Exhibit (d)(10)
HSBC INVESTOR PORTFOLIOS
HSBC INVESTOR INTERMEDIATE DURATION PORTFOLIO
HSBC INVESTOR CORE PLUS FIXED INCOME PORTFOLIO
HSBC INVESTOR HIGH YIELD FIXED INCOME PORTFOLIO
HSBC INVESTOR SHORT DURATION PORTFOLIO
HSBC INVESTOR CORE FIXED INCOME PORTFOLIO
SUB-ADVISORY AGREEMENT
AGREEMENT, dated December 5, 2006, between Halbis Capital Management (USA) Inc.
(the "Sub-adviser") and HSBC Investments (USA) Inc. (the "Manager").
WHEREAS, the Manager has been retained by HSBC Investor Portfolios, a New York
master trust (the "Trust") registered as an open-end diversified investment
management company under the Investment Company Act of 1940, as amended (the
"1940 Act"), to provide investment advisory services to each of the HSBC
Investor Intermediate Duration Portfolio, HSBC Investor Core Plus Fixed Income
Portfolio, HSBC Investor High Yield Fixed Income Portfolio, HSBC Investor Short
Duration Portfolio and HSBC Investor Core Fixed Income Portfolio (the
"Portfolios") pursuant to an Investment Advisory Contract dated December 31,
1999 and amended and restated March 1, 2001, and Supplements thereto;
WHEREAS, the Trust's Board of Trustees, including a majority of the Trustees who
are not parties to this Agreement or "interested persons," as defined in the
1940 Act, of any party to this Agreement, have approved the appointment of the
Sub-adviser to perform certain investment advisory services for the Portfolios
pursuant to this Sub-advisory Agreement and the Sub-adviser is willing to
perform such services for the Portfolios;
WHEREAS, the Sub-adviser is registered or exempt from registration as an
investment adviser under the Investment Advisers Act of 1940, as amended
("Advisers Act");
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Manager and the Sub-adviser as follows:
1. APPOINTMENT. The Manager hereby appoints the Sub-adviser to perform
advisory services to the Portfolios for the periods and on the terms set forth
in this Sub-advisory Agreement. The Sub-adviser accepts such appointment and
agrees to furnish the services herein set forth, for the compensation herein
provided.
2. INVESTMENT ADVISORY DUTIES. Subject to the supervision of the Board of
Trustees of the Trust and the Manager, the Sub-adviser will, in coordination
with the Manager, (a) provide a program of continuous investment management for
the Portfolios in accordance with each Portfolio's investment objectives,
policies and limitations as stated in the Portfolio's Prospectus
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Exhibit (d)(10)
and Statement of Additional Information included as part of the Trust's
Registration Statement on behalf of the Portfolios filed with the Securities and
Exchange Commission, as they may be amended from time to time, copies of which
shall be provided to the Sub-adviser by the Manager; (b) make investment
decisions for the Portfolios; and (c) place orders to purchase and sell
securities for the Portfolios. In particular, the Sub-adviser will be
responsible for the purchase and sale of securities and for all yield
enhancement strategies used in managing the Portfolios.
In performing its investment management services to the Portfolios
hereunder, the Sub-adviser will provide the Portfolios with ongoing investment
guidance and policy direction. The Sub-adviser will determine the securities,
instruments, repurchase agreements, options and other investments and techniques
that the Portfolios will purchase, sell, enter into or use, and will provide an
ongoing evaluation of the Portfolios. The Sub-adviser will determine what
portion of each Portfolio shall be invested in securities and other assets.
