EXHIBIT 77Q1-(e)
INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT, made this 1st day of July, 2001, is by and among U.S.
Bancorp Xxxxx Xxxxxxx Asset Management, Inc., a Delaware corporation registered
as an investment adviser under the Investment Advisers Act of 1940, as amended
(the "Advisers Act") (the "Adviser"), Xxxx Xxxxxx, Inc., a New York corporation
registered as an investment adviser under the Advisers Act (the "Sub-Adviser"),
and Firstar Funds, Inc. (the "Company"), an open-end diversified management
investment company of the series type, registered under the Investment Company
Act of 1940, as amended (the "1940 Act").
WHEREAS, the Adviser is the investment adviser to the Firstar International
Value Fund (the "Fund") of the Company, and the Adviser desires to retain the
Sub-Adviser to furnish it with portfolio selection and related research and
statistical services in connection with the Adviser's investment advisory
activities on behalf of the Fund, and the Sub-Adviser desires to furnish such
services to the Adviser;
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:
1. Appointment of Sub-Adviser
In accordance with and subject to the investment advisory agreement (the
"Investment Advisory Agreement") between the Company and the Adviser, the
Adviser hereby appoints the Sub-Adviser to perform portfolio selection and
related research and statistical services described herein for investment and
reinvestment of the Fund's investment assets, subject to the control and
direction of the Company's Board of Directors, for the period and on the terms
hereinafter set forth. The Sub-Adviser accepts such appointment and agrees to
furnish the services hereinafter set forth for the compensation herein provided.
The Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized, have no
authority to act for or represent the Company or the Adviser in any way or
otherwise be deemed an agent of the Company or the Adviser.
2. Obligations of and Services to be Provided by the Sub-Adviser
(a) The Sub-Adviser shall provide the following services and assume the
following obligations with respect to the Fund:
(1) The investment of the assets of the Fund shall at all times be
subject to the applicable provisions of the articles of
incorporation, the by-laws, the registration statement, the
effective prospectus and the statement of additional information
of the Company relating to the Fund (the "Fund Documents") and
shall conform to the investment objectives, policies and
restrictions of the Fund as set forth in such documents and as
interpreted from time to time by the Board of Directors of the
Company and by the Adviser. Copies of the Fund Documents have
been or will be submitted to the Sub-Adviser. The Company agrees
to provide copies of all amendments to or restatements of the
Fund Documents to the Sub-Adviser on a timely and on-going basis
but in all events prior to such time as said amendments or
restatements become effective. The Sub-Adviser will be entitled
to rely on all such documents furnished to it by the Company, the
Fund, or the Adviser. Within the framework of the investment
objectives, policies and restrictions of the Fund, and subject to
the supervision of the Adviser, the Sub-Adviser shall have
responsibility for making and executing investment decisions for
the Fund.
(2) In carrying out its obligations to manage the investments and
reinvestments of the assets of the Fund, the Sub-Adviser shall:
(1) obtain and evaluate pertinent economic, statistical,
financial and other information affecting the economy generally
and individual companies or industries, the securities of which
are included in the Fund's investment portfolio or are under
consideration for inclusion therein; (2) under the supervision of
the Adviser, formulate and implement a continuous investment
program for the Fund consistent with the investment objective and
related investment policies for the Fund as set forth in the Fund
Documents, as amended; and (3) take such steps as are necessary
to implement the aforementioned investment program by purchase
and sale of securities including the placing, or directing the
placement through an affiliate of the Sub-Adviser in accordance
with applicable regulatory requirements, of orders for such
purchases and sales.
(3) In connection with the purchase and sale of securities of the
Fund, the Sub-Adviser shall arrange for the transmission to the
Custodian for the Fund and, as directed by the Adviser, any other
persons retained by the Fund on a daily basis such confirmations,
trade tickets and other documents as may be necessary to enable
them to perform their administrative responsibilities with
respect to the Fund's investment portfolio. The Sub-Adviser shall
render such reports to the Adviser and/or to the Company's Board
of Directors concerning the investment activity and portfolio
composition of the Fund in such form and at such intervals as the
Adviser or the Board may, from time to time require.
