FORM OF INVESTMENT SUB-ADVISORY AGREEMENT INVESTMENT SUB-ADVISORY AGREEMENT among KIEWIT INVESTMENT FUND LLLP and HALL CAPITAL PARTNERS LLC and GEODE CAPITAL MANAGEMENT, LLC
among
and
HALL
CAPITAL PARTNERS LLC
and
GEODE
CAPITAL MANAGEMENT, LLC
This Agreement is entered into as of
February 17, 2010, by and among Kiewit Investment Fund LLLP, a Delaware limited
liability limited partnership (the “Fund”), Hall Capital Partners LLC, a
Delaware limited liability company (the “Adviser”), and Geode Capital
Management, LLC, a Delaware limited liability company (the
“Sub-adviser”).
WHEREAS, the Fund has entered into an
Investment Advisory Agreement between itself and the Adviser, dated August 7,
2007, pursuant to which the Adviser is required to provide certain investment
advisory services to the Fund; and
WHEREAS, the Adviser and the Fund
desire to retain the Sub-adviser as investment Sub-adviser to provide the
investment advisory services specified herein with respect to a portion of the
Fund’s assets as Adviser or the Fund shall from time to time designate, and
Sub-adviser is willing to render such services to the Fund in such capacity;
and
WHEREAS, the Fund is registered with
the Securities and Exchange Commission (the “Commission”) under the Investment
Company Act of 1940, as amended (the “1940 Act”), as a non-diversified,
closed-end management investment company and operates as an “employees’
securities company” within the meaning of Section 2(a)(13) of the 1940
Act.
NOW, THEREFORE, in consideration of the
mutual covenants contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
I. APPOINTMENT
OF SUB-ADVISER; COMPENSATION
1.1. Appointment as
Sub-adviser. Subject to and in accordance with the provisions
hereof, the Fund and Adviser hereby appoint Sub-adviser as investment
sub-adviser to perform the various investment advisory and other services as set
forth herein with respect to the portion of the Fund’s assets that Adviser or
the Fund shall from time to time designate (the “Allocated Portion”), subject to
the restrictions set forth herein. It is acknowledged and agreed that
the Fund and Adviser may appoint from time to time other sub-advisers in
addition to the Sub-adviser to manage the assets of the Fund that do not
constitute the Allocated Portion and nothing in this Agreement shall be
construed or interpreted to grant Sub-adviser an exclusive arrangement to act as
the sole sub-adviser to the Fund.
1
1.2. Scope of Investment
Authority.
(a) The
Sub-adviser is hereby authorized, on a discretionary basis, to manage the
investments and determine the composition of the assets of the Allocated
Portion; provided that the
Allocated Portion shall be managed with the objective of obtaining the price and
yield performance of the Xxxxxxx 3000 Index or such other index or management
strategy as the Fund, Adviser and Sub-adviser may agree in writing from time to
time. Sub-adviser’s management of the Allocated Portion shall be
subject at all times to (i) the supervision and control of the Board of
Directors of the Fund (the “Board” or “Board of Directors”); (ii) the
requirements of the 1940 Act and the rules thereunder; (iii) the Fund’s
investment objective, policies and limitations as provided in the Fund’s
registration statement on Form N-2 (as amended or supplemented from time to
time, the “Registration Statement”); and (iv) such instructions, restrictions,
policies and limitations relating to the Fund and/or the performance of
oversight of the Sub-adviser’s duties hereunder as the Board or Adviser may from
time to time adopt and communicate in writing to Sub-adviser; provided that the
Fund or Adviser shall provide Sub-adviser with notice reasonably in advance of
the effectiveness of any changes to the matters covered by clauses (iii) and
(iv) to the extent they relate to the Allocated Portion (“Policy Changes”) and
shall cooperate with respect to the implementation of such Policy
Changes. In the event that Sub-adviser objects in writing to any
Policy Change that is material on the basis that Sub-adviser would be unable to
perform its duties under this Agreement without unreasonable effort or expense
(the reasonableness of the matter to be viewed in light of industry practice for
a registered investment adviser serving registered investment companies and
managing assets of $50 billion or more), the Fund, Adviser and Sub-adviser shall
cooperate in seeking to resolve the Sub-adviser’s objection prior to the
effectiveness of such Policy Change and if the issues cannot be resolved between
the parties then the Sub-adviser shall have the right for a period that ends on
the sixtieth day after effectiveness of such Policy Change to terminate this
Agreement upon ten business days notice to the Fund and the
Adviser. It is acknowledged and agreed that the Fund or Adviser may
delay or cancel the effectiveness of a Policy Change at any time, including
after it receives notice of Sub-adviser’s intent to terminate this Agreement,
and that Sub-adviser shall have no right to terminate this Agreement pursuant to
this Section 1.2(a) if such Policy Change does not become effective prior to
such termination date. Notwithstanding anything herein to the
contrary, Sub-adviser is not authorized to take any action, including the
purchase and sale of portfolio securities, in contravention of any restriction,
limitation, objective, policy or instruction described in this Section
1.2(a).
