EXHIBIT D-12
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the "Agreement") made as of this 18th day of
December, 2013 by and between Xxxxxx Associates Inc., a California corporation
with its principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000 (the "Adviser"), and SSgA Funds Management,
Inc. a Massachussetts corporation with its principal place of business at Xxx
Xxxxxxx Xxxxxx, Xxxxxx, XX 00000-0000 (the "Sub-Adviser").
W I T N E S S E T H
WHEREAS, pursuant to authority granted to the Adviser by the Board of
Trustees (the "Board") of THE KP FUNDS (the "Trust") on behalf of the series
set forth on Schedule A to this Agreement (the "Fund") and pursuant to the
provisions of the Investment Advisory Agreement dated as of December 18, 2013
between the Adviser and the Fund (the "Management Agreement"), the Adviser has
selected the Sub-Adviser to act as sub-investment adviser to the Fund and to
provide certain related services, as more fully set forth below, and to perform
such services under the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Adviser and the Sub-Adviser do hereby agree as follows:
1. THE SUB-ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Sub-Adviser
shall act as sub-investment adviser with respect to the Fund. In such
capacity, the Sub-Adviser shall, subject to the supervision of the Adviser
and the Board, furnish continuously an investment program for such Fund
assets as may be allocated by the Adviser to the Sub-Adviser (the
"Assets"), consistent with the investment objectives and policies of the
Fund and any investment guidelines established and modified from time to
time by the Adviser and communicated in writing to the Sub-Adviser. The
Sub-Adviser shall determine, from time to time, which investments shall be
purchased for the Fund and which such securities shall be held or sold by
the Fund, subject always to the provisions of the Trust's Agreement and
Declaration of Trust, By-Laws and its registration statement on Form N-1A
(the "Registration Statement") under the Investment Company Act of 1940, as
amended (the "1940 Act"), and under the Securities Act of 1933, as amended
(the "1933 Act"), covering Fund shares, as filed with the Securities and
Exchange Commission (the "Commission"), and to the investment objectives,
policies and restrictions of the Fund, as each of the same shall be from
time to time in effect, and to any investment guidelines established by the
Adviser and provided to the Sub-Adviser in writing as referred to above. To
carry out such obligations, the Sub-Adviser shall exercise full discretion
and act for the Fund in the same manner and with the same force and effect
as the Fund itself might or could do with respect to purchases, sales or
other transactions, as well as with respect to all other such things
necessary or incidental to the furtherance or conduct of such purchases,
sales or other transactions. Notwithstanding the
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foregoing, the Sub-Adviser shall, upon written instructions from the
Adviser, effect such portfolio transactions for the Fund as the Adviser may
from time to time direct; provided however, that the Sub-Adviser shall not
be responsible for any such portfolio transactions effected upon written
instructions from the Adviser. No reference in this Agreement to the
Sub-Adviser having full discretionary authority over the Fund's investments
shall in any way limit the right of the Adviser, in its sole discretion, to
establish or revise policies in connection with the management of the
Fund's assets or to otherwise exercise its right to control the overall
management of the Fund's assets. The Sub-Adviser shall have no
responsibility for filing proofs of claim on behalf of the Fund related to
class actions involving any Assets.
(b) COMPLIANCE. With respect to the services contemplated in this
Agreement, the Sub-Adviser agrees to comply with the requirements of the
1940 Act, the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), the 1933 Act, the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the Commodity Exchange Act and the respective rules and
regulations thereunder, as applicable, as well as with all other applicable
federal and state laws, rules, regulations and case law that relate to the
services and relationships described hereunder and to the conduct of its
business as a registered investment adviser. The Sub-Adviser also agrees to
comply with the objectives, policies and restrictions set forth in the
Registration Statement, as amended or supplemented, of the Fund, and with
any policies, guidelines, instructions and procedures approved by the Board
or the Adviser and provided to the Sub-Adviser in writing. The Adviser will
use its best efforts to provide the Sub-Adviser with at least 30 days'
advance written notice of any (i) change in a Fund's investment objective,
policies or restrictions; (ii) any change to the Trust's Agreement and
Declaration of Trust or By-Laws; and (iii) any material change to the
Trust's compliance policies and procedures. Notwithstanding the above
notice provision, with respect to any change that is required by law or
initiated by the Trustees, the Adviser will use its best efforts to provide
the Sub-Adviser with as much advance notice as is possible under the
circumstances or will notify the Sub-Adviser as soon as practicable after
such changes have been approved or effectuated. The Sub-Adviser shall be
responsible for compliance with any of the aforementioned changes only
following written notice of such change. In selecting the Fund's portfolio
securities and performing the Sub-Adviser's obligations hereunder, the
Sub-Adviser shall cause the Assets to comply with the diversification and
source of income requirements of Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), to allow for the Fund's qualification as
a regulated investment company. The Sub-Adviser shall maintain compliance
procedures that it reasonably believes are adequate to ensure the
compliance with the foregoing. The Adviser shall continue to have
responsibility for all services to be provided to the Fund pursuant to the
Advisory Agreement and while the Adviser is primarily responsible for the
Fund's overall compliance matters, the Sub-Adviser is responsible, solely
with respect to the Assets, for compliance with applicable law and the
Fund's investment objectives, policies and restrictions, as set forth
above. The Adviser acknowledges that the Sub-Adviser is not the compliance
agent for the Trust and that Sub-Adviser's responsibilities are limited to
those related to the management of the Assets, and that the Sub-Adviser is
not responsible for compliance, qualification or
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other matters related to those portions of the Trust which are not subject
to this Agreement. The Sub-Adviser shall maintain records adequately
demonstrating compliance with its obligations set forth above.
