EX-99.d.5.
SUBADVISORY AGREEMENT
THIS AGREEMENT is made and entered into effective the [ ]day of [ ], 2007,
by and among ABERDEEN FUNDS (the "Trust"), a Delaware statutory trust, ABERDEEN
ASSET MANAGEMENT INC. (the "Adviser") a Delaware corporation registered under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
SECURITY INVESTORS, LLC, a limited liability company organized under the laws of
the State of Kansas (the "Subadviser"), and also registered under the Advisers
Act.
WITNESSETH:
WHEREAS, the Trust is registered with the U.S. Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser has, pursuant to an Investment Advisory Agreement with
the Trust dated of the [ ] day of [ ], 2007 (the "Advisory Agreement"), been
retained to act as investment adviser for certain of the series of the Trust
that are listed on Exhibit A to this Agreement (each, a "Fund");
WHEREAS, the Adviser represents that it is willing and possesses legal
authority to render such services subject to the terms and conditions set forth
in this Agreement;
WHEREAS, the Trust and the Adviser each represent that the Advisory
Agreement permits the Adviser to delegate certain of its duties under the
Advisory Agreement to other investment advisers, subject to the requirements of
the 1940 Act; and
WHEREAS, the Adviser desires to retain the Subadviser to assist it in the
provision of a continuous investment program for that portion of the Fund's
assets that the Adviser will assign to the Subadviser, and the Subadviser is
willing to render such services subject to the terms and conditions set forth in
this Agreement,
NOW, THEREFORE, the parties do mutually agree and promise as follows with
respect to each Fund:
1. Appointment as Subadviser. The Adviser hereby appoints the Subadviser to
act as investment adviser for and to manage that portion or all of the assets of
the Fund that the Adviser from time to time upon reasonable prior notice
allocates to, and puts under the control of, the Subadviser (the "Subadviser
Assets") subject to the supervision of the Adviser and the Board of Trustees of
the Trust and subject to the terms of this Agreement; and the Subadviser hereby
accepts such appointment. In such capacity, the Subadviser shall be responsible
for the investment management of the Subadviser Assets. It is recognized that
the Subadviser and certain of its affiliates now act, and that from time to time
hereafter may act, as investment adviser to one or more other investment
companies and to fiduciary or other managed accounts and that the Adviser and
the Trust cannot object to such activities.
2. Duties of Subadviser.
a. Investments. The Subadviser is hereby authorized and directed and hereby
agrees, subject to the stated investment policies and restrictions of the Fund
as set forth in the Fund's prospectus and statement of additional information as
currently in effect and, as soon as practical after the Trust, the Fund or the
Adviser notifies the Subadviser thereof, as supplemented or amended from time to
time (collectively referred to hereinafter as the "Prospectus") and subject to
the directions of the Adviser and the Trust's Board of Trustees, to monitor on a
continuous basis the performance of the Subadviser Assets and to conduct a
continuous program of investment, evaluation and, if appropriate, sale and
reinvestment of the Subadviser Assets. The Adviser agrees to provide the
Subadviser with such assistance as may be reasonably requested by the Subadviser
in connection with the Subadviser's activities under this Agreement, including,
without limitation, providing information concerning the Fund, its funds
available, or to become available, for investment and generally as to the
conditions of the Fund's or the Trust's affairs.
b. Compliance with Applicable Laws, Governing Documents and Trust
Compliance Procedures. In the performance of its services under this Agreement,
the Subadviser shall act in conformity with: (i) the Prospectus; (ii) the
Trust's Agreement and Declaration of Trust and By-Laws as currently in effect
and, as soon as practical after the Trust, the Fund or the Adviser notifies the
Subadviser thereof, as supplemented, amended and/or restated from time to time
(referred to hereinafter as the "Declaration of Trust" and "By-Laws,"
respectively); (iii) the policies and procedures for compliance by the Trust
with the Federal Securities Laws (as that term is defined in Rule 38a-1 under
the 0000 Xxx) provided to the Subadviser (together, the "Trust Compliance
Procedures"); and (iv) with the instructions and directions received in writing
from the Adviser or the Trustees of the Trust. The Subadviser in performing its
services under this Agreement will conform to, and comply with, the requirements
of the 1940 Act, the Internal Revenue Code of 1986, as amended (the "Code"), and
all other applicable federal and state laws and regulations. Without limiting
the preceding sentence, the Adviser promptly shall notify the Subadviser as to
any act or omission of the Subadviser hereunder that the Adviser reasonably
deems to constitute or to be the basis of any noncompliance or nonconformance
with any of the Trust's Declaration of Trust and By-Laws, the Prospectus and
Trust Compliance Procedures, the instructions and directions received in writing
from the Adviser or the Trustees of the Trust or the 1940 Act, the Code, and all
other applicable federal and state laws and regulations. Notwithstanding the
foregoing, the Adviser shall remain responsible for ensuring the Fund's and the
Trust's overall compliance with the 1940 Act, the Code and all other applicable
federal and state laws and regulations and the Subadviser is only obligated to
comply with this subsection (b) with respect to the Subadviser Assets. The
Adviser timely will provide the Subadviser with a copy of the minutes of the
meetings of the Board of Trustees of the Trust to the extent they may affect a
Fund or the services of the Subadviser, copies of any financial statements or
reports made by a Fund to its shareholders, and any further materials or
information which the Subadviser may reasonably request to enable it to perform
its functions under this Agreement.