(b) It
is understood and agreed that, for so long as this Agreement shall remain in
effect, Sub-adviser shall retain discretionary investment authority over the
manner in which the Allocated Portion is invested, and Adviser shall not have
the right to overrule any investment decision with respect to a particular
security made by Sub-adviser in accordance with Section 1.2 hereof; provided that the
Board and Adviser shall at all times have the right to monitor the Fund’s
investment activities and performance, require Sub-adviser to make reports and
give explanations as to the manner in which the Fund’s assets are being
invested, and, should either Adviser or the Board become dissatisfied with
Sub-adviser’s performance in any way, terminate this Agreement in accordance
with the provisions of Section 8.2 hereof.
2
1.3. Appointment as Proxy Voting
Agent. Subject to and in accordance with the provisions
hereof, the Board and Adviser hereby appoint Sub-adviser as the Fund’s proxy
voting agent in respect of the securities held from time to time in the
Allocated Portion, and hereby delegate to Sub-adviser discretionary authority to
vote all proxies solicited by or with respect to issuers of securities held in
the Allocated Portion from time to time substantially in accordance with the
proxy voting policies and procedures of Sub-adviser as provided to the Fund and
Adviser from time to time. Sub-adviser may act as the Fund’s proxy
voting agent (with respect to the Allocated Portion) directly or Sub-adviser
may, in whole or in part, employ a third-party to vote proxies on behalf of the
Fund; provided,
however, that in either case, Sub-adviser shall be responsible for voting all
proxies on behalf of the Fund in respect of securities held in the Allocated
Portion. Upon written notice to Sub-adviser, either the Fund or
Adviser may at any time withdraw the authority granted to Sub-adviser pursuant
to this Section 1.3 to perform any or all of the proxy voting services
contemplated hereby. Upon reasonable request, Sub-adviser will make
itself available to review its proxy voting activities with the Board and
Adviser.
1.4. Governing
Documents. The Fund or Adviser will provide Sub-adviser with
copies of (i) the Fund’s Limited Partnership Agreement and By-laws, as currently
in effect (together, the “Partnership Instruments”); (ii) the Fund’s currently
effective Registration Statement under the 1940 Act and the Securities Act of
1933, as amended; (iii) and any instructions, investment policies or other
restrictions adopted by the Board or Adviser relating to its performance of
oversight of the Sub-adviser. Sub-adviser agrees to review and become
familiar with the Registration Statement and any written policies, restrictions
or limitations adopted by the Board or Adviser with respect to the Allocated
Portion and provided to Sub-adviser from time to time reasonably in advance of
their effectiveness (the “Governing Documents”). Adviser will provide
Sub-adviser with such further documentation and information concerning the
investment objectives, policies and restrictions applicable to the Fund as
Sub-adviser may from time to time reasonably request.
1.5. Sub-adviser’s
Relationship. Notwithstanding anything herein to the contrary,
Sub-adviser shall be an independent contractor and will have no authority to act
for or represent the Fund or Adviser in any way or otherwise be deemed an agent
of any of them, except to the extent expressly authorized by this Agreement or
in writing by the Fund or Adviser.
1.6. Compensation. Sub-adviser
shall be compensated for the services it performs on behalf of the Fund in
accordance with the terms set forth in Appendix A to this
Agreement. In case of commencement or termination of this Agreement
during any calendar month, the fee with respect to the Fund for 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 daily net assets
of the Allocated Portion for the days during which it is in effect.
II. SERVICES
TO BE PERFORMED BY SUB-ADVISER
3
2.1. Investment Sub-Advisory
Services.
(a) In
fulfilling its obligations to manage the assets of the Allocated Portion,
Sub-adviser will:
(i) formulate
and implement a continuous investment program for the Allocated
Portion;
(ii) take
whatever steps are necessary to implement the investment program for the
Allocated Portion by the purchase and sale of securities and other investments,
including the selection of brokers or dealers, the placing of orders for such
purchases and sales in accordance with the provisions of paragraph (b) below and
confirming that such purchases and sales are properly settled and
cleared;
(iii) provide
such reports with respect to the implementation of the investment program for
the Allocated Portion as the Board or Adviser shall reasonably request;
and
(iv) provide
advice and assistance to the Fund as to the determination of the fair value of
certain securities held in the Allocated Portion where market quotations are not
readily available for purposes of calculating the net asset value of the Fund in
accordance with valuation procedures and methods established by the
Board.