(c) PROXY VOTING. Pursuant to Board authority, the Adviser has the
authority to determine how proxies with respect to securities that are held
by the Fund shall be voted, and the Adviser may delegate the authority and
responsibility to vote proxies for the Fund's securities to the
Sub-Adviser. So long as proxy voting authority for the Fund has been
delegated to the Sub-Adviser, the Adviser shall provide such assistance to
the Sub-Adviser with respect to the voting of proxies for the Fund as the
Sub-Adviser may from time to time reasonably request, and the Adviser shall
promptly forward to the Sub-Adviser any information or documents necessary
for the Sub-Adviser to exercise its proxy voting responsibilities. The
Sub-Adviser shall carry out such responsibility in accordance with any
instructions that the Board or the Adviser shall provide from time to time,
and at all times in a manner consistent with Rule 206(4)-6 under the
Advisers Act and its fiduciary responsibilities to the Trust. The
Sub-Adviser shall provide the Adviser with a copy of its written proxy
voting policies and procedures and as such may be amended from time to
time. The Sub-Adviser shall provide periodic reports and keep such records
relating to proxy voting as the Adviser and the Board may reasonably
request or as may be necessary for the Fund to comply with the 1940 Act and
other applicable law. Any such delegation of proxy voting responsibility to
the Sub-Adviser may be revoked or modified by the Board or the Adviser at
any time.
Unless and until otherwise directed by the Adviser or the Board the
Sub-Adviser shall be responsible for voting the Fund's proxies and
exercising all other applicable rights of the Fund as a security holder in
connection with corporate actions or other transactions relating to the
Fund's portfolio holdings. The Sub-Adviser is authorized to instruct the
Fund's custodian and/or broker(s) to forward promptly to the Sub-Adviser or
designated service provider copies of all proxies and shareholder
communications relating to securities held in the portfolio of a Fund
(other than materials relating to legal proceedings against the Fund). The
Sub-Adviser may also instruct the Fund's custodian and/or broker(s) to
provide reports of holdings in the portfolio of the Fund. The Sub-Adviser
has the authority to engage a service provider to assist with
administrative functions related to voting Fund proxies. The Trust shall
direct the Fund's custodian and/or broker(s) to provide any assistance
requested by the Sub-Adviser in facilitating the use of a service provider.
In no event shall the Sub-Adviser have any responsibility to vote proxies
that are not received on a timely basis. The Trust acknowledges that the
Sub-Adviser, consistent with the Sub-Adviser's written proxy voting
policies and procedures, may refrain from voting a proxy if, in the
Sub-Adviser's discretion, refraining from voting would be in the best
interests of the Fund and its shareholders.
(d) RECORDKEEPING. The Sub-Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the
Fund, except as otherwise provided herein or as may be necessary for the
Sub-Adviser to supply to the
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Adviser, the Trust or its Board the information required to be supplied
under this Agreement.
The Sub-Adviser shall maintain separate books and detailed records of
all matters pertaining to the Fund's assets advised by the Sub-Adviser
required by Rule 31a-1 under the 1940 Act (other than those records being
maintained by the Adviser, or any administrator custodian or transfer agent
appointed by the Fund) relating to its responsibilities provided hereunder
with respect to the Fund, and shall preserve such records for the periods
and in a manner prescribed therefore by Rule 31a-2 under the 1940 Act (the
"Fund Books and Records"). The Fund Books and Records shall be available to
the Adviser and the Board at any time upon request shall be delivered to
the Trust in a form requested by the Adviser, which may include electronic
format, upon the termination of this Agreement and shall be available upon
reasonable request during any day the Trust is open for business. Nothing
herein shall prevent the Sub-Adviser from maintaining its own records as
required by law, which may be a duplication of the Fund's records.
