INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this 24th day of May, 2006, by and between, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Investment Management, Inc. ("CSIM"), and Mondrian Investment Partners
Limited ("Sub-Adviser").
WHEREAS, Schwab Capital Trust, a Massachusetts business trust
("Company"), is an open-end, management investment company registered under the
Investment Company Act of 1940 ("1940 Act"), consisting of several series, each
having its own investment objective and policies; and
WHEREAS, Company has entered into an Investment Advisory and
Administration Agreement with CSIM pursuant to which CSIM acts as investment
manager to Company ("Management Agreement"); and
WHEREAS, CSIM, acting with the approval of Company, wishes to retain
Sub-Adviser to provide discretionary investment advisory services ("Services")
with respect to a portion of each series identified on Schedule A hereto, as may
be amended from time to time, (each a "Fund") that may be allocated by CSIM for
management by the Sub-Adviser from time to time, together with all income earned
on those assets and all realized and unrealized capital appreciation related to
those assets (for each Fund, the "Managed Assets"), and Sub-Adviser is willing
to render the Services.
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties agree as follows:
1. APPOINTMENT. CSIM appoints Sub-Adviser to provide the Services for the period
and term set forth in this Investment Sub-Advisory Agreement ("Agreement").
Sub-Adviser accepts such appointment and agrees to render the Services as
provided herein.
2. DUTIES OF SUB-ADVISER.
(a) Subject to supervision of the Company, the Board of Trustees
("Trustees") and CSIM (collectively "Fund Parties"), Sub-Adviser shall be
responsible for managing the investment and reinvestment of the Managed Assets
and determine in its discretion, the securities and other property to be
purchased or sold and the portion of the Managed Assets to be retained in cash,
and shall not be responsible for providing investment advice to any other
portion of a Fund. In performance of its duties and obligations under this
Agreement, Sub-Adviser shall not consult with any other sub-adviser to a Fund
concerning the Managed Assets, except to the extent permitted under the 1940
Act, or any rule, regulation or order thereunder. Sub-Adviser will use same
skill and care in providing the Services to each Fund as it utilizes in
providing investment advisory services to other fiduciary accounts for which it
has investment responsibilities. Sub-Adviser will provide Fund Parties with
records concerning Sub-Adviser's activities that Fund Parties are required to
maintain, and regular reports concerning Sub-Adviser's performance of the
Services.
(b) Unless CSIM provides written instructions to the contrary, CSIM
will review all proxy solicitation materials and will exercise any voting rights
associated with securities comprising the Managed Assets pursuant to its proxy
voting policy and guidelines.
(c) Sub-Adviser will provide assistance to Company, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Co, Inc. ("Distributor") and CSIM (collectively "Schwab Parties"), as may be
reasonably requested by such parties, in connection with the general offering,
sale and marketing of Fund shares. Such assistance will include, without
limitation: (i) periodic review of general offering, marketing and sales
materials; and (ii) quarterly conference call by Sub-Advisor portfolio
management staff with CSIM fund management professionals; (iii)
annual participation by Sub-Advisor portfolio management staff in educational
activities regarding Sub-Advisor's investment style, market views and
performance results including, but not limited to, web casts or other
technology-based communication media; and (iv) periodic provision of discussion,
analysis and commentary and market and performance data for filings with the
Securities and Exchange Commission ("SEC"). Except as described in the prior
sentence, Sub-Adviser shall have no obligation to assist the Schwab Parties in
connection with the offering, sale or marketing of Fund shares to any specific
party or to participate in internal or external conferences, conventions, road
shows or other sales or educational meetings. Schwab parties may use the names,
trade names, trademarks, service marks, artwork, designs, or other copyrighted
materials of Sub-Adviser in connection with the offering, sale and marketing of
Fund shares, subject to the written approval of Sub-Adviser, which will not be
unreasonably withheld.
(d) Unless CSIM provides written instructions to the contrary,
Sub-Adviser will provide assistance in determining, in good faith, the fair
value of any securities of the Managed Assets for which market quotations are
not readily available in accordance with guidelines and procedures adopted by
the Trustees. In addition, Sub-Adviser will assist the Company's pricing agent
with arranging for the provision of market values from at least two parties
independent of Sub-Adviser with respect to any securities of the Managed Assets
for which the Company's pricing agent does not obtain prices in the ordinary
course of business from an automated pricing service.
