DG INVESTOR SERIES
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between ParkSouth Corporation, a Mississippi
corporation (hereinafter referred to as "Adviser") and Xxxxxxx Xxxxxxxx
Management, LLC, a New York limited liability company (hereinafter referred to
as the "Sub-Adviser").
WITNESSETH
That the parties hereto, intending to be legally bound, hereby agree as
follows:
1. The Adviser in its capacity as investment adviser to DG Mid-Cap Fund
(the "Fund"), a portfolio of DG Investor Series ("Trust"), under the Investment
Advisory Contract dated as of March 31, 1997, appoints the Sub-Adviser as a
discretionary investment sub-adviser to the Fund pursuant to the terms set forth
in this Agreement.
2. (a) The Sub-Adviser will deal in good faith and with due diligence
and will use professional skill, care and judgment in the performance of its
duties under this Agreement. In so doing, the Sub-Adviser shall formulate and
implement a continuing program for the management of the assets of the Fund. The
Sub-Adviser shall amend and update such program from time to time as financial
and other economic conditions warrant. The Sub-Adviser shall make all
determinations with respect to the investment of the assets of the Fund and
shall take such steps as may be necessary to implement the same, including the
placement of purchase and sale orders on behalf of the Fund. The Adviser shall
be responsible for the administration of the investment activities of the Fund,
including compliance with the requirements of the Investment Company Act of
1940, except for the investment management activities specifically delegated to
the Sub-Adviser pursuant to this Agreement. The Sub-Adviser's activities
hereunder shall comply with: (i) the Declaration and By-Laws of the Trust; (ii)
the Registration Statement of the Trust, as it may be amended from time to time,
including the investment objectives and policies set forth therein; (iii) the
Investment Company of 1940 and the Investment Advisers Act of 1940 and the
regulations thereunder; (iv) the Internal Revenue Code and the regulations
thereunder applicable to regulated investment companies; (v) any other
applicable laws or regulations; and (vi) such other limitations as the Adviser
or the Board of Trustees of the Trust may adopt.
(b) The Sub-Adviser will adopt or has adopted a written code
of ethics complying with the requirements of Rule 17j-1 under the Investment
Company Act of 1940, will provide the Adviser with a copy of the code of ethics
and evidence of its adoption, and will make such reports to the Trust or other
persons as required by Rule 17j-1. The Sub-Adviser will also adopt or has
adopted policies and procedures sufficient to enable the Sub-Adviser to detect
and prevent the misuse of material, nonpublic information by the Sub-Adviser or
any person associated with the Sub-Adviser, in compliance with federal and state
securities laws.
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(c) The Sub-Adviser will prepare, maintain, keep current and
preserve on behalf of the Trust and the Adviser all records concerning the
Sub-Adviser's activities in connection with the Fund that the Fund is required
by law to maintain, including, but not limited to, records required under
paragraphs (b)(5), (b)(6), (b)(9), (b)(10), and (f) of rule 31a-1 under the
Investment Company Act. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-l and Rule 31a-2 under the Investment
Company Act of 1940 that are prepared by the Sub-Adviser on behalf of the Fund
are the property of the Fund and will be surrendered promptly on request to the
Fund or any person acting on behalf of the Trust during the term of this
Agreement and at any time after the termination of this Agreement; provided,
however, that the Sub-Adviser has the right to make and retain copies. The
Sub-Adviser will comply with all reasonable requests for information by the
Adviser or the Trust's officers or Board of Trustees, including information
required for the Fund's filings with the Securities and Exchange Commission and
state securities commissions.
(d) The Sub-Adviser will promptly after filing with the
Securities and Exchange Commission an amendment to its Form ADV furnish a copy
of such amendment to the Trust and the Adviser.
(e) The Sub-Adviser will immediately notify the Adviser of the
occurrence of any event which would disqualify the Sub-Adviser from serving as
an investment adviser of an investment company pursuant to Section 9(a) of the
Investment Company Act of 1940 or otherwise.
3. (a) The Sub-Adviser's power to direct the investment and
reinvestment of the assets of the Fund shall be exercised in accordance with
applicable law, the Fund's governing documents and the investment objectives,
policies and restrictions set forth in the then-current Prospectus and Statement
of Additional Information (collectively the "Prospectus") relating to the Fund
contained in the Trust's Registration Statement under the Investment Company Act
of 1940 and the Securities Act of 1933, as amended. The Adviser may also place
additional limitations on the Sub-Adviser's investment decisions by written
notice to the Sub-Adviser. The Adviser agrees to provide promptly, or cause to
be provided promptly, to the Sub-Adviser a copy of the documents mentioned above
and all changes made to such documents.
(b) While the Sub-Adviser will have day-to-day responsibility
for the discretionary investment decisions to be made on behalf of the Fund, the
Sub-Adviser will be subject to oversight by the Adviser. Such oversight,
however, shall not require prior approval of discretionary investment decisions
made by the Sub-Adviser by the Adviser pursuant to the preceding sentence.
