EX-99.d.21
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 1st day of July, 2008 by and between Xxxxxx Global
Investments, Inc., a Delaware corporation (the "Advisor"), and Xxxxxxx Sachs
Asset Management, L.P. (the "Sub-Advisor").
WHEREAS, the Advisor and the Sub-Advisor are registered investment advisers
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and
engage in the business of providing investment management services; and
WHEREAS, the Advisor has been retained to act as investment adviser
pursuant to an Investment Advisory Agreement, dated July 1, 2005 (the "Advisory
Agreement"), with MGI Funds (the "Trust"), a Delaware statutory trust registered
with the U.S. Securities and Exchange Commission (the "SEC") as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), which consists of several separate series of shares
(each a "Series"), each having its own investment objectives and policies, and
which is authorized to create additional series in the future; and
WHEREAS, the Advisory Agreement permits the Advisor, subject to the
supervision and direction of the Trust's Board of Trustees (the "Board"), to
delegate certain of its duties under the Advisory Agreement to other investment
advisers, subject to the requirements of the 1940 Act; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to assist the
Advisor in the provision of a continuous investment program for that portion of
one or more of the Trust's series' (each a "Fund") assets which the Advisor will
assign to the Sub-Advisor (the "Sub-Advisor Assets"), and the Sub-Advisor is
willing to render such services, subject to the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of mutual covenants recited below, the
parties agree and promise as follows:
1. Appointment as Sub-Advisor. The Advisor hereby appoints the Sub-Advisor
to act as investment adviser for and to manage the Sub-Advisor Assets, subject
to the supervision of the Advisor and the Board of Trustees of the Trust, and
subject to the terms of this Agreement; and the Sub-Advisor hereby accepts such
appointment. In such capacity, the Sub-Advisor shall be responsible for the
investment management of the Sub-Advisor Assets. The Sub-Advisor agrees to
exercise the same degree of skill, care and diligence in performing its services
under this Agreement as the Sub-Advisor exercises in performing similar services
with respect to other fiduciary accounts for which the Sub-Advisor has
investment responsibilities, and that a prudent manager would exercise under the
circumstances.
In the event that the Trust establishes one or more series of shares other
than the MGI US Small/Mid Cap Growth Equity Fund with respect to which Advisor
desires to retain Sub-Advisor to render investment advisory services hereunder,
Advisor shall so notify Sub-Advisor in writing, indicating the advisory fee to
be payable with respect to the additional series of shares. If Sub-Advisor is
willing to render such services on the terms provided for herein, it shall so
notify Advisor in writing, whereupon such series shall become a Fund hereunder
and such notification by Sub-Advisor shall become a schedule to this Agreement.
2. Duties of the Sub-Advisor.
(a) Investments. The Sub-Advisor is hereby authorized and directed,
and hereby agrees, subject to the stated investment objectives, policies
and restrictions of each Fund as set forth in such Fund's prospectus and
statement of additional information as currently in effect and as amended
from time to time (collectively referred to as the "Prospectus") and as
provided to the Sub-Advisor by the Advisor and subject to the directions of
the Advisor and the Trust's Board of Trustees, to purchase, hold and sell
investments for the Sub-Advisor Assets and to monitor such investments on
an ongoing basis. In providing these services, the Sub-Advisor will conduct
an ongoing program of investment, evaluation and, if appropriate, sale and
reinvestment of the Sub-Advisor Assets. The Advisor agrees to provide the
Sub-Advisor information concerning (i) a Fund; (ii) a Fund's assets
available or to become available for investment; and (iii) the conditions
of a Fund's or the Trust's affairs as relevant to the Sub-Advisor.
(b) Compliance with Applicable Laws, Governing Documents and Trust
Compliance Procedures. In the performance of its duties and obligations
under this Agreement, the Sub-Advisor shall, with respect to Sub-Advisor
Assets, (i) use reasonable efforts to act in conformity with: (A) the
Trust's Agreement and Declaration of Trust (the "Declaration of Trust") and
By-Laws; (B) the Prospectus; (C) the policies and procedures for compliance
by the Trust with the Federal Securities Laws (as that term is defined in
Rule 38a-1 under the 0000 Xxx) provided to the Sub-Advisor (together, the
"Trust Compliance Procedures"); and (D) the instructions and directions
received in writing from the Advisor or the Trustees of the Trust; and (ii)
use reasonable efforts to conform to and comply with the requirements of
the 1940 Act, the Advisers Act, and all other federal laws applicable to
registered investment companies' and Sub-Advisors' duties under this
Agreement. The Advisor will provide the Sub-Advisor with any materials or
information that the Sub-Advisor may reasonably request to enable it to
perform its duties and obligations under this Agreement.