The Sub-adviser further agrees that, in performing its duties hereunder,
it will:
a. comply with the 1940 Act and all rules and regulations
thereunder, the Advisers Act, applicable sections of the Internal Revenue Code
of 1986, as amended (the "Code"), and all other applicable federal and state
laws and regulations, and with any applicable procedures adopted by the
Trustees;
b. manage the Portfolios so that each Portfolio will qualify, and
continue to qualify (except where extraordinary circumstances dictate
otherwise), as a regulated investment company under Subchapter M of the Code and
regulations issued thereunder;
c. place orders pursuant to its investment determinations for the
Portfolios directly with the issuer, or with any broker or dealer the
Sub-adviser may choose, in accordance with applicable policies expressed in each
Portfolio's Prospectus and/or Statement of Additional Information and in
accordance with applicable legal requirements;
x. xxxxxxx to the Trust whatever statistical information the Trust
may reasonably request in writing with respect to each Portfolio's assets or
contemplated investments. In addition, the Sub-adviser will keep the Trust and
the Trustees informed of developments materially affecting the Portfolios and
shall, on the Sub-adviser's own initiative, furnish to the Trust from time to
time whatever information the Sub-adviser believes appropriate for this purpose;
e. make available to the Manager and the Trust, promptly upon their
written request, such copies of its investment records and ledgers with respect
to the Portfolios as may be required to assist the Manager and the Trust in
their compliance with applicable laws and regulations. The Sub-adviser will
furnish the Trustees with such available data regarding the Portfolios, as may
be mutually agreed upon from time to time;
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Exhibit (d)(10)
f. promptly notify the Manager and the Trust in the event that the
Sub-adviser or any of its affiliates: (1) becomes aware that it is subject to a
statutory disqualification that prevents the Sub-adviser from serving as an
investment adviser pursuant to this Sub-advisory Agreement; or (2) becomes aware
that it is the subject of an administrative proceeding or enforcement action by
the SEC or other regulatory authority. The Sub-adviser further agrees to notify
the Trust and the Manager promptly if any statement regarding the Sub-adviser
contained in the Trust's Registration Statement with respect to the Portfolios,
or any amendment or supplement thereto, becomes untrue or incomplete in any
material respect.
In performing its duties under this Agreement, the Sub-adviser shall
manage and invest each Portfolio's assets in accordance with each Portfolio's
investment objectives, policies and restrictions as well as applicable federal
and state securities laws, based upon instructions as may be provided to the
Sub-adviser by the Manager, the Portfolios' administrator, accountant, custodian
or other agent designated by the Manager as responsible for testing compliance
of the Portfolios (the "Compliance Agent"). The Sub-adviser further agrees to
manage and invest each Portfolio's assets in accordance with instructions as may
be provided to the Sub-adviser from time to time by the Manager or the
Compliance Agent in an effort to ensure that the Portfolios meet and maintain,
so long as required by the Code, the requirements for qualification as a
regulated investment company under Subchapter M of the Code and regulations
issued thereunder.
In fulfilling its obligations under this Agreement, the Sub-adviser shall
be entitled to reasonably rely on and act in accordance with instructions
provided by the Manager or Compliance Agent.
3. ALLOCATION OF CHARGES AND EXPENSES. Except as otherwise specifically
provided in this Section 3, the Sub-adviser shall pay the compensation and
expenses of all its directors, partners, officers and employees, if any, who
serve as officers and executive employees of the Trust (including the
Portfolios' share of payroll taxes), and the Sub-adviser shall make available,
without expense to the Portfolios, the service of its directors, partners,
officers and employees, if any, who may be duly elected officers of the Trust,
subject to their individual consent to serve and to any limitations imposed by
law.
The Sub-adviser shall not be required to pay any expenses of the
Portfolios other than those specifically allocated to the Sub-adviser in this
Section 3. In particular, but without limiting the generality of the foregoing,
the Sub-adviser shall not be responsible for the following expenses of the
Portfolios: organization and offering expenses of the Portfolios (including
out-of-pocket expenses); fees payable to any other Portfolio advisers or
consultants; legal expenses; auditing and accounting expenses; interest
expenses; telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; dues and expenses incurred by or with
respect to the Portfolios in connection with membership in investment company
trade organizations; cost of insurance relating to fidelity coverage for the
Trust's officers and employees; fees and expenses of any custodian,
subcustodian, transfer agent, registrar, or dividend disbursing agent of the
Portfolios; payments for maintaining the Portfolios'
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Exhibit (d)(10)
financial books and records and calculating the daily net asset value of the
Portfolios' shares; other payments for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if any; expenses
relating to investor and public relations; expenses of registering and
qualifying shares of the Portfolios for sale (if any); freight, insurance and
other charges in connection with the shipment of the portfolio securities of the
Portfolios; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities or other assets of the Portfolios, or of entering into
other transactions or engaging in any investment practices with respect to the
Portfolios; expenses of printing and distributing prospectuses, Statements of
Additional Information, reports, notices and dividends to stockholders; costs of
stationery; litigation expenses; costs of stockholders' and other meetings; the
compensation and all expenses (specifically including travel expenses relating
to the Portfolios' business) of officers, trustees and employees of the Trust
who are not interested persons of the Sub-adviser; and travel expenses (or an
appropriate portion thereof) of officers or trustees of the Trust who are
officers, directors or employees of the Sub-adviser to the extent that such
expenses relate to attendance at meetings of the Board of Trustees of the Trust
or any committees thereof or advisers thereto.
