Ex 10.3
SUB-ADVISERY AGREEMENT
AGREEMENT made as of the 21st day of September, 1994 between UNITED
SERVICES ADVISORS, INC., a corporation organized under the laws of the State of
Texas (the "Adviser"), ACCOLADE FUNDS, a Massachusetts business trust having its
principal place of business in San Antonio, Texas (the "Trust"), on behalf of
the Bonnel Growth Fund (the "Fund"), a series of shares of the Trust, and
BONNEL, INC. (the "Sub-Adviser") of Reno, Nevada.
WHEREAS, the Adviser is engaged in the business of rendering investment
management services to the Trust; and
WHEREAS, the Trust is an open-end management investment company and is so
registered under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust is operated as a "series company" within the meaning of
Rule 18f-2 under the 1940 Act and has three separate series of shares of
beneficial interest, one of which series is the Fund.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-ADVISER.
The Sub-Adviser is hereby appointed to provide investment advisory
services to the Fund for the period and on the terms herein set forth.
The Sub-Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided. To
enable Sub-Adviser to exercise fully its discretion and authority as
provided in this Section 1, the Trust hereby constitutes and appoints
Sub-Adviser as the Trust's agent and attorney-in-fact with full power
and authority for the Trust and on the Trust's behalf to buy, sell and
otherwise deal in securities and contracts relating to same for the
Fund.
2. DUTIES OF SUB-ADVISER.
(a) The Sub-Adviser is hereby authorized and directed and hereby
agrees, subject to the stated investment objective and policies
of the Fund as set forth in the Fund's Prospectus (as defined
below) and subject to the supervision of the Adviser and the
Board of Trustees of the Trust, (i) to develop, recommend and
implement such investment program and strategy for the Fund as
may from time to time in the circumstances appear most
appropriate to the achievement of the investment objective of the
Fund as stated in the aforesaid Prospectus, (ii) to provide
research and analysis relative to the investment program and
investments of the Fund, (iii) to determine what securities
should be purchased and sold and what portion of the assets of
the Fund should be held in cash or cash equivalents and (iv) to
monitor on a continuing basis the performance of the portfolio
securities of the Fund. The Sub-Adviser will advise the Trust's
custodian and the Adviser on a prompt basis of each purchase and
sale of a portfolio security specifying the name of the issuer,
the description and amount or number of shares of the security
purchased, the market price, commission and gross or net price,
trade date, settlement date and identity of the effecting broker
or dealer; and will review the accuracy of the pricing of
portfolio securities in accordance with Trust procedures. From
time to time, as the Trustees of the Trust or the Adviser may
reasonably request, the Sub-Adviser will furnish to the Trust's
officers and to each of its Trustees reports on portfolio
transactions and reports on issues of securities held in the
portfolio, all in such detail as the Trust or the Adviser may
reasonably request. The Sub-Adviser will also inform the Trust's
officers and Trustees on a current basis of changes in investment
strategy or tactics. The Sub-Adviser will make its officers and
employees available to meet with the Trust's officers and
Trustees on due notice to review the investments and investment
program of the Fund in the light of current and prospective
economic and market conditions.
The Sub-Adviser shall place all orders for the purchase and sale
of portfolio securities for the account of the Fund with brokers
or dealers selected by the Sub-Adviser, although the Trust will
pay the actual brokerage commissions and any transfer taxes with
respect to transactions in the portfolio securities of the Trust.
The Sub-Adviser is authorized to submit any such order
collectively with orders on behalf of other accounts under its
management, provided that the Sub-Adviser shall have determined
that such action is in the best interest of the Fund and is in
accordance with applicable law, including, without limitation,
Rule 17d-1 under the 1940 Act. In executing portfolio
transactions and selecting brokers or dealers, 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 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 (for the specific
transaction and on a continuing basis). In evaluating the best
overall terms available, and in selecting the broker or dealer to
execute a particular transaction, the Sub-Adviser may also
consider the brokerage and research services (as those terms
defined in Section 28(e) of the Securities Exchange Act of 1934)
provided to the Fund and/or other accounts over which the
Sub-Adviser or an affiliate of the Sub-Adviser exercises
investment discretion. The Sub-Adviser is authorized to pay to a
broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for
the Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that
transaction if, but only if, the Sub-Adviser determines in good
faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such
broker or dealer, viewed in terms of that particular transaction
or in terms of all of the accounts over which investment
discretion is so exercised. An affiliated person of the
Sub-Adviser may provide brokerage services to the Fund provided
that the Sub-Adviser shall have determined that such action is
consistent with its obligation to seek the best overall terms
available and is in accordance with applicable law, including,
without limitation, Section 17(e) of the 0000 Xxx. The foregoing
shall not be deemed to authorize an affiliated person of the
Sub-Adviser to enter into transactions with the Fund as
principal.