The Adviser shall perform quarterly and annual tax compliance tests to
ensure that the Fund is in compliance with Subchapter M and Section 817(h) of
the Code. In connection with such compliance tests, the Adviser shall inform the
Subadviser at least ten (10) business days prior to a calendar quarter end if
the Subadviser Assets are out of compliance with the diversification
requirements under either Subchapter M or Section 817(h). If the Adviser
notifies the Subadviser that the Subadviser Assets are not in compliance with
such requirements noted above, the Subadviser will take prompt action to bring
the Subadviser Assets back into compliance within the time permitted under the
Code thereunder.
The Adviser will provide the Subadviser with reasonable advance notice of
any change in a Fund's investment objectives, policies and restrictions as
stated in the Prospectus, and the Subadviser shall, in the performance of its
duties and obligations under this Agreement, manage the Subadviser Assets
consistent with such changes, provided that the Subadviser has received prompt
notice of the effectiveness of such changes from the Trust or the Adviser. In
addition to such notice, the Adviser shall provide to the Subadviser a copy of a
modified Prospectus reflecting such changes. The Adviser acknowledges and will
ensure that the Prospectus will at all times be in compliance with all
disclosure requirements under all applicable federal and state laws and
regulations relating to the Trust or the Fund, including, without limitation,
the 1940 Act, and the rules and regulations thereunder, and that the Subadviser
shall have no liability in connection therewith, except as to the accuracy of
material information furnished in writing by the Subadviser to the Trust or to
the Adviser specifically for inclusion in the Prospectus. The Subadviser hereby
agrees to provide to the Adviser in a timely manner such information relating to
the Subadviser and its relationship to, and actions for, the Trust as may be
required to be contained in the Prospectus or in the Trust's Registration
Statement on Form N-1A.
In order to assist the Trust and the Trust's Chief Compliance Officer (the
"Trust CCO") to satisfy the requirements contained in Rule 38a-1 under the 1940
Act, the Subadviser shall provide to the Trust CCO: (i) direct access to the
Subadviser's chief compliance officer (the "Subadviser CCO"), as reasonably
requested by the Trust CCO; (ii) quarterly reports confirming that the
Subadviser has complied with the Trust Compliance Procedures in managing the
Subadviser Assets; and (iii) quarterly certifications that there were no
Material Compliance Matters (as that term is defined by Rule 38a-1(e)(2)) that
arose under the Trust Compliance Procedures that related to the Subadviser's
management of the Subadviser Assets.
c. Subadviser Compliance Policies and Procedures. The Subadviser shall
promptly provide the Trust CCO with copies of: (i) the Subadviser's policies and
procedures for compliance by the Subadviser with the Federal Securities Laws
(together, the "Subadviser Compliance Procedures"), and (ii) any material
changes to the Subadviser Compliance Procedures. The Subadviser shall cooperate
fully with the Trust CCO so as to facilitate the Trust CCO's performance of the
Trust CCO's responsibilities under Rule 38a-1 to review, evaluate and report to
the Trust's Board of Trustees on the operation of the Subadviser Compliance
Procedures, and shall promptly report to the Trust CCO any Material Compliance
Matter arising under the Subadviser Compliance Procedures involving the
Subadviser Assets. The Subadviser shall provide to the Trust CCO: (i) quarterly
reports confirming the Subadviser's compliance with the Subadviser Compliance
Procedures in managing the Subadviser Assets, and (ii) certifications that there
were no Material Compliance Matters involving the Subadviser that arose under
the Subadviser Compliance Procedures that affected the Subadviser Assets. At
least annually, the Subadviser shall provide a certification to the Trust CCO to
the effect that the Subadviser has in place and has implemented policies and
procedures that are reasonably designed to ensure compliance by the Subadviser
with the Federal Securities Laws.
d. Voting of Proxies. The Adviser hereby delegates to the Subadviser the
Adviser's discretionary authority to exercise voting rights with respect to the
securities and other investments in the Subadviser Assets and authorizes the
Subadviser to delegate further such discretionary authority to a designee
identified in a notice given to the Trust and the Adviser. The Subadviser,
including without limitation its designee, shall have the power to vote, either
in person or by proxy, all securities in which the Subadviser Assets may be
invested from time to time, and shall not be required to seek or take
instructions from, the Adviser, the Fund or the Trust or take any action with
respect thereto. If both the Subadviser and another entity managing assets of
the Fund have invested the Fund's assets in the same security, the Subadviser
and such other entity will each have the power to vote its pro rata share of the
Fund's security.