(e) Sub-Adviser will discharge the foregoing responsibilities subject
to the supervision of Fund Parties, and in compliance with the following: (i)
such policies as Fund Parties may from time to time establish; (ii) Company's
Prospectus and Statement of Additional Information ("Prospectus and SAI"); (iii)
Company's Declaration of Trust and By-Laws; (iv) 1940 Act; (v) the Investment
Advisers Act of 1940 ("Advisers Act"); (vi) any exemptive or other relief
granted by the SEC; (vii) the Internal Revenue Code of 1986 ("Code"); (viii) the
Commodities and Exchange Act ("CEA"); and (ix) any other applicable laws. If a
conflict in policies referenced herein occurs, the Prospectus and SAI will
control.
(f) Sub-Adviser agrees to perform such duties at its own expense and
to provide the office space, furnishings and equipment and the personnel
required by it to perform the Services on the terms and for the compensation
provided herein. Sub-Adviser will not, however, pay for the cost of securities,
commodities, and other investments (including brokerage commissions and other
transaction charges, if any) purchased or sold for a Fund.
3. DUTIES OF CSIM. CSIM will continue to have responsibility for all services to
be provided to a Fund pursuant to the Management Agreement and will oversee and
review Sub-Adviser's performance of the Services. CSIM will furnish to
Sub-Adviser current and complete copies of the Declaration of Trust and By-laws
of Company, and the current Prospectus and SAI as those documents may be amended
from time to time.
4. CUSTODY. Company will designate one or more custodians to hold the Managed
Assets ("Custodian") in the name of each Fund. Each custodian will be
responsible for the custody, receipt and delivery of securities and other assets
of a Fund including the Managed Assets, and Sub-Adviser will have no authority,
responsibility or obligation with respect to the custody, receipt or delivery of
securities or other assets of a Fund. In the event that any cash or securities
of a Fund are delivered to Sub-Adviser, Sub-Adviser will promptly deliver the
same to the Custodian for the benefit of and in the name of Fund. Sub-Adviser
will provide to the Custodian and Fund Accountant on each business day,
information relating to all transactions in the Managed Assets and will provide
such information to Fund Parties upon request. Sub-Adviser will make all
reasonable efforts to notify Custodian and Fund Accountant of all orders to
brokers for the Managed Assets by 9:00 am EST on the day following the trade
date and will affirm the trade to the Custodian and Fund Accountant before the
close of business one business day after the trade date.
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5. PORTFOLIO TRANSACTIONS.
(a) Sub-Adviser is authorized to select brokers or dealers that will
execute the purchases and sales of portfolio securities and other property for a
Fund in a manner that implements the policy with respect to brokerage set forth
in the Prospectus and SAI, or as Fund Parties may direct from time to time, and
in conformity with the federal securities laws.
(b) In effecting transactions for a Fund and selecting brokers or
dealers, Sub-Adviser will use its best efforts to seek best execution on behalf
of the Fund . In assessing best execution for any transaction, Sub-Adviser will
consider any factors that it deems relevant, including price paid for the
security, commission paid for the transaction, clearance, settlement,
reputation, financial strength and stability, efficiency of execution and error
resolution, block trading and block positioning capabilities, willingness to
execute related or unrelated difficult transactions and order of call.
(c) Consistent with any policies established by Fund Parties and in
compliance with the Prospectus and SAI and 1940 Act, Sub-Adviser is authorized,
in its discretion, to utilize the services of a broker or dealer that provides
brokerage or research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934).
(d) In no instance will Sub-Adviser cause Managed Assets to be
purchased from or sold to Distributor, CSIM, Sub-Adviser or any affiliated
person of either Company, Distributor, CSIM, or Sub-Adviser (collectively
"Related Parties"), except to the extent permitted by the 1940 Act or any
exemptive or other relief granted by the SEC. Sub-adviser will not execute any
transactions with brokers or dealers that are Related Parties without the prior
written approval of CSIM. CSIM shall periodically provide Sub-Adviser with a
list of all Related Parties in writing (other than parties that are affiliates
of Sub-Adviser). Sub-Adviser shall have no obligation to independently determine
whether a party may be a Related Party (other than parties that are Related
Parties by being an affiliate of Sub-Adviser). Sub-Adviser shall have no
liability whatsoever in the event that it engages in a transaction with a party
that is actually a Related Party (other than a Related Party that is an
affiliate of Sub-Adviser) but did not appear on the list of Related Parties most
recently provided by CSIM to Sub-Adviser.
