COMMUNITY DEVELOPMENT FUND ADVISORS, LLC
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this 20TH day of January, 2016 between Community
Development Fund Advisors, LLC (the "Adviser") and Xxxxx Circle Partners, L.P.
(the "Subadviser").
WHEREAS, The Community Development Fund, a Delaware Statutory Trust (the
"Fund"), is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser, with the approval of the Fund, desires to retain the
Subadviser to provide investment advisory services to the Adviser in connection
with the management of the Fund, and the Subadviser is willing to render such
investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUBADVISER. Subject to supervision by the Adviser and the
Fund's Board of Trustees (the "Board"), the Subadviser shall manage all of
the securities and other assets of the Fund entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Fund's investment objectives, policies and
restrictions as stated in the Fund's prospectus and statement of additional
information, as currently in effect and as amended or supplemented from
time to time (referred to collectively as the "Prospectus"), and subject to
the following:
(a) The Subadviser shall, in consultation with and under the direction of
the Adviser, determine from time to time what Assets will be
purchased, retained or sold by the Fund, and what portion of the
Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this
Agreement, the Subadviser shall act in conformity with the Fund's
Declaration of Trust (as defined herein), the Prospectus, the Fund's
compliance policies and procedures ("Compliance Policies and
Procedures") provided that the Adviser or the Fund has given the
Subadviser such documents and any amendments thereto and with the
instructions and directions of the Adviser and of the Board and will
conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986 (the "Code"), and all other applicable
federal and state laws and regulations, as each is amended from time
to time.
(c) The Subadviser shall determine the Assets to be purchased or sold by
the Fund as provided in Subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Prospectus or as the Board or
the Adviser may direct from time to time, in conformity with all
federal securities laws. In executing Fund transactions and selecting
brokers or dealers, the Subadviser 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 Subadviser
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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 Subadviser may also consider the
brokerage and research services provided (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")). Consistent with any guidelines established by
the Board and Section 28(e) of the Exchange Act, the Subadviser 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 Subadviser 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 the
overall responsibilities of the Subadviser to its discretionary
clients, including the Fund. In addition, the Subadviser is authorized
to allocate purchase and sale orders for securities to brokers or
dealers (including brokers and dealers that are affiliated with the
Adviser, the Subadviser or the Fund's principal underwriter) if the
Subadviser 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 the Assets be purchased from or
sold to the Adviser, the Subadviser, the Fund's principal underwriter,
or any affiliated person of either the Fund, the Adviser, the
Subadviser or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and
Exchange Commission ("SEC") and the 1940 Act.
(d) The Subadviser shall maintain all books and records with respect to
transactions involving the Assets required by Subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and Paragraph (f) of Rule 31a-1 under the
1940 Act. The Subadviser shall keep the books and records relating to
the Assets required to be maintained by the Subadviser under this
Agreement and shall timely furnish to the Adviser all information
relating to the Subadviser's services under this Agreement needed by
the Adviser to keep the other books and records of the Fund required
by Rule 31a-1 under the 1940 Act. The Subadviser agrees that all
records that it maintains on behalf of the Fund are property of the
Fund and the Subadviser will surrender promptly to the Fund any of
such records upon the Fund's request; provided, however, that the
Subadviser may retain a copy of such records. In addition, for the
duration of this Agreement, the Subadviser shall preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act any such records
as are required to be maintained by it pursuant to this Agreement, and
shall transfer said records to any successor Subadviser upon the
termination of this Agreement (or, if there is no successor
Subadviser, to the Adviser).
(e) The Subadviser shall provide the Fund's custodian on each business
day with information relating to all transactions concerning the
Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) To the extent called for by the Compliance Policies and Procedures,
or as reasonably requested by the Fund, the Subadviser shall provide
the Fund with information and advice regarding Assets to assist the
Fund in determining the appropriate valuation of such Assets.
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(g) The investment management services provided by the Subadviser under
this Agreement are not to be deemed exclusive and the Subadviser 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 Fund.