The Subadviser will establish a written procedure for proxy voting in
compliance with current applicable rules and regulations, including but not
limited to Rule 30b1-4 under the 1940 Act. The Subadviser will provide the
Adviser or its designee, a copy of such procedure and establish a process for
the timely distribution of the Subadviser's voting record with respect to the
Fund's securities and other information necessary for the Fund to complete
information required by Form N-lA under the 1940 Act and the Securities Act of
1933, as amended (the "Securities Act"), Form N-PX under the 1940 Act, and Form
N-CSR under the Xxxxxxxx-Xxxxx Act of 2002, as amended, respectively.
e. Agent. Subject to any other written instructions of the Adviser or the
Trust, the Subadviser is hereby appointed the Adviser's and the Trust's agent
and attorney-in-fact for the limited purposes of executing account
documentation, agreements, contracts and other documents as the Subadviser shall
be requested by brokers, dealers, counterparties and other persons in connection
with its management of the Subadviser Assets. The Subadviser agrees to provide
the Adviser and the Trust with copies of any such agreements executed on behalf
of the Adviser or the Trust.
f. Brokerage. The Subadviser is authorized, subject to the supervision of
the Adviser and the plenary authority of the Trust's Board of Trustees, to
establish and maintain accounts on behalf of the Fund with, and place orders for
the investment and reinvestment, including without limitation purchase and sale,
of the Subadviser Assets with or through, such persons, brokers (including, to
the extent permitted by applicable law, any broker affiliated with the
Subadviser) or dealers (collectively "Brokers") as the Subadviser may elect and
negotiate commissions to be paid on such transactions. The Subadviser, however,
is not required to obtain the consent of the Adviser or the Trust's Board of
Trustees prior to establishing any such brokerage account. The Subadviser shall
place all orders for the purchase and sale of portfolio investments for a Fund's
account with Brokers selected by the Subadviser. In the selection of such
Brokers and the placing of such orders, the Subadviser shall seek to obtain for
the Fund the most favorable price and execution available, except to the extent
it may be permitted to pay higher brokerage commissions for brokerage and
research services, as provided below. In using its reasonable efforts to obtain
for a Fund the most favorable price and execution available, the Subadviser,
bearing in mind the best interests of each Fund at all times, shall consider all
factors it deems relevant, including price, the size of the transaction, the
breadth and nature of the market for the security, the difficulty of the
execution, the amount of the commission, if any, the timing of the transaction,
market prices and trends, the reputation, experience and financial stability of
the Broker involved, and the quality of service rendered by the Broker in other
transactions. Notwithstanding the foregoing, neither the Trust, the Fund nor the
Adviser shall instruct the Subadviser to place orders with any particular
Broker(s) with respect to the Subadviser Assets. Subject to such policies as the
Trustees may determine, or as may be mutually agreed to by the Adviser and the
Subadviser, the Subadviser is authorized but not obligated to cause, and shall
not be deemed to have acted unlawfully or to have breached any duty created by
this Agreement or otherwise solely by reason of its having caused, the Fund to
pay a Broker that provides brokerage and research services (within the meaning
of Section 28(e) of the Securities Exchange Act of 1934) to the Subadviser an
amount of commission for effecting a Subadviser Assets' investment transaction
that is in excess of the amount of commission that another Broker 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 viewed in
terms of either that particular transaction or the overall responsibility of the
Subadviser with respect to the accounts as to which it exercises investment
discretion.
It is recognized that the services provided by such Brokers may be useful
to the Subadviser in connection with the Subadviser's services to other clients.
On occasions when the Subadviser deems the purchase or sale of a security to be
in the best interests of the Fund with respect to the Subadviser Assets as well
as other clients of the Subadviser, the Subadviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of securities so sold or purchased, as well as the expenses
incurred in the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its fiduciary
obligations to each Fund and to such other clients. It is recognized that in
some cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtainable for, or disposed of by, the Fund
with respect to the Subadviser Assets.
g. Securities Transactions. The Subadviser and any affiliated person of the
Subadviser will not purchase securities or other instruments from or sell
securities or other instruments to the Fund; provided, however, the Subadviser
or any affiliated person of the Subadviser may purchase securities or other
instruments from or sell securities or other instruments to the Fund if such
transaction is permissible under applicable laws and regulations, including,
without limitation, the 1940 Act and the Advisers Act and the rules and
regulations promulgated thereunder.
