INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT, effective as of the 3rd day of March, 2008 by
and among Old Mutual Capital, Inc. (the "Adviser"), Ibbotson
Associates Advisors, LLC (the "Sub-Adviser"), and Old Mutual
Funds III, a Delaware statutory trust (the "Trust").
WHEREAS, the Trust is registered as an open-end
management investment company under the Investment Company Act
of 1940, as amended (the "1940 Act");
WHEREAS, pursuant to the Investment Advisory Agreement
dated March 3, 2008, between the Adviser and the Trust, the Adviser
acts as investment adviser for the Old Mutual 2011-2020
Conservative Fund, Old Mutual 2011-2020 Moderate Fund, Old
Mutual 2011-2020 Aggressive Fund, Old Mutual 2021-2030
Conservative Fund, Old Mutual 2021-2030 Moderate Fund, Old
Mutual 2021-2030 Aggresssive Fund, Old Mutual 2031-2040
Conservative Fund, Old Mutual 2031-2040 Moderate Fund, Old
Mutual 2031-2040 Aggressive Fund, Old Mutual 2041-2050
Conservative Fund, Old Mutual 2041-2050 Moderate Fund, and Old
Mutual 2041-2050 Aggressive Fund (each a "Fund", and collectively,
the "Funds"); and
WHEREAS, the Adviser and the Trust each desire to retain
the Sub-Adviser to provide investment advisory services to the Trust
in connection with the management of all or a portion of the assets of
each Fund, and the Sub-Adviser is willing to render such investment
advisory services.
NOW, THEREFORE, intending to be legally bound, the
parties hereto agree as follows:
1. (a) Subject to supervision and oversight by the Adviser and
the Trust's Board of Trustees, the Sub-Adviser shall recommend a
continuous investment allocation program for the Funds in
accordance with each Fund's investment objectives, policies and
restrictions as stated in such Fund's Prospectus and Statement of
Additional Information (such Prospectus and Statement of Additional
Information as currently in effect and as amended or supplemented
from time to time, being herein called the "Prospectus"), and subject
to the following understandings:
(i) The Sub-Adviser shall continuously review each of
the Fund's investments and shall recommend, from time to time, the
allocation of the assets of a Fund by specific investment style mandate
(referred to herein as a "Portfolio Account").
(ii) In the performance of its duties and obligations
under this Agreement, the Sub-Adviser shall act in conformity with
the Trust's Prospectus and with the instructions and directions of the
Adviser and of the Board of Trustees and will conform and comply
with the applicable requirements of the 1940 Act, section 817(h) of
the Internal Revenue Code of 1986, as amended, and all other
applicable federal and state laws and regulations, as each is amended
from time to time.
(iii) The Sub-Adviser at its expense will make
available to the Trustees of the Funds and the Adviser at reasonable
times its portfolio managers and other appropriate personnel, either in
person or, at the mutual convenience of the Adviser and the Sub-
Adviser, by telephone, in order to review the investment policies,
performance and other investment related information regarding a
Portfolio Account and to consult with the Trustees of the Funds and
Adviser regarding each Fund's investment affairs, including
economic, statistical and investment matters related to the Sub-
Adviser's duties hereunder, and will provide periodic reports to the
Adviser relating to the investment strategies it employs. The Sub-
Adviser and its personnel shall also cooperate fully with counsel and
auditors for, and the Chief Compliance Officers of, the Adviser and
the Trust.
(iv) The Sub-Adviser at its expense will provide the
Adviser and/or the Trust's Chief Compliance Officer with such
compliance reports relating to its duties under this Agreement as may
be reasonably requested from time to time. Notwithstanding the
foregoing, the Sub-Adviser will promptly report to the Adviser any
material violations of the federal securities laws (as defined in Rule
38a-1 of the 0000 Xxx) that it is or should be aware of or of any
material violation of the Sub-Adviser's compliance policies and
procedures that pertain to the Funds, as well as any change in
portfolio manager(s) of the Funds.
(v) The Sub-Adviser represents and warrants that it
has adopted a code of ethics meeting the requirements of Rule 17j-1
under the 1940 Act and the requirements of Rule 204A-1 under the
Investment Advisers Act of 1940 and has provided the Adviser and
the Trustees a copy of such code of ethics, together with evidence of
its adoption, and will promptly provide copies of any changes thereto,
together with evidence of their adoption. The Sub-Adviser will
supply the Adviser a written report that (A) describes any issues
arising under the code of ethics or procedures since the Sub-Adviser's
last report, including but not limited to material violations of the code
of ethics or procedures and sanctions imposed in response to the
material violations, no less frequently than quarterly; and (B) certifies
that the procedures contained in the Sub-Adviser's code of ethics are
reasonably designed to prevent "access persons" from violating the
code of ethics, no less frequently than annually.
