their
respective representatives in connection with any such monitoring
efforts. The Sub-adviser will furnish the Fund's Directors with
respect to the Portfolio such periodic and special reports as the
Manager and the Directors may reasonably request.
(b) The Sub-adviser agrees that it will immediately
notify the Manager and the Fund: (i) in the event that the Sub-
adviser or any of its affiliates becomes subject to a statutory
disqualification that prevents the Sub-adviser from serving as an
investment sub-adviser pursuant to this Agreement, or becomes or
expects to become the subject of an administrative proceeding or
enforcement action by the SEC or other regulatory authority; (ii)
of a change in the Sub-adviser, financial or otherwise, that
adversely affects its ability to perform services under this
Agreement; (iii) of any reorganization or change in the Sub-
adviser, including any change in its ownership or key employees;
or (iv) upon having a reasonable basis for believing that, as a
result of the Sub-adviser's managing the Allocated Assets, the
Portfolio's investment portfolio has ceased to adhere to the
Portfolio's investment objectives, policies and restrictions as
stated in the Prospectus or Statement of Additional Information
or is otherwise in violation of applicable law.
(c) The Sub-adviser has provided the information
about itself set forth in the Registration Statement and has
reviewed the description of its operations, duties and
responsibilities as stated therein and acknowledges that they are
true and correct and contain no material misstatement or
omission; and it further agrees to notify the Manager and the
Fund immediately of any material fact known to the Sub-adviser
respecting or relating to the Sub-adviser that is not contained
in the Prospectus or Statement of Additional Information, or any
amendment or supplement thereto, or any statement contained
therein that becomes untrue in any material respect.
(d) The Sub-adviser represents and warrants that it is an
investment adviser registered under the Advisers Act and other
applicable laws and has obtained all necessary licenses and
approvals in order to perform the services provided in this
Agreement. The Sub-adviser has supplied the Manager and the Fund
copies of its Form ADV with all exhibits and attachments thereto
and will hereinafter supply the Manager and the Fund, promptly
upon preparation thereof, copies of all amendments or
restatements of such document. The Sub-adviser further
represents that the statements contained in its Form ADV, as of
the date hereof, are true and correct and do not omit to state
any material fact required to be stated therein or necessary in
order to make the statement therein not misleading. The Sub-
adviser agrees to maintain the completeness and accuracy of its
registration on Form ADV in accordance with all legal
requirements relating to that Form and to maintain all necessary
registrations, licenses and approvals in effect during the term
of this Agreement. The Sub-adviser acknowledges that it is an
"investment adviser" to the Portfolio within the meaning of the
Act and the Advisers Act.
(e) The Sub-adviser represents that it has adopted a
written Code of Ethics in compliance with Rule 17j-1 under the
Act and will provide the Fund with any amendments to such Code.
Section 5. Books and Records
(a) In compliance with the requirements of Rule 31a-3
under the Act, the Sub-adviser hereby agrees that all records
that it maintains for the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund copies of any
such records upon the Fund's request. The Sub-adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under
the Act the records required to be maintained by Rule 31a-1 under
the Act and to preserve the records required by Rule 204-2 under
the Advisers Act for the period specified therein
(b) The Sub-adviser hereby agrees to furnish to
regulatory authorities having the requisite authority any
information or reports in connection with services that the Sub-
adviser renders pursuant to this Agreement which may be requested
in order to ascertain whether the operations of the Portfolio are
being conducted in a manner consistent with applicable laws and
regulations.
Section 6. Proprietary and Confidential Information
(a) The Sub-adviser agrees on behalf of itself and its
employees to treat confidentially and as proprietary information
of the Fund all records and other information relative to the
Portfolio, the Manager and prior, present or potential
shareholders of the Fund and not to 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 of the Fund, 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 or when
requested to divulge such information by duly constituted
authorities.
(b) The Sub-adviser represents and warrants that neither
it nor any affiliate will use the name of the Fund,
the Portfolio, the Manager or any of their affiliates
in any prospectus, sales literature or other material
in any manner without the prior written approval of
the Fund or the Manager, as applicable.
Section 7. Compensation
(a) In consideration of services rendered pursuant to
this Agreement, the Manager will pay the Sub-adviser a fee that
is computed daily and paid monthly at the following annual rates
of average daily net assets of the Portfolio: 0.30% of the
Portfolio's average daily net assets up to $25 million and 0.25%
of the Portfolio's average daily net assets in excess of $25
million, multiplied by a fraction, the numerator of which is the
average daily value of Allocated Assets and the denominator of
which is the average daily value of the Portfolio's total assets
(the "Portfolio Advisory Fee").
(b) The Portfolio Advisory Fee for the period from the
date of this Agreement becomes effective to the end of the month
during which this Agreement becomes effective shall be prorated
according to the proportion that such period bears to the full
monthly period. Upon any termination of this Agreement before
the end of a month, the fee for such part of that month shall be
prorated according to the proportion that such period bears to
the full monthly period and shall be payable upon the date of
termination of this Agreement.
(c) For the purpose of determining fees payable to the
Sub-adviser, the value of the Portfolio's net assets shall be
computed at the time and in the manner specified in the
Prospectus and/or the Statement of Additional Information.
(d) The Sub-adviser shall have no right to obtain
compensation directly from the Portfolio or the Fund for services
provided hereunder and agrees to look solely to the Manager for
payment of fees due.