4. COMPENSATION. As compensation for the services provided and expenses
assumed by the Sub-adviser under this Agreement, the Manager will pay the
Sub-adviser, with regard to each Portfolio, within 21 calendar days after the
end of each calendar quarter an advisory fee computed daily based on the basis
of each Portfolio's average daily net assets at an annual rate of 0.15% for the
HSBC Investor Core Fixed Income Portfolio and at an annual rate of 0.20% for the
HSBC Investor Intermediate Duration Portfolio, HSBC Investor Core Plus Fixed
Income Portfolio, HSBC Investor High Yield Fixed Income Portfolio and HSBC
Investor Short Duration Portfolio. The "average daily net assets" of a Portfolio
shall mean the average of the values attributed to that Portfolio's net assets
as of 4:00 p.m. (New York time) on each day on which the net asset value of the
Portfolio is determined consistent with the provisions of Rule 22c-1 under the
1940 Act or, if the Portfolio lawfully determines the value of its net assets as
of some other time on each business day, as of such other time. The value of net
assets of a Portfolio shall always be determined pursuant to the applicable
provisions of the Trust's Declaration of Trust, as amended, and Registration
Statement. If, pursuant to such provisions, the determination of net asset value
is suspended for any particular business day, then for the purposes of this
Section 4, the value of the net assets of a Portfolio as last determined shall
be deemed to be the value of its net assets as of the close of regular trading
on the New York Stock Exchange, or as of such other time as the value of the net
assets of the Portfolio's portfolio may lawfully be determined, on that day. If
the determination of the net asset value of the shares of a Portfolio has been
so suspended for a period including any quarter end when the Sub-adviser's
compensation is payable pursuant to this Section, then the Sub-adviser's
compensation payable at the end of such quarter shall be computed on the basis
of the value of the net assets of that Portfolio as last determined (whether
during or prior to such quarter). If a Portfolio determines the value of the net
assets of its portfolio more than once on any day, then the last such
determination thereof on that day shall be deemed to be the sole determination
thereof on that day for the purposes of this Section 4. In the event that this
Agreement is terminated pursuant to Section 10 hereof, the Sub-adviser shall be
entitled to a PRO RATA portion of the fee under this Section 4 through and
including the date upon
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Exhibit (d)(10)
which the Agreement is terminated and the Sub-adviser ceases to provide
investment advisory services to a Portfolio hereunder.
5. BOOKS AND RECORDS. The Sub-adviser agrees to maintain such books and
records with respect to its services to the Portfolios as are required by
Section 31 under the 1940 Act, and rules adopted thereunder, and by other
applicable legal provisions, including the Investment Advisers Act of 1940 and
the Securities and Exchange Act of 1934, and to preserve such records for the
periods and in the manner required by that Section, and those rules and legal
provisions. The Manager shall maintain all books and other records not related
to the Portfolios' transactions. The Sub-adviser also agrees that records it
maintains and preserves pursuant to Rules 31a-1 and Rule 31a-2 under the 1940
Act and otherwise in connection with its services hereunder are the joint
property of the Portfolios and the Sub-adviser and a copy will be provided
promptly to the Portfolios upon their written request. The Sub-adviser further
agrees that it will furnish to regulatory authorities having the requisite
authority any information or reports in connection with its services hereunder
which may be requested in order to determine whether the operations of the
Portfolios are being conducted in accordance with applicable laws and
regulations.
6. STANDARD OF CARE AND LIMITATION OF LIABILITY. The Sub-adviser shall
exercise its best judgment in rendering the services provided by it under this
Sub-advisory Agreement. The Sub-adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Portfolios or the
holders of the Portfolios' shares in connection with the matters to which this
Sub-advisory Agreement relate, provided that nothing in this Sub-advisory
Agreement shall be deemed to protect or purport to protect the Sub-adviser
against any liability to the Portfolios or to holders of the Portfolios' shares
to which the Sub-adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or by reason of the Sub-adviser's reckless disregard of its obligations
and duties under this Sub-advisory Agreement. As used in this Section 6, the
term "Sub-adviser" shall include any officers, directors, partners, employees,
agents or other affiliates of the Sub-adviser performing services for the
Portfolios.