(b) The
Sub-adviser shall place all orders for the purchase and sale of securities in
respect of the Allocated Portion with brokers and dealers selected by
Sub-adviser. Such brokers and dealers may include brokers or dealers
that are “affiliated persons” (as such term is defined in the 0000 Xxx) of the
Fund, Adviser or Sub-adviser; provided that
Sub-adviser shall only place orders on behalf of the Fund with such affiliated
persons in accordance with procedures adopted by the Board pursuant to Rule
17e-1 under the 1940 Act. The Fund or Adviser shall provide
Sub-adviser with a written list of the affiliated persons of the Fund and
Adviser for these purposes, and Sub-adviser shall not be responsible for any
violation of this Section 2.1(b) or related Fund policies as a result of placing
orders with brokers or dealers that are affiliated persons of the Fund or
Adviser unless Sub-adviser had received notice of such status pursuant to such
written list (as it is amended from time to time). The Sub-adviser
shall use its best efforts to seek to execute transactions at prices which are
advantageous to the Fund and at commission rates which are reasonable in
relation to the benefits received. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) to the Fund
and/or other accounts over which Sub-adviser or its affiliates exercise
investment discretion. Subject to the Governing Documents,
Sub-adviser is authorized to pay a broker or dealer who provided such brokerage
and research services a commission for executing a 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 Sub-adviser determines in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage and research services provided by such broker or
dealer. This determination may be viewed in terms of either that
particular transaction or the overall responsibilities which the Sub-adviser and
its affiliates have in respect of accounts over which they exercise investment
discretion. The Sub-adviser shall provide such information as is
reasonably necessary to allow the Board to periodically review the commissions
paid by the Fund to determine if the commissions paid over representative
periods were reasonable in relation to the benefits received by the
Fund.
4
2.2. Administrative and Other
Services.
(a) Sub-adviser
will, at its expense, furnish (i) all necessary investment and management
facilities, including salaries of personnel required for it to faithfully
execute its duties as set forth in this Agreement, and (ii) administrative
facilities, including bookkeeping, clerical personnel and equipment necessary
for the efficient conduct of the investment affairs of the Fund (excluding
determination of net asset values and partner accounting services that are not
otherwise required under this Agreement).
(b) Sub-adviser
will maintain all accounts, books and records with respect to the Fund as are
required of an investment adviser of a registered investment company pursuant to
the 1940 Act and the rules thereunder. Sub-adviser agrees that such
records are the property of the Fund, and will be surrendered to the Fund
promptly upon request. The Fund and Adviser shall be granted
reasonable access to the records and documents in Sub-adviser’s possession
relating to the Fund.
2.3. Information and
Reporting. Prior to each Board meeting and at other times as
the Fund or Adviser may reasonably request, Sub-adviser will provide Adviser and
the Board with reports regarding Sub-adviser’s management of the Allocated
Portion, including written certifications that the Fund is in compliance with
the Governing Documents with respect to the Allocated Portion, the 1940 Act and
applicable rules and regulations thereunder, and such other information about
the Allocated Portion in such form as may be mutually agreed upon by the Fund,
Sub-adviser and Adviser. The Sub-adviser also will certify quarterly
to the Fund and Adviser that it and its “Advisory Persons” (as defined in Rule
17j-1 under the 0000 Xxx) have complied materially with the requirements of Rule
17j-1 during the previous quarter or, if not, explain what Sub-adviser has done
to seek to ensure such compliance in the future. Annually, Sub-adviser will
furnish a written report, which complies with the requirements of Rule 17j-1 and
Rule 38a-1 under the 1940 Act, concerning the Sub-adviser’s code of ethics and
compliance program, respectively, to the Fund and
Adviser. Sub-adviser also will provide the Fund and Adviser with any
information reasonably requested regarding its management of the Allocated
Portion required for any Fund financial statement, shareholder report, amendment
to the Registration Statement or prospectus supplement. Sub-adviser
understands that the Fund will rely on such information in the preparation of
such documents, and hereby covenants that any such information approved by
Sub-adviser expressly for use in such documents shall be true and complete in
all material respects. Sub-adviser will promptly inform the Fund and
Adviser upon becoming aware that any material information in such documents is
(or will become) materially inaccurate or materially incomplete.
5
III. COMPLIANCE;
CONFIDENTIALITY
3.1. Compliance.
(a) Sub-adviser
will comply with (i) all applicable state and federal laws and regulations
governing the performance of the Sub-adviser’s duties hereunder and (ii) the
Governing Documents. Sub-adviser will notify the Fund and Adviser as
soon as reasonably practicable upon detection of any material breach by
Sub-adviser of such Governing Documents. The Fund and Adviser hereby
agree to notify Sub-adviser as soon as reasonably practicable upon becoming
aware of any material breach of the Governing Documents with respect to
Sub-adviser’s management of the Allocated Portion.
(b) Sub-Adviser
shall maintain written policies and procedures (“Compliance Policies”)
reasonably designed to detect and prevent violations of the Federal Securities
Laws (as defined in Rule 38a-1 under the 1940 Act). Sub-adviser will
also adopt and maintain a written code of ethics complying with the requirements
of Rule 17j-1 under the 1940 Act and will provide the Fund with a copy of such
code of ethics, evidence of its adoption and copies of any supplemental policies
and procedures implemented to ensure compliance
therewith. Sub-adviser will also maintain a compliance program in
accordance with Rule 206(4)-7 under the Investment Advisers Act of 1940 (the
“Advisers Act”). Sub-adviser will perform its obligations under this
Agreement in accordance with its compliance program, the Compliance Policies and
its code of ethics. Sub-Adviser shall provide copies of such
Compliance Policies, or written summaries thereof, to the Fund upon reasonable
request and provide reasonable cooperation with the Fund’s chief compliance
officer (the “CCO”) or the CCO’s designee for purposes of allowing the CCO to
assess the operation of the Compliance Policies and any material changes
thereto.