The Advisor will provide the Sub-Advisor with reasonable advance
notice, in writing, of: (i) any change in a Fund's investment objectives,
policies and restrictions as stated in the Prospectus; (ii) any change to
the Trust's Declaration of Trust or By-Laws; and (iii) any material change
in the Trust Compliance Procedures; and the Sub-Advisor, in the performance
of its duties and obligations under this Agreement, shall manage the
Sub-Advisor Assets consistently with such changes, provided the Sub-Advisor
has received such prior notice of the effectiveness of such changes from
the Trust or the Advisor. In addition to such notice, the Advisor shall
provide to the Sub-Advisor a copy of a modified Prospectus and copies of
the revised Trust Compliance Procedures, as applicable, reflecting such
changes. The Sub-Advisor hereby agrees to provide to the Advisor in a
timely manner, in writing, such information relating to the Sub-Advisor and
its relationship to, and actions for, a Fund as may be required to be
contained in the
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Prospectus or in the Trust's registration statement on Form N-1A
("Registration Statement"), or otherwise as reasonably requested by the
Advisor.
In order to assist the Trust and the Trust's Chief Compliance Officer
(the "Trust CCO") to satisfy the requirements contained in Rule 38a-1 under
the 1940 Act, the Sub-Advisor shall provide to the Trust CCO: (i) upon
appropriate notice to the Sub-Advisor, reasonable access to the
Sub-Advisor's chief compliance officer (the "Sub-Advisor CCO"), as may be
reasonably requested by the Trust CCO; (ii) quarterly reports confirming
that the Sub-Advisor has complied with the Trust Compliance Procedures in
managing the Sub-Advisor Assets; and (iii) quarterly certifications that
there were no Material Compliance Matters (as that term is defined by Rule
38a-1(e)(2)) that arose under the Trust Compliance Procedures that related
to the Sub-Advisor's management of the Sub-Advisor Assets.
(c) Sub-Advisor Compliance Policies and Procedures. (i) The Trust and
the Advisor acknowledge that the Sub-Advisor is not the compliance agent
for any Series or for the Trust or the Advisor, and does not have access to
all of each Series' books and records necessary to perform certain
compliance testing. To the extent that the Sub-Advisor has agreed to
perform the services specified in Section 2 in accordance with the Trust's
Registration Statement and other applicable documentation (collectively,
the "Charter Requirements"), and in accordance with applicable law
(including Subchapters M and L of the Code, the 1940 Act and the Advisers
Act ("Applicable Law")), the Sub-Advisor shall perform such services based
upon its books and records with respect to each Series, which comprise a
portion of each Series' books and records, and upon information and written
instructions received from the Trust, the Advisor or the Trust's
administrator, and shall not be held responsible under this Agreement so
long as it performs such services in accordance with this Agreement, the
Charter Requirements and Applicable Law based upon such books and records
and such information and instructions provided by the Trust, the Advisor,
or the Trust's administrator. The Advisor shall promptly provide the
Sub-Advisor with copies of the Charter Requirements any written policies
and procedures adopted by the Trust's Board applicable to the Series and
any amendments or revisions thereto.
(ii) The Advisor agrees that it shall immediately notify the
Sub-Advisor (A) in the event that the SEC has censured the Advisor or the
Trust; placed limitations upon either of their activities, functions, or
operations; suspended or revoked the Advisor's registration as an
investment adviser; or has commenced proceedings or an investigation that
may result in any of these actions, (B) upon having a reasonable basis for
believing that the Series has ceased to qualify or might not qualify as a
regulated investment company under Subchapter M of the Code, or (C) upon
having a reasonable basis for believing that the Series has ceased to
comply with the diversification provisions of Section 817(h) of the Code or
the regulations thereunder.
The Sub-Advisor shall promptly provide the Trust CCO with copies of:
(i) the Sub-Advisor's policies and procedures for compliance by the
Sub-Advisor with the Federal Securities Laws (together, the "Sub-Advisor
Compliance Procedures"), and (ii) any material changes to the Sub-Advisor
Compliance Procedures. The Sub-Advisor shall
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cooperate fully with the Trust CCO so as to facilitate the Trust CCO's
performance of the Trust CCO's responsibilities under Rule 38a-1 to review,
evaluate and report to the Trust's Board of Trustees on the operation of
the Sub-Advisor Compliance Procedures, and shall promptly report to the
Trust CCO any Material Compliance Matter arising under the Sub-Advisor
Compliance Procedures involving the Sub-Advisor Assets. The Sub-Advisor
shall provide to the Trust CCO: (i) quarterly reports confirming the
Sub-Advisor's compliance with the Sub-Advisor Compliance Procedures in
managing the Sub-Advisor Assets, and (ii) certifications that there were no
Material Compliance Matters involving the Sub-Advisor that arose under the
Sub-Advisor Compliance Procedures that affected the Sub-Advisor Assets. At
least annually, the Sub-Advisor shall upon request provide a certification
to the Trust CCO to the effect that the Sub-Advisor has in place and has
implemented policies and procedures that are reasonably designed to ensure
compliance by the Sub-Advisor with the Federal Securities Laws.
(d) Voting of Proxies. Unless otherwise instructed by the Advisor or
the Trust, the Sub-Advisor shall have the power, discretion and
responsibility to vote, either in person or by proxy, all securities in
which the Sub-Advisor Assets may be invested from time to time, and shall
not be required to seek instructions from the Advisor, the Trust or a Fund.