In the performance of its duties hereunder, the Sub-Adviser is
and shall be an independent contractor and unless otherwise
expressly provided or authorized shall have no authority to act
for or represent the Trust in any way or otherwise be deemed to
be an agent of the Trust or of the Adviser.
(b) Delivery of Documents. The Adviser will furnish upon request or
has furnished the Sub- Adviser with true copies of each of the
following:
(i) The Trust's Master Trust Agreement dated April 15, 1993 as
filed with the Secretary of State of the Commonwealth of
Massachusetts and all amendments thereto (such Master Trust
Agreement, as presently in effect and as it shall from time to
time be amended, is herein called the "Master Trust Agreement");
(ii) The Trust's By-Laws and amendments thereto (such By-Laws, as
presently in effect and as it shall from time to time be amended,
is herein called the "By-Laws);
(iii)Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Adviser and Sub-Adviser and approving the
Advisory Agreement and this Agreement;
(iv) The most recent Post-Effective Amendment to the Trust's
Registration Statement on Form N-1A under the Securities Act of
1933 as amended ("1933 Act") and the 1940 Act as filed with the
Securities and Exchange Commission;
(v) The Fund's most recent prospectus (such prospectus, as
presently in effect and all amendments and supplements thereto
being referred to herein as the "Prospectus"); and
(vi) All resolutions of the Board of Trustees of the Trust
pertaining to the management of the assets of the Fund.
During the term of this Agreement the Adviser shall not use or
implement any amendment or supplement that relates to or affects the
obligations of the Sub-Adviser hereunder if the Sub-Adviser reasonably
objects in writing within five business days after delivery thereof
(or such shorter period of time as the Adviser shall specify upon
delivery, if such shorter period of time is reasonable under the
circumstances).
3. ADVISORY FEE.
(a) For the services to be provided to the Fund by the Sub-Adviser as
provided in Paragraph 2 hereof, the Adviser will pay the
Sub-Adviser a minimum fee of $150,000 per year. When the Fund's
assets exceed $30 million, the Adviser and Sub-Adviser will share
the management fee (as defined below) equally except that the
Sub-Adviser's share would be subject to downward adjustments for:
(1) the Adviser's incurred costs and expenses of marketing the
Bonnel Fund (including prospectus fulfillment, Xx. Xxxxxx'x
travel costs, annual costs for marketing and promotion of the
Fund etc.) that exceed the .25% "12b-1 fee" charged to the Fund
for such marketing purposes; (2) for any monies previously
received as a result of the minimum sub-advisory fee set forth
above that were paid by the Adviser or the Trust prior to the
date that the Securities and Exchange Commission declared the
Fund's Registration Statement to be effective; (3) the
unrecovered costs of organizing the Bonnel Fund up to $40,000
(the Adviser will be responsible for bearing costs of
organization of the Fund in excess of $40,000); and (4) if a
decision is made with respect to placing a cap on expenses to the
extent that actual expenses of the Fund would exceed the cap, and
the Adviser would be required to pay or absorb any of the excess
expenses, by the amount of the excess expenses paid or absorbed
by the Adviser through such downward adjustments. Advisor agrees
to pay the Sub-Advisor the minimum fee for a period of three
years provided Xx. Xxxxxx is ready, willing and able to perform
the Sub-Advisor's duties hereunder. The fee is payable in monthly
installments in arrears. The "Management Fee" means the
management fee paid by the Trust to the Adviser under the
Advisory Agreement, dated as of September 21, 1994, between the
Trust and the Adviser with respect to the management of the Fund.
(b) In the case of termination of the Agreement during any calendar
month, the fee with respect to that month shall be reduced
proportionately based upon the number of calendar days during
which it is in effect and the fee shall be computed upon the
average net assets of the Fund for the days during which it is so
in effect.
(c) The "Monthly Average Net Assets" of the Fund for any calendar
month shall be equal to the quotient produced by dividing (i) the
sum of the net assets of the Fund, determined in accordance with
procedures established from time to time by or under the
direction of the Board of Trustees of the Trust in accordance
with the Master Trust Agreement, as of the close of business on
each day during such month that the Fund was open for business,
by (ii) the number of such days.