(e) HOLDINGS INFORMATION AND PRICING. The Sub-Adviser shall provide
regular reports regarding the Fund's holdings, and may, on its own
initiative, furnish the Adviser, the Trust and its Board from time to time
with whatever information the Sub-Adviser believes is appropriate for this
purpose. The Sub-Adviser agrees to notify the Adviser and the Board
promptly if the Sub-Adviser reasonably believes that the value of any
security held by a Fund may not reflect fair value. The Sub-Adviser agrees
to provide upon request any pricing information of which the Sub-Adviser is
aware to the Adviser, Trust, its Board and/or any Fund pricing agent to
assist in the determination of the fair value of any Fund holdings for
which market quotations are not readily available or as otherwise required
in accordance with the 1940 Act or the Fund valuation procedures for the
purpose of calculating the Trust's net asset value in accordance with
procedures and methods established by the Board. The Adviser acknowledges
that the Sub-Adviser is not responsible for determining the value of any
security.
(f) COOPERATION WITH AGENTS OF THE ADVISER AND THE TRUST. The
Sub-Adviser agrees to cooperate with and provide reasonable assistance to
the Adviser, the Trust and any Trust custodian or foreign sub-custodians,
any Trust pricing agents and all other agents and representatives of the
Adviser and the Trust with respect to such information regarding the Fund
as such entities may reasonably request from time to time in the
performance of their obligations, provide prompt responses to reasonable
requests made by such persons and establish appropriate interfaces with
each so as to promote the efficient exchange of information and compliance
with applicable laws and regulations. The Sub-Adviser shall make its
officers and employees available to the Adviser from time to time to review
any current or proposed investment guidelines for the Fund and to consult
with the Adviser with respect to the Fund's investment matters.
(g) CONSULTATION WITH OTHER SUB-ADVISERS. In performance of its duties
and obligations under this Agreement, the Sub-Adviser shall not consult
with any other sub-adviser to the Fund or a sub-adviser to a portfolio that
is under common control with the
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Fund concerning transactions for the Fund, except as permitted by the
policies and procedures of the Fund. The Sub-Adviser shall not provide
investment advice to any assets of the Fund other than the assets managed
by the Sub-Adviser.
2. CODE OF ETHICS. The Sub-Adviser has adopted a written code of
ethics that it reasonably believes complies with the requirements of Rule 17j-1
under the 1940 Act, which it has provided to the Adviser and the Trust. The
Sub-Adviser shall take reasonable efforts to ensure that its Access Persons (as
defined in the Sub-Adviser's Code of Ethics) comply in all material respects
with the Sub-Adviser's Code of Ethics, as in effect from time to time. Upon
request, the Sub-Adviser shall provide the Trust with (i) a copy of the
Sub-Adviser's current Code of Ethics, as in effect from time to time, and (ii)
a certification that it has adopted procedures reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by the Sub-Adviser's
Code of Ethics. Annually, the Sub-Adviser shall furnish a written report, which
complies with the requirements of Rule 17j-1, concerning the Sub-Adviser's Code
of Ethics to the Adviser and the Trust's Board. The Sub-Adviser shall respond
to requests for information from the Adviser and the Trust as to violations of
the Code by Access Persons and the sanctions imposed by the Sub-Adviser. The
Sub-Adviser shall notify the Adviser as soon as practicable of any material
violations of the Code, whether or not such violation relates to a security
held by the Fund.
3. INFORMATION AND REPORTING. The Sub-Adviser shall provide the
Adviser, the Trust, and their respective officers with such periodic reports
concerning the obligations the Sub-Adviser has assumed under this Agreement as
the Adviser and the Trust may from time to time reasonably request.
(a) NOTIFICATION OF BREACH OR SIGNIFICANT CHANGES / COMPLIANCE
REPORTS. The Sub-Adviser shall notify the Trust's Chief Compliance Officer
and Adviser immediately upon detection of (i) any material failure to
manage any Fund in accordance with its investment objectives and policies
or any applicable law; or (ii) any material breach of any of the Fund's or
the Adviser's policies, guidelines or procedures. The Sub-Adviser shall
notify the Adviser as soon as possible of (i) any significant changes in
its investment strategy, asset allocation or other matters affecting its
management of the Fund's assets; or (ii) any changes to the senior
investment management personnel primarily responsible for the investment or
servicing of the Fund's assets, which include portfolio managers and
relationship managers. In addition, the Sub-Adviser shall provide a
quarterly report regarding the Fund's compliance with its investment
objectives and policies, applicable law, including, but not limited to the
1940 Act and Subchapter M of the Code, and the Fund's and the Adviser's
policies, guidelines or procedures as applicable to the Sub-Adviser's
obligations under this Agreement. The Sub-Adviser acknowledges and agrees
that the Adviser may, in its discretion, provide such quarterly compliance
certifications to the Board. The Sub-Adviser agrees to correct any such
failure promptly and to take any action that the Board and/or the Adviser
may reasonably request in connection with any such breach, consistent with
applicable law. Upon request, the Sub-Adviser shall also provide the
officers of the Trust with supporting certifications in connection with
such certifications of Fund financial statements and disclosure
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controls pursuant to the Xxxxxxxx-Xxxxx Act. The Sub-Adviser will promptly
notify the Trust in the event (i) the Sub-Adviser is served or otherwise
receives notice of any action, suit, proceeding, inquiry or investigation,
at law or in equity, before or by any court, public board, or body,
involving the affairs of the Trust (excluding class action suits in which a
Fund is a member of the plaintiff class by reason of the Fund's ownership
of shares in the defendant) or the compliance by the Sub-Adviser with
federal or state securities laws or (ii) an actual change in control of the
Sub-Adviser resulting in an "assignment" (as defined in the 1940 Act) has
occurred or is otherwise proposed to occur.