The Sub-Advisor shall also provide its Proxy Voting Policy (the "Proxy
Policy"), and, if requested by the Advisor, a summary of such Proxy Policy
suitable for including in the Prospectus, and will provide the Advisor with
any material amendment to the Proxy Policy within a reasonable time after
such amendment has taken effect. If both the Sub-Advisor and another person
managing assets of a Fund have invested in the same security, the
Sub-Advisor and such other entity will each have the power to vote its pro
rata share of the security.
(e) Agent. Subject to any other written instructions of the Advisor or
the Trust, the Sub-Advisor is hereby appointed the Advisor's and the
Trust's agent and attorney-in-fact for the limited purposes of executing
account documentation, agreements, contracts and other documents as the
Sub-Advisor shall be requested by brokers, dealers, counterparties and
other persons in connection with its management of the Sub-Advisor Assets,
provided that, the Sub-Advisor's actions in executing such documents shall
comply with federal regulations, all other federal laws applicable to
registered investment companies and the Sub-Advisor's duties and
obligations under this Agreement and the Trust's governing documents. In
rendering the services required under this Agreement, the Sub-Advisor may,
from time to time, employ or associate with itself such affiliated or
unaffiliated person or persons as it believes necessary to assist it in
carrying out its obligations under this Agreement. Notwithstanding the
foregoing, in all such cases, the Sub-Advisor shall remain liable for the
performance of the services and the carrying out of its obligations
hereunder.
(f) Brokerage. The Sub-Advisor will place orders pursuant to the
Sub-Advisor's investment determinations for a Fund either directly with an
issuer or with any broker or dealer selected by the Sub-Advisor, pursuant
to this paragraph. In executing portfolio transactions and selecting
brokers or dealers, the Sub-Advisor will use its best efforts to seek, on
behalf of a Fund, the best overall execution available. In assessing the
best overall terms available for any transaction, the Sub-Advisor shall
consider all factors
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that 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 or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in selecting the
broker or dealer to execute a particular transaction, the Sub-Advisor may
also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended
(the "1934 Act")) provided to a Fund and/or other accounts over which the
Sub-Advisor may exercise investment discretion. The Sub-Advisor is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for
any of the Funds that is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if, but
only if, the Sub-Advisor determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of that particular
transaction or in terms of the overall responsibilities of the Sub-Advisor
to a Fund. Such authorization is subject to termination at any time by the
Board of Trustees of the Trust for any reason. In addition, the Sub-Advisor
is authorized to allocate purchase and sale orders for portfolio securities
to brokers or dealers that are affiliated with the Advisor, the
Sub-Advisor, the Trust's principal underwriter, or other sub-advisors (if
applicable) if the Sub-Advisor believes that the quality of the transaction
and the commission are comparable to what they would be with other
qualified firms, and provided that the transactions are consistent with the
Trust's Rule 17e-1 and Rule 10f-3 procedures. The Advisor will identify all
brokers and dealers affiliated with the Trust, the Advisor, and the Trust's
principal underwriter (and the other Sub-Advisors of the Fund, to the
extent such information is necessary for the Sub-Advisor to comply with
applicable federal securities laws), other than those whose sole business
is the distribution of mutual fund shares, who effect securities
transactions for customers. The Advisor shall immediately furnish a written
notice to the Sub-Advisor if the information so provided is no longer
accurate.
In connection with its management of the Sub-Advisor Assets and
consistent with its fiduciary obligation to the Sub-Advisor Assets and
other clients, the Sub-Advisor, to the extent permitted by applicable laws
and regulations, may, but shall be under no obligation to, aggregate the
securities or futures contracts to be sold or purchased in order to obtain
the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities or futures contracts
so purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Sub-Advisor in the manner the Sub-Advisor considers to
be, over time, the most equitable and consistent with its fiduciary
obligations to the Sub-Advisor's Assets and to such other clients.
On occasions when the Sub-Advisor deems the purchase or sale of a
security or other instrument to be in the best interest of a Series, as
well as of other investment advisory clients of the Sub-Advisor or any of
its affiliates, the Sub-Advisor may, to the extent permitted by applicable
laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased with those of its other clients where
such aggregation is not inconsistent with the policies set forth in the
Registration Statement. In such event, allocation of the securities so
purchased or sold, as well as the
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expenses incurred in the transaction, will be made by the Sub-Advisor in a
manner that is fair and equitable in the judgment of the Sub-Advisor in the
exercise of its fiduciary obligations to the Trust and to such other
clients and subject to the Sub-Advisor's General Principals on Trade
Allocation in the Sub-Advisor's Compliance Policies and Procedures dated
March 2008, as such procedures may be modified by Sub-Advisor from time to
time at its sole discretion.
(g) Securities Transactions. In no instance will any Fund's portfolio
securities be purchased from or sold to the Advisor, the Sub-Advisor, the
Trust's principal underwriter, or any affiliated person the Trust, the
Advisor, the Sub-Advisor or the Trust's principal underwriter, acting as
principal in the transaction, except to the extent permitted by the SEC and
the 1940 Act, including Rule 17a-7 thereunder.
The Sub-Advisor acknowledges that the Advisor and the Trust may rely
on Rule 17a-7, Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under
the 1940 Act, and the Sub-Advisor hereby agrees that it shall not consult
with any other sub-advisor to the Fund with respect to transactions in
securities for the Sub-Advisor Assets or any other transactions of Fund
assets.
