EXHIBIT D-7
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the "Agreement") made as of this ____th day
of ________________, 2013 by and between Xxxxxx Associates Inc., a California
corporation with its principal place of business at 000 Xxxxxxxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxxxxxxx, XX 00000-0000 (the "Adviser"), and _Eaton Xxxxx Management
a Massachusetts Business Trust with its principal place of business at _Two
International Place, Boston, MA 02110 (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 _________ __, 2013
between the Adviser and the Fund (the "Management Agreement"), the Adviser has
selected the Sub-Adviser to act as sub-investment adviser of 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, regularly provide the Fund with investment research, advice
and supervision and shall 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 reasonably in advance in writing to
the Sub-Adviser. The Sub-Adviser shall determine, from time to time, what
investments shall be purchased for the Fund and what 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"), which have
been provided to the Sub-Adviser by the Adviser 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 as referred to above and provided to the
Sub-Adviser in writing. To carry out such obligations, the Sub-Adviser
shall exercise full
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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 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 provided the Sub-Adviser is given advance written notice of
such policies with reasonable time to implement. The Adviser shall provide
(or cause the Fund's custodian to provide) timely information to the
Sub-Adviser regarding cash requirements and cash available for investment
in the Fund managed by the Sub-Adviser, and all other information as may be
reasonably necessary for the Sub-Adviser to perform its duties hereunder
(including, as may be requested under certain circumstances from time to
time, any excerpts of minutes of meetings of the Board that affect the
duties of the Sub-Adviser).
(b) COMPLIANCE. 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. With respect to
the Fund Assets as defined in Section 1(a) herein, 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 selecting the
Fund's portfolio securities and performing the Sub-Adviser's obligations
hereunder, the Sub-Adviser shall cause the Fund 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"), for 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. No supervisory activity undertaken by
the Adviser shall limit the Sub-Adviser's full responsibility for any of
the foregoing. The Adviser acknowledges that the 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 other matters related to those portions of the Fund which
are not subject to this Agreement.
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(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 upon notice.
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, provided however, that the Sub-Adviser
is not responsible for making any securities class action filings on behalf
of the Fund. 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 Adviser, the Trust or its Board the
information required to be supplied under this Agreement.
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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 reasonable request, and shall be
delivered to the Trust in a form mutually agreed to by the Adviser and the
Sub-Adviser, which may include an electronic format to the extent such
records are maintained in electronic format, upon the termination of this
Agreement and shall be available without unreasonable delay during any day
the Trust is open for business.
(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 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.
(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 provide reasonable assistance in
establishing 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 and upon reasonable request 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 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
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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 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 of the Sub-Adviser responsible for the investment
management services of the Sub-Adviser and the sanctions imposed by the
Sub-Adviser on such Access Persons. The Sub-Adviser shall promptly notify the
Adviser and the Trust of any material violations of the Code by Access Persons
responsible for the investment management services of the Sub-Adviser, whether
or not such violation relates to a security held by any 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 as soon as reasonably practicable 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
that directly relate to management of Fund Assets or to the sub-advisory
services provided by the Sub-Adviser to the Fund hereunder. 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 Fund Assets; or (ii) any changes to the senior investment
management personnel primarily responsible for the investment or servicing
of Fund Assets which include portfolio managers and relationship managers.
In addition, the Sub-Adviser shall provide a quarterly report regarding the
compliance of Fund Assets with the Fund's investment objectives and
policies, applicable law, including, the 1940 Act and diversification and
source of income requirements of 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
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reasonably request in connection with any such breach. Upon request, the
Sub-Adviser shall also provide the officers of the Trust with mutually
agreeable supporting certifications in connection with such certifications
of Fund financial statements and disclosure 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 the federal or state
securities laws applicable to the investment management services of the
Sub-Adviser 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, during regular business hours
at the Sub-Advisers offices, 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, 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.
(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.
The Sub-Adviser may place orders pursuant to its investment determination
for the Fund directly with the issuers of the securities, or 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
the best execution available under the circumstances, taking into account
factors such as 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 pay the lowest
commission rate available 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 futures contracts 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.
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(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 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.
(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. To the best of its
knowledge, 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 materially 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 accurate and
complete in all material respects and does not omit to state any material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
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(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
provided such documents are provided by the Adviser and the Adviser allows
seven business days for the Sub-Adviser to review: 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
(collectively the "Disclosure Documents"). If requested by the Adviser with
respect to Disclosure Documents requiring urgent or expedited review, the
Sub-Adviser agrees to work with the Adviser to provide such review within
less than seven business days. The Sub-Adviser represents and warrants that
such it will use best efforts to ensure that portions of the Disclosure
Documents relating to the Sub-Adviser contain or will contain no 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 name "Xxxxx
Xxxxx Management" 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 Sub-Adviser or the Trust to use the name "Xxxxx Xxxxx
Management."
