SUB-ADVISORY AGREEMENT
AGREEMENT made as of the ___ day of _____, 199_ among U.S. GLOBAL
INVESTORS, INC., a corporation organized under the laws of the State of Texas
(the "Advisor"), ACCOLADE FUNDS, a Massachusetts business trust having its
principal place of business in San Antonio, Texas (the "Trust"), on behalf of
the Regent Emerging Europe Opportunity Fund (the "Fund"), a series of shares of
the Trust, a corporation organized under the laws of Barbados. Regent Fund
Management Limited (the "Sub-Advisor").
WHEREAS, the Advisor 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 four 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-ADVISOR.
The Sub-Advisor is hereby appointed to provide investment
advisory services to the Fund for the period and on the terms
herein set forth. The Sub-Advisor accepts such appointment and
agrees to render the services herein set forth, for the
compensation herein provided. To enable Sub-Advisor to
exercise fully its discretion and authority as provided in
this Section 1, the Trust hereby constitutes and appoints
Sub-Advisor 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-ADVISOR.
(a) The Sub-Advisor is hereby authorized and directed and
hereby agrees, subject to the stated investment
objectives and policies of the Fund as set forth in the
Fund's Prospectus (as defined below) and subject to the
supervision of the Advisor 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 under the circumstances appears 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 which 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-Advisor will advise the Trust's custodian and
the Advisor 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
Advisor may reasonably request, the Sub-Advisor 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 Advisor may reasonably
request. The Sub- Advisor will also inform the Trust's
officers and Trustees on a current basis of changes in
investment strategy or tactics. The Sub-Advisor 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-Advisor 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-Advisor, although the Trust will pay the actual
brokerage commissions and any transfer taxes with
respect to transactions in the
1
50
portfolio securities of the Trust. The Sub-Advisor is
authorized to submit any such order collectively with
orders on behalf of other accounts under its
management, provided that the Sub-Advisor 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-Advisor 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-Advisor
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-Advisor may also consider the
brokerage and research services [as those terms are
defined in Section 28(e) of the Securities Exchange Act
of 1934] provided to the Fund and/or other accounts
over which the Sub-Advisor or an affiliate of the
Sub-Advisor exercises investment discretion. The
Sub-Advisor 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-Advisor 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-Advisor may provide
brokerage services to the Fund provided that the
Sub-Advisor 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-Advisor to
enter into transactions with the Fund as principal.
In the performance of its duties hereunder, the
Sub-Advisor 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 Advisor.
(b) Delivery of Documents. The Advisor will furnish upon
request or has previously furnished the Sub-Advisor
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, are
herein called the "By-Laws");
(iii) Resolutions of the Trust's Board of Trustees
authorizing the appointment of the Advisor
and Sub-Advisor 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.
2
51
During the term of this Agreement, the Advisor shall not use
or implement any amendment or supplement that relates to or
affects the obligations of the Sub-Advisor hereunder if the
Sub-Advisor reasonably objects in writing within five business
days after delivery thereof (or such shorter period of time as
the Advisor 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-Advisor as provided in Paragraph 2 hereof, the
Advisor will pay the Sub-Advisor in accordance with
the following:
(i) Subject to shareholder approval the initial
term of the advisory agreement will be for
two years, and the Fund will pay a one and
one quarter percent (1.25%) annual
management fee to the Advisor;
The Advisor will pay to the Sub-Advisor 50
percent of the management fee received net
of all waivers and reimbursements.
(ii) The Fund is not responsible for paying any
portion of the Sub-Advisor's fees.
(iii) The fee is payable in monthly installments
in arrears. The "Management Fee" means the
management fee paid by the Trust to the
Advisor under the Addendum to the Advisory
Agreement, dated as of ______________,
199__, between the Trust and the Advisor
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-Advisor will bear
all expenses incurred by it in the performance of its duties
hereunder.
5. FUND TRANSACTIONS.
The Sub-Advisor 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-Advisor hereby represents and warrants to the Advisor
that it is duly registered as an investment Advisor, 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.
3
52
7. LIABILITY OF SUB-ADVISOR.
In the performance of its duties under this Agreement, the
Sub-Advisor 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-Advisor that a
notice of eligibility may be filed on behalf of the Trust
pursuant to Rule 4.5 promulgated under said Act). The
Sub-Advisor 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 statutes 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-Advisor 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-Advisor 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-Advisor 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 for two years from
the date of shareholder approval and 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 Advisor on sixty (60) days'
written notice to the other parties or (iii) by the
Sub-Advisor 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 Advisor and the Trust with
respect to the Fund.
10. SERVICES NOT EXCLUSIVE.
The services of the Sub-Advisor of the Fund hereunder are not
to be deemed exclusive, and the Sub-Advisor shall be free to
render similar services to others.
11. LIMITATION OF LIABILITY.
(a) The Trust. The term "Accolade 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
4
53
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 obligations of the Advisor and Sub-Advisor hereunder
shall not be binding upon any of the shareholders,
nominees, officers, agents or employees of the Advisor
or Sub-Advisor, personally, but bind only the assets and
property of the Advisor and Sub-Advisor, respectively.
The execution and delivery of the Agreement have been
authorized by the directors and officers of the Advisor
and Sub-Advisor and signed by an authorized officer of
the Advisor and Sub-Advisor, 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-Advisor, respectively. This limitation of
liability shall not be deemed to protect the
shareholders, nominees, officers, agents or employees of
the Advisor and Sub-Advisor 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 constitutes the entire agreement of the
parties and supersedes all prior or contemporaneous
written or oral negotiations, correspondence, agreements
and understandings, regarding the subject matter hereof.
13. STANDARD OF CARE.
To the extent permitted under applicable law (including
section 36 of the 1940 Act), the Sub-Advisor will not be
liable to the Trust or the Advisor for any losses incurred by
the Trust, the Fund or the Advisor that arise out of or are in
any way connected with any recommendation or other act or
failure
5
54
to act of the Sub-Advisor 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-Advisor's
fiduciary duty to the Trust, the Fund or the Advisor. 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 Advisor or the Fund may have under any Federal or
state securities laws.
IN WITNESS WHEREOF, the Advisor, the Trust and the Sub-Advisor have caused this
Agreement to be executed on the day and year first above written.
U.S. GLOBAL INVESTORS, INC.
By:_______________________________
ACCOLADE FUNDS
By:_______________________________
REGENT FUND MANAGEMENT LIMITED
By:_______________________________
6
55