(e) Provided that Fund Parties have not prohibited the aggregation of
orders for purchase or sale of Managed Assets with similar orders being made
concurrently for other accounts managed by Sub-Adviser and notified Sub-Adviser
in writing of such prohibition, consistent with any policies established by
Sub-Adviser, Sub-Adviser may aggregate such orders, if, in Sub-Adviser's
reasonable judgment, such aggregation will result in an overall economic benefit
to Fund, taking into consideration the transaction price, brokerage commission
and other expenses.
6. COMPENSATION OF SUB-ADVISER. For the Services provided and expenses assumed
by Sub-Adviser under this Agreement, CSIM will pay to Sub-Adviser compensation
at the rate specified in Schedule B, as may be amended from time to time. Such
compensation will be paid at the times and on the terms set forth in Schedule B.
All rights of compensation under this Agreement for Services performed as of the
termination date will survive the termination of this Agreement. Except as
otherwise prohibited by law or regulation, Sub-Adviser may, in its discretion,
from time to time, waive a portion of its compensation.
7. REPORTS.
(a) Sub-Adviser will provide written quarterly reports to Fund Parties
regarding the Managed Assets. CSIM will reasonably specify the information to be
included in such quarterly reports. Although Sub-Adviser does not currently
provide any economic, statistical or investment services to clients
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other than asset management services, in the event that Sub-Adviser does provide
such services to its other institutional clients, it shall make such services
available to the Fund Parties.
(b) Sub-Adviser will promptly communicate to Fund Parties any
information relating to transactions in the Managed Assets, as Fund Parties may
reasonably request.
(c) Sub-Adviser will promptly notify Fund Parties of any financial or
regulatory condition that is likely to impair the ability of Sub-Adviser to
perform the Services. In addition, Sub-Adviser will promptly notify Fund Parties
of any intended change in control of Sub-Adviser and of any intended change in
portfolio or senior management, as far in advance of such change as possible.
(d) Sub-Adviser will make its officers and employees available to meet
with Fund Parties at such times and places, as Fund Parties may reasonably
request, including at quarterly and special meetings of the Trustees in San
Francisco, California.
8. STATUS OF SUB-ADVISER. Sub-Adviser is and will continue to be registered
under the Advisers Act. The Services of Sub-Adviser to Company for each Fund are
not to be deemed exclusive, and Sub-Adviser is free to render similar services
to others so long as its Services to the Fund are not impaired thereby.
Sub-Adviser is and will continue to be an independent contractor and, unless
otherwise expressly provided or authorized, has no authority to act for or
represent Company in any way or otherwise act as agent of Company.
9. CODE OF ETHICS. Sub-Adviser will furnish to Fund Parties a current copy of
its code of ethics that complies with the requirements of Rule 17j-1 under the
1940 Act. Upon written request of CSIM, Sub-Adviser will permit Fund Parties to
examine the reports made by Sub-Adviser pursuant to Rule 17j-1 and other records
relevant to Sub-Adviser's code of ethics. Sub-Adviser will provide an annual
certification to Fund Parties certifying that there have been no material
violations of Sub-Adviser's code of ethics or, if such violations have occurred,
that appropriate actions have been taken in response to such violations.
10. CERTAIN RECORDS.
(a) Sub-Adviser will maintain all books and records with respect to
transactions involving the Managed Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
Sub-Adviser will provide to Fund Parties periodic and special reports, balance
sheets, profitability analyses, financial information, and such other
information with regard to Sub-Adviser's affairs, as Fund Parties may reasonably
request, including any information requested by Fund Parties to assist the
Trustees in evaluating the terms of this Agreement and any renewal thereof under
Section 15(c) of the ▇▇▇▇ ▇▇▇.