The Subadviser acknowledges that the Adviser and the Trust may rely on Rule
17a-7, Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the 1940 Act,
and the Subadviser hereby agrees that it shall not consult with any other
subadviser to the Trust with respect to transactions in securities for the
Subadviser Assets or any other transactions of Trust assets.
The Subadviser, on its own behalf and with respect to its Access Persons
(as defined in subsection (e) of Rule 17j-1 under the 1940 Act), agrees to
observe and comply with Rule 17j-1 and its Code of Ethics (which shall comply in
all material respects with Rule 17j-1), as the same may be amended from time to
time. On at least an annual basis, the Subadviser will comply with the reporting
requirements of Rule 17j-1, which may include either (i) certifying to the
Adviser that the Subadviser and its Access Persons have complied with the
Subadviser's Code of Ethics with respect to the Subadviser Assets or (ii)
identifying any violations which have occurred with respect to the Subadviser
Assets. The Subadviser will have also submitted its Code of Ethics for its
initial approval by the Board of Trustees no later than the date of execution of
this agreement and subsequently within six months of any material change
thereto.
h. Books and Records. The Subadviser shall maintain separate detailed
records as are required by applicable laws and regulations of all matters
hereunder pertaining to the Subadviser Assets (the "Fund's Records"), including,
without limitation, brokerage and other records of all securities transactions.
The Subadviser acknowledges that the Fund's Records are property of the Trust;
except to the extent that the Subadviser is required to maintain the Fund's
Records under the Advisers Act or other applicable law and except that the
Subadviser, at its own expense, is entitled to make and keep a copy of the
Fund's Records for its internal files. The Fund's Records shall be available to
the Adviser or the Trust at any time upon reasonable request during normal
business hours and shall be available for telecopying promptly to the Adviser
during any day that the Fund is open for business as set forth in the
Prospectus.
i. Information Concerning Subadviser Assets and Subadviser. From time to
time as the Adviser or the Trust reasonably may request in good faith, the
Subadviser will furnish the requesting party reports on portfolio transactions
and reports on the Subadviser Assets, all in such reasonable detail as the
parties may reasonably agree in good faith. The Subadviser will also inform the
Adviser in a timely manner of material changes in portfolio managers responsible
for Subadviser Assets, any changes in the ownership or management of the
Subadviser, or of material changes in the control of the Subadviser. Upon the
Trust's or the Adviser's reasonable request, the Subadviser will make available
its officers and employees to meet with the Trust's Board of Trustees to review
the Subadviser Assets via telephone on a quarterly basis and on a less frequent
basis as agreed upon by the parties in person.
Subject to the other provisions of this Agreement, the Subadviser will also
provide such information or perform such additional acts with respect to the
Subadviser Assets as are reasonably required for the Trust or the Adviser to
comply with their respective obligations under applicable laws, including
without limitation, the Code, the 1940 Act, the Advisers Act, and the Securities
Act, and any rule or regulation thereunder.
j. Custody Arrangements. The Trust or the Adviser shall notify the
Subadviser of the identities of its custodian banks and the custody arrangements
therewith with respect to the Subadviser Assets and shall give the Subadviser
written notice of any changes in such custodian banks or custody arrangements.
The Subadviser shall on each business day provide the Adviser and the Trust's
custodian such information as the Adviser and the Trust's custodian may
reasonably request in good faith relating to all transactions concerning the
Subadviser Assets. The Trust shall instruct its custodian banks to (A) carry out
all investment instructions as may be directed by the Subadviser with respect to
the Subadviser Assets (which instructions may be orally given if confirmed in
writing); and (B) provide the Subadviser with all operational information
necessary for the Subadviser to trade the Subadviser Assets on behalf of the
Fund. The Subadviser shall have no liability for the acts or omissions of the
authorized custodian(s), unless such act or omission is required by and taken in
reliance upon instructions given to the authorized custodian(s) by a
representative of the Subadviser properly authorized (pursuant to written
instruction by the Adviser) to give such instructions.
k. Valuation of Subadviser Assets. The Subadviser agrees to monitor the
Subadviser Assets and to notify the Adviser or its designee on any day that the
Subadviser determines that a significant event has occurred with respect to one
or more securities held in the Subadviser Assets. As requested by the Adviser or
the Trust's Valuation Committee, the Subadviser hereby agrees to provide
additional assistance to the Valuation Committee of the Trust, the Adviser and
the Trust's pricing agents in valuing Subadviser Assets held in the portfolio.