(4) The Sub-Adviser shall, in the name of the Fund, place or direct
the placement of orders for the execution of portfolio
transactions in accordance with the policies of the Fund, as set
forth in the Fund Documents, as amended from time to time, and
under the Securities Act of 1933, as amended (the "1933 Act"),
and the 1940 Act. In connection with the placement of orders for
the execution of the Fund's portfolio transactions, the
Sub-Adviser shall create and maintain all necessary brokerage
records of the Fund in accordance with all applicable laws, rules
and regulations, including but not limited to, records required
by Section 31(a) of the 1940 Act. All records shall be the
property of the Company and shall be available for inspection and
use by the Securities and Exchange Commission ("SEC"), the
Company, the Adviser, or any other person retained by the
Company. The Sub-Adviser agrees to surrender promptly to the
Company any of such records upon the Company's request. Where
applicable, such records shall be maintained by the Sub-Adviser
for the period and in the place required by the 1940 Act. The
Sub-Adviser shall, in the name of the Fund, vote all proxies
solicited by or with respect to the issuers of securities in
which the Fund may be invested from time to time.
(5) In placing orders or directing the placement of orders for the
execution of portfolio transactions, the Sub-Adviser shall select
brokers and dealers for the execution of the Fund's transactions.
In selecting brokers or dealers to execute such orders, the
Sub-Adviser will use its best efforts to seek on behalf of the
Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Sub-Adviser
shall consider all factors that it deems relevant, including the
breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both
for the specific transaction and on a continuing basis. In
evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the
Sub-Adviser is expressly authorized to consider the fact that a
broker or dealer has furnished statistical, research or other
information or services which enhance the Sub-Adviser's
investment research and portfolio management capability
generally. Subject to the initial approval of the Sub-Adviser's
soft dollar policy by the Company's Board of Directors and
further subject to the review of the Company's Board of Directors
from time to time with respect to the extent and continuation of
such policy, the Sub-Adviser may, in accordance with Section
28(e) of the Securities Exchange Act of 1934, as amended,
negotiate with and assign to a broker a commission which may
exceed the commission which another broker would have charged for
effecting the transaction if the Sub-Adviser determines in good
faith that the amount of commission charged was reasonable in
relation to the value of brokerage and/or research services (as
defined in Section 28(e)) provided by such broker viewed in terms
either of the Fund or the Sub-Adviser's overall responsibilities
to the Sub-Adviser's discretionary accounts. In addition, the
Sub-Adviser is authorized to take into account the sale of shares
of the Company in allocating purchase and sale orders for
portfolio securities to brokers or dealers (including brokers and
dealers that are affiliated with the Adviser, Sub-Adviser or the
Company's principal underwriter), provided that the Sub-Adviser
believes that the quality of the transaction and the commission
are comparable to what they would be with other qualified firms.
In no instance, however, will portfolio securities be purchased
from or sold to the Sub-Adviser, the Adviser, the Company's
principal underwriter, or any affiliated person of either the
Company, the Adviser, Sub-Adviser or the principal underwriter,
acting as principal in the transaction, except to the extent
permitted by the SEC through rules, regulations, decisions and
no-action letters.
(b) The Sub-Adviser shall use the same skill and care in providing
services to the Fund as it uses in providing services to fiduciary
accounts for which it has investment responsibility. The Sub-Adviser
will conform with all applicable federal and state laws, rules and
regulations.
(c) The Sub-Adviser will treat confidentially and as proprietary
information of the Fund all records and other information relative to
the Fund and prior, present or potential shareholders, and will not
use such records and information for any purpose other than
performance of its responsibilities and duties hereunder (except after
prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld and may not be withheld
and will be deemed granted where Sub-Adviser may be exposed to civil
or criminal contempt proceedings for failure to comply, when requested
to divulge such information by duly constituted authorities, or when
so requested by the Fund).