3.2. Confidentiality.
(a) The
parties to this Agreement agree that each shall treat as confidential all
information provided by a party to the others regarding such party’s business
and operations, including without limitation the investment activities or
holdings of the Fund. All confidential information provided by a
party hereto shall be used by any other parties hereto solely for the purposes
of rendering services pursuant to this Agreement and the arrangements
contemplated hereby. Except as may be necessary or appropriate in
carrying out the terms of this Agreement and the arrangements contemplated
hereby, such confidential information shall not be disclosed to any third party
without the prior consent of such providing party. The foregoing
limitations shall not be applicable to any information that is publicly
available when provided or which thereafter becomes publicly available other
than in contravention of this Section 3.2 or which is required to be disclosed
by any regulatory authority in the lawful and appropriate exercise of its
jurisdiction over a party, including in response to any regulatory or
enforcement request, any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or
regulation. It is acknowledged and agreed that any confidential
information which is required to be disclosed to any regulatory authority due to
the lawful and appropriate exercise of such regulatory authority’s jurisdiction
over a party, by judicial or administrative process or otherwise by applicable
law or regulation shall not render such information non-confidential for any
other purpose.
6
(b) This
Section 3.2 shall constitute the only express confidentiality agreement between
Sub-adviser, the Fund and Adviser, and all other confidentiality agreements,
including the confidentiality agreements between (i) Sub-adviser and the Fund;
and (ii) Sub-adviser and Adviser, each dated January 14, 2010, are hereby
revoked.
IV. STANDARD
OF CARE; INDEMNIFICATION
4.1. Standard of Care;
Liability. Sub-adviser will act in good faith and use
reasonable care and act in a manner consistent with applicable federal and state
laws and regulations in rendering the services it agrees to provide under this
Agreement. Subject to Section 4.2, and notwithstanding anything else
herein to the contrary, neither Sub-adviser, nor any of its directors, officers
or employees, shall be liable to the Fund or Adviser for any loss resulting from
Sub-adviser’s acts or omissions as Sub-adviser to the Fund, except to the extent
any such losses result from bad faith, willful misfeasance, reckless disregard
or gross negligence on the part of the Sub-adviser or any of its directors,
officers or employees in the performance of the Sub-adviser’s duties and
obligations under this Agreement.
4.2. Indemnification.
(a) Sub-adviser Indemnification.
Sub-adviser agrees to indemnify and hold the Fund and Adviser, severally and not
jointly, harmless from any and all direct or indirect liabilities, losses or
damages (including reasonable attorneys fees) suffered by the Fund or Adviser
resulting from (i) Sub-adviser’s material breach of Section 1.3 or Article II
hereof or (ii) bad faith, willful misfeasance, reckless disregard or gross
negligence on the part of the Sub-adviser or any of its directors, officers or
employees in the performance of the Sub-adviser’s duties and obligations under
this Agreement, except to the extent
such loss results from the Fund’s or Adviser’s own willful misfeasance, bad
faith, reckless disregard or gross negligence in the performance of their
respective duties and obligations under this Agreement. For the
avoidance of doubt, no act of willful misfeasance, bad faith, reckless disregard
or gross negligence in the performance of Adviser’s duties and obligations under
this Agreement shall relieve Sub-adviser of any indemnification obligation to
which the Fund would be otherwise entitled pursuant to this Section
4.2(a). Additionally, for the avoidance of doubt, no act of willful
misfeasance, bad faith, reckless disregard or gross negligence in the
performance of the Fund’s duties and obligations under this Agreement shall
relieve Sub-adviser of any indemnification obligation to which Adviser would be
otherwise entitled pursuant to this Section 4.2(a).
(b) Fund
Indemnification. The Fund hereby agrees to indemnify and hold
Sub-adviser harmless from any and all direct or indirect liabilities, losses or
damages (including reasonable attorney’s fees) suffered by Sub-adviser resulting
from (i) the Fund’s material breach of Section 1.4 or Section 5.2 hereof or (ii)
bad faith, willful misfeasance, reckless disregard or gross negligence on the
part of the Fund or any of its directors, officers or employees in the
performance of its duties and obligations under this Agreement, except to the extent
such loss results from Sub-adviser’s own willful misfeasance, bad faith,
reckless disregard or gross negligence in the performance of Sub-adviser’s
duties and obligations under this Agreement. For the avoidance of
doubt, no act of willful misfeasance, bad faith, reckless disregard or gross
negligence in the performance of Adviser’s duties and obligations under this
Agreement shall relieve the Fund of any indemnification obligation to which
Sub-adviser would be otherwise entitled pursuant to this Section
4.2(b).