Such assistance may include fair value pricing of portfolio securities, as
requested by the Adviser. The Subadviser agrees that it will act, at all times,
in accordance with the Trust's Valuation Procedures, and will provide such
certifications or sub-certifications relating to its compliance with the Trust's
Valuation Procedures as reasonably may be requested, from time to time, by the
Adviser or the Trust.
The Subadviser also will provide such information or perform such
additional acts as are customarily performed by a Subadviser and may be required
for a Fund or the Adviser to comply with their respective obligations under
applicable federal securities laws, including, without limitation, the 1940 Act,
the Advisers Act, the 1934 Act, the Securities Act, and any rule or regulation
thereunder.
3. Independent Contractor. In the performance of its services hereunder,
the Subadviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Fund, the Trust or the Adviser in any way
or otherwise be deemed an agent of the Fund, the Trust or the Adviser.
4. Expenses. During the term of this Agreement, the Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement.
The Subadviser shall, at its sole expense, employ or associate itself with such
persons as it believes to be particularly fitted to assist it in the execution
of its duties under this Agreement. The Subadviser shall not be responsible for
the Trust's, the Fund's or Adviser's expenses, which shall include, but not be
limited to, the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased for a
Fund and any losses incurred in connection therewith, expenses of holding or
carrying Subadviser Assets, including, without limitation, expenses of dividends
on stock borrowed to cover a short sale and interest, fees or other charges
incurred in connection with leverage and related borrowings with respect to the
Subadviser Assets, organizational and offering expenses (which include, but are
not limited to, out-of-pocket expenses, but not overhead or employee costs of
the Subadviser); expenses for legal, accounting and auditing services; taxes and
governmental fees; dues and expenses incurred in connection with membership in
investment company organizations; costs of printing and distributing shareholder
reports, proxy materials, prospectuses, stock certificates and distribution of
dividends; charges of the Fund's custodians and sub-custodians, administrators
and sub-administrators, registrars, transfer agents, dividend disbursing agents
and dividend reinvestment plan agents; payment for portfolio pricing services to
a pricing agent, if any; registration and filing fees of the SEC; expenses of
registering or qualifying securities of the Fund for sale in the various states;
freight and other charges in connection with the shipment of the Fund's
portfolio securities; fees and expenses of non-interested Trustees; salaries of
shareholder relations personnel; costs of shareholders meetings; insurance;
interest; brokerage costs; and litigation and other extraordinary or
non-recurring expenses. The Trust or the Adviser, as the case may be, shall
reimburse the Subadviser for any expenses of the Funds or the Adviser as may be
reasonably incurred by such Subadviser on behalf of the Fund or the Adviser. The
Subadviser shall keep and supply to the Trust and the Adviser reasonable records
of all such expenses.
5. Compensation. For the services provided pursuant to this Agreement, the
Subadviser is entitled to the fee listed for the Fund on Exhibit A hereto. Such
fees will be computed daily and paid no later than the seventh (7th) business
day following the end of each month, from the Adviser, calculated at an annual
rate based on the Subadviser Assets' average daily net assets.
The method of determining the net asset value of the Subadviser Assets for
purposes hereof shall be the same as the method of determining net asset value
for purposes of establishing the offering and redemption price of the shares of
the Trust as described in the Fund's Prospectus. If this Agreement shall be
effective for only a portion of a month with respect to the Fund, the aforesaid
fee shall be prorated for the portion of such month during which this Agreement
is in effect for the Fund.