The Sub-Advisor is authorized to engage in transactions in which the
Sub-Advisor, or an affiliate of the Sub-Advisor, acts as a broker for both
the Fund and for another party on the other side of the transaction
("agency cross transactions"). The Sub-Advisor shall effect any such agency
cross transactions in compliance with Rule 206(3)-2 under the Advisers Act
and any other applicable provisions of the federal securities laws and
shall provide the Advisor with periodic reports describing such agency
cross transactions. By execution of this Agreement, the Advisor authorizes
the Sub-Advisor or its affiliates to engage in agency cross transactions,
as described above. The Advisor may revoke its consent at any time by
providing at least 30 days' prior written notice to the Sub-Advisor.
The Sub-Advisor will prevent the disclosure by it, its employees or
its agents of the Trust's portfolio holdings to any person or entity other
than the Advisor, the Trust's custodian, or other persons expressly
designated by the Advisor or the Sub-Advisor.
(h) Code of Ethics. The Sub-Advisor hereby represents that it has
adopted policies and procedures and a code of ethics that meet the
requirements of Rule 17j-1 under the 1940 Act and Rule 204A-1 under the
Advisers Act. Copies of such policies and procedures and code of ethics and
any changes or supplements thereto shall, upon request, be delivered to the
Advisor and the Trust, and any material violation of such policies, and
procedures and code of ethics by personnel of the Sub-Advisor, the
sanctions imposed in response thereto, and any issues arising under such
policies, and procedures and code of ethics shall be reported to the
Advisor and the Trust at the times and in the format reasonably requested
by the Advisor and the Board of Trustees.
(i) Books and Records. The Sub-Advisor shall maintain separate
detailed records of all matters pertaining to the Sub-Advisor Assets,
including, without limitation, brokerage and other records of all
securities transactions. Any records required to be
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maintained and preserved pursuant to the provisions of Rule 31a-1 and Rule
31a-2 promulgated under the 1940 Act that are prepared or maintained by the
Sub-Advisor on behalf of the Trust are the property of the Trust and will
be surrendered promptly to the Trust upon request although the Sub-Advisor
may, at its own expense, make and retain a copy of such records for
archival purposes only; provided that such records shall be treated as
"Confidential Information" as defined in, and subject to the provisions of,
Section 13 of this Agreement. The Sub-Advisor further agrees to preserve
for the periods prescribed in Rule 31a-2 under the 1940 Act the records
required to be maintained under Rule 31a-1 under the 1940 Act.
(j) Information Concerning Sub-Advisor Assets and the Sub-Advisor.
From time to time as the Advisor, and any consultants designated by the
Advisor, or the Trust may request, the Sub-Advisor will furnish the
requesting party reports on portfolio transactions and reports on
Sub-Advisor Assets held in the portfolio, all in such detail as the
Advisor, its consultant(s) or the Trust may reasonably request. The
Sub-Advisor will provide the Advisor with information (including
information that is required to be disclosed in the Prospectus) with
respect to the portfolio managers responsible for Sub-Advisor Assets, any
changes in the portfolio managers responsible for Sub-Advisor Assets, any
changes in the ownership or management of the Sub-Advisor, or of material
changes in the control of the Sub-Advisor. The Sub-Advisor will promptly
notify the Advisor of any pending investigation, material litigation,
administrative proceeding or any other significant regulatory inquiry. Upon
reasonable request, the Sub-Advisor will make available its officers and
employees to meet with the Trust's Board of Trustees to review the
Sub-Advisor Assets.
(k) Valuation of Sub-Advisor Assets. The Sub-Advisor agrees to
provide, upon request, reasonable assistance to the Advisor, the Trust's
valuation committee and the Fund's pricing agent in making determinations
of the fair value of the Fund's portfolio securities in accordance with the
Trust's valuation procedures. With respect to any security or instrument
held both by the Fund and by another registered investment company
sponsored by the Sub-Advisor ("GS Proprietary Fund"), the Sub-Advisor
further agrees to: (i) to immediately notify the Advisor if the Sub-Advisor
believes that market quotations for such security or instrument are not
readily available or the market price does not reflect the security's or
instrument's fair value; and (ii) provide the Advisor that value assigned
to such security or instrument within such GS Proprietary Fund, and the
basis for the decision, pursuant to the Sub-Advisor's procedures for
determining the fair value of a security or instrument. With respect to
securities or instruments that are not also held by a GS Proprietary Fund,
the Sub-Advisor agrees to (i) the above to the extent that Sub-Advisor has
actual knowledge of a valuation situation of the type described therein.
Notwithstanding the foregoing, the Sub-Advisor shall not be responsible for
any valuation determinations made with respect to the Fund.
Pursuant to the provisions of this Agreement, the Sub-Advisor also
will provide such information or perform such additional acts as may be
reasonably required for a Fund or the Advisor to comply with their
respective obligations under applicable federal securities laws, including,
without limitation, the 1940 Act, the Advisers Act, the 1934
7
Act, the Securities Act of 1933, as amended (the "Securities Act"), and any
rule or regulation thereunder.