(vi) The Sub-Adviser will review draft reports to
shareholders and amendments to the Prospectus and other documents
provided or available to it and provide comments on a timely basis.
In addition, the Sub-Adviser and each officer and portfolio manager
thereof designated by the Adviser will provide on a timely basis such
certifications or sub-certifications as the Adviser may reasonably
request.
(vii) The Sub-Adviser shall maintain all books and
records with respect to each Fund's portfolio transactions required by
subparagraphs (b)(10) and (11) and paragraph (f) of Rule 31a-1 under
the 1940 Act and shall render to the Trust's Board of Trustees such
periodic and special reports as the Trust's Board of Trustees may
reasonably request.
(viii) (A) The investment management services
provided by the Sub-Adviser under this Agreement are not to be
deemed exclusive and the Sub-Adviser shall be free to render similar
services to others, as long as such services do not impair the services
rendered to the Adviser or the Trust.
(B) Services to be furnished by the Sub-
Adviser under this Agreement may be furnished through the medium
of any of the Sub-Adviser's officers or employees.
(C) The Sub-Adviser shall keep each Fund's
books and records required to be maintained by the Sub-Adviser
pursuant to paragraph 1(a) of this Agreement and shall timely furnish
to the Adviser all information relating to the Sub-Adviser's services
under this Agreement needed by the Adviser to keep the other books
and records of the Fund required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser agrees that all records that it maintains on behalf of
the Fund are property of the Fund and the Sub-Adviser will surrender
promptly to the Fund any of such records upon the Fund's request;
provided, however, that the Sub-Adviser may retain a copy of such
records. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any such records as are
required to be maintained by it pursuant to paragraph 1(a) of this
Agreement.
(ix) The Sub-Adviser will develop allocations for the
Funds and will work with the Adviser to develop a questionnaire as
an education tool that is intended to assist individual investors in
determining a risk profile. Adviser agrees and acknowledges that
Sub-Adviser does not intend to provide investment advice to
individual investors and therefore, Adviser will not present the
questionnaire in any way that would characterize the Sub-Adviser as
providing investment advice to the individual investor.
(x) The Sub-Adviser will develop a glide path
allocation for each Fund from Fund inception to the target retirement
date and will develop an appropriate asset allocation strategy for each
Fund post-retirement date.
2. The Adviser shall continue to have responsibility for all
services to be provided to each Fund pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's
performance of its duties under this Agreement.
3. The Adviser has delivered to the Sub-Adviser copies of each
of the following documents and will deliver to it all future
amendments and supplements, if any:
(a) Certified resolutions of the Trust's Board of Trustees
authorizing the appointment of the Sub-Adviser and approving the
form of this Agreement;
(b) Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended on Form N-1A (the "Registration
Statement"), as filed with the Securities and Exchange Commission
(the "Commission") relating to each Fund and shares of the Fund's
beneficial shares, and all amendments thereto; and
(c) Prospectus of each Fund.
4. For the services to be provided by the Sub-Adviser pursuant to
this Agreement for each Fund, the Adviser will pay to the Sub-
Adviser as full compensation therefore a fee at an annual rate of the
Funds' average daily net assets in the aggregate, as set forth in
Schedule A. The fee will be paid to the Sub-Adviser from the
Adviser's advisory fee from each Fund, or from the Adviser's own
resources if the advisory fee is insufficient. This fee will be computed
daily and paid to the Sub-Adviser monthly. The Sub-Adviser shall
have no recourse against the Funds for payment of any sub-advisory
fee payable under this Agreement.
5. The Sub-Adviser shall not be liable for any error of judgment
or for any loss suffered by the Funds or the Adviser in connection
with performance of its obligations under this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 1940 Act), or a loss resulting from willful
misfeasance, bad faith or gross negligence on the Sub-Adviser's part
in the performance of its duties or from reckless disregard of its
obligations and duties under this Agreement, except as may otherwise
be provided under provisions of applicable state law which cannot be
waived or modified hereby.
6. The initial term of this Agreement shall commence on the
effective date hereof and continue for a period of two years. This
Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically
approved at least annually in conformance with the 1940 Act
provided, however, that this Agreement may be terminated (a) by the
Fund at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Fund, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days'
nor less than 30 days' written notice to the other parties, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90
days' written notice to the other parties. This Agreement shall
terminate automatically and immediately in the event of its
assignment. As used in this Section 6, the terms "assignment" and
"vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to such exceptions as may be granted
by the Commission under the 1940 Act.