Section 8. Costs and Expenses
During the term of this Agreement, the Sub-adviser will pay
all expenses incurred by it and its staff in connection with the
performance of its services under this Agreement, including the
payment of salaries of all officers and employees who are
employed by it and the Fund.
Section 9. Standard of Care
The Sub-adviser shall exercise its best judgment in
rendering the services provided by it under this Agreement. The
Sub-adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Manager or the
Fund in connection with the matter to which this Agreement
relates, except that the Sub-adviser shall be liable for a loss
resulting from a breach of fiduciary duty by the Sub-adviser with
respect to the receipt of compensation for services; provided
that nothing in this Agreement shall be deemed to protect or
purport to protect the Sub-adviser against any liability to the
Manager or the Fund or to holders of the Fund's shares
representing interests in the Portfolio to which the Sub-adviser
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its
duties or by reason of the Sub-adviser's reckless disregard of
its obligations and duties under this Agreement.
Section 10. Services to Other Companies or Accounts
(a) It is understood that the services of the Sub-adviser
are not exclusive, and nothing in this Agreement shall prevent
the Sub-adviser from providing similar services to other
investment companies (whether or not their investment objectives
and policies are similar to those of the Portfolio) or from
engaging in other activities, provided that those activities do
not adversely affect the ability of the Sub-adviser to perform
its services under this Agreement.
(b) On occasions when the Sub-adviser deems the purchase
or sale of a security to be in the best interest of the Portfolio
as well as of other investment advisory clients of the Sub-
adviser, the Sub-adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to,
aggregate the securities to be so sold or purchased with those of
its other clients. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-adviser in a manner that is
fair and equitable in the exercise of its fiduciary obligations
to the Portfolio and to such other clients. The Sub-adviser
shall provide to the Manager and the Fund all information
reasonably requested by the Manager and the Fund relating to the
decisions made by the Sub-adviser regarding allocation of
securities purchased or sold, as well as the expenses incurred in
a transaction, among the Portfolio and the Sub-adviser's other
investment advisory clients.
(c) The Fund and the Manager understand and acknowledge
that the persons employed by the Sub-adviser to assist in the
performance of its duties under this Agreement will not devote
their full time to that service. Nothing contained in this
Agreement will be deemed to limit or restrict the right of the
Sub-adviser or any affiliate of the Sub-adviser to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature, provided that those
activities do not adversely affect the ability of the Sub-adviser
to perform its services under this Agreement.
Section 11. Duration and Termination
(a) This Agreement shall become effective on March 15,
2000 or, if a later date, the date it is approved by shareholders
of the Portfolio, and shall continue for two years from that
date, and thereafter shall continue automatically for successive
annual periods, provided such continuance is specifically
approved at least annually by (i) the Fund's Board of Directors
or (ii) a vote of a majority of the Portfolio's outstanding
voting securities (as defined in the Act), provided that the
continuance is also approved by a majority of the Directors who
are not "interested persons" (as defined in the Act) of any party
to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval.
(b) Notwithstanding the foregoing, this Agreement may be
terminated, without penalty (i) by the Manager at any time, upon
sixty (60) days' written notice to the Sub-adviser and the Fund,
(ii) at any time by vote of a majority of the Fund's Directors or
by vote of the majority of the Portfolio's outstanding voting
securities, upon notice to the Manager and the Sub-adviser, or
(iii) by the Sub-adviser at any time upon sixty (60) days'
written notice to the Manager and the Fund.
(c) This Agreement will terminate automatically in the
event of its assignment (as defined in the Act and in rules
adopted under the Act) by any party hereto.
(d) In the event of termination of this Agreement for any
reason, all records relating to the Portfolio kept by the Sub-
adviser shall promptly be returned to the Manager or the Fund,
free from any claim or retention of rights in such records by the
Sub-adviser.
Section 12. Amendments
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 whom enforcement of the
change, waiver, discharge or termination is sought, and no
amendment of this Agreement shall be effective until approved in
accordance with applicable law.
Section 13. Notices
All communications hereunder shall be given (a) if to the
Sub-adviser, to Trainer Xxxxxxx & Co. 000 Xxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (Attention: _________.), telephone:
_______, telecopy: ____________, and (b) if to the Manager or the
Fund, c/o Centurion Trust Company, 0000 Xxxx Xxxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000-0000 (Attention: Xxxxxx X.
Xxxxxx, Xx.), telephone: 000-000-0000 (x236), telecopy: 602-957-
9788.
Section 14. Miscellaneous
(a) This Agreement shall be governed by the laws of the
State of Arizona, provided that nothing herein shall be construed
in a manner inconsistent with the Act, the Advisers Act, or rules
or orders of the SEC thereunder.
(b) The captions of this Agreement are included for
convenience only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or
effect.
(c) 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 and, to
this extent, the provisions of this Agreement shall be deemed to
be severable.
(d) Nothing herein shall be construed as constituting the
Sub-adviser as an agent of the Fund or the Manager.
(e) This Agreement may be executed in counterparts, with
the same effect as if the signatures were upon the same
instrument.
If the terms and conditions described above are in accordance
with your understanding, kindly indicate your acceptance of this
Agreement by signing and returning to us the enclosed copy of
this Agreement.
CENTURION TRUST COMPANY
By:
_________________
_______
Name: Xxxxxx X.
XxXxxx, Xx.
Title: President
Accepted:
Trainer, Xxxxxxx & Company Inc.
By: ______________________________
Name:
Title:
