INVESTMENT SUB-ADVISORY AGREEMENT
This Agreement is made as of this 22nd of January 2001, by and among Xxxxx
Xxxxxxx Capital Management Co., a Texas corporation (the "Adviser"), TCL Capital
Management, Inc., a Louisiana corporation (the "Sub-Adviser" or "TCL") and the
Senior Funds, a Massachusetts business trust (the "Company").
WHEREAS, the Company is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated
January 22, 2001 (the "Advisory Agreement") with the Company, pursuant to which
the Adviser serves as investment adviser to the following funds; and
Senior U.S. Government Fund
Senior Large Cap Equity Fund
Senior Corporate Bond Fund
Senior Money Market Fund
Senior Balanced 50 Fund
Senior Balanced 60 Fund
Senior Balanced 70 Fund
WHEREAS, the Adviser and the Company each desire to retain the Sub-Adviser to
provide investment management services for the equity securities portion of the
portfolios of the Senior Large Cap Equity Fund, Senior Balanced 50 Fund, Senior
Balanced 60 Fund, Senior Balanced 70 Fund (singularly "Fund" and collectively
"Funds") and the Sub-Adviser is willing to render such investment management
services.
NOW, THEREFORE, the parties hereto agree as follows:
1(a). Subject to supervision by the Adviser and the Company's Board of
Trustees, the Sub-Adviser shall manage the equity securities
investment operations of the Funds and the composition of the Funds'
equity securities portfolio, including the purchase, retention and
disposition thereof, in accordance with the Funds' Prospectus (such
Prospectus and the Statement of Additional Information, as currently
in effect and as amended or supplemented from time to time, being
herein called the "Prospectus"), and subject to the following:
(1) The Sub-Adviser shall provide supervision of the Funds' equity
securities investments and determine from time to time what
investments and securities will be purchased, retained or sold by
the Funds, and what portion of the costs will be invested or held
uninvested in cash.
(2) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the
Company's Master Trust Agreement and the Prospectus and with the
instructions and directions of the Adviser and of the Board of
Trustees of the Company and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code and all
other applicable federal and state laws and regulations, as each
is amended from time to time.
Sub-Advisory Agreement
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(3) The Sub-Adviser shall have full and complete discretion to
establish brokerage accounts with one or more brokers, dealers or
other financial intermediaries as Sub-Adviser may select in
accordance with its customary practices and procedures, including
those which from time to time may furnish to Sub-Adviser or its
affiliates statistical and investment research information and
other services. Sub-Adviser will place orders with or through
such brokers, dealers or other financial intermediaries in
accordance with industry standards as to brokerage practices and
the policy with respect to brokerage set forth in the Funds'
Registration Statement (as defined herein) or as the Board of
Trustees or the Adviser may direct from time to time, in
conformity with federal securities laws on occasions when the
Sub-Adviser deems the purchase or sale of a security to be in the
best interest of a Fund as well as other clients of the
Sub-Adviser, it may allocate such transactions in the manner it
considers to be the most equitable and consistent with its
fiduciary obligation to the Fund and to such other clients.
(4) The Sub-Adviser shall maintain all books and records with respect
to the Funds' portfolio transactions required by subparagraphs
(b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule
31a-1 under the 1940 Act and shall render to the Company's Board
of Trustees such periodic and special reports as the Company's
Board of Trustees may reasonably request.
(5) The Sub-Adviser shall provide the Funds' Custodian on each
business day with information relating to all transactions
concerning the Funds' assets and shall provide the Adviser with
such information upon request of the Adviser.
(6) The investment management services provided by the Sub-Adviser
under this Agreement are not to be deemed exclusive and the
Sub-Adviser shall be free to render similar services to others,
as long as such services do not impair the services rendered to
the Adviser or the Company.
1(b). Services to be furnished by the Sub-Adviser under this Agreement may
be furnished through the medium of any of the Sub-Adviser's partners,
officers or employees.
1(c). The Sub-Adviser shall keep the Funds' books and records required to be
maintained by the Sub-Adviser pursuant to paragraph 1(a) of this
Agreement and shall timely furnish to the Adviser all information
relating to the Sub-Adviser's services under this Agreement needed by
the Adviser to keep the other books and records of the Fund required
by Rule 31a-1 under the 1940 Act. The Sub-Adviser agrees that all
records that it maintains on behalf of each Fund are property of the
Fund and the Sub-Adviser will surrender promptly to the Fund any of
such records upon the Fund's request; provided, however, that the
Sub-Adviser may retain a copy of such records. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any such records as are required to be maintained by it
pursuant to paragraph 1(a) of this Agreement.
Sub-Advisory Agreement
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2. The Adviser shall continue to have responsibility for all services to be
provided to the Funds pursuant to the Advisory Agreement and shall oversee
and review the Sub-Adviser's performance of its duties under this
Agreement.
3. The Adviser has delivered to the Sub-Adviser copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a) The Company's Master Trust Agreement (as in effect on the date of this
Agreement and as amended from time to time, herein called "Charter");
(b) By-Laws of the Company (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Certified resolutions of the Company's Board of Trustees authorizing
the appointment of the Adviser and the Sub-Adviser with respect to the
Fund, and approving the form of this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the "Registration Statement"), as
filed with the Securities and Exchange Commission (the "Commission")
relating to the Fund and shares of the Fund's beneficial shares, and
all amendments thereto; and
(e) Notification of Registration of the Company under the 1940 Act on Form
N-8A as filed with the Commission and all amendments thereto.