(h) The Subadviser shall promptly notify the Adviser of any financial
condition that is reasonably likely to materially impair the
Subadviser's ability to fulfill its commitment under this Agreement.
(i) The Subadviser shall not be responsible for reviewing proxy
solicitation materials or voting and handling proxies in relation to
the securities held as Assets in the Fund. If the Subadviser receives
a misdirected proxy, it shall promptly forward such misdirected proxy
to the Adviser.
(j) The Subadviser shall not provide investment advice to any assets of
the Fund other than the Assets.
(k) On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other
clients of the Subadviser, the Subadviser may, to the extent permitted
by applicable law and regulations, aggregate the order for securities
to be sold or purchased. In such event, the Subadviser will allocate
securities so purchased or sold, as well as the expenses incurred in
the transaction, in a manner the Subadviser reasonably considers to be
equitable and consistent with its fiduciary obligations to the Fund
and to such other clients under the circumstances.
(l) The Subadviser shall provide to the Adviser or the Board such
periodic and special reports, balance sheets or financial information,
and such other information with regard to its affairs as the Adviser
or Board may reasonably request. The Subadviser shall also furnish to
the Adviser any other information relating to the Assets that is
required to be filed by the Adviser or the Fund with the SEC or sent
to shareholders under the 1940 Act (including the rules adopted
thereunder) or any exemptive or other relief that the Adviser or the
Fund obtains from the SEC (if any).
(m) With respect to the Assets of the Fund, the Subadviser shall file any
required reports with the SEC pursuant to Section 13(f) and Section
13(g) of the Exchange Act and the rules and regulations thereunder.
To the extent permitted by law, the services to be furnished by the
Subadviser under this Agreement may be furnished through the medium of any
of the Subadviser's partners, officers, employees or control affiliates;
provided, however, that the use of such mediums does not relieve the
Subadviser from any obligation or duty under this Agreement.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Fund pursuant to its advisory
agreement with the Fund (the "Advisory
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Agreement") and shall continuously monitor the Subadviser's performance of
its duties under this Agreement (including trade execution), perform
certain due diligence functions and oversee the Subadviser's compliance
with the Fund's investment objectives, policies and guidelines, including
the Fund's investments that are intended to qualify for credit under the
Community Reinvestment Act of 1977, as amended (the "CRA"); provided,
however, that in connection with its management of the Assets, nothing
herein shall be construed to relieve the Subadviser of responsibility for
compliance with the Fund's Declaration of Trust (as defined herein), the
Prospectus, the Compliance Policies and Procedures provided that the
Adviser or the Fund has given the Subadviser such documents and any
amendments thereto, the instructions and directions of the Board, the
requirements of the 1940 Act, the Code, and all other applicable federal
and state laws and regulations, as each is amended from time to time.
The Adviser shall communicate regularly with the Subadviser regarding any
geographic, regulatory or other directions with respect to the Subadviser's
selection of Assets for the Fund, including, without limitation, any
directions or investment restrictions with respect to the Fund's portfolio
in connection with the CRA. Upon request from the Subadviser, the Adviser
shall promptly evaluate whether a potential investment may be
CRA-qualifying, either generally or with respect to a specific financial
institution shareholder. The Adviser agrees to make itself readily
available to the Subadviser to answer any questions about the Fund or a
potential investment for the Fund.
The Adviser shall also be responsible for maintaining any records necessary
for the Fund and its shareholders to receive appropriate regulatory credit
with respect to the CRA, maintaining documentation readily available to a
financial institution or an examiner supporting its determination that a
security is a qualifying investment for CRA purposes and the Subadviser
agrees to provide the Adviser with any information necessary to assist the
Adviser with such recordkeeping. In determining whether a particular
investment is qualified for credit under the CRA, the Adviser shall assess
whether the investment has as its primary purpose community development.