(l) Custody Arrangements. The Sub-Advisor, on each business day, shall
provide the Advisor, its consultant(s) and the Trust's custodian such
information as the Advisor and the Trust's custodian may reasonably request
relating to all transactions concerning the Sub-Advisor Assets.
(m) Historical Performance Information. To the extent agreed upon by
the parties, the Sub-Advisor will provide the Trust with historical
performance information on similarly managed investment companies or for
other accounts to be included in the Prospectus or for any other uses;
provided that any use, including disclosure in the Prospectus, may only be
as permitted by applicable law or regulation as determined by the
Sub-Advisor in its reasonable discretion.
(n) Regulatory Examinations. The Sub-Advisor will cooperate promptly
and fully with the Advisor and/or the Trust in responding to any regulatory
or compliance examinations or inspections (including information requests)
relating to the Trust, the Fund or the Advisor brought by any governmental
or regulatory authorities having appropriate jurisdiction (including, but
not limited to, the SEC).
Subject to the foregoing, the Sub-Advisor shall treat as confidential
all information pertaining to the Trust and actions of the Trust, the
Advisor and the Sub-Advisor, and the Advisor shall treat as confidential
and use only in connection with the Series all information furnished to the
Trust or the Advisor by the Sub-Advisor, in connection with its duties
under the Agreement except that the aforesaid information need not be
treated as confidential if required to be disclosed under applicable law,
if generally available to the public through means other than by disclosure
by the Sub-Advisor or the Advisor, or if available from a source other than
the Advisor, Sub-Advisor or the Trust.
3. Independent Contractor. In the performance of its duties hereunder, the
Sub-Advisor is and shall be an independent contractor and, unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent a Fund, the Trust or the Advisor in any way or
otherwise be deemed an agent of a Fund, the Trust or the Advisor.
4. Services to Other Clients. Nothing herein contained shall limit the
freedom of the Sub-Advisor or any affiliated person of the Sub-Advisor to render
investment advisory, supervisory and other services to other investment
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business activities. It is
understood that the Sub-Advisor may give advice and take action for its other
clients that may differ from advice given, or the timing or nature of action
taken, for a Fund. The Sub-Advisor is not obligated to initiate transactions for
a Fund in any security that the Sub-Advisor, its principals, affiliates or
employees may purchase or sell for its or their own accounts or other clients.
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5. Expenses. During the term of this Agreement, the Sub-Advisor will pay
all expenses incurred by it in connection with its activities under this
Agreement, other than the costs of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased or otherwise acquired, or sold or otherwise disposed of, for a Fund.
The Sub-Advisor, at its sole expense, shall employ or associate itself with such
persons as it believes to be particularly fitted to assist it in the execution
of its duties under this Agreement. The Trust or the Advisor, as the case may
be, shall reimburse the Sub-Advisor for any expenses as may be reasonably
incurred by the Sub-Advisor, at the request of and on behalf of a Fund or the
Advisor. The Sub-Advisor shall keep and supply to the Trust and the Advisor
reasonable records of all such expenses. The Advisor or the Trust shall be
responsible for all the expenses of the Trust's operations including, but not
limited to:
(a) Expenses of all audits by the Trust's independent public
accountants;
(b) Expenses of the Series' transfer agent, registrar, dividend
disbursing agent, and shareholder recordkeeping services;
(c) Expenses of the Series' custodial services including recordkeeping
services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of each
Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports and Analyses of
International Management Reports (as appropriate) for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors,
stockholders, or employees of the Sub-Advisor or an affiliate of the
Sub-Advisor;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions, transfer fees, registration fees,
taxes and similar liabilities and costs properly payable or incurred in
connection with the purchase and sale of portfolio securities for the
Series;
(j) Costs, including the interest expense, of borrowing money;
(k) Costs and/or fees incident to meetings of the Trust's
shareholders, the preparation, printing and mailings of prospectuses and
reports of the Trust to its shareholders, the filing of reports with
regulatory bodies, the maintenance of the Trust's existence, and the
regulation of shares with federal and state securities or insurance
authorities;
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(l) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
(m) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Sub-Advisor or any affiliate thereof;
(n) The Trust's pro rata portion of the fidelity bond required by
Section 17(g) of the 1940 Act, or other insurance premiums;
(o) Association membership dues;
(p) Unless otherwise stated in the agreement, extraordinary expenses
of the Trust as may arise including expenses incurred in connection with
litigation, proceedings, and other claims, and the legal obligations of the
Trust to indemnify its Trustees, officers, employees, shareholders,
distributors, and agents with respect thereto; and
(q) Organizational and offering expenses.
6. Compensation. For the services provided and the expenses assumed with
respect to a Fund pursuant to this Agreement, the Sub-Advisor will be entitled
to the fee listed for the Fund(s) on Exhibit A. Such fees will be computed and
accrued daily and payable in arrears no later than the seventh (7th) business
day following the end of each quarter, from the Trust on behalf of the Fund(s),
calculated at an annual rate based on the daily net assets of the Sub-Advisor
Assets.