(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.
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(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. 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 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.
9. INDEPENDENT CONTRACTOR. 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.
10. 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; 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.
11. 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 11(d)
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and unless terminated automatically as set forth in Section 10 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 schedule as the Adviser shall reasonably 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. The Sub-Adviser may retain copies of
such records.
12. 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
11
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.
13. LIABILITY OF THE SUB-ADVISER.
(a) The Sub-Adviser shall have responsibility for the accuracy and
completeness (and liability for lack thereof) of statements in the Fund's
Disclosure Documents applicable to the Sub-Adviser that have been reviewed,
prepared or provided by the Sub-Adviser and that are applicable or relate
to the Sub-Adviser and the services provided by the Sub-Adviser hereunder
("Sub-Adviser Reviewed Fund Disclosure Documents"). The Sub-Adviser shall
meet its responsibility for accuracy and completeness by promptly
communicating to the Adviser any and all materially incorrect, incomplete
or misleading information in any Fund Disclosure Documents or proposed
Disclosure Documents; provided however that the aforementioned provision
shall not limit the responsibility of the Sub-Adviser for any materially
incorrect, incomplete or misleading information contained in any
Sub-Adviser Reviewed Fund Disclosure Documents or proposed Sub-Adviser
Reviewed Fund Disclosure Documents prior to the time the Sub-Adviser made
such communication to the Adviser. Except as provided in Section 13(b) or
as may otherwise be required by the 1940 Act or the rules thereunder or
other applicable law, the Sub-Adviser shall not be liable for any errors of
judgment or for any loss suffered by the Fund or the Adviser in connection
with the matters to which this Agreement relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the
Sub-Adviser's part in performance of its duties or from its reckless
disregard of its obligations and duties under this Agreement, provided
however, that nothing in this Agreement shall be deemed to waive any rights
of the Adviser or the Fund may have against the Sub-Adviser under federal
or state securities laws. In any event, neither the Sub-Adviser nor its
affiliates shall be liable for any loss or damage arising or resulting from
the acts or omissions of the Fund's custodian, any broker, financial
institution or any other third party with or through whom the Sub-Adviser
arranges or enters into a transaction with respect to the Fund.
(b) The Sub-Adviser shall be liable to the Fund for any loss
(including transaction costs if applicable) incurred by the Fund 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
Registration Statement or as approved by the Board from time to time and
provided to the Sub-Adviser; or (ii) applicable law, including but not
limited to the 1940 Act and the Code (with respect to the failure of Fund
Assets to satisfy the diversification requirements of Subchapter M of the
Code by reason of any action or omission of the Sub-Adviser, unless acting
at the direction of the Adviser) (the investments described in
12
this subsection (b) collectively are referred to as "Improper
Investments").The Adviser acknowledges and agrees that the Sub-Adviser
makes no representations or warranty, expressed or implied, that any level
of performance or investment results will be achieved by the Fund or that
the Fund will perform comparably with any standard or index, including
other clients of the Sub-Adviser, whether public or private.
(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 (any such person an "Indemnified Party") against
any and all losses, claims, damages, expenses or liabilities (including
reasonable attorneys' fees) 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 by the Sub-Adviser of
this Agreement or of the representations and warranties made by the
Sub-Adviser herein; or (ii) any Improper Investment; or (iii) any untrue
statement or alleged untrue statement of a material fact contained in any
Sub-Adviser Reviewed Fund Disclosure Document or the omission or alleged
omission from a Sub-Adviser Reviewed Fund Disclosure Document of a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that such material misstatement or
omission related to information regarding the Sub-Adviser and its services
under the Agreement and provided further, that the Sub-Adviser was offered
the opportunity to review and provide comments on such Disclosure Documents
and all comments provided by the Sub-Adviser were incorporated into such
Disclosure Documents or otherwise resolved to the satisfaction of the
Sub-Adviser; or (iv) the Sub-Adviser's willful misfeasance, bad faith or
gross negligence in the performance of its obligations and duties under
this Agreement or by reason of its reckless disregard of its obligations
and duties under this Agreement. The Adviser expressly acknowledges that
the Sub-Adviser is a Massachusetts business trust formed under a
declaration of trust and that all persons dealing with the Sub-Adviser must
look solely to the property of the Sub-Adviser for satisfaction of claims
of any nature against the Sub-Adviser, as neither the trustees, officers,
employees nor shareholders of the Sub-Adviser assume any personal liability
in connection with its business or obligation entered into on its behalf.