3. Expenses
The Sub-Adviser will bear all expenses in connection with the performance
of its services under this Agreement, which expenses shall not include brokerage
fees or commissions in connection with the effectuation of securities
transactions for the Fund. The Fund (or the Adviser) will bear certain other
expenses to be incurred in the Fund's operation, including but not limited to:
organizational expenses, taxes, interest, brokerage fees and commissions, if
any; SEC fees and state blue sky qualification fees; expenses of custodians,
transfer and dividend disbursing agents and the Fund's co-administrators;
insurance premiums; outside auditing and legal expenses; costs of maintenance of
the Fund's existence; costs attributable to investor services, including without
limitation, telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings of the shareholders of the Fund and of the officers or Board of
Directors of the Fund; and any extraordinary expenses.
4. Compensation
In payment for the investment sub-advisory services to be rendered by the
Sub-Adviser in respect of the Fund hereunder, the Adviser shall pay to the
Sub-Adviser as full compensation for all services hereunder a fee computed at an
annual rate which shall be a percentage of the average net assets of the Fund.
The fee shall be accrued daily and shall be based on the net asset values of all
of the issued and outstanding shares of the Fund as determined as of the close
of each business day pursuant to the Fund Documents. The fee shall be payable in
arrears during the following calendar month.
The amount of such annual fee, as applied to the average daily value of the
net assets of the Fund shall be as described in the schedule below:
Assets Fee
On the first $500 million in assets 0.25%
On the assets in excess of $500 million 0.15%
5. Effective Date, Renewal and Termination
This Agreement shall become effective as of the date first above written
and, unless otherwise terminated, shall continue for not more than 150 days.
This Agreement may be terminated without penalty on sixty (60) days' written
notice to the Sub-Adviser (i) by the Adviser, (ii) by vote of the Board of
Directors of the Company, or (iii) by vote of a majority of the outstanding
voting securities of the Fund; or it may be terminated without penalty on sixty
(60) days' written notice to the Adviser by the Sub-Adviser. This Agreement will
terminate automatically in the event of its assignment or upon any termination
of the Investment Advisory Agreement. The terms "assignment" and "vote of
majority of the outstanding voting securities" shall have the meanings set forth
in the 1940 Act.
6. Representations of the Company, Adviser and the Sub-Adviser
The Company and Fund represent that (i) a copy of the Company's Articles of
Incorporation, dated February 15, 1988, together with all amendments thereto, is
on file in the office of the Wisconsin Department of Financial Institutions,
(ii) the appointment of the Adviser has been duly authorized, (iii) the
appointment of the Sub-Adviser has been duly authorized, and (iv) they have
acted and will continue to act in conformity with the 1940 Act, and other
applicable laws.
The Adviser represents that (i) it is authorized to perform the services
herein, (ii) the appointment of the Sub-Adviser has been duly authorized, and
(iii) it will act in conformity with the 1940 Act, and other applicable laws.
The Sub-Adviser represents that it is authorized to perform the services
described herein.
7. Materials
Neither the Adviser, the Company, or the Fund shall publish or distribute
any information including but not limited to, registration statements,
advertising or promotional material regarding the provision of investment
advisory services by the Sub-Adviser pursuant to this Agreement, without the
prior written consent of the Sub-Adviser, which consent shall not be
unreasonably withheld or delayed. If the Sub-Adviser has not notified the
Adviser of its disapproval of sample materials within five (5) days after its
receipt thereof, such materials shall be deemed approved. Materials
substantially similar to materials approved on an earlier occasion, with the
exception of any regulatory filings, shall also be deemed approved.
Notwithstanding the foregoing, the Adviser may distribute information regarding
the provision of investment advisory services by the Sub-Adviser to the
Company's Board of Directors ("Board Materials") without the prior written
consent of the Sub-Adviser. The Adviser shall provide copies of the Board
Materials to the Sub-Adviser within a reasonable time following distribution to
the Company's Board of Directors.