4. For the services to be provided by the Sub-Adviser pursuant to this
Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees
to accept as full compensation therefore a sub-advisory fee payable on a
monthly basis, based on the average month-end net assets of each Fund. The
fee rate will be based on a percentage basis of the actual fee received by
the Adviser as set forth in the attached fee schedule.
If Sub-Adviser shall serve for less than the whole of any monthly period,
its compensation determined as provided herein will be calculated and
payable on a pro rata basis for the period of the calendar month for which
it has served as Sub-Adviser.
5. The Sub-Adviser shall not be liable for any error of judgment or for any
loss suffered by a Fund or the Adviser in connection with performance of
its obligations under this Agreement, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services
(in which case any award of damages shall be limited to the period and the
amount set forth in Section 36(b)(3) of the 1940 Act), or a loss resulting
form willful misfeasance, bad faith or negligence on the Sub-Adviser's part
in the performance of it duties or from reckless disregard of its
Sub-Advisory Agreement
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obligations and duties under this Agreement, except as may otherwise be
provided under provisions of applicable state law which cannot be waived or
modified hereby.
6. This Agreement shall continue in effect with respect to a Fund for a period
of more than two years from January 22, 2001, only so long as continuance
is specifically approved at least annually in conformance with the 1940
Act; provided, however, that this Agreement may be terminated (a) by a Fund
at any time, without the payment of any penalty, by the vote of a majority
of Trustees of the Company or by the vote of a majority of the outstanding
voting securities of such Fund, (b) by the Adviser at any time, without the
payment of any penalty, on not more than 60 days nor less than 30 days
written notice to the other parties, or (c) by the Sub-Adviser at any time,
without the payment of any penalty, on 90 days written notice to the other
parties. This Agreement shall terminate automatically and immediately in
the event of its assignment. As used in this Section 6, the terms
"assignment" and "vote of a majority of the outstanding voting securities"
shall have the respective meanings set forth in the 1940 Act and the rules
and regulations thereunder, subject to such exceptions as may be granted by
the Commission under the 1940 Act.
7. Nothing in this Agreement shall limit or restrict the right of any of the
Sub-Adviser's partners, officers, or employees to engage in any other
business or to devote his or her time and attention in part to the
management or other aspects of any business, whether of a similar or
dissimilar nature, nor limit or restrict the Sub-Adviser's right to engage
in any other business or to render services of any kind to any other
corporation, firm, individual or association.
8. During the term of this Agreement, the Adviser agrees to furnish the
Sub-Adviser at its principal office all Prospectus, proxy statements,
reports to stockholders, sales literature or other materials prepared for
distribution to stockholders of the Fund, the Company or the public that
refer to the Sub-Adviser. Such materials may be deemed to have been
approved by Sub-Adviser unless Sub-Adviser reasonably objects in writing
within five business days (or such other period as may be mutually agreed)
after receipt thereof. The Sub-Adviser's right to object to such materials
is limited to the portions of such materials that expressly relate to the
Sub-Adviser, its services and its clients. The Adviser agrees to use its
reasonable best efforts to ensure that materials prepared by its employees
or agents or its affiliates that refer to the Sub-Adviser or its clients in
any way are consistent with those materials previously approved by the
Sub-Adviser as referenced in the first sentence of this paragraph. Sales
literature may be furnished to the Sub-Adviser by first class or overnight
mail, facsimile transmission equipment or hand delivery.
9. No provisions of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination
is sought, and no amendment of this Agreement shall be effective until
approved by the vote of the majority of the outstanding voting securities
of the Fund.
Sub-Advisory Agreement
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10. This Agreement shall be governed by the laws of the state of Texas;
provided, however, that nothing herein shall be construed as being
inconsistent with the 1940 Act.
11. This Agreement embodies the entire agreement and understanding among the
parties hereto, and supersedes all prior agreements and understandings
relating to this Agreement's subject matter. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together, constitute only one
instrument.
12. Should any part of this Agreement be held 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.
13. Any notice, advice, or report to be given pursuant to this Agreement shall
be delivered or mailed:
To the Adviser at:
Xxxxx Xxxxxxx Capital Management Co.
00000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
To Sub-Adviser at:
TCL Capital Management, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
Attention: Legal Department
To the Company or the Fund at:
Senior Funds
00000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
14. Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of
the Commission, whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or
order.
15. A copy of the Charter of the Company is on file with the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed
on behalf of the Trustees of the Company as Trustees, and that the
obligations of this
Sub-Advisory Agreement
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instrument are not binding upon any of the Trustees, officers, or
shareholders of the Company individually but binding only upon the assets
and property of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers designated below as of the day and year first written above.
Xxxxx Xxxxxxx Capital Management Co.
By: ______________________________________
Xxxxxx X. Xxxxx, President
TCL Capital Management, Inc.
By: ______________________________________
Name, and Title
Senior Funds
By: ______________________________________
Xxxxxx X. Xxxxx, President
Sub-Advisory Agreement
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FEE SCHEDULE
INVESTMENT SUB-ADVISORY AGREEMENT
DATED JANUARY 22, 2001
PERCENTAGE OF ADVISORY FEE ACTUALLY
FUND RECEIVED BY ADVISOR
---- -------------------
Senior Large Cap Equity Fund 87.5%
Senior Balanced 50 Fund 50%
Senior Balanced 60 Fund 40%
Senior Balanced 70 Fund 30%