(b) INSPECTION. Upon reasonable request, the Sub-Adviser agrees to
make its records and premises (including the availability of the
Sub-Adviser's employees for interviews) to the extent that they relate to
the conduct of services provided to the Fund or the Sub-Adviser's conduct
of its business as an investment adviser reasonably available for
compliance audits by the Adviser or the Trust's officers, employees,
accountants or counsel; in this regard, the Trust and the Adviser
acknowledge that the Sub-Adviser shall have no obligation to make available
proprietary information unrelated to the services provided to the Fund or
any information related to other clients of the Sub-Adviser, except to the
extent necessary for the Adviser to confirm the absence of any conflict of
interest and compliance with any laws, rules or regulations in the
management of the Fund.
(c) BOARD AND FILINGS INFORMATION. The Sub-Adviser will also provide
the Adviser and Trust with any information reasonably requested regarding
its management of the Fund required for any meeting of the Board, or for
any shareholder report, Form N-CSR, Form N-Q, Form N-PX, Form N-SAR,
amended registration statement, proxy statement, or prospectus supplement
to be filed by the Trust with the Commission. The Sub-Adviser will make its
officers and employees available to meet with the Board from time to time
on due notice to review its investment management services to the Fund in
light of current and prospective economic and market conditions and shall
furnish to the Board such information as may reasonably be necessary in
order for the Board to evaluate this Agreement or any proposed amendments
thereto.
(d) TRANSACTION INFORMATION. The Sub-Adviser shall furnish to the
Adviser and the Trust such information concerning portfolio transactions as
may be necessary to enable the Adviser, Trust or their designated agents to
perform such compliance testing on the Fund and the Sub-Adviser's services
as the Adviser and the Trust may, in their sole discretion, determine to be
appropriate. The provision of such information by the Sub-Adviser to the
Adviser, Trust or their designated agents in no way relieves the
Sub-Adviser of its own responsibilities under this Agreement.
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4. BROKERAGE.
(a) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of a Fund, neither the Sub-Adviser nor any of
its directors, officers or employees will act as a principal or agent or
receive any commission except as permitted by the 1940 Act and the rules
thereunder.
(b) PLACEMENT OF ORDERS. The Sub-Adviser shall arrange for the placing
of all orders for the purchase and sale of securities for a Fund's account
with brokers or dealers selected by the Sub-Adviser. In the selection of
such brokers or dealers and the placing of such orders, subject to the
other provisions of this paragraph, the Sub-Adviser is directed at all
times to seek for a Fund best execution under the circumstances, generally
taking into account price, size of order and type of transaction,
difficulty of execution, scope and quality of brokerage services provided
and the financial responsibility and operations of the broker. It is
expected that the Sub-Adviser will seek competitive commission rates
generally although it is understood that the Sub-Adviser will not
necessarily achieve the lowest commission rate on each transaction . It is
also understood that it may be desirable for the Fund that the Sub-Adviser
have access to brokerage and research services provided by brokers who may
execute brokerage transactions at a higher cost to the Fund than may result
when allocating brokerage to other brokers, consistent with section 28(e)
of the 1934 Act and any Commission staff interpretations thereof.
Therefore, the Sub-Adviser is authorized to place orders for the purchase
and sale of securities for the Fund with such brokers if the Sub-Adviser
determines, in good faith, that such amount of commissions is reasonable in
relation to the value of such brokerage or research services provided in
terms of a particular Fund transaction or the Sub-Adviser's overall
responsibilities to the Fund and its other clients, and that the total
commissions paid by the Fund will be reasonable in relation to the benefits
to the Fund over the long-term. This practice is subject to review by the
Adviser and the Board from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Sub-Adviser in connection with its or
its affiliates' services to other clients.
(c) AGGREGATED TRANSACTIONS. 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, the Sub-Adviser may, to the
extent permitted by applicable law and regulations, aggregate the order for
securities to be sold or purchased. In such event, the Sub-Adviser will
allocate securities or other investments so purchased or sold, as well as
the expenses incurred in the transaction, in the manner the Sub-Adviser
reasonably considers to be equitable and consistent with its fiduciary
obligations to a Fund and to such other clients under the circumstances.