(b) Sub-Adviser will keep the books and records relating to the
Managed Assets required to be maintained by Sub-Adviser under this Agreement and
will timely furnish to Fund Parties all information relating to Sub-Adviser's
Services under this Agreement needed by Fund Parties to keep the other books and
records of the Company required by Rule 31a-1 under the 1940 Act. Sub-Adviser
will also furnish to Fund Parties any other information relating to the Managed
Assets that must be filed by Company with the SEC or sent to shareholders under
the 1940 Act, and any exemptive or other relief granted by the SEC. Fund Parties
shall obtain the prior written consent of Sub-Adviser before including
information regarding the Sub-Adviser in any document that is required to be
filed with the SEC or required to be sent to shareholders, which approval will
not be unreasonably withheld. Sub-Adviser agrees that all records that it
maintains on behalf of Company are property of Company and Sub-Adviser will
surrender promptly to Company any of such records upon Fund Parties' request;
provided, however, Sub-Adviser may retain a copy of such records. In addition,
Sub-Adviser will preserve for the periods prescribed by Rule 31a-2 under
4
1940 Act any such records as are required to be maintained by it pursuant to
this Agreement, and will transfer said records to any successor sub-adviser upon
the termination of this Agreement (or, if there is no successor sub-adviser, to
CSIM).
11. LIMITATION OF LIABILITY OF SUB-ADVISER. Sub-Adviser will not be liable for
any claims, liabilities, damages, costs or losses ("collectively" claims)
arising out of this Agreement, except to the extent such claims arise out of:
(a) Sub-Adviser's negligence, bad faith or willful misfeasance; or (b)
Sub-Adviser's material breach of this Agreement. Nothing in this Section 11 will
be deemed a waiver or limitation of any obligation or duty that may not by law
be waived or limited.
12. INDEMNIFICATION.
(a) Sub-Adviser will indemnify and hold harmless Fund Parties, their affiliates
and their respective employees, officers and directors from and against all
claims arising out of this Agreement to the extent such claims arise out of: (i)
Sub-Adviser's negligence, bad faith or willful misfeasance; or (ii)
Sub-Adviser's material breach of this Agreement.
(b) CSIM will indemnify and hold harmless Sub-Adviser, its affiliates, and their
respective employees, officers and directors from and against all claims arising
out of this Agreement, except to the extent such claims arise out of: (i)
Sub-Adviser's negligence, bad faith or willful misfeasance; or (ii)
Sub-Adviser's breach of this Agreement.
13. CONFIDENTIALITY. The Mutual Confidentiality and Non-Disclosure Agreement
("Confidentiality Agreement") previously entered into between the parties is
attached hereto as Schedule C and incorporated herein by reference. The
Confidentiality Agreement will remain in effect throughout the term of this
Agreement, and each party will abide by all of the provisions set forth therein.
Upon termination of this Agreement, each party will continue to hold any
Confidential Information (as that term is defined in the Confidentiality
Agreement) in strict confidence for ten years from the date of termination,
except with regard to: (a) trade secrets of either party which will be held in
confidence for as long as such information remains a trade secret; and (b)
Schwab Customer Information (as that term is defined in the Confidentiality
Agreement) which will be held by Sub-Adviser in strict confidence in perpetuity
and which will be used by Sub-Adviser only to perform the Services and for no
other purpose. In addition, Sub-Adviser will not use any information concerning
each Funds' portfolio holdings, including, without limitation, the names of the
portfolio holdings and the values thereof or other Schwab Confidential
Information, for purposes of making any decision about whether to purchase or
redeem shares of each Fund or to execute any other securities transaction. In
the event any of the provisions of the Confidentiality Agreement conflict with
any of the provisions of this Agreement, the latter will control.
14. PUBLICITY. During and after the term of this Agreement, neither the Schwab
Parties nor Sub-Adviser will make any media release or other public announcement
relating to this Agreement without the other party's prior written consent.
Sub-Adviser will acquire no right to use, and will not use, without Schwab
Parties' prior written consent, with respect to each use, the terms or existence
of this Agreement, the names, trade names, trademarks, service marks, artwork,
designs, or copyrighted materials of Schwab Parties or their affiliates in any
sales or advertising materials, press releases, client lists, presentations,
promotions or other publicity related materials or media.
15. DURATION AND TERMINATION.
(a) This Agreement will become effective for each Fund upon its
approval by the Trustees , without approval by the shareholders. This Agreement
will remain in effect until two years from date of each effectiveness, and
thereafter, for periods of one year so long as such continuance thereafter is
5
specifically approved at least annually (i) by the vote of a majority of those
Trustees who are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Trustees, or by the vote of a majority of the
outstanding voting securities of the Fund; provided, however, that if the
shareholders of a Fund fail to approve the Agreement as provided herein,
Sub-Adviser may continue to serve hereunder in the manner and to the extent
permitted by the ▇▇▇▇ ▇▇▇. The foregoing requirement that continuance of this
Agreement be "specifically approved at least annually" will be construed in a
manner consistent with the 1940 Act.