7. INDEMNIFICATION.
a. The Sub-adviser hereby agrees to indemnify and hold harmless the
Manager from any controversies, claims, suits, losses, liabilities, judgments,
awards or settlements, and costs or expenses, including reasonable legal fees,
directly or proximately caused by, the investment decisions rendered by the
Sub-adviser in bad faith in a grossly negligent manner inconsistent with the
Portfolios' stated investment objectives, guidelines and restrictions, any
intentional failure of the Sub-adviser to fulfill any of its other obligations
under this Sub-advisory Agreement, any willful omission to disclose material
facts, by the Sub-adviser to the Portfolios or the Manager or any willful
violation of applicable law by the Sub-adviser. The Sub-adviser also agrees to
indemnify and hold harmless the Manager with respect to any reasonable losses
incurred as the result of grossly negligent errors made by the Sub-adviser in
transmitting orders to any broker for execution.
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Exhibit (d)(10)
b. The Manager hereby agrees to indemnify and hold harmless the
Sub-adviser from any controversies, claims, suits, losses, liabilities,
judgments, awards or settlements, and costs or expenses, including reasonable
legal fees, caused by, or in any related to, its failure to fulfill any of its
obligations under this Sub-advisory Agreement, any willful omission to disclose
material facts by the Manager or any willful violation of applicable law by the
Manager.
c. If any party seeks indemnification under this Agreement (an
"indemnified party"), it shall notify the other party (the "indemnifying party")
in writing of the assertion of any third party claim or action and shall deliver
all copies of materials received in connection with the matter to the
indemnifying party. The indemnifying party shall have the right to control the
defense of any such claim or action with counsel of its own choosing, and the
indemnified party shall cooperate fully with the indemnifying party in the
defense or settlement of any matter that is covered by paragraphs (a) or (b)
above, subject to reimbursement by the indemnifying party for expenses incurred
by the indemnified party in connection with the indemnifying party's
participation in the defense.
8. SERVICES NOT EXCLUSIVE. It is understood that the services of the
Sub-adviser are not exclusive, and that nothing in this Sub-advisory Agreement
shall prevent the Sub-adviser from providing similar services to other
individuals, institutions or investment companies (whether or not their
investment objectives and policies are similar to those of the Portfolios) or
from engaging in other activities, provided such other services and activities
do not, during the term of this Sub-advisory Agreement, interfere in a material
manner with the Sub-adviser's ability to meet its obligations to the Trust and
the Portfolios hereunder. When the Sub-adviser recommends the purchase or sale
of a security for other investment companies and other clients, and at the same
time the Sub-adviser recommends the purchase or sale of the same security for
the Portfolios, the Sub-adviser may, but shall not be obligated to, aggregate
the orders for securities to be purchased or sold. It is understood that in
light of its fiduciary duty to the Portfolios, such transactions will be
executed on a basis that is fair and equitable to the Portfolios. In connection
with purchases or sales of portfolio securities for the account of the
Portfolios, neither the Sub-adviser nor any of its directors, partners, officers
or employees shall act as a principal or agent or receive any commission.
9. DOCUMENTATION. The Trust shall provide the Sub-adviser with the
following documents:
a. the Trust's registration statement relating to the Portfolios,
and any amendments thereto;
b. the current Declaration of Trust and By-laws (and any amendments
thereto) of the Trust;
c. resolutions of the Board of Trustees of the Trust authorizing the
appointment of the Sub-adviser to serve as Sub-adviser and approving this
Sub-advisory Agreement;
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Exhibit (d)(10)
d. the Trust's Notification of Registration on Form N-8A; and
e. all procedures, policies or other documentation relating to the
Sub-adviser's activities under this Sub-advisory Agreement.
10. DURATION AND TERMINATION. This Sub-advisory Agreement shall continue
for an initial term until December 31, 2007, unless sooner terminated as
provided herein, and shall continue in effect thereafter, but only so long as
the continuance is specifically approved at least annually (a) by the vote of a
majority of the outstanding voting securities of the Portfolio (as defined in
the 1940 Act) or by the Board of Trustees and (b) by the vote, cast in person at
a meeting called for that purpose, of a majority of the members of the Board of
Trustees who are not parties to this Contract or "interested persons" (as
defined in the 1940 Act) of any such party. Notwithstanding the foregoing, this
Sub-advisory Agreement may be terminated: (a) at any time without penalty upon
thirty (30) days' written notice to the Sub-adviser by a Portfolio upon the vote
of a majority of the Trustees or upon the vote of a majority of that Portfolio's
outstanding voting securities, (b) at any time without penalty upon thirty (30)
days' written notice to the Sub-adviser by the Manager, or (c) by the
Sub-adviser upon thirty (30) days' written notice to the Trust or the Manager.