6. Representations and Warranties of Subadviser. The Subadviser represents
and warrants to the Adviser and the Trust as follows:
a. The Subadviser is registered as an investment adviser under the Advisers
Act;
b. The Subadviser is registered as a Commodity Trading Advisor under the
Commodity Exchange Act, as amended (the "CEA"), with the Commodity Futures
Trading Commission (the "CFTC"), or is not required to file such registration;
c. The Subadviser is a limited liability company duly organized and
properly registered and operating under the laws of the State of Kansas with the
power to own and possess its assets and carry on its business as it is now being
conducted and as proposed to be conducted hereunder;
d. The execution, delivery and performance by the Subadviser of this
Agreement are within the Subadviser's powers and have been duly authorized by
all necessary actions of its directors or shareholders, and no action by, or in
respect of, or filing with, any governmental body, agency or official is
required on the part of the Subadviser for execution, delivery and performance
by the Subadviser of this Agreement, and the execution, delivery and performance
by the Subadviser of this Agreement do not contravene or constitute a violation
of, or a material default under, (i) any provision of applicable law, rule or
regulation, (ii) the Subadviser's governing instruments, or (iii) any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Subadviser; and
e. The Form ADV of the Subadviser previously provided to the Adviser and
the Trust is a true and complete copy of the form, including that part or parts
of the Form ADV filed with the SEC, that part or parts maintained in the records
of the Adviser, and/or that part or parts provided or offered to clients, in
each case as required under the Advisers Act and rules thereunder, and the
information contained therein is accurate and complete in all material respects
and does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
7. Representations and Warranties of Adviser. The Adviser represents and
warrants to the Subadviser as follows:
a. The Adviser is registered as an investment adviser under the Advisers
Act;
b. The Adviser has filed a notice of exemption pursuant to Rule 4.14 under
the CEA with the CFTC and the National Futures Association or is not required to
file such exemption;
c. The Adviser is a corporation duly organized and validly existing under
the laws of the State of Delaware with the power to own and possess its assets
and carry on its business as it is now being conducted and as proposed to be
conducted hereunder;
d. The execution, delivery and performance by the Adviser of this Agreement
are within the Adviser's powers and have been duly authorized by all necessary
action on the part of its directors or shareholders, and no action by, or in
respect of, or filing with, any governmental body, agency or official is
required on the part of the Adviser for the execution, delivery and performance
by the Adviser of this Agreement, and the execution, delivery and performance by
the Adviser of this Agreement do not contravene or constitute a violation of, or
a material default under, (i) any provision of applicable law, rule or
regulation, (ii) the Adviser's governing instruments, or (iii) any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Adviser;
e. The Form ADV of the Adviser previously provided to the Subadviser and
the Trust is a true and complete copy of the form, including that part or parts
of the Form ADV filed with the SEC, that part or parts maintained in the records
of the Adviser, and/or that part or parts provided or offered to clients, in
each case as required under the Advisers Act and rules thereunder, and the
information contained therein is accurate and complete in all material respects
and does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading;
f. The Adviser acknowledges that it received a copy of the Subadviser's
Form ADV prior to the execution of this Agreement; and
g. The Adviser and the Trust have duly entered into the Advisory Agreement
pursuant to which the Trust authorized the Adviser to delegate certain of its
duties under the Advisory Agreement to other investment advisers, including
without limitation, the appointment of a subadviser with respect to assets of
each of the Trust's mutual fund series, including without limitation the
Adviser's entering into and performing this Agreement.
8. Representations and Warranties of the Trust. The Trust represents and
warrants to the Adviser and the Subadviser as follows:
a. The Trust is a statutory trust duly formed and validly existing under
the laws of the State of Delaware with the power to own and possess its assets
and carry on its business as it is now being conducted and as proposed to be
conducted hereunder;
b. The Trust is registered as an investment company under the 1940 Act and
has elected to qualify and has qualified, together with the Fund, as a regulated
investment company under the Code, and the Fund's shares are registered under
the Securities Act;
c. The execution, delivery and performance by the Trust of this Agreement
are within the Trust's powers and have been duly authorized by all necessary
action on the part of the Trust and its Board of Trustees, and no action by, or
in respect of, or filing with, any governmental body, agency or official is
required on the part of the Trust for the execution, delivery and performance by
the Trust of this Agreement, and the execution, delivery and performance by the
Trust of this Agreement do not contravene or constitute a default under (i) any
provision of applicable law, rule or regulation, (ii) the Trust's governing
instruments, or (iii) any agreement, judgment, injunction, order, decree or
other instrument binding upon the Trust; and
d. The Trust acknowledges that it received a copy of the Subadviser's Form
ADV prior to the execution of this Agreement.
9. Survival of Representations and Warranties; Duty to Update Information.
All representations and warranties made by the Subadviser, the Adviser and the
Trust pursuant to the recitals above and Sections 6, 7 and 8, respectively,
shall survive for the duration of this Agreement and the parties hereto shall
promptly notify each other in writing upon becoming aware that any of the
foregoing representations and warranties are no longer true or accurate in all
material effects.
10. Liability and Indemnification.
a. Liability. The Subadviser shall exercise its best judgment in rendering
its services in accordance with the terms of this Agreement, but otherwise, in
the absence of willful misfeasance, bad faith or gross negligence on the part of
the Subadviser or a reckless disregard of its duties hereunder, the Subadviser,
each of its affiliates and all respective partners, officers, directors and
employees ("Affiliates") and each person, if any, who within the meaning of the
Securities Act controls the Subadviser ("Controlling Persons"), if any, shall
not be subject to any expenses or liability to the Adviser, any other subadviser
to a Fund, the Trust or a Fund or any of a Fund's shareholders, in connection
with the matters to which this Agreement relates, including without limitation
for any losses that may be sustained in the purchase, holding or sale of
Subadviser Assets. The Adviser shall exercise its best judgment in rendering its
obligations in accordance with the terms of this Agreement, but otherwise
(except as set forth in Section 10(c) below), in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Adviser or a
reckless disregard of its duties hereunder, the Adviser, any of its Affiliates
and each of the Adviser's Controlling Persons, if any, shall not be subject to
any liability to the Subadviser, for any act or omission in the case of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of Subadviser Assets. Notwithstanding
the foregoing, nothing herein shall relieve the Adviser and the Subadviser from
any of their obligations under applicable law, including, without limitation,
the federal and state securities laws and the CEA.
