SUB-ADVISORY CONTRACT
XXXXX FARGO BANK, N.A.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
August 1, 1998
Xxxxx Capital Management Incorporated
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
This will confirm the agreement by and among Xxxxx Fargo Bank, N.A. (the
"Adviser"), Stagecoach Funds, Inc. (the "Company"), on behalf of each Fund
listed on attached Appendix I, (each, a "Fund" and collectively, the "Funds")
and Xxxxx Capital Management Incorporated (the "Sub-Adviser") as follows:
1. The Company is a registered open-end management investment company
currently consisting of a number of investment portfolios, but which may from
time to time consist of a greater or lesser number of investment portfolios.
The Company engages in the business of investing and reinvesting the assets of
the Funds in the manner and in accordance with the investment objective and
restrictions specified in the Company's Registration Statement, as amended from
time to time (the "Registration Statement"), filed by the Company under the
Investment Company Act of 1940 (the "Act") and the Securities Act of 1933.
Copies of the Registration Statement have been furnished to the Adviser. Any
amendments to the Registration Statement shall be furnished to the Adviser
promptly.
2. The Company has engaged the Adviser to manage the investing and
reinvesting of the Funds' assets and to provide the advisory services specified
elsewhere in the Advisory Contract between the Company and the Adviser, subject
to the overall supervision of the Board of Directors of the Company. Pursuant to
Administration and Co-Administration Agreements between the Company, on behalf
of the Funds, and the administrators (the "Administrators"), the Company has
engaged the Administrators to provide the administrative services specified
therein.
3. (a) The Adviser hereby employs the Sub-Adviser to perform for the
Funds certain advisory services and the Sub-Adviser hereby accepts such
employment. The Adviser shall retain the authority to establish and modify, from
time to time, the investment strategies and approaches followed by the Sub-
Adviser, subject, in all respects, to the supervision and direction of the
Company's Board of Directors and subject to compliance with the investment
objective, policies and restrictions set forth in the Registration Statement.
(b) Subject to the overall supervision and control of the Adviser and
the Company, the Sub-Adviser shall be responsible for investing and reinvesting
the Funds' assets in a manner consistent with the investment strategies and
approaches referenced in subparagraph (a), above. In this regard, the Sub-
Adviser, in accordance with the investment objective, policies and restrictions
set forth in the Registration Statement, shall be responsible for implementing
and monitoring the performance of the Fund and shall furnish to the Adviser
periodic reports on the investment activity and performance of the Funds. The
Sub-Adviser shall also furnish such additional reports and information as the
Adviser and the Company's Board of Directors and officers shall reasonably
request.
(c) The Sub-Adviser shall, at its expense, employ or associate with
itself such persons as the Sub-Adviser believes appropriate to assist it in
performing its obligations under this contract.
4. The Adviser shall be responsible for the fees paid to the Sub-Adviser
for its services thereunder. The Sub-Adviser agrees that it shall have no claim
against the Company or the Fund respecting compensation under this contract. In
consideration of the services to be rendered by the Sub-Adviser under this
contract, the Adviser shall pay the Sub-Adviser monthly fees at the rates
specified on Appendix I hereto. If the fee payable to the Sub-Adviser pursuant
to this Paragraph 4 begins to accrue on a day after the first day of any month
or if this contract terminates before the end of any month, the fee for the
period from the effective date to the end of the month or from the beginning of
that month to the termination date, shall be prorated according to the
proportion that such period bears to the full month in which the effectiveness
or termination occurs. For purposes of calculating the monthly fee, the value of
a Fund's net assets shall be computed in the manner specified in the
Registration Statement and the Company's Articles of Incorporation for the
computation of the value of such Fund's net assets in connection with the
determination of the net asset value of Fund shares.
5. The Sub-Adviser shall give the Company the benefit of the Sub-
Adviser's best judgment and efforts in rendering services under this contract.
As consideration and as an inducement to the Sub-Adviser's undertaking to render
these services, the Company and the Adviser agree that the Sub-Adviser shall not
be liable under this contract for any mistake in judgment or in any other event
whatsoever except for lack of good faith, provided that nothing in this contract
shall be deemed to protect or purport to protect the Sub-Adviser against any
liability to the Adviser, the Company or 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 the Sub-Adviser's duties under this
contract or by reason of reckless disregard of its obligations and duties
thereunder.