4. EXPENSES.
During the term of this Agreement, the Sub-Adviser will bear all
expenses incurred by it in the performance of its duties hereunder.
5. FUND TRANSACTIONS.
The Sub-Adviser agrees that neither it nor any of its employees,
officers or directors will take any long or short term position in the
shares of the Fund or portfolio securities of the Fund for trading
purposes; provided, however, that such prohibition shall not prevent
the purchase of shares of the Fund by any of the persons above
described for their account and for investment at the price at which
such shares are available to the public at the time of purchase.
6. REPRESENTATION AND WARRANTY.
The Sub-Adviser hereby represents and warrants to the Adviser that it
is duly registered as an investment adviser, or is exempt from
registration, under the Investment Advisor's Act of 1940, as amended,
and that it shall maintain such registration or exemption at all times
during which this Agreement is in effect.
7. LIABILITY OF SUB-ADVISER.
In the performance of its duties under this Agreement, the Sub-Adviser
shall act in conformity with and in compliance with the requirements
of the 1940 Act and all other applicable U.S. Federal and state laws
and regulations and shall not cause the Fund to take any action that
would require the Fund or any affiliated person thereof to register as
a commodity pool operator under the terms of the U.S. Commodity
Exchange Act, as amended (it being understood by the Sub-Adviser that
a notice of eligibility has been filed on behalf of the Trust pursuant
to Rule 4.5 promulgated under said Act). The Sub-Adviser shall be
responsible for maintaining such procedures as may be reasonably
necessary to ensure that the investment and reinvestment of the Fund's
assets are made in compliance with its investment objectives and
policies and with all applicable statues and regulations and that the
Fund qualifies as a regulated investment company under Subchapter M of
the Internal Revenue Code. No provision of this Agreement shall be
deemed to protect the Sub-Adviser against any liability to the Trust
or its shareholders to which it might otherwise be subject by reason
of any willful misfeasance, bad faith or gross negligence in the
performance of its duties or the reckless disregard of its obligations
and duties under this Agreement.
8. REPORTS.
The Sub-Adviser shall render to the Board of Trustees of the Trust
such periodic and special reports as the Board of Trustees may
reasonably request with respect to matters relating to duties of the
Sub- Adviser set forth herein.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. With respect to the Trust, this Agreement shall become
effective upon the date hereof and shall continue in full force
and effect from year to year thereafter so long as such
continuance is approved at least annually (i) by either the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of the Fund, and
(ii) in either event by the vote of a majority of the Trustees of
the Trust who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of any such party, cast in
person at a meeting called for the purpose of voting on such
approval.
(b) Termination. With respect to the Trust, this Agreement may be
terminated at any time, without payment of any penalty (i) by
vote of the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund (as defined in the 0000
Xxx) on sixty (60) days' written notice to the other parties,
(ii) by the Adviser on sixty (60) days' written notice to the
other parties or (iii) by the Sub-Adviser on ninety (90) days'
written notice to the other parties.
(c) Automatic Termination. With respect to the Trust, this Agreement
shall automatically and immediately terminate in the event of its
assignment or upon expiration of the Advisory Agreement now or
hereafter in effect between the Adviser and the Trust with
respect to the Fund.
(d) It is understood that the Letter Agreement, dated March 22, 1994,
as subsequently clarified by letters dated April 7, 1994, and
April 19, 1994 (the "Letter Agreement"), shall survive the
termination of this Sub-Advisory Agreement with regards to the
relationship between the Adviser and the Sub-Adviser. In
particular, and without limiting the foregoing, so long as the
Sub-Adviser is ready, willing and able to perform its duties
hereunder, the Adviser shall pay the Sub-Adviser the minimum fee
of $150,000, even if this Agreement has been terminated with
respect to the Trust.
10. SERVICES NOT EXCLUSIVE.
The services of the Sub-Adviser of the Fund hereunder are not to be
deemed exclusive, and the Sub- Adviser shall be free to render similar
services to others.
11. LIMITATION OF LIABILITY.
(a) THE TRUST. The term "Sophisticated Investors Funds" means and
refers to the Trustees from time to time serving under the Master
Trust Agreement. It is expressly agreed that the obligations of
the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees
of the Trust, personally, but bind only the assets and property
of the Trust, as provided in the Master Trust Agreement. The
execution and delivery of the Agreement have been authorized by
the Trustees and shareholders of the Trust and signed by an
authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such
execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the assets and
property of the Trust as provided in its Master Trust Agreement.