(d) AFFILIATED BROKERS. The Sub-Adviser or any of its affiliates may
act as broker in connection with the purchase or sale of securities or
other investments for a Fund, subject to: (a) the requirement that the
Sub-Adviser seek to obtain best execution and price within the policy
guidelines determined by the Board and set forth in a Fund's current
Registration Statement; (b) the provisions of the 1940 Act; (c) the
provisions of the Advisers Act; (d) the provisions of the 1934 Act; and (e)
other provisions of
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applicable law. These brokerage services are not within the scope of the
duties of the Sub-Adviser under this Agreement. Subject to the requirements
of applicable law and any procedures adopted by the Board, the Sub-Adviser
or its affiliates may receive brokerage commissions, fees or other
remuneration from a Fund for these services in addition to the
Sub-Adviser's fees for services under this Agreement.
5. CUSTODY. Nothing in this Agreement shall permit the Sub-Adviser
to take or receive physical possession of cash, securities or other investments
of a Fund.
6. ALLOCATION OF CHARGES AND EXPENSES. The Sub-Adviser will bear its
own costs of providing services hereunder. Other than as herein specifically
indicated, the Sub-Adviser shall not be responsible for a Fund's or the
Adviser's expenses, including brokerage and other expenses incurred in placing
orders for the purchase and sale of securities and other investment
instruments.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SUB-ADVISER.
(a) PROPERLY REGISTERED. The Sub-Adviser is registered as an
investment adviser under the Advisers Act, and will remain so registered
for the duration of this Agreement. The Sub-Adviser is not prohibited by
the Advisers Act or the 1940 Act from performing the services contemplated
by this Agreement, and to the best knowledge of the Sub-Adviser, there is
no proceeding or investigation that is reasonably likely to result in the
Sub-Adviser being prohibited from performing the services contemplated by
this Agreement. The Sub-Adviser agrees to promptly notify the Trust of the
occurrence of any event that would disqualify the Sub-Adviser from serving
as an investment adviser to an investment company. The Sub-Adviser is in
compliance in all material respects with all applicable federal and state
law in connection with its investment management operations.
(b) ADV DISCLOSURE. The Sub-Adviser has provided the Trust with a copy
of Part I of its Form ADV as most recently filed with the Commission and
its Part II as most recently updated and will, promptly after filing any
amendment to its Form ADV with the Commission or updating its Part II,
furnish a copy of such amendments or updates to the Trust. The information
contained in the Sub-Adviser's Form ADV is true and correct as of the date
of the Form ADV.
(c) FUND DISCLOSURE DOCUMENTS. The Sub-Adviser has reviewed and will
in the future review, the portions of the following documents that pertain
to the Sub-Adviser and the services provided by the Sub-Adviser hereunder:
the Registration Statement, summary prospectus, prospectus, statement of
additional information, periodic reports to shareholders, reports and
schedules filed with the Commission (including any amendment, supplement or
sticker to any of the foregoing) and advertising and sales material
relating to the Fund which have been provided to the Sub-Adviser
(collectively the "Disclosure Documents") and represents and warrants
solely with respect to disclosure in such Disclosure Documents about the
Sub-Adviser, the manner in which the Sub-Adviser manages the Assets and
information relating directly or indirectly to the
8
Sub-Adviser (the "Sub-Adviser Disclosure"), that such Disclosure Documents
do not or will not contain any untrue statement of any material fact and do
not and will not omit any statement of material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) USE OF THE NAMES "KP" AND "XXXXXX." The Sub-Adviser has the right
to use the names "KP" and "Xxxxxx" in connection with its services to the
Trust and the Trust and the Adviser have the right to use the names "SSgA
Funds Management Inc." or "SSgA FM" solely in connection with the
management and operation of a Fund. The Sub-Adviser is not aware of any
threatened or existing actions, claims, litigation or proceedings that
would adversely affect or prejudice the rights of the Adviser or the Trust
to use the names "SSgA Funds Management Inc." or "SSgA FM."
(e) INSURANCE. The Sub-Adviser maintains errors and omissions
insurance coverage in an appropriate amount and shall provide prior written
notice to the Trust (i) of any material changes in its insurance policies
or insurance coverage; or (ii) if any material claims will be made on its
insurance policies. Furthermore, the Sub-Adviser shall, upon reasonable
request, provide the Trust with any information it may reasonably require
concerning the amount of or scope of such insurance.
(f) NO DETRIMENTAL AGREEMENT. The Sub-Adviser represents and warrants
that it has no arrangement or understanding with any party, other than the
Trust, that would influence the decision of the Sub-Adviser with respect to
its selection of securities for a Fund, and that all selections shall be
done in accordance with what is in the best interest of the Fund.