6. This contract shall become effective as of its execution date and
shall thereafter continue in effect, provided that this contract shall continue
in effect for a period of more than two years from the date hereof only so long
as the continuance is specifically approved at least annually (a) by the vote of
a majority of a Fund's outstanding voting securities (as defined in the Act) or
by the Company's Board of Directors and (b) by the vote, cast in person at a
meeting called specifically for the purpose of continuing this Sub-Advisory
Contract, of a majority of the
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Company's Directors who are not parties to this contract or "interested persons"
(as defined in the Act) of any such party. This contract may be terminated, upon
60 days' written notice to the Sub-Adviser, by the Company, without the payment
of any penalty, by a vote of a majority of such Fund's outstanding voting
securities (as defined in the Act) or by a vote of a majority of the Company's
entire Board of Directors. The Sub-Adviser may terminate this contract on 60
days' written notice to the Company. This contract shall terminate automatically
in the event of its "assignment" (as defined in the Act).
7. Except to the extent necessary to perform the Sub-Adviser's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Sub-Adviser, or any affiliate of the Sub-Adviser, or
any employee of the Sub-Adviser, 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 corporation, firm, individual or association.
8. The Sub-Adviser and the Company each agree that the word "Stagecoach,"
which comprise a component of the Company's name, and the words "Xxxxx Fargo,"
which may in the future comprise a component of the Company's name, are property
rights of the parent of the Adviser. The Company agrees and consents that: (i)
it will use the words "Stagecoach" or "Xxxxx Fargo" as a component of its
corporate name, the name of any class, or both and for no other purpose; (ii) it
will not grant to any third party the right to use the words "Stagecoach" or
"Xxxxx Fargo" for any purpose; (iii) the Adviser or any corporate affiliate of
the Adviser may use or grant to others the right to use the words "Stagecoach"
or "Xxxxx Fargo," or any combination or abbreviation thereof, as all or a
portion of a corporate or business name or for any commercial purpose, other
than a grant of such right to another registered investment company not advised
by the Adviser or one of its affiliates; and (iv) in the event that the Adviser
or an affiliate thereof is no longer acting as investment adviser to any class,
the Company shall, upon request by the Adviser, promptly take such action as may
be necessary to change its corporate name to one not containing the words
"Stagecoach" or "Xxxxx Fargo" and following such change, shall not use the words
"Stagecoach" or "Xxxxx Fargo" 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 directors, officers, and shareholders to take any and all
actions that the Adviser may request to effect the foregoing and to reconvey to
the Adviser any and all rights to such words.
9. This contract shall be governed by and construed in accordance with
the laws of the State of California.
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If the foregoing correctly sets forth the agreement by and among the
Company, the Adviser and the Sub-Adviser, please so indicate by signing and
returning to the Company the enclosed copy hereof.
Very truly yours,
XXXXX FARGO BANK, N.A.
By:___________________________________
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
By:____________________________________
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Vice President
AGREED to as of the date set forth above:
XXXXX CAPITAL MANAGEMENT INCORPORATED
By:______________________________________
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Investment Officer
By:______________________________________
Name: J. Xxxx Xxxxx
Title: Chief Operating Officer
ACCEPTED as of the date set forth above:
STAGECOACH FUNDS, INC.,
on behalf of each Fund listed on attached Appendix I
By:______________________________________
Xxxxxxx X. Xxxxx, Xx.
Chief Operating Officer
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APPENDIX I
Sub-advisory fees are generally subject to a minimum annual fee of $120,000
per Fund; and shall be paid monthly on the first business day of each month, at
the annual rates specified below of each Fund's average daily value (as
determined on each day that such value is determined for the Fund at the time
set forth in the Prospectus for determining net asset value per share) during
the preceding month.
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FUNDS FEE (PER FUND)
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EQUITY FUNDS
Balanced 0.25% of the first $200 million in assets
Diversified Equity Income 0.20% of the next $200 million in assets
Equity Value 0.15% of all assets over $400 million
Growth
International Equity
Small Cap
Strategic Growth
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INCOME FUNDS
Corporate Bond 0.15% of the first $400 million in assets
Short-Term Government-Corporate Income 0.125% of the next $400 million in assets
Short-Intermediate U.S. Government Income 0.10% of all assets over $800 million
Strategic Income
U.S. Government Income
Variable Rate Government
TAX-FREE INCOME FUNDS
Arizona Tax-Free
California Tax-Free Bond
California Tax-Free Income
National Tax-Free
Oregon Tax-Free
Short-Term Municipal Income
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MONEY MARKET FUNDS
Money Market 0.05% of the first $960 million in assets
Money Market Trust 0.04% of all assets above $960 million
California Tax-Free Money Market
California Tax-Free Money Market Trust
Government Money Market
National Tax-Free Money Market
National Tax-Free Money Market Trust
Overland Express Sweep
Prime Money Market
Treasury Money Market
100% Treasury Money Market Fund
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Approved: April 30, 1998
Approved, as amended: July 30, 1998
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