The Adviser shall consider whether the investment: (1) provides affordable
housing for low- and moderate-income ("LMI") individuals; (2) provides
community services targeted to LMI individuals; (3) funds activities that
(a) finance businesses or farms that meet the size eligibility standards of
the Small Business Administration's Development Company or Small Business
Investment Company programs or have annual revenues of $1 million or less
or (b) promote economic development; (4) funds activities that revitalize
or stabilize LMI areas, designated disaster areas, or nonmetropolitan
middle-income areas that have been designated as distressed or underserved
by the institution's primary regulator; or (5) supports, enables, or
facilitates certain projects or activities that meet the "eligible uses"
criteria described in the Housing and Economic Recovery Act of 2008. As the
Fund continues to operate, the Adviser shall assess whether to instruct the
Subadviser to dispose of securities that were acquired for CRA-qualifying
purposes, in which case the Adviser will normally instruct the Subadviser
to attempt to acquire a replacement security that would be CRA-qualifying.
3. DELIVERY OF DOCUMENTS. The Adviser represents and warrants that it will
furnish the Subadviser with copies of each of the following documents and
any amendments thereto:
(a) The Fund's Agreement and Declaration of Trust (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and
as amended from time to time, is herein called the "Declaration of
Trust");
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(b) The By-Laws of the Fund (such By-Laws, as in effect on the date of
this Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) The Prospectus; and
(d) The Compliance Policies and Procedures.
4. COMPENSATION TO THE SUBADVISER. For the services to be provided by the
Subadviser pursuant to this Agreement, the Adviser will pay the Subadviser,
and the Subadviser agrees to accept as full compensation therefor, a
sub-advisory fee at the rate specified in Schedule A which is attached
hereto and made part of this Agreement. Except as may otherwise be
prohibited by law or regulation (including any then current SEC staff
interpretation), the Subadviser may, in its discretion and from time to
time, waive a portion of its fee.
5. INDEMNIFICATION. The Subadviser may rely on information reasonably
believed by it to be accurate and reliable. The Subadviser assumes no
responsibility under this Agreement other than to render the services
called for hereunder, in good faith, and shall not be liable for any error
of judgment or mistake of law, or for any loss arising out of any
investment or for any act or omission in the execution of securities
transactions for the Fund, provided that nothing in this Agreement shall
protect the Subadviser against any liability to the Adviser or the Fund to
which the Subadviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and duties
hereunder. As used in this Paragraph 5, the term the "Subadviser" shall
include any affiliates of the Subadviser performing services for the Fund
contemplated herein and the partners, shareholders, directors, officers and
employees of the Subadviser and such affiliates.
The Adviser shall indemnify and hold harmless the Subadviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorney's fees and other related expenses) howsoever arising
from or in connection with any willful misfeasance, fraud, bad faith, gross
negligence or reckless disregard of the Adviser in the performance of or
failure to perform any of the Adviser's obligations under this Agreement;
provided, however, that the Adviser's obligation under this Paragraph 5
shall be reduced to the extent that the claim against, or the loss,
liability or damage experienced by the Subadviser, is caused by or is
otherwise directly related to the Subadviser's own willful misfeasance,
fraud, bad faith or gross negligence, or to the reckless disregard of its
duties under this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon
approval by the Board and its execution by the parties hereto. Unless
earlier terminated, this Agreement shall continue in effect for an initial
period of two years from the date hereof. Thereafter, this Agreement may be
continued annually if specifically approved in conformance with the 1940
Act; provided, however, that this Agreement may be terminated with respect
to the Fund (a) by the Fund at any time, without the payment of any
penalty, by the vote of a majority of trustees of the Board or by the vote
of a majority of the outstanding voting securities of the Fund, or (b) by
the Adviser or the Subadviser at any time, without the payment of any
penalty, on 30 days' written notice to the other party. This Agreement
shall terminate automatically and immediately in the event of its
assignment, or in the event of a termination of the Advisory Agreement with
the Fund. As used in this Paragraph 6, the terms "assignment" and "vote of
a majority of the outstanding voting securities" shall have the respective
meanings set forth in the 1940 Act and the rules and regulations
thereunder, subject to such exceptions as may be granted by the SEC under
the 1940 Act.
