Exhibit 5.3
XXXXXXXX-XXXXXXXXX MUTUAL FUNDS
SUB-ADVISORY AGREEMENT FOR THE
XXXXXXXX-XXXXXXXXX PACIFIC RIM FUND
Agreement made as of this day of , 19 by
Xxxxxxxx-Xxxxxxxxx Capital Management, a California limited partnership
("Manager"), and NACM (ASIA), a limited liability company (the "Sub-Adviser").
WHEREAS, Xxxxxxxx-Xxxxxxxxx Mutual Funds (the "Trust"), a diversified
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), is a series type investment company
that is comprised of various series, each of which is a separate investment
portfolio having its own investment objectives and investment policies; and
WHEREAS, the Manager has entered into an Investment Advisory Agreement
dated , 19 (the "Management Agreement") pursuant to which the
Manager has been employed to act as the investment manager of the Trust with
respect to the Pacific Rim Fund series of the Trust (the "Fund"); and
WHEREAS, the Sub-Adviser is engaged in business as an investment adviser
and is registered as an investment adviser under the Investment Advisers Act of
1940; and
WHEREAS, the Manager desires to retain the Sub-Adviser to provide
investment advisory services to the Trust in connection with the management of
the Fund, and the Sub-Adviser is willing to render such investment advisory
services.
NOW, THEREFORE, the parties agree as follows:
1. (a) Subject to the supervision of the Board of Trustees of the Trust,
the Sub-Adviser shall, together with the Manager, manage the investment
operations of the Fund, including the purchase, reinvestment, retention and
disposition of securities of the Fund, in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Prospectus and Statement
of Additional Information (as currently in effect for the Fund and as amended or
supplemented from time to time, being herein called the "Prospectus"), and
subject to the following understandings:
(i) The Sub-Adviser shall, together with the Manager, manage the
Fund's investments and determine from time to time what investments and
securities will be purchased, retained, sold or loaned by the Fund, and what
portion of the Fund's assets will be invested or held uninvested as cash.
(ii) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Charter and By-laws
of the Trust and Prospectus and with the instructions, resolutions and
directions of the Manager and of the Board of Trustees of the Trust and shall
conform to and comply with the requirements of the 1940 Act, the Internal
Revenue Code of 1986, as amended (the "Code") (including without
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limitation Section 851), and all other applicable federal and state laws and
regulations and shall specifically monitor and maintain compliance with the
diversification requirements of the Fund under Section 851 of the Code.
(iii) The Sub-Adviser, together with the Manager, shall
determine the securities to be purchased or sold by the Fund and shall place
orders with or through such persons, brokers or dealers as may be necessary or
desirable to carry out the policy with respect to brokerage as set forth in the
Fund's Prospectus or as the Manager and Board of Trustees may direct from time
to time. In providing the Trust with investment management for the Fund, it is
recognized that the Sub-Adviser will give primary consideration to securing the
most favorable price and efficient execution considering all the circumstances.
Within the framework of this policy, the Sub-Adviser may consider the financial
responsibility, research and investment information and other research services
and products provided by brokers or dealers who may effect or be a party to any
such transaction or other transactions to which the Sub-Adviser's other clients
may be a party. It is understood that it is desirable for the Trust that the
Sub-Adviser have access to brokerage and research services and products and
security and economic analysis provided by brokers who may execute brokerage
transactions at a higher cost to the Trust than broker-dealers that do not
provide such brokerage and research services. Therefore, in compliance with
Section 28(e) of the Securities Exchange Act of 1934 ("1934 Act") the
Sub-Adviser is authorized to place orders for the purchase and sale of
securities for the Fund with brokers that provide brokerage and research
products and/or services that charge an amount of commission for effecting a
securities transaction in excess of the amount of commission another broker
would have charged for effecting that transaction, provided the Sub-Adviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research products and/or services
provided by such broker viewed in terms of either that particular transaction or
the overall responsibilities of the Sub-Adviser for this or other advisory
accounts, subject to review by the Trust's Board of Trustees from time to time
with respect to the extent and continuation of this practice. It is understood
that the information, services and products provided by such brokers may be
useful to the Sub-Adviser in connection with the Sub-Adviser's services to other
clients.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients of the
Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, shall be made by the Sub-Adviser in the manner the Sub-Adviser
considers to be the most equitable and consistent with its fiduciary obligations
to the Trust and to such other clients.
(iv) The Sub-Adviser shall maintain, prepare and preserve all
books and records with respect to the Fund's portfolio transactions required by
applicable laws and regulations, including without limitation subparagraphs (b)
(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 and the
provisions of Rule 31a-2 under the 1940 Act, and shall render to the Trust's
Board of Trustees such periodic and special reports as the Board may reasonably
request.