(b) THE ADVISOR AND SUB-ADVISOR. It is expressly agreed that the
oblations of the Advisor and Sub- Adviser hereunder shall not be
binding upon any of the shareholders, nominees, officers, agents
or employees of the Advisor or Sub-Adviser, personally, but bind
only the assets and property of the Advisor and Sub-Adviser,
respectively. The execution and delivery of the Agreement have
been authorized by the directors and officers of the Advisor and
Sub-Adviser and signed by an authorized officer of the Advisor
and Sub-Adviser, acting as such, and neither such authorization
by such directors and officers nor such execution and delivery by
such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the
Advisor and Sub-Adviser, respectively. This limitation of
liability shall not be deemed to protect the shareholders,
nominees, officers, agents or employees of the Advisor and
Sub-Adviser against any liability to the Trust or its
shareholders to which they might otherwise be subject by reason
of any willful misfeasance, bad faith or gross negligence in the
performance of their duties or the reckless disregard of their
obligations and duties under this Agreement.
12. MISCELLANEOUS.
(a) Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
parties at such address as such other parties may designate in
writing for the receipt of such notices.
(b) Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
(c) Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Texas.
(d) This Agreement and the Letter Agreement constitute the entire
agreement of the parties and supersede all prior or
contemporaneous written or oral negotiations, correspondence,
agreements and understandings, regarding the subject matter
hereof. To the extent that the Letter Agreement is inconsistent
with this Agreement, the terms of this Agreement shall control.
13. STANDARD OF CARE.
To the extent permitted under applicable law (including section 36 of
the 1940 Act), the Sub-Adviser will not be liable to the Trust or the
Adviser for any losses incurred by the Trust, the Fund or the Adviser
that arise out of or are in any way connected with any recommendation
or other act or failure to act of the Sub-Adviser under this
Agreement, including, but not limited to, any error in judgment with
respect to the Fund, so long as such recommendation or other act or
failure to act does not constitute a breach of the Sub-Adviser's
fiduciary duty to the Trust, the Fund or the adviser. Anything in this
section 13 or otherwise in this Agreement to the contrary
notwithstanding, however, nothing herein shall constitute a waiver or
limitation of any rights that the Trust, the Adviser or the Fund may
have under any Federal or state securities laws.
14. RIGHT OF SUB-ADVISER IN CORPORATE NAME
The phrase "Bonnel", which comprises a component of the Fund's name,
is a property right of the Sub- Adviser. The Trust, the Adviser and
the Fund agree and consent that so long as this Agreement is in
effect: (i) the Fund may use the phrase "Bonnel" as a component of its
corporate name (including corporate documents, sales literature, and
marketing) and the Trust, the Adviser and the Fund will not use that
name for any other purpose; (ii) none of them will purport to grant to
any third party the right to use the phrase "Bonnel" for any purpose;
(iii) the Sub-Adviser or any corporate affiliate of the Sub- Adviser
may use or grant to others the right to use the phrase "Bonnel" or any
combination or abbreviation thereof, as all or a portion of a
corporate or business name or for any commercial purpose, so long as
there in no material adverse effect to the Fund, and at the request of
the Sub- Adviser, the Trust, the Adviser and the Fund will take such
actions as may be required to provide their consent to such use or
grant; and (iv) on the termination of any investment advisory contract
into which the Sub-Adviser and the Trust, the Adviser and the Fund may
enter, the trust, the Adviser and the fund shall, on request by the
Sub-Adviser, promptly take such action, at their own expense, as may
be necessary to change its corporate name to one not containing
"Bonnel" and following such change, shall not use the phrase "Bonnel"
or any combination thereof, as a part of its corporate name, or for
any other commercial purpose, and shall use its best efforts to cause
its officers, directors and stockholders to take any and all actions
which the Sub-Adviser may request to effect the foregoing and recovery
to the Sub-Adviser any and all rights to such phrase.
IN WITNESS WHEREOF, the Adviser, the Trust and the Sub-Adviser have caused
this Agreement to be executed on the day and year first above written.
UNITED SERVICES ADVISORS, INC.
By: /S/ Xxxxx X. Xxxxxx
ACCOLADE FUNDS
By: /S/ Xxxxx X. Xxxxxx
BONNEL, INC.
By: /S/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx, Xx., President