Anything to the contrary herein notwithstanding, any termination carried out
pursuant to this Section 10 shall be without penalty and, further, the
compensation schedule set forth in Section 4 hereof shall apply to the service
of the Sub-adviser beyond the end of the notice period provided in this Section
10. This Sub-advisory Agreement will also terminate automatically in the event
of its assignment (as defined in the 1940 Act) or the assignment or termination
of the Advisory Agreement. For purposes of this Section 10 and generally for
purposes of this Sub-advisory Agreement, this Sub-Advisory Agreement shall be
construed to pertain separately to each of the Portfolios as if set forth in
separate agreements for each Portfolio.
11. AMENDMENTS. No provision of this Sub-advisory Agreement may be
changed, waived, discharged or terminated orally, unless by an instrument in
writing signed by both parties, and no amendment of this Sub-advisory Agreement
shall be effective until approved by an affirmative vote of (i) a majority of
the outstanding voting securities of the Portfolios, and (ii) a majority of the
Trustees of the Portfolios, including a majority of Trustees who are not
interested persons of any party to this Sub-advisory Agreement, cast in person
at a meeting called for the purpose of voting on such approval, if such approval
is required by applicable law.
12. NOTICES. Any notice or other communication required or permitted to be
given hereunder shall be given in writing and mailed, faxed or delivered to the
other party at its address as follows:
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Exhibit (d)(10)
IF TO THE MANAGER:
HSBC Investments (USA) Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx, Senior Vice President
IF TO THE SUB-ADVISER:
Halbis Capital Management (USA) Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx, Chief Executive Officer
Any party may specify a different or additional address for notice by sending a
written notice to the other at the address above, or at that or those last given
hereunder.
13. MISCELLANEOUS.
a. This Sub-advisory Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder.
b. The captions of this Sub-advisory Agreement are included for
convenience only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
c. If any provision of this Sub-advisory Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Sub-advisory Agreement shall not be affected hereby and, to this extent,
the provisions of this Sub-advisory Agreement shall be deemed to be severable.
d. Nothing herein shall be construed as constituting the
Sub-adviser, or any of its directors, officers or employees, an agent of the
Manager or the Portfolios, nor the Manager, or any of its directors, officers or
employees, an agent of the Sub-adviser.
e. This Sub-advisory Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but counterparts
shall, together, constitute only one Sub-advisory Agreement.
f. Intentionally omitted.
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Exhibit (d)(10)
g. The Manager hereby acknowledges that it has received and read a
copy of the Sub-adviser's current Form ADV, Part II.
h. The Sub-adviser shall vote such stock and other securities
possessing "voting" rights which are part of the portion of the Portfolios
managed by the Sub-adviser, personally or by proxy, consistent with the
Sub-adviser's proxy voting guidelines and processing standards.
i. The Sub-adviser shall not be responsible for voting any proxies
relating to securities held in the Portfolios which proxies have a record date
which is prior to the date of the Sub-advisory Agreement or on or after the date
of any termination of this Sub-advisory Agreement.
j. The Manager acknowledges and agrees that the Sub-adviser shall
have no responsibility for filing claims on behalf of the Manager with respect
to any class action, bankruptcy proceeding or any other action or proceeding in
which the Manager or the Portfolios may be entitled to participate as a result
of the Portfolios' securities holdings. The Sub-adviser's responsibility, with
respect thereto, shall be limited to cooperating with the custodian of the
assets in making such filings.
It is hereby understood and agreed that the Sub-adviser shall not be
liable or responsible for any loss incurred in connection with recommendations
or investments made by the Sub-adviser or other actions taken by the Sub-adviser
with respect to managed assets prior to the termination of this Agreement,
provided such actions were taken by the Sub-adviser in accordance with this
Agreement. The Manager understands and agrees that financial investments carry
substantial risk and Sub-adviser cannot predict or guarantee any particular
results. The Sub-adviser shall not be liable or responsible for any loss
incurred in connection with any act or omission of the client, administrators,
custodian, or any broker-dealer or other third party.
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Exhibit (d)(10)
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their respective officers.
HALBIS CAPITAL MANAGEMENT (USA) INC.
By /s/ Xxxx Xxxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
HSBC INVESTMENTS (USA) INC.
By /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Vice President
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