7
(c) Adviser Indemnification. The
Adviser hereby agrees to indemnify and hold Sub-adviser harmless from any and
all direct or indirect liabilities, losses or damages (including reasonable
attorney’s fees) suffered by Sub-adviser resulting from (i) Adviser’s material
breach of Section 1.4 hereof or (ii) bad faith, willful misfeasance, reckless
disregard or gross negligence on the part of Adviser or any of its directors,
officers or employees in the performance of its duties and obligations under
this Agreement, except to the extent
such loss results from Sub-adviser’s own willful misfeasance, bad faith,
reckless disregard or gross negligence in the performance of Sub-adviser’s
duties and obligations under this Agreement. For the avoidance of
doubt, no act of willful misfeasance, bad faith, reckless disregard or gross
negligence in the performance of the Fund’s duties and obligations under this
Agreement shall relieve the Adviser of any indemnification obligation to which
Sub-adviser would be otherwise entitled pursuant to this Section
4.2(c).
V. SUPPLEMENTAL
ARRANGEMENTS; EXPENSES; INSURANCE
5.1. Supplemental
Arrangements. Subject to the prior written consent of the
Board and Adviser, Sub-adviser may enter into arrangements with other persons
affiliated with Sub-adviser to better fulfill its obligations under this
Agreement for the provision of certain personnel and facilities to Sub-adviser;
provided that
such arrangements do not rise to the level of an advisory contract subject to
the requirements of Section 15 of the 1940 Act or are inconsistent with
applicable law.
5.2. Expenses. It
is understood that the Fund will pay all of its expenses other than those
expressly stated to be payable by Sub-adviser hereunder. Expenses of
the Fund that will not be paid by Sub-adviser include, but are not limited to,
(i) interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Board other than those who are “interested persons” of
Sub-adviser; (iv) legal and audit expenses; (v) custodian, registrar and
transfer agent fees and expenses; (vi) fees and expenses related to the
registration and qualification of the Fund and the Fund’s units for distribution
under state and federal securities laws; (vii) expenses of printing and mailing
reports and notices and proxy material to partners of the Fund; (viii) all other
expenses incidental to holding meetings of the Fund’s partners, including proxy
solicitations therefor; (ix) a proportionate share of insurance premiums for
bond and other coverage; (x) a proportionate share of association membership
dues; (xi) investment management fees; (xii) expenses of typesetting for
printing Prospectuses and Statements of Additional Information and supplements
thereto; (xiii) expenses of printing and mailing Prospectuses and Statements of
Additional Information and supplements thereto sent to existing partners; (xiv)
any index licensing fee for the use of an index on which the Allocated Portion
is based (but shall not include any fees
or expenses relating to the investment of Fund assets based on such index); and
(xv) such non-recurring or extraordinary expenses as may arise, including those
relating to actions, suits or proceedings to which the Sub-adviser is not a
party and any legal obligation that the Fund may have to indemnify the Board of
Directors, officers and/or employees or agents with respect
thereto. Sub-adviser shall not cause the Fund to incur any expenses,
other than those reasonably necessary for Sub-adviser to fulfill its obligations
under this Agreement, unless Sub-adviser has received written permission of the
Fund and Adviser to do so.
8
5.3. Insurance. Sub-adviser
shall maintain for the duration hereof, with an insurer acceptable to Fund and
Adviser, a blanket bond and professional liability (errors and omissions)
insurance in amounts reasonably acceptable to the Fund and
Adviser. Sub-adviser agrees that such insurance shall be considered
primary and Sub-adviser shall assure that such policies pay claims prior to
similar policies that may be maintained by Fund and Adviser. In the
event Sub-adviser fails to have in force such insurance, that failure will not
exclude Sub-adviser’s responsibility to pay for any damages in breach
hereof.
VI. CONFLICTS
OF INTEREST
6.1. Conflicts of
Interest. It is understood that the Board of Directors,
officers, agents and partners of the Fund are or may be interested in
Sub-adviser or Adviser as directors, officers, stockholders or otherwise; that
directors, officers, agents and stockholders of Sub-adviser or Adviser are or
may be interested in the Fund as Board members, officers, partners or otherwise;
that Sub-adviser or Adviser may be interested in the Fund; and that the
existence of any such dual interest shall not affect the validity of this
Agreement or of any transactions hereunder except as otherwise provided in the
Governing Documents, Partnership Instruments and the respective certificates of
formation and limited liability company agreements of Sub-adviser or Adviser, or
by specific provisions of applicable law.
VII. REGULATION
7.1. Regulation. Sub-adviser
shall submit to all regulatory and administrative bodies having jurisdiction
over the services provided pursuant to this Agreement any information, reports
or other material which any such body by reason of this Agreement may reasonably
request or require pursuant to applicable laws and regulations.
VIII. DURATION
AND TERMINATION OF AGREEMENT
9
FORM
OF INVESTMENT SUB-ADVISORY AGREEMENT
8.1. Effective Date; Duration;
Continuance.
(a) This
Agreement shall become effective on April 1, 2010.
(b) Subject
to prior termination pursuant to Section 8.2 below, this Agreement shall
continue in force for two years from the date of execution, and indefinitely
thereafter, but only so long as the continuance after such initial two-year term
shall be specifically approved at least annually by the vote of the Board of
Directors or by a vote of a majority of the outstanding voting securities of the
Fund as required by applicable law or any exemption therefrom obtained by the
Fund.