(b) This Agreement may be terminated at any time, without cause and
without payment of any penalty by Fund Parties, by vote of a majority of the
Trustees or by vote of a majority of the outstanding voting securities of a Fund
on not more than 60 days' written notice to the Sub-Adviser, or by CSIM upon 90
days' written notice to Sub-Adviser. In addition, this Agreement may be
terminated, with cause, by CSIM at any time, without payment of any penalty by
Fund Parties, upon written notice to Sub-Adviser. As used herein, "with cause"
means: (i) any material breach of the Agreement by Sub-Adviser; (ii) any federal
or state regulatory violation by Sub-Adviser; and (iii) any material financial
or other impairment that in the reasonable judgment of CSIM impairs
Sub-Adviser's ability to perform the Services.
(c) This Agreement may not be terminated by the Sub-Adviser prior to
May 24, 2008 except "with cause". As used in this Section 15(c), "with cause"
means: (i) any material breach of the Agreement by Fund Parties or Schwab
Parties; (ii) any federal or state regulatory violation by Fund Parties or
Schwab Parties; and (iii) any material financial or other impairment that in the
reasonable judgment of Sub-Adviser impairs Fund Parties' or Schwab Parties'
ability to perform under the terms of the Agreement. Thereafter, this Agreement
may be terminated by the Sub-Adviser at any time, without cause and without
payment of any penalty, upon 90 days' written notice to CSIM.
(d) This Agreement will automatically and immediately terminate in the
event of its assignment or in the event of the termination of the Management
Agreement.
(e) Any termination of this Agreement in accordance with the terms
hereof will not affect the obligations or liabilities accrued prior to
termination. As used in this Section 15, the terms "assignment", "interested
persons," and a "vote of a majority of the outstanding voting securities" will
have the respective meanings set forth in the 1940 Act; subject to such
exceptions and other relief as may be granted by the SEC.
16. NOTICE. All notices required or permitted hereunder will be deemed
sufficient upon receipt if sent by: (a) hand; (b) registered or certified mail,
postage prepaid; (c) overnight courier; or (d) facsimile transmission to the
last address furnished by the other party to the party giving notice. At the
outset, such notices will be delivered to the following addresses:
CSIM: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Investment Management, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Treasurer and Principal Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Sub-Adviser: Mondrian Investment Partners Limited
Street Address: ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇ and Zip Code: ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: Managing Director
Telephone: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇
6
17. NONCOMPETE PROVISIONS. Sub-Adviser is not and will not become a party to any
noncompete agreement or other agreement or arrangement that would restrict,
limit or otherwise interfere with the ability of Schwab Parties and their
affiliates to employ or engage any person or entity, now or in the future, to
provide investment advisory or other services.
18. SEVERABILITY. If any provision of this Agreement will be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement will not be affected thereby.
19. GOVERNING LAW. This Agreement will be construed in accordance with the laws
of the State of California and the applicable provisions of the 1940 Act. To the
extent that the applicable laws of the State of California, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter will control. Any legal action or proceeding arising out of this
Agreement will be brought only in the courts of the State of California located
in the City and County of San Francisco or in the United States District Court
for the Northern District of California. Each party will submit to the
jurisdiction of such courts and venue in such courts and will waive any claims
that such courts lack jurisdiction or are inconvenient forums.
20. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement and understanding
between the parties relating to the Services. Any prior agreements, promises or
representations not expressly set forth in this Agreement are of no force and
effect. No waiver or modification of this Agreement will be effective unless
reduced to writing and signed by the party to be charged. No failure to exercise
and no delay in exercising on the part of any party hereto of any right, remedy,
power or privilege hereunder will operate as a waiver thereof.
(b) This Agreement is entered into on behalf of each Fund severally,
and not jointly, with the express intention that the provisions contained herein
will apply separately with respect to each Fund, as if contained in separate
agreements.
(c) Except as set forth in Section 15, this Agreement binds and inures
to the benefit of parties, their successors and assigns. This Agreement may be
executed in more than one counterpart each of which will be deemed an original
and both of which, taken together, will be deemed to constitute one and the same
instrument.