(g) CONFLICTS. The Sub-Adviser shall act honestly, in good faith and
in the best interests of the Trust including requiring any of its personnel
with knowledge of Fund activities to place the interest of the Fund first,
ahead of their own interests, in all personal trading scenarios that may
involve a conflict of interest with the Fund, consistent with its fiduciary
duties under applicable law.
(h) REPRESENTATIONS. The representations and warranties in this
Section 7 shall be deemed to be made on the date this Agreement is executed
and at the time of delivery of the quarterly compliance report required by
Section 3(a), whether or not specifically referenced in such report.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ADVISER. The Adviser
represents and warrants to the Sub-Adviser as follows:
(a) The Adviser is registered as an investment adviser under the
Advisers Act;
(b) The Adviser is duly organized and validly existing under its
jurisdiction of organization with the power to own and possess its assets
and carry on its business as it is now being conducted;
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(c) The execution, delivery and performance of the Adviser of this
Agreement are within the Adviser's powers and have been duly authorized by
all necessary action, and no action by or in respect of, or filing with,
any governmental body, agency or official is required on the part of the
Adviser for the execution, delivery and performance by the Adviser of this
Agreement, and the Adviser believes that the execution, delivery and
performance by the Adviser of this Agreement does not contravene or
constitute a default under: (i) any provision of applicable law, rule or
regulation; (ii) the Adviser's governing instruments; or (iii) any
agreement, judgment, injunction, order, decree or other instrument binding
upon the Adviser;
(d) The Adviser acknowledges that it has received a copy of the
Sub-Adviser's Form ADV prior to the execution of this Agreement; and
(e) The Adviser and the Trust have duly entered into the Management
Agreement pursuant to which the Trust authorized the Adviser enter into
this Agreement.
9. SUB-ADVISER'S COMPENSATION. The Adviser shall cause the Fund to
pay the Sub-Adviser, as compensation for the Sub-Adviser's services hereunder,
a fee, determined as described in Schedule A that is attached hereto and made a
part hereof. Such fee shall be computed daily and paid not less than monthly
in arrears by the Fund. The fee payable hereunder shall be prorated for any
partial month.
The Sub-Adviser will be compensated based on the portion of Fund
assets allocated to the Sub-Adviser by the Adviser. The method for determining
net assets of the Fund for purposes hereof shall be the same as the method for
determining net assets for purposes of establishing the offering and redemption
prices of Fund shares as described in the Fund's prospectus. In the event of
termination of this Agreement, the fee provided in this Section shall be
computed on the basis of the period ending on the last business day on which
this Agreement is in effect subject to a pro rata adjustment based on the
number of days elapsed in the current month as a percentage of the total number
of days in such month.
10. INDEPENDENT CONTRACTOR AND NON-EXCLUSIVITY. In the performance of
its duties hereunder, the Sub-Adviser is and shall be an independent contractor
and, unless otherwise expressly provided herein or otherwise authorized in
writing, shall have no authority to act for or represent the Fund, the Trust or
the Adviser in any way or otherwise be deemed to be an agent of the Fund, the
Trust or the Adviser. If any occasion should arise in which the Sub-Adviser
gives any advice to its clients concerning the shares of a Fund, the
Sub-Adviser will act solely as investment counsel for such clients and not in
any way on behalf of the Fund. The 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 Trust.
11. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically
terminate, without the payment of any penalty, (i) in the event of its
assignment (as defined in section 2(a)(4) of the 0000 Xxx) or (ii) in the event
of the termination of the Management Agreement;
10
provided that such termination shall not relieve the Adviser or the Sub-Adviser
of any liability incurred hereunder.
This Agreement may not be added to or changed orally and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act, when applicable.
12. DURATION AND TERMINATION.
This Agreement shall become effective as of the date executed and shall
remain in full force and effect continually thereafter, subject to renewal as
provided in Section 12(c) and unless terminated automatically as set forth in
Section 11 hereof or until terminated as follows:
(a) The Trust may cause this Agreement to terminate either (i) by vote
of its Board or (ii) with respect to the Fund, upon the affirmative vote of
a majority of the outstanding voting securities of the Fund; or
(b) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the
Sub-Adviser; or
(c) The Sub-Adviser may at any time terminate this Agreement by not
more than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Adviser; or
(d) This Agreement shall automatically terminate two years from the
date of its execution unless its renewal is specifically approved at least
annually thereafter by (i) a majority vote of the Trustees, including a
majority vote of such Trustees who are not interested persons of the Trust,
the Adviser or the Sub-Adviser, at a meeting called for the purpose of
voting on such approval; or (ii) the vote of a majority of the outstanding
voting securities of the Fund; provided, however, that if the continuance
of this Agreement is submitted to the shareholders of the Fund for their
approval and such shareholders fail to approve such continuance of this
Agreement as provided herein, the Sub-Adviser may continue to serve
hereunder as to the Fund in a manner consistent with the 1940 Act and the
rules and regulations thereunder; and
(e) Termination of this Agreement pursuant to this Section shall be
without payment of any penalty.