8.2. Termination and
Assignment.
(a) This
Agreement may be terminated at any time without the payment of any penalty (1)
upon sixty (60) days’ written notice to Sub-adviser by (i) the Board of
Directors, (ii) the vote of a majority of the outstanding voting securities of
the Fund; or (iii) the Adviser with the consent of the Board; and (2) upon one
hundred and fifty (150) days’ written notice to the Fund and Adviser by
Sub-adviser; and (3) as provided in Section 1.2(a), unless, in each case under
this Section 8.2(a), otherwise agreed by the parties.
(b) This
Agreement will terminate automatically (i) in the event of its assignment (as
defined in the 0000 Xxx) or (ii) in the event the Investment Advisory Contract
is terminated for any reason; provided, however,
that this Agreement will continue in effect if the Fund and Sub-adviser mutually
agree in writing that this Agreement will not terminate upon the termination of
the Investment Advisory Contract.
8.3. Definitions. The
terms “registered investment company,” “vote of a majority of the outstanding
voting securities,” “assignment,” and “interested persons,” when used herein,
shall have the respective meanings specified in the 1940 Act as now in effect or
as hereafter amended, and subject to such orders or no–action letters as may be
granted by the Commission or its staff.
IX. REPRESENTATIONS,
WARRANTIES AND COVENANTS
9.1. Representations of the
Fund. On and as of the effective date of this Agreement, the
Fund hereby represents and warrants that:
(i) the
Fund is a limited liability limited partnership established pursuant to the laws
of the State of Delaware with the power to own and possess its assets and carry
on its business as its business is now being conducted;
(ii) the
Fund is duly registered as an investment company under the 1940
Act;
(iii) the
execution, delivery and performance of this Agreement are within the Fund’s
powers, have been and remain duly authorized by all necessary action (including
without limitation all necessary approvals and other actions required under the
1940 Act or any exemption therefrom) and will not violate or constitute a
default under any applicable law or regulation or of any decree, order,
judgment, agreement or instrument binding on the Fund;
10
FORM
OF INVESTMENT SUB-ADVISORY AGREEMENT
(iv) no
consent (including, but not limited to, exchange control consents) of any
applicable governmental authority or body is necessary for the execution and
performance of this Agreement, except for such consents as have been obtained
and are in full force and effect, and all conditions of which have been duly
complied with;
(v) this
Agreement constitutes a legal, valid and binding obligation enforceable against
the Fund in accordance with its terms; and
(vi) the
Fund is not required to register as a commodity pool under the Commodity
Exchange Act.
9.2. Representations of the
Adviser. On and as of the effective date of this Agreement,
the Adviser hereby represents, warrants and agrees that:
(i) Adviser
is a limited liability company established pursuant to the laws of the State of
Delaware with the power to own and possess its assets and carry on its business
as its business is now being conducted;
(ii) Adviser
is duly registered with the Commission as an “investment adviser” under the
Advisers Act;
(iii) Adviser
has been duly appointed by the Board of Directors of the Fund to provide
investment services to the Fund as contemplated by the Investment Advisory
Agreement;
(iv) the
execution, delivery and performance of this Agreement are within Adviser’s
powers, have been and remain duly authorized by all necessary corporate action
and will not violate or constitute a default under any applicable law or
regulation or of any decree, order, judgment, agreement or instrument binding on
Adviser;
(v) no
consent (including, but not limited to, exchange control consents) of any
applicable governmental authority or body is necessary for the execution and
performance of this Agreement, except for such consents as have been obtained
and are in full force and effect, and all conditions of which have been duly
complied with; and
11
FORM
OF INVESTMENT SUB-ADVISORY AGREEMENT
(vi) this
Agreement constitutes a legal, valid and binding obligation enforceable against
Adviser in accordance with its terms.
9.3. Representations of
Sub-adviser. On and as of the effective date of this
Agreement, the Sub-adviser hereby represents, warrants and agrees
that:
(i) Sub-adviser
is a Delaware limited liability company established pursuant to the laws of the
State of Delaware with the power to own and possess its assets and carry on its
business as its business is now being conducted;
(ii) Sub-adviser
is duly registered as an “investment adviser” under the Advisers
Act;
(iii) the
execution, delivery and performance of this Agreement are within Sub-adviser’s
powers, have been and remain duly authorized by all necessary corporate action
and will not violate or constitute a default under any applicable law or
regulation or of any decree, order, judgment, agreement or instrument binding on
Sub-adviser;
(iv) no
consent (including, but not limited to, exchange control consents) of any
applicable governmental authority or body is necessary for the execution and
performance of this Agreement, except for such consents as have been obtained
and are in full force and effect, and all conditions of which have been duly
complied with;
(v) this
Agreement constitutes a legal, valid and binding obligation enforceable against
Sub-adviser in accordance with its terms; and
(vi) it
is not the subject of any proceeding, investigation or inquiry brought by the
Commission, FINRA (or any other self-regulatory organization) or any other
federal or state regulator, court or other governmental authority, agency or
body with respect to the types of services for which it is being appointed
herein or which could have a material impact on its ability to fully perform any
of the services to be rendered hereunder and is not aware of any litigation,
investigation or proceeding that has been threatened by or against it or any of
its employees that could reasonably be expected to have a material and adverse
effect on its ability to perform under this Agreement or that is required to be
disclosed in the Registration Statement.