7. Nothing in this Agreement shall limit or restrict the right of
any of the Sub-Adviser's partners, officers, or employees to engage in
any other business or to devote his or her time and attention in part to
the management or other aspects of any business, whether of a similar
or dissimilar nature, nor limit or restrict the Sub-Adviser's right to
engage in any other business or to render services of any kind to any
other corporation, firm, individual or association.
8. During the term of this Agreement, the Adviser agrees to
furnish the Sub-Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature or other materials
prepared for distribution to shareholders of each Fund, the Trust or
the public that refers to the Sub-Adviser or its clients in any way prior
to use thereof and not to use material if the Sub-Adviser reasonably
objects in writing within five business days (or such other period as
may be mutually agreed upon) after receipt thereof. The Sub-
Adviser's right to object to such materials is limited to the portions of
such materials that expressly relate to the Sub-Adviser, its services
and its clients. The Adviser agrees to use its reasonable best efforts to
ensure that materials prepared by its employees or agents or its
affiliates that refer to the Sub-Adviser or its clients in any way are
consistent with those materials previously approved by the Sub-
Adviser as referenced in the first sentence of this paragraph. Sales
literature may be furnished to the Sub-Adviser by first-class mail,
electronic mail or overnight delivery service, facsimile transmission
equipment or hand delivery.
9. No Trustee or Shareholder of the Trust shall be personally
liable for any debts, liabilities, obligations or expenses incurred by, or
contracted for under this Agreement.
10. No provisions of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this
Agreement shall be effective until approved by the vote of the
majority of the outstanding voting securities of each Fund.
11. This Agreement shall be governed by the laws of the state of
Delaware; provided, however, that nothing herein shall be construed
as being inconsistent with the 1940 Act.
12. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject
matter. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original; all such
counterparts shall, together, constitute only one instrument.
13. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors.
14. Any notice, advice or report to be given pursuant to this
Agreement shall be delivered or mailed:
To the Adviser at:
Old Mutual Capital, Inc.
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: General Counsel
To the Sub-Adviser at:
Ibbotson Associates, Inc.
000 Xx. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxx
To the Trust or the Funds at:
Old Mutual Funds III
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: President
15. Where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is altered by a rule, regulation or
order of the Commission, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order.
16. As required by certain exemptive rules under the 1940 Act, the
Sub-Adviser is prohibited form consulting with the entities listed
below concerning transactions for the fund in securities or other
assets:
(a) Other sub-advisers to a Fund;
(b) Other sub-advisers to a series fund of the Trust; and
(c) Other sub-advisers to a portfolio under common
control with a Fund.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below as of the
day and year first written above.
OLD MUTUAL CAPITAL, INC. OLD MUTUAL
FUNDS III
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxx X.
Sluyters
Name: Xxxx X. Xxxxx Name: Xxxxxx X.
Sluyters
Title: Chief FinancialOfficer Title: President
Date: February 20, 2008 Date: February
20, 2008
IBBOTSON ASSOCIATES ADVISORS, LLC
By: /s/ Xxxx Xxxx
Name: Xxxx Xxxx
Title: President
Date:
SCHEDULE A
TO INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN OLD MUTUAL FUNDS III, OLD MUTUAL
CAPITAL, INC. AND IBBOTSON ASSOCIATES ADVISORS,
LLC
EFFECTIVE MARCH 3, 2008
Pursuant to Section 4 of this Agreement, beginning on the effective
date of the Agreement, the Adviser shall pay the Sub-Adviser, at the
end of each calendar month, compensation computed daily on the net
assets of the Funds in the aggregate, based on the following schedule:
Asset Level
Annual
Sub-
Advisory
Fee
Less than $1
Billion
$1 Billion to less
than $2 Billion
$2 Billion to less
than $3 Billion
$3 Billion to less
than $4 Billion
$4 Billion to less
than $5 Billion
$5 Billion or
greater
0.10%
0.09%
0.08%
0.07%
0.06%
0.05%
If at the end of each one year period ended November 30th (the
"minimum calculation period"), the total sub-advisory fees paid under
Section 4 of this Agreement are less than the minimum annual fee
amount set forth below, the difference between the amount of sub-
advisory fees paid and the minimum annual fee amount shall be due
and payable to the Sub-Adviser by the Adviser no later than 45 days
after the start of the next minimum calculation period:
Minimum annual fee amounts:
? Minimum calculation period ended November 30, 2008:
$150,000
? Minimum calculation period ended November 30, 2009:
$250,000
? Minimum calculation period ended November 30, 2010 and each
minimum calculation period thereafter: $350,000
If the Agreement terminates before the end of a full twelve month
minimum calculation period, the minimum annual fee amount for that
minimum calculation period shall be prorated.
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