(c) The Trust retains the right, on reasonable prior written
notice to the Adviser and the Sub-Adviser, to amend the Fund's investment
objectives, policies and restrictions placed on the Sub-Adviser's investment
decisions. Similarly, the Adviser retains the right, on reasonable prior written
notice to the Sub-Adviser, to amend any additional limitations, if any, that
have been placed on the Sub-Adviser's investment decisions with respect to the
Fund. Upon receipt of such prior notice from either the Trust or the Adviser,
the Sub-Adviser will promptly notify both the Fund and the Adviser if adoption
of such amendment would interfere with the completion of any transaction
commenced on behalf of the Fund prior to the Sub-Adviser's receipt of the
notice. In the event that the Trust or the Adviser proceeds to amend the Fund's
investment objectives, policies and restrictions or any additional limitations
after being notified by the Sub-Adviser of the pending transaction commenced on
behalf of the Fund, or in the event that the Trust or the Adviser amends the
Fund's investment objectives, policies and restrictions or any additional
limitations without providing reasonable prior notice to the Sub-Adviser, the
Sub-Adviser may complete such transaction unless doing so would violate any
applicable law, rule or regulation. In such an event, the Sub-Adviser will not
be responsible for any loss that may result from the completion of the
transaction.
(d) Except as may be qualified elsewhere in this Agreement, the Sub-Adviser
is hereby authorized, for and on behalf of the Fund, in its discretion, to:
(i) exercise any conversion and/or subscription
rights available in connection with any securities or other investments held in
the Fund;
(ii) maintain all or part of the Fund's assets
uninvested in short-term income-producing instruments for such periods of time
as shall be deemed reasonable and prudent by the Sub-Adviser;
(iii) instruct the Custodian, to deliver for cash
received, securities or other cash and/or securities instruments sold,
exchanged, redeemed or otherwise disposed of from the Fund, and to pay cash for
securities or other cash and/or securities instruments delivered to the
Custodian and/or credited to the Fund upon acquisition of the same for the
Fund;
(iv) determine how to vote all proxies received
with respect to securities held in the Fund and direct the Custodian as to the
voting of such proxies; and
(v) generally, perform any other act necessary
to enable the Sub-Adviser to carry out its obligations under the Agreement.
4. (a) The Sub-Adviser shall select the brokers and dealers through
which transactions on behalf of the Fund will be executed and the markets on or
in which such transactions will be executed. The Sub-Adviser shall place, in the
name of the Fund or its nominee (or appropriate foreign equivalent), all such
orders for the purchase or sale or of securities due to or from the Fund with
any broker and/or dealer that deals in such securities, all in the manner as set
forth below and in accordance with such operational procedures as may be agreed
to from time to time by the Adviser and the Sub-Adviser.
(b) In placing orders with brokers and/or dealers, the
Sub-Adviser shall use its best efforts to obtain the best net price and the most
favorable execution of its orders, after taking into account all factors it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
and/or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. Consistent with this obligation,
the Sub-Adviser may, to the extent permitted by law, purchase and sell portfolio
securities using brokers that provide brokerage and research services (within
the meaning of Section 28(e) of the Securities and Exchange Act of 1934) to or
for the benefit of the Fund and/or other accounts over which the Sub-Adviser or
the Adviser exercises investment discretion. The Sub-Adviser is authorized to
pay a broker that provides such brokerage and research services a commission for
effecting a securities transaction which is in excess of the amount of
commission another broker would have charged for effecting that transaction, if
the Sub-Adviser determines in good faith that such commission was reasonable in
relation to the value of brokerage and research services provided by such
broker. This determination may be viewed in terms of either that particular
transaction or of the overall responsibilities of the Sub-Adviser with respect
to the accounts as to which it exercises investment discretion.
(c) Notwithstanding the foregoing, the Board of Trustees and
the Adviser periodically shall review the commissions paid by the Fund and
determine whether those commissions were reasonable in relation to the brokerage
and research services received.
5. It is understood that certain other clients (including other funds,
portfolios and accounts) of the Sub-Adviser may have investment objectives and
policies similar to those of the Fund and that the Sub-Adviser may, from time to
time, make recommendations that result in the purchase (or sale) of a particular
security by its other clients and the Fund during the same period of time. If
transactions on behalf of more than one client during the same period increase
the demand for securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. In such event, the
Sub-Adviser shall allocate the securities or investments to be purchased or
sold, as well as the expense incurred in the transactions (including price) in a
manner the Sub-Adviser considers equitable and consistent with its obligations
to the Fund and the Sub-Adviser's other clients.
6. The Sub-Adviser agrees that it will only enter into transactions
that are covered by Section 10 (f) or Section 17 (e) of the Investment Company
Act of 1940 if it has (i) complied with Rule 10f-3 or Rule 17e-1 thereunder,
respectively, or the terms of an appropriate exemptive order issued to the Fund
by the SEC, and (ii) has compiled with the procedures adopted thereunder by the
Board of Trustees of the Trust, which may, pursuant to authority granted by the
Trust, be supplemented by interpretive guidelines of the Adviser. Aside from
parties that are known or should be known by the Sub-Adviser, the Adviser shall
promptly notify the Sub-Adviser of any additional parties with whom engaging in
a transaction for the Fund would result in a violation of the Investment Company
Act of 1940.
7. For its services under this Agreement, Sub-Adviser shall receive
from Adviser an annual fee ("the Sub-Advisory Fee"), as set forth in Exhibit A
hereto.
8. This Agreement shall take effect on the date that the parties
execute the exhibit to this Agreement relating to such Fund and shall continue
in effect for the Fund for two years from the date of its execution and from
year to year thereafter, subject to the provisions for termination and all of
the other terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not parties
to this Agreement or interested persons of any such party (other than as
Trustees of the Trust) cast in person at a meeting called for that purpose; and
(b) the Adviser shall not have notified the Trust in writing at least sixty (60)
days prior to the anniversary date of this Agreement in any year thereafter that
it does not desire such continuation with respect to the Fund.
9. Notwithstanding any provision in this Agreement, it may be
terminated at any time without the payment of any penalty: (a) by the Trustees
of the Trust or by a vote of a majority of the outstanding voting securities (as
defined in Section 2(a)(42) of the Act) of the Fund on sixty (60) days' written
notice to the Adviser; (b) by the Sub-Adviser or the Adviser upon sixty (60)
days' written notice to the other party to the Agreement. Termination of this
Agreement will not affect (i) the validity of any action previously taken by the
Adviser or the Sub-Adviser under this Agreement or (ii) liabilities or
obligations of the parties from transactions initiated before termination of
this Agreement.
10. This Agreement shall automatically terminate:
(a) in the event of its assignment (as defined in the
Investment Company Act of 1940); or
(b) in the event of termination of the Investment
Advisory Contact for any reason whatsoever.
11. So long as both the Adviser and the Sub-Adviser shall be legally
qualified to act as an investment adviser to the Fund, neither the Adviser nor
the Sub-Adviser shall act as an investment adviser (as such term is defined in
the Investment Company Act of 1940) to the Fund except as provided herein and in
the Investment Advisory Contract or in such other manner as may be expressly
agreed between the Adviser and the Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser shall resign
prior to the end of any term of this Agreement or for any reason be unable or
unwilling to serve for a successive term which has been approved by the Trustees
of the Trust pursuant to the provisions of Paragraph 8 of this Agreement or
Paragraph 6 of the Investment Advisory Contract, the remaining party, the
Sub-Adviser or the Adviser as the case may be, shall not be prohibited from
serving as an investment adviser to such Fund by reason of the provisions of
this Paragraph 11.
12. This Agreement may be amended from time to time by agreement of the
parties hereto provided that such amendment shall be approved both by the vote
of a majority of Trustees of the Trust, including a majority of Trustees who are
not parties to this Agreement or interested persons, as defined in Section
2(a)(19) of the Investment Company Act of 1940, of any such party at a meeting
called for that purpose, and, where required by Section 15(a)(2) of the
Investment Company Act of 1940, by the holders of a majority of the outstanding
voting securities (as defined in Section 2(a)(42) of the Investment Company Act
of 1940) of the Fund.
13. This Agreement shall be construed in accordance with the laws of
the Commonwealth of Pennsylvania without giving effect to the choice of law
provisions thereof, to the extent that such laws are consistent with provisions
of the Investment Company Act of 1940 and the regulations thereunder. The
failure of either party to insist, in one or more instances, upon strict
performance of the obligations of this Agreement, or to exercise any rights
contained herein, shall not be construed as a waiver, or relinquishment for the
future of such obligation or right, which shall remain and continue in full
force and effect. Should any part of this Agreement be held or made invalid by a
court decision, statute, regulation, or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Exhibit A
DG Investor Series
DG Mid-Cap Fund
Sub-Advisory Agreement
For all services rendered by Sub-Adviser hereunder, the Adviser shall
pay the Sub-Adviser a Sub-Advisory Fee based on the average daily net assets of
the Fund, as follows:
Fund Assets Annual Rate
Any assets up to and including $5 million 0.75%
Any assets over $5 million up to and including $10 million 0.65%
Any assets over $10 million 0.55%
The Sub-Advisory Fee shall be accrued daily, and paid quarterly, as set forth in
the Investment Advisory Contract dated March 31, 1997.
This Exhibit incorporates by reference the Sub-Advisory Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit to be
executed on their behalf by their duly authorized officers, and their corporate
seals to be affixed hereto this day of
, 1997.
ATTEST: ParkSouth Corporation
By:
Secretary Chief Executive Officer
Xxxxxxx Xxxxxxxx Management, LLC
By:
Secretary Managing Director