If this Agreement is terminated prior to the end of any calendar quarter,
the fee shall be prorated for the portion of any quarter in which this Agreement
is in effect according to the proportion which the number of calendar days,
during which this Agreement is in effect, bears to the number of calendar days
in the quarter, and shall be payable within ten (10) days after the date of
termination.
7. Representations and Warranties of the Sub-Advisor. The Sub-Advisor
represents and warrants to the Advisor and the Trust as follows:
(a) The Sub-Advisor is registered as an investment adviser under the
Advisers Act;
(b) The Sub-Advisor is a limited partnership, duly organized and
validly existing under the laws of New York, with the power to own and
possess its assets and carry on its business as it is now being conducted;
(c) The execution, delivery and performance by the Sub-Advisor of this
Agreement are within the Sub-Advisor's powers and have been duly authorized
by all necessary action on the part of its Board and no action by or in
respect of, or filing with, any governmental body, agency or official is
required on the part of the Sub-Advisor for the execution, delivery and
performance by the Sub-Advisor of this Agreement, and the
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execution, delivery and performance by the Sub-Advisor of this Agreement do
not contravene or constitute a default under (i) any provision of
applicable law, rule or regulation; (ii) the Sub-Advisor's governing
instruments; or (iii) any agreement, judgment, injunction, order, decree or
other instrument binding upon the Sub-Advisor; and
(d) The Form ADV of the Sub-Advisor previously provided to the Advisor
(a copy of which has been provided to the Advisor) is a true and complete
copy of the form as currently filed with the SEC and the information
contained therein is accurate and complete in all material respects and
does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they are made,
not misleading. The Sub-Advisor will promptly provide the Advisor and the
Trust with a complete copy of all subsequent amendments to its Form ADV, to
the extent required by applicable law or regulation.
8. Representations and Warranties of the Advisor. The Advisor represents
and warrants to the Sub-Advisor and the Trust as follows:
(a) The Advisor is registered as an investment adviser under the
Advisers Act;
(b) The Advisor is a corporation duly organized and validly existing
under the laws of the State of Delaware, with the power to own and possess
its assets and carry on its business as it is now being conducted;
(c) The execution, delivery and performance by the Advisor of this
Agreement are within the Advisor's powers and have been duly authorized by
all necessary action on the part of its Board of Directors, and no action
by or in respect of, or filing with, any governmental body, agency or
official is required on the part of the Advisor for the execution, delivery
and performance by the Advisor of this Agreement, and the execution,
delivery and performance by the Advisor of this Agreement do not contravene
or constitute a default under (i) any provision of applicable law, rule or
regulation; (ii) the Advisor's governing instruments; or (iii) any
agreement, judgment, injunction, order, decree or other instrument binding
upon the Advisor;
(d) The Advisor acknowledges that it received a copy of the
Sub-Advisor's Form ADV prior to the execution of this Agreement;
(e) The Advisor and the Trust have duly entered into the Advisory
Agreement pursuant to which the Trust authorized the Advisor to enter into
this Agreement; and
(f) The Advisor and the Trust have policies and procedures designed to
detect and deter disruptive trading practices, including "market timing,"
and the Advisor and the Trust each agree that they will continue to enforce
and abide by such policies and procedures, as amended from time to time,
and comply with all existing and future laws relating to such matters or to
the purchase and sale of interests in the Funds generally.
During the term of this Agreement, the Trust and the Advisor agree to
furnish to the Sub-Advisor at its principal offices prior to use thereof
copies of all Registration
11
Statements and amendments thereto, prospectuses, proxy statements, reports
to shareholders, sales literature or other material prepared for
distribution to shareholders of the Trust or any Series or to the public
that refer or relate in any way to the Sub-Advisor or any of its affiliates
(other than the Advisor), or that use any derivative of the name "Xxxxxxx
Xxxxx Asset Management, L.P.," or logos associated therewith. The Trust and
the Advisor agree that they will not use any such material without the
prior consent of the Sub-Advisor, which consent shall not be unreasonably
withheld. In the event of the termination of this Agreement, the Trust and
the Advisor will furnish to the Sub-Advisor copies of any of the
above-mentioned materials that refer or relate in any way to the
Sub-Advisor;
The Trust and the Advisor will furnish to the Sub-Advisor such
information relating to either of them or the business affairs of the Trust
as the Sub-Advisor shall from time to time reasonably request in order to
discharge its obligations hereunder;
The Advisor and the Trust agree that neither the Trust, the Advisor,
nor affiliated persons of the Trust or the Advisor shall give any
information or make any representations or statements in connection with
the sale of shares of the Series concerning the Sub-Advisor or the Series
other than the information or representations contained in the Registration
Statement, prospectus, or statement of additional information for the
Trust, as they may be amended or supplemented from time to time, and
reviewed and agreed to by the Sub-Advisor, or in reports or proxy
statements for the Trust, or in sales literature or other promotional
material approved in advance by the Sub-Advisor, except with the prior
permission of the Sub-Advisor.
9. Survival of Representations and Warranties; Duty to Update Information.
All representations and warranties made by the Sub-Advisor and the Advisor
pursuant to Sections 7 and 8 of this Agreement, respectively, shall survive for
the duration of this Agreement.