In the event of termination of this Agreement for any reason, the
Sub-Adviser shall, immediately upon notice of termination or on such later
date as may be specified in such notice, cease all activity on behalf of
the Fund and with respect to any of its assets, except as expressly
directed by the Adviser or as otherwise required by any fiduciary duties of
the Sub-Adviser under applicable law. In addition, the Sub-Adviser shall
deliver the Fund's Books and Records to the Adviser by such means and in
accordance with such
11
schedule as the Adviser shall direct and shall otherwise cooperate, as
reasonably directed by the Adviser, in the transition of portfolio asset
management to any successor of the Sub-Adviser, including the Adviser.
13. CERTAIN DEFINITIONS. FOR THE PURPOSES OF THIS AGREEMENT:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" shall have the meaning as set forth in the 1940
Act, subject, however, to such exemptions as may be granted by the
Commission under the 1940 Act or any interpretations of the Commission
staff.
(b) "Interested persons" and "Assignment" shall have their respective
meanings as set forth in the 1940 Act, subject, however, to such exemptions
as may be granted by the Commission under the 1940 Act or any
interpretations of the Commission staff.
14. LIABILITY OF THE SUB-ADVISER AND THE ADVISER.
(a) The Sub-Adviser shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) only of statements in the
Fund's Disclosure Documents with respect to the Sub-Adviser Disclosure,
provided that no changes regarding such matters are made to any applicable
Disclosure Documents without the written consent or other acknowledgment of
the Sub-Adviser from and after the time that such Disclosure Documents are
reviewed by the Sub-Adviser.
(b) Solely as respects the Assets, the Sub-Adviser shall be liable to
the Fund for any loss (including transaction costs) incurred by the Fund
directly as a result of any investment made by the Sub-Adviser in
contravention of: (i) any investment policy, guideline or restriction set
forth in the then current Registration Statement or as approved by the
Board from time to time and provided in writing to the Sub-Adviser; or (ii)
applicable law, including but not limited to the 1940 Act and the Code
(including but not limited to the Fund's failure to satisfy the
diversification or source of income requirements of Subchapter M of the
Code as a result of the composition of the Assets) (the investments
described in this subsection (b) collectively are referred to as "Improper
Investments"). For the removal of doubt, the Sub-Adviser's responsibilities
are limited to those in respect of the Assets. Notwithstanding Section
14(b)(i) above, should the Sub-Adviser at any point determine that any
investment policy, guideline or restriction provided to the Sub-Adviser is
in contravention of applicable law or regulation, Sub-Adviser reserves the
right to refuse to act upon such investment policy, guideline or
restriction. Such refusal to act shall not be considered a breach of this
Agreement and Sub-Adviser shall have no liability in connection with such
determination or refusal to act. In such event, Sub-Adviser will promptly
notify the Adviser and the Fund.
(c) The Sub-Adviser shall indemnify and hold harmless the Trust, each
affiliated person of the Trust within the meaning of Section 2(a)(3) of the
1940 Act, and each person who controls the Trust within the meaning of
Section 15 of the 1933 Act
12
(any such person, an "Indemnified Party") against any and all losses,
claims, damages, expenses or liabilities (including the reasonable cost of
investigating and defending any alleged loss, claim, damage, expense or
liability and reasonable counsel fees incurred in connection therewith) to
which any such person may become subject under the 1933 Act, the 1934 Act,
the 1940 Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages, expenses
or liabilities (or actions in respect thereof) arise directly out of: (i) a
breach by the Sub-Adviser of this Agreement or of the representations and
warranties made by the Sub-Adviser herein; (ii) any Improper Investment;
(iii) the Sub-Adviser's willful misfeasance, bad faith, or gross negligence
in the performance or non-performance of its obligations and duties under
this Agreement; provided however, that the Sub-Adviser's obligations
hereunder shall be reduced or mitigated to the extent that the claims
against, or the losses, damages or liabilities experienced by the Trust,
are directly caused by or are otherwise directly related to the Adviser's
own willful misfeasance, bad faith or gross negligence or to the reckless
disregard of its duties under this Agreement; or (iv) any untrue statement
or alleged untrue statement of a material fact contained in any Disclosure
Document or the omission or alleged omission from a Disclosure Document of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, for purposes of this Section 14(c)(iv)
solely with respect to the Sub-Adviser Disclosure (it being understood,
however, that this indemnification and agreement to hold harmless shall not
apply to the extent that any such untrue statement, alleged untrue
statement, omission or alleged omission is the result of any change made to
any applicable Disclosure Document without the written consent or other
acknowledgment of the Sub-Adviser from and after the time that such
Disclosure Document has been reviewed by the Sub-Adviser, as contemplated
in Section 7(c) hereof); provided, however, that nothing herein shall be
deemed to protect any Indemnified Party who is a Trustee or officer of the
Trust against any liability to the Trust or to its shareholders to which
such Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such person's office with the Trust.