(d) The Adviser shall indemnify the Sub-Adviser and its affiliated
persons, and its officers, directors and employees for any losses, claims,
damages, expenses or liabilities, including reasonable attorneys' fees,
which may be sustained as a result of the Adviser's willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties hereunder
or violation of applicable law including the 1940 Act and federal and state
securities law insofar as such losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) a breach by the Adviser of this Agreement; or (ii) the Adviser's
willful misfeasance, bad faith or gross negligence in the performance of
its obligations and duties under this Agreement or by reason if its
reckless disregard of its obligations and duties under this Agreement.
13
14. 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.
15. 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.
16. CHANGE IN THE SUB-ADVISER'S OWNERSHIP. The Sub-Adviser agrees
that it shall notify the Trust of any anticipated or otherwise reasonably
foreseeable material change in the ownership of the Sub-Adviser within a
reasonable time prior to such change being effected..
17. 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.
18. 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.
19. 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.
20. SALES DATA. In performance of its duties and obligations under
this Agreement, the Adviser shall use best efforts to not share sales data for
the Fund with the Sub-Adviser.
21. CONFIDENTIALITY. Each party to this Agreement shall treat as
confidential all information pertaining to the Sub-Adviser, Adviser, the Fund
or its shareholders or the Trust (as applicable), their actions with respect to
the Fund and the Trust, and the business, operations and clients of the Adviser
and the Sub-Adviser, except that the aforesaid information need not be treated
as confidential if (a) required to be disclosed under applicable law, (b)
generally available to the public through means other than by disclosure by the
parties, or (c) available from a source other than the Adviser, Sub-Adviser or
the Trust. Sub-Adviser acknowledges that the Adviser will have continuous
access to the Fund's holdings and information relating to Fund management that
is in the possession of the Fund's custodian.
14
Neither the Adviser nor Sub-Adviser shall disclose or disseminate non-public
information regarding the Fund, including a list of portfolio securities
identified as being held by the Fund, which it receives or has access to in the
course of performing its duties under this Agreement except as may be permitted
by relevant Fund Procedures. Neither party shall use its knowledge of
non-public information regarding the Fund as a basis to place or recommend any
securities transactions for its own benefit, or the benefit of one or more of
its clients, to the detriment of the Fund. To the extent that either Party has
delegated any duties or services to an affiliate or a third-party, it shall
ensure that any such affiliate or third-party abides by this confidentiality
provision. Each Party shall ensure that any such affiliate or third-party shall
enter into a written confidentiality agreement providing for the non-disclosure
of such non-public information.
22. NOTICES. All notices and shall be in writing sent by facsimile or
email first, if practicable, but shall only be given if delivered in person or
by messenger, cable, certified mail with return receipt, or by reputable
overnight delivery service which provides evidence of receipt to the parties at
the following addresses (or at such other address or number for a party as
shall be specified by like notice):
If to the Sub-Adviser, to:
Xxxxx Xxxxx Management
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Chief Legal Officer -- Funds
If to the Adviser, to:
Xxxxxx Associates
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Vice President, Trust Advisory Group
Facsimile: 303.832.8230
Email: XXXX@XXXXXX.XXX
Telephone: 000.000.0000
All other communications relating to Fund Disclosure Documents, proposed Fund
Disclosure Documents, the Fund Registration Statements, or policies,
guidelines, instructions and procedures from the Fund, the Fund's Board of
Trustees or the Adviser shall be in writing, including by facsimile or email.
23. EXCLUSIVITY. The investment management services provided by the
Sub-Adviser hereunder are not to be deemed exclusive, and the Sub-Adviser shall
be free to render similar services to others. Subject to the Sub-Adviser's
responsibility to the Fund, the Adviser agrees
15
that the Sub-Adviser may give advice or exercise investment responsibility and
take such other action with respect to other individuals or entities which may
differ from the advice given to the Fund. Further, the Adviser acknowledges
that the Sub-Adviser or its agent, or employee, or any of the accounts the
Sub-Adviser advises, may at any time hold, acquire, increase, decrease, dispose
of or otherwise deal with positions in investments in which the Fund may or may
not have an interest from time to time, whether such transactions involve the
Fund or otherwise.
16
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:______________________________________
Name:
Title:
XXXXX XXXXX MANAGEMENT
By:______________________________________
Name:
Title:
17
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
DATED ________________, 2013 BETWEEN
XXXXXX ASSOCIATES INC.
AND
XXXXX XXXXX MANAGEMENT
The Fund will pay to the Sub-Adviser as compensation for the Sub-Adviser's
services rendered, a fee, computed daily and payable monthly, at an annual rate
based on the average daily net assets of the portion of the Fund (or "a 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 Fixed-Income Fund - Senior Floating Rate [____]%
Loans Sub-Strategy
18