b. Indemnification. The Subadviser shall indemnify the Adviser, the Trust
and the Fund, and their respective Affiliates and Controlling Persons, for any
liability and expenses, including without limitation reasonable attorneys' fees
and expenses, which the Adviser, the Trust and/or the Fund and their respective
Affiliates and Controlling Persons may sustain as a result of the Subadviser's
willful misfeasance, bad faith, gross negligence, reckless disregard of its
duties hereunder or violation of applicable law, including, without limitation,
the federal and state securities laws or the CEA. The Adviser shall indemnify
the Subadviser, its Affiliates and its Controlling Persons, for any liability
and expenses, including without limitation reasonable attorneys' fees and
expenses, which may be sustained as a result of the Adviser's willful
misfeasance, bad faith, gross negligence, reckless disregard of its duties
hereunder or violation of applicable law, including, without limitation, the
federal and state securities laws or the CEA.
The Trust shall indemnify the Subadviser, its Affiliates and its
Controlling Persons, for any liability and expenses, including without
limitation reasonable attorneys' fees and expenses, which may be sustained as a
result of the Trust's willful misfeasance, bad faith, gross negligence, reckless
disregard of its duties hereunder or violation of applicable law, including,
without limitation, the federal and state securities laws or the CEA.
c. The Subadviser shall not be liable to the Adviser for (i) any acts of
the Adviser or any other subadviser to a Fund with respect to the portion of the
assets of that Fund not managed by Subadviser, or (ii) acts of the Subadviser
which result from acts of the Adviser, including, but not limited to, a failure
of the Adviser to provide accurate and current information with respect to any
records maintained by the Adviser or any other subadviser to a Fund, which
records are not also maintained by or otherwise available to the Subadviser upon
reasonable request. The Adviser agrees that the Subadviser shall manage the
Subadviser Assets as if they were a separate operating Fund as set forth in
Section 2(b) of this Agreement. The Adviser shall indemnify the Subadviser, its
Affiliates and Controlling Persons from any liability arising from the conduct
of the Adviser and any other subadviser with respect to the portion of the
Fund's assets not allocated to the Subadviser.
11. Duration and Termination.
a. Duration. Unless sooner terminated, this Agreement shall continue until
[ ] with respect to any Fund covered by this Agreement initially and for any
Fund subsequently added to this Agreement, an initial period of no more than two
years, and thereafter shall continue automatically for successive annual periods
with respect to each of the Funds; provided that such continuance is
specifically approved at least annually by the Trust's Board of Trustees or the
vote of the lesser of (a) 67% of the shares of a Fund represented at a meeting
if holders of more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (b) more than 50% of the outstanding shares of the Fund;
provided further that in either event its continuance also is approved by a
majority of the Trust's Trustees who are not "interested persons" (as defined in
the 0000 Xxx) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval.
b. Termination. Notwithstanding whatever may be provided herein to the
contrary, this Agreement may be terminated at any time with respect to the Fund,
without payment of any penalty:
(i) By vote of a majority of the Trust's Board of Trustees, or by "vote of
a majority of the outstanding voting securities" of the Fund (as defined in the
1940 Act), or by the Adviser, in each case, upon not more than 60 days' written
notice to the Subadviser;
(ii) By any party hereto immediately upon written notice to the other
parties in the event of a breach of any provision of this Agreement by either of
the other parties; or
(iii) By the Subadviser upon not more than 60 days' written notice to the
Adviser and the Trust.
This Agreement shall not be assigned (as such term is defined in the 0000
Xxx) and shall terminate automatically in the event of its assignment or upon
the termination of the Advisory Agreement.
12. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Fund pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement. Nothing contained in this Agreement shall
obligate the Adviser to provide any funding or other support for the purpose of
directly or indirectly promoting investments in the Fund.