(d) Company refers to Schwab Capital Trust and its Trustees, as
Trustees but not individually or personally, acting under a Declaration of Trust
dated May 7, 1993. A copy of the Certificate of Trust of Company is on file with
the Secretary of State of the State of Massachusetts. Notice is hereby given
that the obligations of Company entered into in the name of or on behalf of
Company by any of its Trustees, representatives or agents are made not
individually, but in such Company capacities. Such obligations are not binding
upon any of the Trustees, shareholders or representatives of Company personally,
but bind only the assets of Company belonging to such Fund for the enforcement
of any claims against Company.
(e) As used in this Agreement, any references to any laws (including,
without limitation, the 1940 Act, Advisers Act, Code and CEA) incorporate the
effects of: (i) any amendments to such laws; (ii) any rules or regulations
promulgated under such laws; and (iii) any interpretations of such laws, rules
or regulations by the applicable regulatory authorities.
7
NOW THEREFORE, the parties hereto have caused this Agreement to be executed as
of the day and year first written above.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Investment Management, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
MONDRIAN INVESTMENT PARTNERS LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: CIO/Managing Director
List of Schedules
Schedule A -- Funds
Schedule B -- Fees
Schedule C -- Mutual Confidentiality and Non-Disclosure Agreement
Schedule D -- Intentionally Deleted
8
SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INVESTMENT MANAGEMENT, INC.
AND
MONDRIAN INVESTMENT PARTNERS LIMITED
FUND(S)
Laudus International MarketMasters Fund
Effective Date of this Schedule A: May 24, 2006
9
SCHEDULE B
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INVESTMENT MANAGEMENT, INC.
AND
MONDRIAN INVESTMENT PARTNERS LIMITED
FEES
Fees will be accrued each day by applying to the Net Asset Value of the Managed
Assets at the end of that day, the daily rate, using a 365-day year, equivalent
to the applicable fee percentage set forth below ("Company Percentage").
Sub-Adviser represents and warrants that the Company Percentage now is and in
the future will be equal to or less than the applicable fee percentage payable
to Sub-Adviser under any other advisory or sub-advisory agreement for comparable
investment advisory services (each a "Third Party Percentage"). If at any time,
the Company Percentage is greater than any Third Party Percentage, the Company
Percentage will be reduced to the lowest Third Party Percentage, including with
respect to any advisory or sub-advisory agreement amended or entered into by
Sub-Adviser after the effective date of this Schedule. Fees will be paid within
30 days following the end of each calendar quarter.
COMPANY PERCENTAGE
First $850 million: 57.5 Basis Points annually
Thereafter: 55.0 Basis Points annually
The above fee scale is subject to a minimum funding of $100 million, or fees
equivalent thereto.
The maximum amount of Managed Assets that may be held in the account is $500
million. Sub-Adviser agrees to review its capacity positions once the account
reaches $400 million to determine if the $500 million account size cap may be
adjusted.
Effective Date of this Schedule B: May 24, 2006
10
SCHEDULE C
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INVESTMENT MANAGEMENT, INC.
AND
MONDRIAN INVESTMENT PARTNERS LIMITED
MUTUAL CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
A true and correct copy of the MUTUAL CONFIDENTIALITY AND NON-DISCLOSURE
AGREEMENT is attached hereto.
Effective Date of this Schedule C: May 24, 2006
11
CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT
This Agreement is made effective as of this 22nd day of May, 2006
("Effective Date") by and between Mondrian Investment Partners Limited
("Company"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Investment Management, Inc. ("CSIM").
WHEREAS, Company and CSIM are considering entering into a business
arrangement ("Business Arrangement"); and
WHEREAS, Company and CSIM each desires to review and discuss certain
proprietary and confidential information of the other party and its affiliates
in connection with analysis of the Business Arrangement ("Analysis"); and
WHEREAS, Company and CSIM each desires that all of its and its affiliates
confidential and proprietary information revealed to the other party and its
affiliates be subject to the confidentiality and non-disclosure restrictions
imposed by this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties agree as follows:
1. Definition of Confidential Information. The term "Confidential
Information" means any information that Disclosing Party (as defined below)
discloses in connection with the Analysis or any resulting Business Arrangement,
whether in writing, electronically or orally, to Receiving Party (as defined
below), whether in tangible or intangible form. Confidential Information
includes, without limitation, any information concerning: (a) Disclosing Party's
financial or business plans or operations, such as research or investment
activities and plans, marketing or sales plans, pricing or pricing strategies,
operational techniques, internal controls, compliance policies, methods of
operation, security procedures, strategic plans, Schwab Customer Information (as
defined below), and unpublished financial information, including information
concerning revenues, profits and profit margins; and (b) the compensation to be
paid to Company under the Business Arrangement. In addition, Company will not
use any Confidential Information concerning each Funds' portfolio holdings,
including, without limitation, the names of the portfolio holdings and the
values thereof or other Schwab Confidential Information, for purposes of making
any decision about whether to purchase or redeem shares of each Fund or to
execute any other securities transaction. In the event any of the provisions of
the Confidentiality Agreement conflict with any of the provisions of the
Investment Sub-Advisory Agreement, the latter will control.
