SUBADVISORY AGREEMENT
AGREEMENT made as of August 31, 2006 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:
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(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.
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(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
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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
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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. XxXxx
-------------------------
Xxxxx X. XxXxx
Title: President
U.S. GLOBAL ACCOLADE FUNDS
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Xxxxx X. Xxxxxx
Title: Chief Executive Officer
CHARLEMAGNE CAPITAL (IOM) LIMITED
By: /s/ Xxxxxxxx Xxxxxxx
-------------------------
Xxxxxxxx Xxxxxxx
Title: Managing Director