13. Reference to Adviser and Subadviser.
a. Neither the Adviser nor any Affiliate or agent of the Adviser shall make
reference to or use the name of the Subadviser or any of its Affiliates, or any
of their clients, except references concerning the identity of and services
provided by the Subadviser to a Fund, which references shall not differ in
substance from those included in the Prospectus and this Agreement, in any
advertising or promotional materials without the prior approval of the
Subadviser, which approval shall not be unreasonably withheld or delayed. The
Adviser hereby agrees to make all reasonable efforts to cause the Fund and any
Affiliate thereof to satisfy the foregoing obligation.
b. Neither the Subadviser nor any Affiliate or agent of it shall make
reference to or use the name of the Adviser or any of its Affiliates, or any of
their clients, except references concerning the identity of and services
provided by the Adviser to a Fund or to the Subadviser, which references shall
not differ in substance from those included in the Prospectus and this
Agreement, in any advertising or promotional materials without the prior
approval of the Adviser, which approval shall not be unreasonably withheld or
delayed. The Subadviser hereby agrees to make all reasonable efforts to cause
any Affiliate of the Subadviser to satisfy the foregoing obligation.
14. Amendment. This Agreement may be amended by mutual consent of the
parties, provided that the terms of any material amendment shall be approved by:
(a) the Trust's Board of Trustees or by a vote of a majority of the outstanding
voting securities of the Funds (as required by the 1940 Act), and (b) the vote
of a majority of those Trustees of the Trust who are not "interested persons" of
any party to this Agreement cast in person at a meeting called for the purpose
of voting on such approval, if such approval is required by applicable law.
15. Confidentiality. Subject to the duties of the Adviser, the Trust and
the Subadviser to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the parties hereto shall
treat as confidential and shall not disclose any and all information pertaining
to the Fund and the actions of the Subadviser, the Adviser and the Fund in
respect thereof; except to the extent:
a. Authorized. The Adviser or the Trust has authorized such disclosure;
b. Court or Regulatory Authority. Disclosure of such information is
expressly required or requested by a court or other tribunal of competent
jurisdiction or applicable federal or state regulatory authorities;
c. Publicly Known Without Breach. Such information becomes known to the
general public without a breach of this Agreement or a similar confidential
disclosure agreement regarding such information;
d. Already Known. Such information already was known by the party prior to
the date hereof;
e. Received From Third Party. Such information was or is hereafter
rightfully received by the party from a third party (expressly excluding the
Fund's custodian, prime broker and administrator) without restriction on its
disclosure and without breach of this Agreement or of a similar confidential
disclosure agreement regarding them; or
f. Independently Developed. The party independently developed such
information.
16. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, delivered, or
mailed postpaid to the other parties, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other parties:
If to the Subadviser:
Security Investors, LLC
One Security Benefit Place
Topeka, Kansas 66636
Attention: President
Facsimile: (000) 000-0000
If to the Adviser:
Aberdeen Asset Management Inc.
0000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Legal Department
Facsimile: (000) 000-0000
If to the Trust:
Xxxxxxxx Xxxxx
0 Xxxxx Xxxxxx
000 Xxxx Xxxxxx Xxxxx
Xxxx Xxxxxxxxxxxx, XX 00000
Attention: Legal Department
Facsimile: (000) 000-0000
17. Jurisdiction. This Agreement shall be governed by and construed in
accordance with substantive laws of the State of Delaware without reference to
choice of law principles thereof and in accordance with the 1940 Act. In the
case of any conflict, the 1940 Act shall control.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which shall
together constitute one and the same instrument.
19. Certain Definitions. For the purposes of this Agreement and except as
otherwise provided herein, "interested person," "affiliated person," and
"assignment" shall have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC.
20. Captions. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.
21. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision or applicable law, the remainder of the Agreement
shall not be affected adversely and shall remain in full force and effect.
22. Entire Agreement. This Agreement, together with all exhibits,
attachments and appendices, contains the entire understanding and agreement of
the parties with respect to the subject matter hereof.
23. Aberdeen Funds and its Trustees. The terms "Aberdeen Funds" and the
"Trustees of Aberdeen Funds" refer respectively to the Trust created and the
Trustees, as trustees but not individually or personally, acting from time to
time under the Declaration of Trust made and dated as of [ ] 2007, as has been
or may be amended and/or restated from time to time, and to which reference is
hereby made.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first written above.
TRUST
ABERDEEN FUNDS
By:
Name:
Title:
ADVISER
ABERDEEN ASSET MANAGEMENT INC.
By:
Name:
Title:
SUBADVISER:
Security Investors, LLC
By:
Name:
Title:
EXHIBIT A
SUBADVISORY AGREEMENT AMONG
ABERDEEN ASSET MANAGEMENT,
ABERDEEN FUNDS
AND NATIONWIDE SEPARATE ACCOUNTS, LLC
Effective [ ], 2007
Fund of the Trust Subadvisory Fees
Aberdeen Select Mid Cap Growth Fund 0.40% on assets up to $250 million
0.35% on assets of $250 million or more