2. Definition of Disclosing Party and Receiving Party. The term "Disclosing
Party" means the party and its affiliates providing Confidential Information.
The term "Receiving Party" means the party and its affiliates receiving
Confidential Information. As defined herein, CSIM's affiliates include, without
limitation, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. ("Schwab") and Schwab Capital Trust.
Confidentiality Agreement 1 CSIM Confidential
3. Restrictions on Use. Receiving Party will not use, without the prior
written consent of Disclosing Party, any portion of Disclosing Party's
Confidential Information for any purpose other than to perform the Analysis or
to provide the services under any resulting Business Arrangement. Receiving
Party will: (a) hold Confidential Information of Disclosing Party in the
strictest confidence; (b) exercise no less care with respect to Disclosing
Party's Confidential Information than the level of care exercised with respect
to Receiving Party's Confidential Information; (c) not disclose, without
Disclosing Party's prior written consent, Disclosing Party's Confidential
Information to any third party; (d) notify immediately Disclosing Party of any
unauthorized disclosure, and cooperate with Disclosing Party to protect all
rights in and ownership of the Confidential Information; and (e) restrict
dissemination of Disclosing Party's Confidential Information to persons within
Receiving Party who are directly involved in the Analysis or in performing the
services under any resulting Business Arrangement, and who are bound by
confidentiality provisions as stringent as the terms set forth herein.
4. Exceptions. The foregoing Restrictions on Use will not prohibit or limit
Receiving Party's use, disclosure, reproduction or dissemination of any
Confidential Information that: (a) is or becomes public domain information or
material through no fault or breach on the part of Receiving Party; (b) is
already lawfully known (without restriction on disclosure) to Receiving Party
prior to the information being disclosed to Receiving Party by Disclosing Party;
(c) is or becomes rightfully furnished to Receiving Party without restriction on
disclosure by a third person lawfully in possession thereof; (d) is
independently developed, by or for Receiving Party, without reference to
Disclosing Party's Confidential Information; and (e) is required to be disclosed
by court order, or pursuant to applicable law, regulation or self-regulatory
organization rules; provided that Receiving Party notifies Disclosing Party in
order that Disclosing Party may have a reasonable opportunity to obtain a
protective order or other form of protection against disclosure. It will be
presumed that any Confidential Information in the possession of Receiving Party
that has been disclosed to it by Disclosing Party is not within any of the
exceptions above, and the burden is on Receiving Party to prove otherwise by
records and documentation.
5. No License. This Agreement will not be construed as granting or
conferring any rights on either party by license or otherwise, expressly or
implicitly, with respect to any Confidential Information, Schwab Customer
Information, or any invention, discovery or improvement made, conceived or
acquired prior to or after the Effective Date.
6. Termination. This Agreement will terminate as follows: (a) If the Parties
do not enter into a Business Arrangement, upon termination of this Analysis; or
(b) If the Parties do enter into a Business Arrangement, as provided in the
written agreement memorializing the Business Arrangement. Upon termination, each
party will continue to hold the Confidential Information in strict confidence as
set forth herein for ten years from the date of termination, except with regard
to (a) trade secrets of Disclosing Party which will be held in confidence for as
long as such information remains a trade secret, and (b) Schwab Customer
Information (as defined below) which will be held by Company in strict
confidence in perpetuity.
7. Return of Materials. Within ten days of this Agreement's termination,
Receiving Party will: (a) return or destroy, at the option of Disclosing Party,
all originals and copies of all documents and materials Receiving Party has
received from Disclosing Party containing Confidential Information; (b) deliver
or destroy, at the option of Disclosing Party, all originals
Confidentiality Agreement 2 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc.
and copies of all summaries, records, descriptions, modifications, negatives,
drawings, adoptions and other documents or materials, whether in writing or in
machine-readable form, prepared by Receiving Party or prepared under its
direction or at its request from Disclosing Party's Confidential Information
("Derivative Material"); and (c) provide a written statement to Disclosing Party
certifying that all Confidential Material and all Derivative Material have been
delivered to Disclosing Party or destroyed, as requested by Disclosing Party.