12
FORM
OF INVESTMENT SUB-ADVISORY AGREEMENT
9.4. Covenants of the
Sub-adviser.
(a) Sub-adviser
hereby covenants and agrees that for the duration of this Agreement it will
promptly notify the Fund and Adviser in writing of the occurrence of any of the
following events:
(i) the
occurrence of any event which could disqualify Sub-adviser from serving as an
investment adviser of a registered investment company pursuant to Section 9 of
the 1940 Act or otherwise;
(ii) any
material change in the Sub-adviser’s overall business activities that could
reasonably be expected to have a material adverse effect on Sub-adviser’s
ability to perform its obligations under this Agreement;
(iii) any
event that would constitute a change of control of Sub-adviser (within the
meaning of the Advisers Act and 1940 Act);
(iv) any
change in the portfolio manager(s) of the Sub-adviser that service the account
of the Fund;
(v) any
proposed change or change in the representations made by Sub-adviser concerning
the nature of the Sub-adviser’s business plan; and
(vi) the
existence of any pending or threatened audit, investigation, complaint,
examination or other inquiry (other than routine or “sweep” regulatory
examinations or inspections) conducted by any state or federal governmental
regulatory authority that relates to the Fund or that could reasonably be
expected to have a material adverse effect on the operations of the
Sub-adviser.
(b) Further Covenants of
Sub-adviser. Sub-adviser further covenants and agrees that for
the duration of this Agreement:
(i) it
will be duly registered with the Commission as an “investment adviser” under the
Advisers Act;
13
FORM
OF INVESTMENT SUB-ADVISORY AGREEMENT
(ii) it
will, promptly after making any material amendment to its Form ADV, furnish a
copy of such amendment to the Fund and Adviser;
(iii) it
will fully cooperate in any regulatory investigation, examination, or inspection
of the Fund;
(iv) it
will provide such information to the Fund and Adviser as the Fund or Adviser
determines necessary from time to time in order for the Fund to comply with the
1940 Act, the Fund’s investment program and to maintain the effectiveness of the
Fund’s Registration Statement; and
(v) it
shall promptly notify the Fund and Adviser if it (1) receives notice from any
governmental authority, agency or body of its ceasing to have maintained its
required status as a registered investment adviser; (2)(A) ceases to be a
registered investment adviser under the Advisers Act or (B) becomes aware that
it is likely to cease to be a registered investment adviser under the Advisers
Act; and (3) becomes aware of the commencement by any governmental, regulatory
or law enforcement authority, agency or body of any investigation, examination
or other proceeding directly involving Sub-adviser, its members, managers,
officers or employees, that would materially adversely affect Sub-adviser’s
ability to perform under this Agreement.
(c) Sub-adviser
agrees that it will promptly supply the Fund and Adviser with copies of any
material changes to any of the documents provided by Sub-adviser pursuant to
Section 3.1.
14
FORM
OF INVESTMENT SUB-ADVISORY AGREEMENT
9.5. Covenants of
Adviser. The Adviser covenants and agrees that for the
duration of this Agreement:
(i) Adviser
will notify Sub-adviser if Adviser ceases to be duly appointed by the Board of
Directors of the Fund to provide investment services to the Fund as contemplated
by the Investment Advisory Agreement; and
(ii) Adviser
will fully cooperate in any regulatory investigation, examination, or inspection
of the Sub-adviser with respect to the Fund.
9.6. Covenants of
Fund. The Fund covenants and agrees that for the duration of
this Agreement the Fund will promptly notify Sub-adviser of any investigation
involving the Fund by the Commission or other regulatory agency with
jurisdiction over the Fund that could reasonably be expected to have a material
adversely affect on the ability of Sub-adviser to manage the Allocated
Portion.
X. MISCELLANEOUS
PROVISIONS
10.1. Use of Sub-adviser’s
Name. Neither the Fund nor Adviser will use the name of
Sub-adviser, or any affiliate of Sub-adviser, in any advertisement, sales
literature or other communication to the public except as the
Sub-adviser may agree in writing or in accordance with such policies and
procedures as shall be mutually agreed to by the Sub-adviser, the Fund and the
Adviser; provided, however,
that so long as this Agreement remains in effect, the Fund may include the
Sub-adviser’s name in the Registration Statement or reports to
partners.
10.2. Use of Fund or Adviser’s
Name. Sub-adviser will not use the name of Adviser or the Fund
in any prospectus, advertisement, sales literature or other communication to the
public except
as the Fund or Adviser, as applicable, may agree in writing or in accordance
with such policies and procedures as shall be mutually agreed to by the
Sub-adviser and the Fund or Adviser.