The Sub-Adviser shall not publish or distribute any information including
but not limited to, registration statements, advertising or promotional material
regarding the provision of investment advisory services by the Sub-Adviser
pursuant to this Agreement, without the prior written consent of the Adviser and
the Company, which consent shall not be unreasonably withheld or delayed. If the
Adviser or Company has not notified the Sub-Adviser of its disapproval of sample
materials within five (5) days after its receipt thereof, such materials shall
be deemed approved. Materials substantially similar to materials approved on an
earlier occasion, with the exception of any regulatory filings, shall also be
deemed approved.
8. General Provisions
(a) The Sub-Adviser may rely on information reasonably believed by it to
be accurate and reliable. Except as may otherwise be provided by the
1940 Act, neither the Sub-Adviser nor its officers, directors,
employees or agents shall be subject to any liability for any error of
judgment or mistake of law or for any loss arising out of any
investment or other act or omission in the performance by the
Sub-Adviser of its duties under this Agreement or for any loss or
damage resulting from the imposition by any government or exchange
control restrictions which might affect the liquidity of the Fund's
assets, or from acts or omissions of custodians or securities
depositories or from any war or political act of any foreign
government to which such assets might be exposed, provided that
nothing herein shall be deemed to protect or purport to protect, the
Sub-Adviser against any liability to the Adviser or the Company or to
its shareholders to which the Sub-Adviser would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of the Sub-Adviser's
reckless disregard of its obligations and duties hereunder or a breach
of its fiduciary duty.
(b) The Adviser and the Fund understand that the Sub-Adviser now acts,
will continue to act, or may act in the future, as investment adviser
or investment sub-adviser to fiduciary and other managed accounts,
including other investment companies and the Adviser and the Fund have
no objection to the Sub-Adviser so acting, provided that the
Sub-Adviser duly performs all obligations under this Agreement. The
Adviser and the Fund also understand that the Sub-Adviser may give
advice and take action with respect to any of its other clients or for
its own account which may differ from the timing or nature of action
taken by the Sub-Adviser with respect to the Fund. Nothing in this
Agreement shall impose upon the Sub-Adviser any obligation to purchase
or sell or to recommend for purchase or sale, with respect to the
Fund, any security which the Sub-Adviser or its shareholders,
directors, officers, employees or affiliates may purchase or sell for
its or their own account(s) or for the account of any other client.
(c) Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the right of the
Sub-Adviser, or the right of any of its officers, directors or
employees who may also be an officer, director or employee of the
Company, or person otherwise affiliated with the Company (within the
meaning of the 0000 Xxx) to engage in any other business or to devote
time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature or to render
services of any kind to any other trust corporation, firm, individual
or association.
(d) Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Wisconsin. The captions in this
Agreement are included for convenience only and in no way define or
delimit any of the provisions hereof or otherwise affect their
construction or effect.
(e) Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage pre-paid to the appropriate party at the
following address: The Adviser, the Company and the Fund at Drinker
Xxxxxx & Xxxxx LLP, One Xxxxx Square, 00xx & Xxxxxx Xxxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx, 00000, Attention: W. Xxxxx XxXxxxxx, Esq.,
and the Sub-Adviser at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention:
General Counsel.
(f) Sub-Adviser agrees to notify Adviser of any change in Sub-Adviser's
senior officers, portfolio managers, and directors within a reasonable
time after such change. Sub-Adviser further agrees to provide Adviser
with any amendments to Parts I and II of its ADV within a reasonable
time after such amendments and notify Adviser of any regulatory, civil
or criminal proceedings, actions or complaints involving the
Sub-Adviser or its affiliates within a reasonable time.
(g) This Agreement may be amended in accordance with the 1940 Act.
(h) This Agreement constitutes the entire agreement among the parties
hereto.
(i) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
XXXX XXXXXX, INC.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
By: (Signature illegible)
------------------------------
Name: Illegible
Title: Illegible
U.S. BANCORP XXXXX XXXXXXX ASSET
MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: COO
FIRSTAR FUNDS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