8. Equitable Relief. Each party acknowledges that any breach of this
Agreement would cause Disclosing Party irreparable harm for which monetary
damages would be inadequate. Accordingly, Disclosing Party will be entitled to
seek injunctive or other equitable relief to remedy any threatened or actual
breach of this Agreement by Receiving Party, as well as monetary damages.
9. No Commitment. This Agreement will not constitute a commitment by either
party to enter into any Business Arrangement with the other party.
10. Definition of Schwab Customer Information. "Schwab Customer Information"
means all intentionally or unintentionally disclosed information, however
collected, including without limitation, through "cookies", Web bugs or
non-electronic means, pertaining to or identifiable to a Customer (as defined
below), including without limitation; (a) name, address, email address,
passwords, personal financial information, personal preferences, demographic
data, marketing data, data about securities transactions, credit data, or any
other identification data; (b) any information that reflects use of or
interactions with a Schwab Service (as defined below), including but not limited
to, information concerning computer search paths, any profiles created, or
general usage data; or (c) any data otherwise submitted in the process of
registering for, or during the course of using, a Schwab Service. "Customer"
means any (a) customer, (b) prospect, or (c) subscriber or user of any Schwab
Service. "Schwab Service" means any service that Schwab makes available to its
Customers through Web sites, desktops, email, wireless devices, or from any
other communications channel or other medium developed, owned, licensed,
operated, hosted, or otherwise controlled by or on behalf of Schwab.
11. Restrictions on Use of Schwab Customer Information. Without limiting any
other warranty or obligation of Company, during the term of this Agreement and
thereafter in perpetuity, Company will not gather, store, or use any Schwab
Customer Information in any manner, and will not disclose, distribute, sell,
share, rent or otherwise transfer any Schwab Customer Information to any third
party, except as expressly provided in this Agreement or as Company may be
expressly directed in advance in writing by Schwab. Company represents,
covenants, and warrants that Company will use Schwab Customer Information only
in compliance with: (i) this Agreement or any subsequent Business Arrangement;
(ii) ▇▇▇▇▇▇'▇ privacy policies; and (iii) all applicable laws, policies and
regulations (including but not limited to applicable laws, policies and
regulations related to spamming, privacy, and consumer protection). Company
hereby agrees to indemnify and hold harmless Schwab and its affiliates
(including, without limitation, CSIM and Schwab Capital Trust) from against any
and all damages, losses, liabilities, settlements and expenses (including
without limitation costs and attorneys' fees) in connection with any claim or
action that arises from an alleged violation of this Agreement. Company will not
retain any Schwab Customer Information for any period longer than necessary for
Company to fulfill its obligations under this Agreement. As soon as
Confidentiality Agreement 3 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc.
Company no longer needs to retain such Schwab Customer Information in order to
perform its duties under this Agreement, Company will promptly return or (if so
instructed by Schwab or its affiliates) in writing) destroy all originals and
copies of such Schwab Customer Information.
12. No Publicity. Company will not announce or disclose the existence of
this Agreement, the Analysis, and any subsequent Business Arrangement, or their
contents or any discussions relating thereto, to any third party without the
prior written consent of CSIM, or except as may be required by law, in which
case Company will give CSIM the maximum feasible prior notice of such
disclosure.
13. Miscellaneous. This Agreement will be governed by the laws of the State
of California applicable to agreements between residents of California made and
to be performed entirely within the State of California. This Agreement will be
binding upon, and will inure to the benefit of, the parties and their respective
successors and assigns. Any modifications to this Agreement must be in writing
and signed by both parties. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same Agreement.
IN WITNESS WHEREOF, the authorized representatives of the parties hereto have
executed this Agreement.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INVESTMENT MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President -- Chief Investment Officer, Equities
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Date: May 22, 2006
MONDRIAN INVESTMENT PARTNERS LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director & CIO
Telephone: ▇▇▇ ▇▇▇▇ ▇▇▇▇
Facsimile: 020 7523 0300
Date: 22 May 2006
Confidentiality Agreement 4 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc.