Exhibit 4(b)(viii)
THE MASTERS' SELECT INTERNATIONAL FUND
MASTERS' SELECT FUNDS TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT is made as of the __ day of ________,
2000 by and between XXXXXX/XXXXXXX FUND ADVISORS, LLC (hereinafter called the
"Advisor") and Xxxxxx Associates L.P. (hereinafter called "Sub-Advisor").
WITNESSETH:
WHEREAS, the Advisor has been retained as the investment adviser to The Masters'
Select International Fund (the "Fund"), a series of Masters' Select Funds Trust
(the "Trust"), an open-end management investment company, registered as such
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"); and
WHEREAS, the Advisor has been authorized by the Trust to retain one or more
investment advisers (each an "investment manager") to serve as portfolio
managers for a specified portion of the Fund's assets (the "Allocated Portion");
and
WHEREAS, Sub-Advisor is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the "Investment Advisers Act"), and is engaged
in the business of supplying investment advisory services as an independent
contractor; and
WHEREAS, the Fund and the Advisor desire to retain Sub-Advisor as an investment
manager to render portfolio advice and services to the Fund pursuant to the
terms and provisions of this Agreement, and Sub-Advisor desires to furnish said
advice and services; and
WHEREAS, the Trust and the Fund are third party beneficiaries of such
arrangements;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, which shall include the
Trust on behalf of the Fund for purposes of the indemnification provisions of
section 11 hereof, intending to be legally bound hereby, mutually agree as
follows:
1. APPOINTMENT OF SUB-ADVISOR.
(a) The Advisor hereby employs Sub-Advisor, and Sub-Advisor hereby
accepts such employment, to render investment advice and related services with
respect to the Allocated Portion of the assets of the Fund for the period and on
the terms set forth in this Agreement, subject to the supervision and direction
of the Advisor and the Trust's Board of Trustees.
(b) Sub-Advisor's employment shall be solely with respect to an
Allocated Portion of the Fund's assets, such Allocated Portion to be specified
by the Advisor and subject to periodic increases or decreases at the Advisor's
sole discretion.
2. DUTIES OF SUB-ADVISOR.
(a) GENERAL DUTIES. Sub-Advisor shall act as one of several investment
managers to the Fund and shall invest Sub-Advisor's Allocated Portion of the
assets of the Fund in accordance with the investment objectives, policies and
restrictions of the Fund as set forth in the Fund's and the Trust's governing
documents, including, without limitation, the Trust's Agreement and Declaration
of Trust and By-Laws; the Fund's prospectus, statement of additional information
and undertakings; and such other limitations, policies and procedures as the
Advisor or the Trustees of the Trust may impose from time to time in writing to
Sub-Advisor. In providing such services, Sub-Advisor shall at all times adhere
to the provisions and restrictions contained in the federal securities laws,
applicable state securities laws, the Internal Revenue Code, and other
applicable law. Advisor shall provide to Sub-Advisor such information with
respect to the Fund such that Sub-Advisor will be able to maintain compliance
with applicable regulations, laws, policies, and restrictions with respect to
Sub-Advisor's Allocated Portion.
Without limiting the generality of the foregoing, Sub-Advisor shall: (i) furnish
the Fund with advice and recommendations with respect to the investment of the
Sub-Advisor's Allocated Portion of the Fund's assets, (ii) effect the purchase
and sale of portfolio securities for Sub-Advisor's Allocated Portion; (iii)
determine that portion of Manager's Allocated Portion that will remain
uninvested, if any; (iv) manage and oversee the investments of the Sub-Advisor's
Allocated Portion, subject to the ultimate supervision and direction of the
Trust's Board of Trustees; (v) vote proxies, file required ownership reports,
and take other actions with respect to the securities in Sub-Advisor's Allocated
Portion; (vi) maintain the books and records required to be maintained with
respect to the securities in Sub-Advisor's Allocated Portion; (vii) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund's assets which the Advisor, the
Trustees, or the officers of the Trust may reasonably request; and (viii) render
to the Trust's Board of Trustees such periodic and special reports with respect
to Sub-Advisor's Allocated Portion as the Board may reasonably request.
(b) BROKERAGE. With respect to Sub-Advisor's Allocated Portion,
SubAdvisor shall be responsible for broker-dealer selection and for negotiation
of brokerage commission rates, provided.that Sub-Advisor shall not direct orders
to an affiliated person of the Sub-Advisor or to any other broker-dealer who has
been identified to the Sub-Advisor as an affiliate of any other investment
manager without general prior authorization to use such affiliated broker or
dealer by the Trust's Board of Trustees. Sub-Advisor's primary consideration in
effecting a securities transaction will be execution at the most favorable
price. In selecting a broker-dealer to execute each particular transaction,
Sub-Advisor may take the following into consideration: the best net price
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available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis. The price to the Fund in any transaction may
be less favorable than that available from another broker-dealer if the
difference is reasonably justified by other aspects of the portfolio execution
services offered.
Subject to such policies as the Advisor and the Board of Trustees of the Trust
may determine, Sub-Advisor 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 or dealer that provides (directly
or indirectly) brokerage or research services to SubAdvisor an amount of
commission for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if SubAdvisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or Sub-Advisor's or Advisor's overall responsibilities
with respect to the Fund. Sub-Advisor is further authorized to allocate the
orders placed by it on behalf of the Fund to such brokers or dealers who also
provide research or statistical material, or other services, to the Trust, the
Advisor, any affiliate of either, or the Sub-Advisor. Such allocation shall be
in such amounts and proportions as Sub-Advisor shall determine, and SubAdvisor
shall report on such allocations regularly to the Advisor and the Trust,
indicating the broker-dealers to whom such allocations have been made and the
basis therefor. Sub-Advisor is also authorized to consider sales of shares of
the Fund as a factor in the selection of brokers or dealers to execute portfolio
transactions, subject to the requirements of best execution, i.e., that such
brokers or dealers are able to execute the order promptly and at the best
obtainable securities price.
On occasions when Sub-Advisor deems the purchase or sale of a security to be in
the best interest of the Fund as well as other clients of Sub-Advisor,
Sub-Advisor, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by Sub-Advisor in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
3. REPRESENTATIONS OF SUB-ADVISOR.
(a) Sub-Advisor shall use its best judgment and efforts in rendering
the advice and services to the Fund as contemplated by this Agreement.
(b) Sub-Advisor shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
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(c) Sub-Advisor shall conduct its operations at all times in
conformance with the Investment Advisers Act, the Investment Company Act and any
other applicable state and/or self-regulatory organization regulations.
(d) Sub-Advisor shall be covered by errors and omissions insurance.
The company self-retention or deductible shall not exceed 10% of the the policy
limits and the limits shall be as follows:
Total Fund Assets E&O Policy Limits
----------------- -----------------
Up to $500 million $1,000,000
$500 million -$I billion $2,000,000
$1 billion - $1.5 billion $3,000,000
$1.5 billion - $2 billion $4,000,000
Above $2 billion $5,000,000
4. INDEPENDENT CONTRACTOR. Sub-Advisor shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust, the Fund, or the Advisor in any way, or in any way be deemed an agent for
the Trust, the Fund, or the Advisor. It is expressly understood and agreed that
the services to be rendered by Sub-Advisor to the Fund under the provisions of
this Agreement are not to be deemed exclusive, and Sub-Advisor shall be free to
render similar or different services to others so long as its ability to render
the services provided for in this Agreement shall not be impaired thereby.
5. SUB-ADVISOR'S PERSONNEL. Sub-Advisor shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of SubAdvisor shall be
deemed to include persons employed or retained by Sub-Advisor to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information advice, and assistance as
Sub-Advisor, the Advisor or the Trust's Board of Trustees may desire and
reasonably request.
6. EXPENSES.
(a) Sub-Advisor shall be responsible for (i) providing the personnel,
office space, and equipment reasonably necessary to fulfill its obligations
under this Agreement, and (ii) the costs of any special meetings of the Fund's
shareholders or the Trust's Board of Trustees convened for the primary benefit
of Sub-Advisor.
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(b) Sub-Advisor may voluntarily absorb certain Fund expenses or waive
some or all of Sub-Advisor's own fee.
(c) To the extent Sub-Advisor incurs any costs by assuming expenses
which are an obligation of the Advisor or the Fund, the Advisor or the Fund
shall promptly reimburse the Sub-Advisor for such costs and expenses. To the
extent Sub-Advisor performs services for which the Fund or the Advisor is
obligated to pay, Sub-Advisor shall be entitled to prompt reimbursement in such
amount as shall be negotiated between Sub-Advisor and the Advisor but shall,
under no circumstances, exceed Sub-Advisor's actual costs for providing such
services.
7. INVESTMENT SUB-ADVISORY FEE.
(a) The Advisor shall pay to Sub-Advisor, and Sub-Advisor agrees to
accept, as full compensation for all investment advisory services furnished or
provided to the Fund pursuant to this Agreement, an annual sub-advisory fee
based on Sub-Advisor's Allocated Portion, as such Allocated Portion may be
adjusted from time to time. Such fee shall be equal to 0.65% of the average
daily net assets of the Fund attributable to the Sub-Advisor's Allocated
Portion, all computed on the value of such net assets as of the close of
business each day.
(b) The sub-advisory fee shall be paid by the Advisor to Sub-Advisor
monthly in arrears on the tenth business day of each month.
(c) The initial fee under this Agreement shall be payable on the tenth
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to SubAdvisor shall be prorated for the portion
of any month in which this Agreement is in effect which is not a complete month
according to the proportion which the number of calendar days in the month
during which the Agreement is in effect bears to the number of calendar days in
the month, and shall be payable within ten (10) days after the date of
termination.
(d) The fee payable to Sub-Advisor under this Agreement will be
reduced to the extent of any receivable owed by Sub-Advisor to the Advisor or
the Fund.
(e) Sub-Advisor voluntarily may reduce any portion of the compensation
or reimbursement of expenses due to it pursuant to this Agreement and may agree
to make payments to limit the expenses which are the responsibility of the
Advisor of the Fund under this Agreement. Any such reduction or payment shall be
applicable only to such specific reduction or payment and shall not constitute
an agreement to reduce any future compensation or reimbursement due to
Sub-Advisor hereunder or to continue future payments. Any such reduction will be
agreed to prior to accrual of the related expense or fee and will be estimated
daily and reconciled and paid on a monthly basis.
(f) Sub-Advisor may agree not to require payment of any portion of the
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compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to Sub-Advisor
hereunder.
8. NO SHORTING, NO BORROWING. Sub-Advisor agrees that neither it nor any of
its officers or employees shall take any short position in the shares of the
Fund. This prohibition shall not prevent the purchase of such shares by any of
the officers or employees of Sub-Advisor or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. Sub-Advisor
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Funds assets in connection with any borrowing not
directly for the Fund's benefit.
9. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Agreement and Declaration of Trust, By-Laws, or
any applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of the conduct of
the affairs of the Trust and the Fund. In this connection, Sub-Advisor
acknowledges that the Advisor and the Trust's Board of Trustees retain ultimate
plenary authority over the Fund, including the Allocated Portion, and may take
any and all actions necessary and reasonable to protect the interests of
shareholders.
10. REPORTS AND ACCESS. Sub-Advisor agrees to supply such information to
the Advisor and to permit such compliance inspections by the Advisor or the Fund
as shall be reasonably necessary to permit the administrator to satisfy its
obligations and respond to the reasonable requests of the Trustees.
11. STANDARD OF CARE, LIABILITY AND INDEMNIFICATION.
(a) Sub-Advisor shall exercise reasonable care and prudence in
fulfilling its obligations under this Agreement.
(b) Sub-Advisor shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of the statements furnished by
Sub-Advisor for use by the Advisor in the Fund's offering materials (including
the prospectus, the statement of additional information, advertising and sales
materials) that pertain to Sub-Advisor and the investment of Sub-Advisor's
Allocated Portion of the Fund. Sub-Advisor shall have no responsibility or
liability with respect to other disclosures.
(c) Sub-Advisor shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any investment made by
Sub-Advisor in violation of Section 2 hereof.
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(d) In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties hereunder on the part of
Sub-Advisor, Sub-Advisor shall not be subject to liability to the Advisor, the
Trust, or the Fund or to any shareholder of the Fund for any act or omission in
the course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security by the
Fund.
(e) Each party to this Agreement, including the Trust on behalf of the
Fund, shall indemnify and hold harmless the other party and the shareholders,
directors, officers, and employees of the other party (any such person, an
"Indemnified Party") against any loss, liability, claim, damage, or expense
(including the reasonable cost of investigating and defending any alleged loss,
liability, claim, damage, or expense and reasonable counsel fees incurred in
connection therewith) arising out of the Indemnified Party's performance or
non-performance of any duties under this Agreement provided, however, that
nothing herein shall be deemed to protect any Indemnified Party against any
liability to which such Indemnified Party would otherwise be subject by reason
of willful misfeasance, bad faith, or negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties under
this Agreement.
If indemnification is to be sought hereunder, then the Indemnified Party shall
promptly notify the other party of the assertion of any claim or the
commencement of any action or proceeding in respect thereof; provided, however,
that the failure so to notify the other party shall not relieve the other party
from any liability that it may otherwise have to the Indemnified Party provided
such failure shall not affect in a material adverse manner the position of the
other party or the Indemnified Party with respect to such claim. Following such
notification, the other party may elect in writing to assume the defense of such
action or proceeding and, upon such election, it shall not be liable for any
legal costs incurred by the Indemnified Party (other than reasonable costs of
investigation previously incurred) in connection therewith, unless (i) the other
party has failed to provide counsel reasonably satisfactory to the Indemnified
Party in a timely manner or (ii) counsel which has been provided by the other
party reasonably determines that its representation of the Indemnified Party
would present it with a conflict of interest.
The provisions of this paragraph 11 (e) shall not apply in any action where the
Indemnified Party is the party adverse, or one of the parties adverse, to the
other party.
(f) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or officer of the Advisor or Sub-Advisor, from
liability in violation of Sections 17(h) and (i) of the Investment Company Act.
12. NON-EXCLUSIVITY, TRADING FOR SUB-ADVISOR'S OWN ACCOUNT. The Advisor's
employment of Sub-Advisor is not an exclusive arrangement. The Advisor
anticipates that it will employ other individuals or entities to furnish it with
the services provided for herein. Likewise, Sub-Advisor may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from buying, selling, or trading any securities for its or their own accounts or
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the accounts of others for whom it or they may be acting, provided, however,
that Sub-Advisor expressly represents that it will undertake no activities which
will adversely affect the performance of its obligations to the Fund under this
Agreement; and provided further that SubAdvisor will adhere to a code of ethics
governing employee trading and trading for proprietary accounts that conforms to
the requirements of the Investment Company Act and the Investment Advisers Act,
a copy of which has been provided to the Board of Trustees of the Trust.
13. TERM.
(a) This Agreement shall become effective at the time Advisor
allocates a portion of Fund's assets to Sub-Advisor as approved by a majority of
the Trustees of the Trust who are not parties to this Agreement nor interested
persons thereof, and shall remain in effect for a period of two (2) years,
unless sooner terminated as hereinafter provided. This Agreement shall continue
in effect thereafter for additional periods not exceeding one (1) year so long
as such continuation is approved for the Fund at least annually by (i) the Board
of Trustees of the Trust or by the vote of a majority of the outstanding voting
securities of the Fund and (ii) the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement nor interested persons thereof, cast
in person at a meeting called for the purpose of voting on such approval, and
(iii) the Advisor. The terms "majority of the outstanding voting securities" and
"interested persons" shall have the meanings as set forth in the Investment
Company Act.
(b) The Fund and its distributor may use the Sub-Advisor's trade name
or any name derived from the Sub-Advisor's trade name only in a manner
consistent with the nature of this Agreement for so long as this Agreement or
any extension, renewal, or amendment hereof remains in effect. Within sixty (60)
days from such time as this Agreement shall no longer be in effect, the Fund
shall cease to use such a name or any other name connected with Sub-Advisor.
14. TERMINATION: NO ASSIGNMENT.
(a) This Agreement may be terminated by the Advisor, the Sub-Advisor,
or the Trust on behalf of the Fund at any time without payment of any penalty,
by the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund, upon sixty (60) days' written notice
to the Sub-Advisor, and by the Sub-Advisor upon sixty (60) days' written notice
to the Fund. In the event of a termination, Sub-Advisor shall cooperate in the
orderly transfer of the Fund's affairs and, at the request of the Board of
Trustees, transfer any and all books and records of the Fund maintained by
Sub-Advisor on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
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15. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
16. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
17. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act and
any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
XXXXXX/XXXXXXX FUND XXXXXX ASSOCIATES L.P.
ADVISORS, LLC
By:_______________________________ By:_________________________________
Name:_____________________________ Name:_______________________________
Title:____________________________ Title:______________________________
As a Third Party Beneficiary,
MASTERS' SELECT FUNDS TRUST
on behalf of
THE MASTERS' SELECT INTERNATIONAL FUND:
By:_______________________________
Name:_____________________________
Title:____________________________
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