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7. COMPLIANCE PROGRAMS. Each of the Adviser and the Subadviser hereby
represents and warrants that:
(a) in accordance with Rule 206(4)-7 under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), each the Adviser and the
Subadviser has adopted and implemented and will maintain written
policies and procedures reasonably designed to prevent violation by
the Adviser and the Subadviser, respectively, and its supervised
persons (as such term is defined in the Advisers Act) of the Advisers
Act and the rules the SEC has adopted under the Advisers Act; and
(b) to the extent that the Adviser's or the Subadviser's activities or
services could affect the Fund, each the Adviser and the Subadviser
has adopted and implemented and will maintain written policies and
procedures that are reasonably designed to prevent violation of the
"federal securities laws" (as such term is defined in Rule 38a-1 under
the 0000 Xxx) by the Fund, the Adviser and the Subadviser (the
Subadviser's policies and procedures referred to in this Paragraph
7(b), along with the Subadviser's policies and procedures referred to
in Paragraph 7(a), are referred to herein as the "Subadviser's
Compliance Program").
8. REPORTING OF COMPLIANCE MATTERS.
(a) The Subadviser shall promptly provide to the Fund's Chief Compliance
Officer ("CCO") the following documents:
(i) copies of all SEC examination correspondences, including
correspondences regarding books and records examinations and
"sweep" examinations, issued during the term of this Agreement,
in which the SEC identified any concerns, issues or matters (such
correspondences are commonly referred to as "deficiency letters")
relating to the Subadviser's investment advisory business
involving the Fund and the Subadviser's responses thereto;
(ii) a report of any material violations of the Subadviser's
Compliance Program or any "material compliance matters" (as such
term is defined in Rule 38a-1 under the 0000 Xxx) that have
occurred with respect to the Subadviser's Compliance Program;
(iii) a report of any material changes to the policies and procedures
that compose the Subadviser's Compliance Program;
(iv) a copy of the Subadviser's chief compliance officer's report (or
similar document(s) which serve the same purpose) regarding his
or her annual review of the Subadviser's Compliance Program, as
required by Rule 206(4)-7 under the Advisers Act; and
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(v) an annual (or more frequently as the CCO may reasonably request)
representation regarding the Subadviser's compliance with
Paragraphs 7 and 8 of this Agreement.
(b) The Subadviser shall also provide the CCO with:
(i) reasonable access to the testing, analyses, reports and other
documentation, or summaries thereof, that the Subadviser's chief
compliance officer relies upon to monitor the effectiveness of
the implementation of the Subadviser's Compliance Program; and
(ii) reasonable access, during normal business hours, to the
Subadviser's facilities for the purpose of conducting
pre-arranged on-site compliance related due diligence meetings
with personnel of the Subadviser.