10.3. Amendments. This
Agreement may be modified by mutual consent of the Adviser, the Sub-adviser and
the Fund subject to the provisions of Section 15 of the 1940 Act, as modified by
or interpreted by any applicable order or orders of the Commission or any rules
or regulations adopted by, or interpretive releases of, the Commission and
applicable no-action letters issued by the staff thereof.
10.4. Entire
Agreement. This Agreement contains the entire understanding
and agreement of the parties with respect to the subject hereof.
10.5. Captions. The
headings in the sections of this Agreement are inserted for convenience of
reference only and shall not constitute a part of the Agreement.
10.6. Notices. All
notices, communications, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (and if sent by mail, sent via
certified or registered mail, return receipt requested) or be by confirmed
facsimile transmission or email with confirmed delivery status
notification. All notices shall be deemed to have been duly given or
made when delivered by hand, or three business days after being deposited in the
mail, postage prepaid, or, in the case of facsimile transmission or email
transmission, when sent, addressed to the last known business address of such
party or as such party may designate in writing; provided, however,
that notices to terminate this Agreement must be sent via certified or
registered mail, return receipt requested.
15
FORM
OF INVESTMENT SUB-ADVISORY AGREEMENT
10.7. Severability. Should
any portion of this Agreement, for any reason, be held to be void at law or in
equity, the Agreement shall be construed, insofar as is possible, as if such
portion had never been contained herein.
10.8. Governing
Law. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of Delaware (without giving
effect to the choice of law provisions thereof), or any of the applicable
provisions of the 1940 Act. To the extent that the laws of the State
of Delaware, or any of the provisions in this Agreement, conflict with
applicable provisions of the 1940 Act, the latter shall control.
10.9. Limitation of
Liability. A copy of the Fund’s Limited Partnership Agreement
establishing the Fund, dated July 22, 2005, together with all amendments, is
publicly available, and notice is hereby given that this Agreement is not
executed on behalf of any individual and no Board member, partner, officer,
employee or agent of the Fund shall be held to any personal liability, nor shall
resort be had to their private property, for the satisfaction of any obligation
or claim, in connection with the affairs of the Fund, but only the assets
belonging to the Fund shall be liable.
10.10. Compliance with Rule
17a-10. In accordance with Rule 17a-10 under the 1940 Act and
any other applicable law, Sub-adviser will not consult with any investment
adviser concerning transactions for the Fund in securities or other assets that
would prohibit the parties from relying on Rule 17a-10, including consulting
with Adviser or any other sub-adviser to the Fund or any adviser to any other
portfolio of the Fund, if any.
10.11. Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed an original, and all of such counterparts together will constitute one
and the same instrument.
16
FORM
OF INVESTMENT SUB-ADVISORY AGREEMENT
10.12. Miscellaneous. All
words used herein shall be construed to be of such gender or number as the
circumstances require. The words “herein,” “hereby,” “hereof” and
“hereto,” and words of similar import, refer to this Agreement in its entirety
and not to any particular paragraph, clause or other subdivision, unless
otherwise specified. The word “including” shall mean “including
without limitation” unless otherwise specified. Section and Appendix
references are to this Agreement unless otherwise
specified. Capitalized terms in any Appendix hereto shall have the
same meanings as defined in this Agreement.
[The
remainder of this page is intentionally left blank.]
17
FORM
OF INVESTMENT SUB-ADVISORY AGREEMENT
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the date first mentioned above.
By: \s\
Xxxxxx X. Xxxxx, Xx.
Name: Xxxxxx
X. Xxxxx, Xx.
Title: Chief
Executive Officer
HALL
CAPITAL PARTNERS LLC
By: \s\
Xxxxxxx X. Xxxx
Name: Xxxxxxx
X. Xxxx
Title: Chief
Executive Officer and Chief Investment Officer
GEODE
CAPITAL MANAGEMENT, LLC
By: \s\
Xxxxxxx Xxxxxxxx
Name: Xxxxxxx
Xxxxxxxx
Title: President
and Chief Investment Officer
APPENDIX A
As consideration for the Sub-Adviser’s
services to the Fund, the Sub-Adviser shall receive from the Fund an annual
advisory fee based on the applicable percentage stated below of the average
daily net assets of the Allocated Portion. The advisory fee shall be
accrued daily at the rate of 1/365th of the applicable advisory fee rate and
payable on the first business day of each month. For the purposes of
calculating the advisory fee, the value of the net assets of the Allocated
Portion will be computed in the manner specified in the Registration Statement
for the valuation of assets, and on days on which the net assets are not so
determined, the net asset value computation to be used will be as determined on
the immediately preceding day on which the net assets were
determined.
The advisory fee rates are as
follows:
|
|
·
|
10 basis points (0.10 of 1%) on
the first $100,000,000
|
|
|
·
|
8 basis points (0.08 of 1%) on the
next $150,000,000
|
|
|
·
|
6 basis points (0.06 of 1%) on any
amount in excess of $250,000,000 in
assets
|
|
|
·
|
Minimum per annum fee of
$40,000
|
