EX-99.d.20
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 30th day of June, 2008 by and between Mercer
Global Investments, Inc., a Delaware corporation (the "Advisor"), and Pacific
Investment Management Company LLC, a Delaware limited liability company (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 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, 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.
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
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) its 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. Notwithstanding any other provision to the contrary, the
Sub-Advisor shall have no obligation to perform the following services or
to have employees of the Sub-Advisor perform the following roles, as
applicable: (a) preparing and filing material for distribution to
shareholders of the Fund, including statistical information about the Fund
and material regarding the Fund's performance or investments; (b) providing
employees of the Sub-Advisor to serve as officers of the Trust; or (c)
providing employees of the Sub-Advisor to serve as the Trust's Chief
Compliance Officer and associated staff.
In-Kind Securities will be transferred into the Sub-Advisor Assets in
accordance with Exhibit A, and Exhibit A is hereby incorporated into this
Agreement.
(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) 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) conform
to and comply with the requirements of the 1940 Act, the Advisers Act, and
all other federal laws applicable to 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; or (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 Prospectus or in the Trust's registration statement on
Form N-1A, or otherwise as reasonably requested by the Advisor.
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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) direct
access to the Sub-Advisor's chief compliance officer (the "Sub-Advisor
CCO"), as 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. 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 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 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. Further, the Sub-Advisor shall have the power,
discretion and responsibility to exercise rights, options, warrants,
conversion privileges, and redemption privileges, and to tender securities
pursuant to a tender offer with respect to the Sub-Advisor Assets under
management by the Sub-Advisor.
(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 (i)
executing account documentation,
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agreements, contracts and other documents (e.g. any derivatives
documentation such as exchange traded and over-the-counter, as applicable)
as the Sub-Advisor shall be requested by brokers, dealers, counterparties
and other persons in connection with its management of the Sub-Advisor
Assets; and (ii) acknowledge the receipt of brokers' risk disclosure
statements, electronic trading disclosure statements and similar
disclosures provided that, the Sub-Advisor's actions in executing such
documents shall comply with federal regulations, all other federal laws
applicable to the Sub-Advisor's duties and obligations under this Agreement
and the Trust's governing documents.
(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
in effect, bears to the number of calendar days in the quarter. best
overall terms available for any transaction, the Sub-Advisor shall consider
all factors that it deems relevant, which may include 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) who effect securities transactions for
customers. The Advisor shall promptly 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
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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.
(g) Securities Transactions. In no instance will any Fund's portfolio
securities be purchased from or sold by the Sub-Advisor 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
written notice to the Sub-Advisor.
The Sub-Advisor hereby represents that it has implemented policies and
procedures that 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.
(h) Code of Ethics. The Sub-Advisor hereby represents that it has
adopted policies and procedures and a code of ethics that comply in all
material respects with 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
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 material
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.
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(j) 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 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. The Sub-Advisor shall be
entitled to retain originals or copies of records pursuant to the
requirements of applicable laws or regulations. 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.
(k) Information Concerning Sub-Advisor Assets and the Sub-Advisor.
From time to time as the Advisor, and any consultants designated by the
Advisor in writing, 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) so designated in writing 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 material 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 that could reasonably be expected to have a
material adverse effect on the Sub-Advisor's provision of services pursuant
to this Agreement. Upon reasonable request, the Sub-Advisor will make
available certain account management officers and employees to meet with
the Trust's Board of Trustees to review the Sub-Advisor Assets.
(l) Valuation of Sub-Advisor Assets. The Sub-Advisor agrees to monitor
the Sub-Advisor Assets and to use commercially reasonable efforts to notify
the Advisor or its designee on any day that the Sub-Advisor determines that
a significant event has occurred with respect to one or more securities
held in the Sub-Advisor Assets which would materially affect the value of
such securities. As requested by the Advisor or the Trust's Valuation
Committee, the Sub-Advisor hereby agrees to provide additional reasonable
assistance to the Valuation Committee of the Trust, the Advisor and the
Trust's pricing agents so that the Trust can value Sub-Advisor Assets held
in the portfolio. Such assistance may include assistance with the Trust's
fair value pricing of portfolio securities, as requested by the Advisor.
The Advisor acknowledges and agrees that the Sub-Advisor is not a pricing
vendor for the Fund and does not have responsibility for determining the
market value of any asset in the Fund. The Sub-Advisor agrees that it will
act, at all times, in accordance with the Sub-Advisor's Pricing Policy and
will provide such certifications or sub-certifications relating to
valuation and liquidity in such forms as may be agreed upon from time to
time by the Advisor and the Sub-Advisor.
The Sub-Advisor also will provide such reasonable information or
perform such reasonable additional acts as are customarily performed by a
Sub-Advisor and may be required for a Fund or the Advisor to comply with
their respective obligations under
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applicable federal securities laws, including, without limitation, the 1940
Act, the Advisers Act, the 1934 Act, the Securities Act of 1933, as amended
(the "Securities Act"), and any rule or regulation thereunder.
(m) Custody Arrangements. The Sub-Advisor, on each business day, shall
provide the Advisor, its consultant(s) so designated in writing 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.
(n) 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
permitted by applicable law.
(o) 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).
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.
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.
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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 B. 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 liability company, duly organized and
validly existing under the laws 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 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 members 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 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 is attached as Exhibit C to this Agreement) is a true and
complete copy of the form 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.