9. CONFIDENTIALITY. Except as otherwise permitted pursuant to this Agreement
or as required by applicable law, each party hereto agrees that the
provisions of this Agreement, all of the information, documents and reports
described herein, all understandings, agreements and other arrangements
between and among the parties, and all other non-public information
received from, or otherwise relating to, the Assets or this Agreement,
shall be confidential, and each party shall use its reasonable best efforts
not to disclose or otherwise release to any other person (other than
another party hereto) such matters, without the written consent of the
other party. The confidentiality obligations of the parties under this
Paragraph 9 shall not apply: (i) to the disclosure of information to a
party's partners, members, equity holders (including holders of beneficial
interests), affiliates, officers, auditors, agents, directors, attorneys,
employees or fiduciaries (PROVIDED, that such persons agree to hold
confidential such information substantially in accordance with this
Paragraph 9 or are otherwise bound (pursuant to internal procedures or
otherwise) by a duty of confidentiality to such party), which persons shall
be subject to the provisions of this Paragraph 9 as if they were parties or
which persons shall have agreed to hold confidential such information
substantially in accordance with this Paragraph 9, (ii) to information
already known to the general public at the time of disclosure or that
became known prior to such disclosure through no act or omission by any
party or any person acting on a party's behalf, (iii) to information
received from a source not bound by a duty of confidentiality to a party
hereto (or any affiliates of any of the foregoing), (iv) to any party to
the extent that the disclosure by such party of information otherwise
determined to be confidential is required by applicable law or legal
process (including pursuant to an arbitration proceeding), or by any
regulatory body with jurisdiction over such party, or (v) to the disclosure
of confidential information to any financial advisors and other
professional advisors of a party who agree to hold confidential such
information substantially in accordance with this Paragraph 9 or who are
otherwise bound by a duty of confidentiality to such party, PROVIDED that,
with respect to clause (iv) above, prior to disclosing such confidential
information, a party shall, to the extent practicable, notify the other
party thereof, which notice shall include the basis upon which such party
believes the information is required to be disclosed.
10. WRITTEN INSTRUCTIONS. All directions by or on behalf of the Adviser or the
Fund, as applicable, to the Subadviser shall be in writing signed by one or
more of the following persons and/or such other persons as identified in
writing from time to time:
NAME TITLE
---- -----
Xxxxxxx X. Xxxxxx Managing Member and President
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11. USE OF NAME AUTHORIZATION. Upon the consent of the Adviser, the Subadviser
may use the Adviser's and the Fund's legal names, trade names (if any),
and/or logos in (a) marketing and promotional materials used by the
Subadviser in connection with services offered by it to existing and
prospective clients and (b) a list of the Subadviser's client references.
Further, the Subadviser may use the Adviser's and the Fund's legal names,
trade names (if any), and/or logos whenever required to be disclosed by
process of law or pursuant to applicable law or regulation, provided that
the Subadviser will use its commercially reasonable best efforts to notify
the Adviser of any such disclosure.
12. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Pennsylvania, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
13. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
14. NOTICE. Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: Community Development Fund Advisors, LLC
0000 Xxxxxxx Xxxxx Xx.
Xxxxx, XX 00000
Attention: Xxx Xxxxxx
To the Subadviser at: Xxxxx Circle Partners, L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Legal Department
15. AMENDMENT OF AGREEMENT. This Agreement may be amended only by written
agreement of the Adviser and the Subadviser and only in accordance with the
provisions of the 1940 Act and the rules and regulations promulgated
thereunder.
16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
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.
17. MISCELLANEOUS.
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(a) Notice is hereby given that the obligations of the Declaration of
Trust are not binding upon any of the trustees of the Board, officers
or shareholders of the Fund.
(b) Where the effect of a requirement of the 1940 Act or Advisers Act
reflected in any provision of this Agreement is altered by a rule,
regulation or order of the SEC, whether of special or general
application, such provision shall be deemed to incorporate the effect
of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
COMMUNITY DEVELOPMENT FUND XXXXX CIRCLE PARTNERS, L.P.
ADVISORS, LLC
By: /S/ XXXXXXX X. XXXXXX By: /S/ XXXXXXX X. XXXXXXX
--------------------- -----------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxxx
Title: Managing Member and President Title: Chief Operating Officer
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SCHEDULE A TO THE SUB-ADVISORY AGREEMENT BETWEEN
COMMUNITY DEVELOPMENT FUND ADVISORS, LLC AND XXXXX CIRCLE PARTNERS, L.P.
AS OF JANUARY 20, 2016
Pursuant to Paragraph 4, the Adviser will pay to the Subadviser as compensation
for the Subadviser's services rendered, a fee, computed daily at an annual rate
based on the average daily net assets of The Community Development Fund as may
be allocated by the Adviser to the Subadviser from time to time under the
following fee schedule:
RATE
----
0.15%
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