10. Liability and Indemnification.
(a) Liability. The duties of the Sub-Advisor shall be confined to
those expressly set forth herein, with respect to the Sub-Advisor Assets.
The Sub-Advisor shall not be liable for any loss arising out of any
portfolio investment or disposition hereunder, except a loss resulting from
willful misfeasance, bad faith or negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of
applicable state law that cannot be waived or modified hereby. Under no
circumstances shall the Sub-Advisor be liable for any loss arising out of
any act or omission taken by another sub-advisor, or any other third party,
in respect of any portion of the Trust's assets not managed by the
Sub-Advisor pursuant to this Agreement. Under no circumstances shall either
party hereto be liable to the other for special, punitive or consequential
damages, arising under or in connection with this Agreement, even if
previously informed of the possibility of such damages.
(b) Indemnification. The Sub-Advisor shall indemnify the Advisor, the
Trust and each Fund, and their respective affiliates and controlling
persons (the "Sub-Advisor
12
Indemnified Persons") for any liability and expenses, including reasonable
attorneys' fees, which the Advisor, the Trust or a Fund and their
respective affiliates and controlling persons may sustain as a result of
the Sub-Advisor's willful misfeasance, bad faith, negligence, or reckless
disregard of its duties hereunder; provided, however, that the Sub-Advisor
Indemnified Persons shall not be indemnified for any liability or expenses
which may be sustained as a result of the Advisor's willful misfeasance,
bad faith, negligence, or reckless disregard of its duties hereunder.
The Advisor shall indemnify the Sub-Advisor, its affiliates and its
controlling persons (the "Advisor Indemnified Persons") for any liability
and expenses, including reasonable attorneys' fees, howsoever arising from,
or in connection with, the Advisor's breach of this Agreement or its
representations and warranties herein or as a result of the Advisor's
willful misfeasance, bad faith, negligence, reckless disregard of its
duties hereunder or violation of applicable law; provided, however, that
the Advisor Indemnified Persons shall not be indemnified for any liability
or expenses which may be sustained as a result of the Sub-Advisor's willful
misfeasance, bad faith, negligence, or reckless disregard of its duties
hereunder.
11. Duration and Termination.
(a) Duration. This Agreement, unless sooner terminated as provided
herein, shall for the Fund(s) listed on Exhibit A attached hereto remain in
effect from the date of execution (the "Effective Date"), until two years
from the Effective Date, and thereafter, for periods of one year, so long
as such continuance thereafter is specifically approved at least annually
(i) by the vote of a majority of those Trustees of the Trust who are not
interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by the
Trustees of the Trust, or by the vote of a majority of the outstanding
voting securities of each Fund (except as such vote may be unnecessary
pursuant to relief granted by an exemptive order from the SEC). The
foregoing requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with
the 1940 Act and the rules and regulations thereunder.
(b) Termination. This Agreement may be terminated as to any Fund at
any time, without the payment of any penalty by: (i) the vote of a majority
of the Trustees of the Trust, the vote of a majority of the outstanding
voting securities of the Fund, or the Advisor, or (ii) the Sub-Advisor on
not less than 90 days written notice to the Advisor and the Trust. This
Agreement may also be terminated as to any Fund at any time by any party
hereto immediately upon written notice to the other parties in the event of
a breach of any provision to this Agreement by any of the parties.
This Agreement shall not be assigned and shall terminate automatically
in the event of its assignment, except as provided otherwise by any rule,
exemptive order issued by the SEC, or No Action Letter provided or pursuant
to the 1940 Act, or upon the termination of the Advisory Agreement. In the
event that there is a proposed change in control of the Sub-Advisor that
would act to terminate this Agreement, if a vote of shareholders to approve
continuation of this Agreement is at that time deemed by counsel
13
to the Trust to be required by the 1940 Act or any rule or regulation
thereunder, the Sub-Advisor agrees to assume all reasonable costs
associated with soliciting shareholders of the appropriate Fund(s) of the
Trust to approve continuation of this Agreement. Such expenses include the
costs of preparation and mailing of a proxy statement, and of soliciting
proxies. In the event that such proposed change in control of the
Sub-Advisor shall occur following either: (i) receipt by the Advisor and
the Trust of an exemptive order issued by the SEC with respect to the
appointment of sub-advisors absent shareholder approval, or (ii) the
adoption of proposed Rule 15a-5 under the 1940 Act, the Sub-Advisor agrees
to assume all reasonable costs and expenses (including the costs of
mailing) associated with the preparation of a statement, required by the
exemptive order or Rule 15a-5, containing all information that would be
included in a proxy statement (an "Information Statement"). In addition, if
the Sub-Advisor shall resign, the Sub-Advisor agrees to assume all
reasonable costs and expenses (including the costs of mailing) associated
with the preparation of an Information Statement; provided that the
Sub-Advisor shall not be responsible for the amount of such costs under
this section 11(b) in excess of $25,000. Notwithstanding the foregoing, if
in its sole reasonable judgment, the Sub-Advisor determines that continuing
to serve in its role as Sub-Advisor under this Agreement will expose it to
unwanted reputational, regulatory, financial or other risks, then the
Sub-Advisor will not assume the costs or expenses (including the costs of
mailing) associated in any way with the preparation or distribution of an
Information Statement.