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;
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(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 (a copy of which is attached as Exhibit C) at least
48 hours 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;
(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;
(g) Each Fund is a "qualified institutional buyer" ("QIB") as defined
in Rule 144A under the Securities Act of 1933, as amended, and the Advisor
will promptly notify the Sub-Advisor if a Fund ceases to be a QIB;
(h) Each Fund is a "qualified eligible person" ("QEP") as defined in
Commodity Futures Trading Commission Rule 4.7 ("CFTC Rule 4.7"), and the
Advisor will promptly notify the Sub-Advisor if a Fund ceases to be a QEP,
and hereby consents for each Fund to be treated as an "exempt account"
under CFTC Rule 4.7; and
(i) The Sub-Advisor Assets are free from all liens and charges, and
the Advisor undertakes that no liens or charges will arise from the acts or
omissions of the Advisor which may prevent the Sub-Advisor from giving a
first priority lien or charge on the assets solely in connection with the
Sub-Advisor's authority to direct the deposit of margin or collateral to
the extent necessary to meet the obligations of a Fund with respect to any
investments made for the Fund.
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 and the parties hereto shall promptly notify each
other in writing upon becoming aware that any of the foregoing representations
and warranties are no longer true in any material respect.
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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 gross 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 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 or the Trust'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 B 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
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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 or the vote of a majority of the outstanding
voting securities of the Fund, (ii) the Advisor on not less than 30 days
written notice to the Sub-Advisor, or (iii) the Sub-Advisor on not less
than 60 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
material 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 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 Sub-Advisor shall not be
responsible for the amount of such costs 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.
The Sub-Advisor may delegate portfolio management and administrative
duties to its affiliates and may share such information as necessary to
accomplish these purposes. Additionally, the Sub-Advisor will have the
ability to delegate back office services to State Street Investment Manager
Solutions, LLC. In all cases, the Sub-Advisor shall remain liable as if
such services were provided directly. No additional fees shall be imposed
for such services except as otherwise agreed.
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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, and by a vote of the majority of a Fund's outstanding securities 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.
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. Use of Sub-Advisor's Name. During the term of this Agreement, the
Advisor shall have permission to use the Sub-Advisor's name in the marketing of
the Fund, and agrees to furnish the Sub-Advisor at its principal office all
marketing materials, prospectuses, statements of additional information, proxy
statements and reports to shareholders prepared for distribution to shareholders
of the Fund or the public, which refer to the Sub-Advisor in any way.
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:
Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
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Fax: 000-000-0000
Attention: General Counsel
Cc: Xxxx Xxxxxxx, Account Manager
E-mail: xxxx.xxxxxxx@xxxxx.xxx
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 "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 B 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN
CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS ACCOUNT DOCUMENT IS
NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY
FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A
TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY TRADING ADVISOR
DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT
REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS ACCOUNT DOCUMENT.
ADVISOR
XXXXXX GLOBAL INVESTMENTS, INC.
By: /s/ Xxxx Xxxxxxxxxxx
Xxxx Xxxxxxxxxxx
President
SUB-ADVISOR
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Managing Director
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EXHIBIT A
The Advisor desires to include within the Sub-Advisor Assets certain "in-kind"
securities (the "In-Kind Securities"). A certified list of the In-Kind
Securities to be transferred to the Sub-Advisor Assets will be provided to the
Sub-Advisor by a Fund's custodian bank.
The Advisor acknowledges and agrees that some or all of the In-Kind Securities
may have value for the Sub-Advisor Assets and it may be in the Advisor's best
interest to retain them, but in order to comply with the investment objectives
or strategies of a Fund, some or all of such assets may be liquidated at such
times and in such manner as is deemed appropriate by the Sub-Advisor and the
proceeds be invested in compliance with the investment objectives of the Fund.
The Advisor acknowledges and agrees that the Sub-Advisor will use its
commercially reasonable efforts to obtain the best execution. The Sub-Advisor
will not be liable to the Advisor, the Trust or to a Fund for the prices
obtained in connection with any sale of the In-Kind Securities and the Advisor
acknowledges that such prices may in fact be much lower than the prices at which
such In-Kind Securities are presently carried in a Fund's account. The
Sub-Advisor shall maintain a log of all transactions placed through all
securities brokerage firms including the name of the firm, a description of each
transaction, the date of each transaction and the amount or commissions paid.
The Sub-Advisor shall invest the proceeds from the sale of the assets, together
with any assets remaining unsold, in accordance with the investment objectives
of the relevant Fund as mutually established by the Sub-Advisor and the Advisor.
In the event any assets contributed in-kind into the Sub-Advisor Assets are not
compliant with the investment objectives for the Fund, the Advisor acknowledges
and agrees that the Sub-Advisor can continue to hold such assets in the
Sub-Advisor Assets without regard to the Fund's investment objectives.
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EXHIBIT B
SUB-ADVISORY AGREEMENT
BETWEEN XXXXXX GLOBAL INVESTMENTS, INC.
AND
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
June 30, 2008
MGI CORE OPPORTUNISTIC FIXED INCOME FUND
FEE SCHEDULE
ASSETS COMPENSATION
If less than $3 billion in assets 0.25%
If over $3 billion in assets 0.25% on the first $1 billion
0.225% thereafter
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.
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EXHIBIT C
SUB-ADVISOR
FORM ADV
(Please attach)
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