(d) The Adviser shall indemnify and hold harmless the Sub-Adviser,
each affiliated person of the Sub-Adviser within the meaning of Section
2(a)(3) of the 1940 Act, and each person who controls the Sub-Adviser
within the meaning of Section 15 of the 1933 Act (collectively, the
"Sub-Adviser Indemnitees") against any and all losses, claims, damages,
expenses or liabilities (including the reasonable cost of investigating and
defending any alleged loss, claim, damage, expense or liability and
reasonable counsel fees incurred in connection therewith) to which any such
person may become subject under the 1933 Act, the 1934 Act, the 1940 Act or
other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages, expenses or liabilities
(or actions in respect thereof) arise out of or are based upon: (i) a
breach of this Agreement or of the representations and warranties made by
the Adviser herein; or (ii) the Adviser's willful misfeasance, bad faith,
or gross negligence in the performance or non-performance of its
obligations and duties under this Agreement; provided however, that the
Adviser's obligations hereunder shall be reduced to the extent
13
that the claims against, or the losses, damages or liabilities experienced
by the Sub-Adviser, are caused by or are otherwise directly related to the
Sub-Adviser's own willful misfeasance, bad faith or gross negligence, or to
the reckless disregard of its duties under this Agreement.
15. ENFORCEABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
16. LIMITATION OF LIABILITY. The parties to this Agreement
acknowledge and agree that all litigation arising hereunder, whether direct or
indirect, and of any and every nature whatsoever shall be satisfied solely out
of the assets of the affected Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Fund shall be personally liable for any of
the foregoing liabilities. The Trust's Certificate of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Certificate of Trust and the Trust's
Agreement and Declaration of Trust describe in detail the respective
responsibilities and limitations on liability of the Trustees, officers, and
holders of shares of beneficial interest.
17. CHANGE IN THE ADVISER'S OWNERSHIP. The Sub-Adviser agrees that it
shall notify the Trust of any anticipated or otherwise reasonably foreseeable
change in the ownership of the Sub-Adviser within a reasonable time prior to
such change being effected.
18. JURISDICTION. This Agreement shall be governed by and construed
in accordance with the substantive laws of the Commonwealth of Massachusetts
and the Sub-Adviser consents to the jurisdiction of courts, both state or
federal, in Massachusetts, with respect to any dispute under this Agreement.
19. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement and
shall not affect its construction.
20. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
21. NOTICES. All notices hereunder shall be given in writing (and
shall be deemed to have been duly given) by delivery in person, by facsimile or
by electronic means (with corresponding personal, facsimile or electronic
receipt of such delivery), or by registered or certified mail (with return
receipt requested), or by reputable overnight delivery service (with evidence
of receipt to the parties) at the address of each set forth below (or at such
other address, number or electronic address for at party as shall be specified
by like notice).
14
If to the Sub-Adviser, to:
SSgA Funds Management, Inc.
State Street Financial Center
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention:
Facsimile:
Email:
Telephone:
If to the Adviser, to:
Xxxxxx Associates Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx, Vice President, Trust Advisory Group
Facsimile: 303.832.8230
Email: XXXX@XXXXXX.XXX
Telephone: 000.000.0000
15
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their duly authorized officers as of the date first above
written.
XXXXXX ASSOCIATES INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------
Name: Xxxxxxx X. Xxxxx
Title: President & Director of Research
SSGA FUNDS MANAGEMENT, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------
Name: Xxxxx Xxxxxxx
Title: President
16
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
DATED DECEMBER 18, 2013 BETWEEN
XXXXXX ASSOCIATES INC.
AND
SSGA FUNDS MANAGEMENT, INC.
Each Fund will pay to the Sub-Adviser as compensation for the Sub-Adviser's
services rendered, a fee, computed daily at an annual rate based on the average
daily net assets of the portion of the respective Fund (or "Assets" as defined
in this Agreement) as may be allocated by the Adviser to the Sub-Adviser from
time to time under the following fee schedule:
FUND RATE
KP Large Cap Equity Fund -- Passive Large Cap [Redacted]%
Equity (S&P 500 Index) Sub-Strategy
KP Small Cap Equity Fund -- Passive Small Cap [Redacted]%
Equity (Xxxxxxx 2000 Index) Sub-Strategy
KP International Fund -- Passive International [Redacted]%
Equity (MSCI EAFE Index) Sub-Strategy
KP Fixed Income Fund -- Passive Intermediate [Redacted]%
Fixed Income (Barclays Capital Intermediate
Gov't/Credit Index) Sub-Strategy
17