This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
12. Amendment. This Agreement may be amended by mutual consent of the
parties, provided that the terms of any material amendment shall be approved by:
(a) the Trust's Board of Trustees, and (b) the vote of a majority of those
Trustees of the Trust who are not interested persons of any party to this
Agreement cast in person at a meeting called for the purpose of voting on such
approval, if such approval is required by applicable law, and unless otherwise
permitted pursuant to exemptive relief granted by the SEC or No Action position
granted by the SEC or its staff, by a vote of the majority of a Fund's
outstanding securities.
13. Confidentiality. Any information or recommendations supplied by either
the Advisor or the Sub-Advisor, that are not otherwise in the public domain or
previously known to the other party in connection with the performance of its
obligations and duties hereunder, including portfolio holdings of the Trust,
financial information or other information relating to a party to this
Agreement, are to be regarded as confidential ("Confidential Information") and
held in the strictest confidence. Except as may be required by applicable law or
rule or as requested by regulatory authorities having jurisdiction over a party
to this Agreement, Confidential Information may be used only by the party to
which said information has been communicated and such other persons as that
party believes are necessary to carry out the purposes of this Agreement, the
custodian, and such persons as the Advisor may designate in connection with the
Sub-Advisor Assets. Nothing in this Agreement shall be construed to prevent the
Sub-Advisor from giving other entities investment advice about, or trading on
their behalf, in the securities of a Fund or the Advisor.
14
14. Use of Sub-Advisor's Name. It is understood that the names "Xxxxxxx
Sachs Asset Management, L.P." or any derivative thereof or logos associated with
those names are the valuable property of the Sub-Advisor and its affiliates and
that the Trust and/or the Series have the right to use such names (or
derivatives or logos) in offering materials of the Trust with the approval of
the Sub-Advisor and for so long as the Sub-Advisor is a sub-Advisor to the Trust
and/or the Series. Upon termination of this Agreement between the Trust, the
Advisor, and the Sub-Advisor, the Trust shall as soon as is reasonably possible
cease to use such names (or derivatives or logos).
15. Notice. Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
(a) If to the Advisor:
Xxxxxx Global Investments, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Counsel
(b) If to the Sub-Advisor:
Xxxxxxx, Sachs & Co.
00 Xxx Xxxx 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
16. Governing Law. This Agreement shall be governed by the internal laws of
the State of New York without regard to conflict of law principles; provided,
however that nothing herein shall be construed as being inconsistent with the
1940 Act. 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
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
17. Entire Agreement. This Agreement embodies the entire agreement and
understanding between 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, but such counterparts shall, together, constitute only one
instrument.
18. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
19. Certain Definitions. For the purposes of this Agreement and except as
otherwise provided herein, "interested person," "affiliated person,"
"affiliates," "controlling persons" and
15
"assignment" shall have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC, and the term
"Fund" or "Funds" shall refer to those Fund(s) for which the Sub-Advisor
provides investment management services and as are listed on Exhibit A to this
Agreement.
20. Captions. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
ADVISOR
XXXXXX GLOBAL INVESTMENTS, INC.
By: /s/ Xxxx Xxxxxxxxxxxx
Xxxx Xxxxxxxxxxxx
President
XXXXXXX XXXXX ASSET MANAGEMENT, L.P.
By: /s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
Managing Director
16
EXHIBIT A
SUB-ADVISORY AGREEMENT
BETWEEN XXXXXX GLOBAL INVESTMENTS, INC.
AND
XXXXXXX XXXXX & CO.
July 1, 2008
MGI US Small/Mid Cap Growth Equity Fund
FEE SCHEDULE
ASSETS COMPENSATION
On the first $100 million 0.70%
Assets over $100 million 0.65%
Computation
As soon as practicable after the end of each calendar quarter, the Sub-Advisor
shall send to the Advisor a calculation (the "Calculation") in reasonable detail
of the fee for the calendar quarter then ended as of the close of business on
the last day of such calendar quarter. The Advisor may approve or disapprove the
Calculation within ten (10) business days of its receipt. In the event that the
Calculation has been accurately prepared in accordance with the terms of this
Agreement, the Advisor shall pay the fee to the Sub-Advisor. In the event of a
dispute between the parties regarding the accuracy of the Calculation, it is
hereby agreed that all discussions in resolution of such dispute will be
conducted promptly and in good faith.
The foregoing fee shall be accrued for each calendar day and the sum of the
daily fee accruals shall be paid quarterly in arrears by the Advisor to the
Sub-Advisor as described herein. The daily fee accruals will be computed by
multiplying the fraction of one over the number of calendar days in the year by
the applicable annual rate set forth in the schedule above and multiplying this
product by the net assets of the Sub-Advisors Assets, as determined in
accordance with the Prospectus as of the close of business on the previous
business day on which the Trust was open for business. If this Agreement is
terminated prior to the end of any calendar quarter, the fee shall be prorated
for the portion of any quarter in which this Agreement is in effect according to
the proportion which the number of calendar days, during which this Agreement is
in effect, bears to the number of calendar days in the quarter.
17