(v) The Sub-Adviser shall provide the Trust's Custodian on each
business day with information relating to all transactions by the Sub-Adviser
concerning the Fund's assets
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and shall provide the Manager with such information upon request of the Manager.
In performing the duties stated in Section 1, the Sub-Adviser will regularly
provide the Manager and the Trust with the benefits of such investment research,
advice and management as the Manager and the Board or officers of the Trust may,
from time to time, consider necessary for the proper management of the Fund. In
connection with its continuous program of evaluation of the assets in the Fund,
the Sub-Adviser will provide the Manager with all statistical information with
respect to investments of the Trust and such periodic and special reports and
information as the Manager or the Board or officers of the Trust may reasonably
request. Statistical information includes information prepared in a manner
consistent with the procedures and requirements established by the Board, if
any.
(b) The Sub-Adviser shall authorize and permit any of its officers or
employees who are officers of the Trust to serve in the capacities in which they
are elected. Services to be furnished by the Sub-Adviser under this Agreement
may be furnished through the medium of any of such officers or employees.
(c) The Sub-Adviser shall keep the Fund's books and records required
to be maintained, prepared and preferred by the Sub-Adviser pursuant to
paragraph 1(a) hereof and shall timely furnish to the Manager all information
relating to the Sub-Adviser's services hereunder needed by the Manager 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 which it maintains for the Fund
are the property of the Trust and the Sub-Adviser shall surrender promptly to
the Trust any of such records upon the Trust'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) hereof. The Sub-Adviser also agrees, upon the request of the Manager or
the Trust, to promptly surrender the books and records to either party or make
the books and records available for inspection by representatives of any
regulatory authorities.
2. The Manager shall continue to have responsibility for all services to
be provided to the Trust and the Fund pursuant to the Management Agreement and
shall oversee and review the Sub-Adviser's performance of its duties under this
Agreement.
3. The Manager shall pay the Sub-Adviser, as compensation for the
services provided and the expenses assumed pursuant to this Agreement, a
sub-advisory fee at the annual rate of 1.00% of the Fund's average daily net
asset value. The Manager shall pay the sub-advisory fee at the end of each
calendar month. The Fund's net asset value shall be determined and computed in
accordance with the method for determining net asset value contained in the
Prospectus.
The Sub-Adviser agrees to waive or defer the fee payable by the
Manager if expenses of the Fund (other than interests, taxes, brokerage
commissions and other portfolios transaction expenses, capital expenditures and
extraordinary expenses) exceed 1.40% of the Fund's average net assets on an
annual basis. Subject to the percentage limitation set forth above, the Manager
will reimburse the Sub-Adviser for fees deferred when the expenses of the Funds
fall below the percentage limitation.
4. The Sub-Adviser shall not be liable for any error of judgment or for
any loss suffered by the Trust or the Manager in connection with the matters to
which this Agreement relates,
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except a loss resulting from (i) a breach of fiduciary duty with respect to the
receipt of compensation for services or (ii) willful misfeasance, bad faith or
gross negligence on the Sub-Adviser's part in the performance of its duties or
its reckless disregard of its obligations and duties under this Agreement.
If any person who is a member, officer or employee of the Sub-Adviser
is or becomes a trustee, officer or employee of the Trust and acts as such in
any business of the Trust pursuant to this Agreement, then such member, officer
or employee of the Sub-Adviser shall be deemed to be acting in such capacity
solely for the Trust, and not as a member, officer or employee of the
Sub-Adviser or under the control or direction of the Sub-Adviser, although paid
by the Sub-Adviser.
5. This Agreement shall continue in effect for a period of more than two
years from the date the Fund commences operation only so long as such
continuance is specifically approved at least annually in conformity with the
requirements of the 1940 Act; provided, however, that this Agreement may be
terminated by the Trust at any time, without the payment of any penalty, by the
Board of Trustees of the Trust or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of the Trust, or by the Manager
or the Sub-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 party. This
Agreement shall terminate automatically in the event of its assignment (as
defined in the 0000 Xxx) or upon the termination of the Management Agreement.
Termination by the Board or the Manager shall be subject to shareholder approval
only to the extent legally required by applicable law.
6. This Agreement may be amended by mutual written consent, but only if
such amendment is in conformity with the requirements of the 1940 Act or other
applicable laws or the terms of the Declaration of Trust and Bylaws of the
Trust.
7. This Agreement shall be governed by the laws of the State of
California without regard to principles of conflicts of law. To the extent that
the applicable law of the State of California, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act or other federal laws
and regulations which may be applicable, the latter shall control.
IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
(ASIA) LLC
By: Xxxxxxxx-Xxxxxxxxx Capital Management
Holdings, LP, its Managing Member
By:
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E. Xxxxx Xxxxx, Jr., Secretary
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
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By:
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E. Xxxxx Xxxxx, Jr., General Counsel
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