SUB-ADVISORY AGREEMENT
AGREEMENT
made as of the 31stday of May,
2007, by and between AssetMark Investment Services, Inc., a California
corporation (“AssetMark”), and Research Affiliates, LLC, a California limited
liability company (“Research Affiliates”).
WHEREAS,
AssetMark and Research Affiliates are registered investment advisers under
the
Investment Advisers Act of 1940, as amended (the “Advisers Act”), and engage in
the business of providing investment advisory services.
WHEREAS,
AssetMark has been retained to act as investment adviser to manage the assets
of
AssetMark 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”), pursuant to an Investment Advisory Agreement originally dated
October 20, 2006 (the “Advisory Agreement”). The Trust consists of
separate series of shares, with each having its own investment objectives and
policies, and is authorized to create additional series in the
future.
WHEREAS,
the Advisory Agreement permits AssetMark, 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.
WHEREAS,
Research Affiliates has developed and may continue to develop proprietary
securities indexes created and weighted based on accounting data (including
but
not limited to total income, book equity value, total sales and gross dividends)
of the underlying companies issuing the securities, which are known as Research
Affiliates’ Fundamental Index™ (“RAFI™”) indexes.
WHEREAS,
AssetMark desires to retain Research Affiliates to assist AssetMark in the
provision of a continuous investment program for one or more of the Trust’s
series (each a “Fund”) which will be managed according to the RAFI™
approach, and Research Affiliates is willing to render such services,
subject to the terms and conditions set forth in this Agreement. The
parties recognize that a separate sub-advisor, as opposed to Research
Affiliates, will be hired by AssetMark to be responsible for implementing the
Funds’ investment strategy and effecting related securities
transactions.
WHEREAS,
Research Affiliates possesses confidential and proprietary data and technical
information relating to the systems, devices, methods, information, results,
data, materials, or technology embodied in its RAFI™ approach to index
and portfolio construction. One version of the RAFI™
approach is directed to standard or passive indexes which AssetMark
understands
and agrees that Research Affiliates has granted to FTSE International Limited
(“FTSE”) a world-wide exclusive license to calculate and publish passive
RAFI™ indexes, subject to Research Affiliates retaining the right to
use and to license RAFI™ for active or enhanced investment
strategies. The AssetMark Fundamental Index Funds are structured to
seek to invest in companies within the enhanced versions of RAFI™, as
further described in the Preliminary Prospectus for the AssetMark
Fundamental Index Funds filed with the Securities and Exchange Commission on
January 31, 2007.
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WHEREAS,
Research Affiliates is the owner of certain intellectual property rights
directed to the RAFI™ approach.
WHEREAS,
Research Affiliates and AssetMark both desire to have AssetMark
incorporate the enhanced version of the RAFI™ approach in AssetMark’s
creation and management of fundamental index funds (each such Fund is a
“RAFI™ Portfolio” and, collectively, the “RAFI
Portfolios”).
WHEREAS,
AssetMark desires to acquire from Research Affiliates, and Research Affiliates
desires to grant to AssetMark, rights to Research Affiliates’ enhanced version
of the RAFI™ approach.
NOW,
THEREFORE, in consideration of mutual covenants recited below, the
parties agree and promise as follows:
1. Appointment
as Sub-Advisor.
(a) AssetMark
hereby appoints Research Affiliates to act as investment adviser for and to
provide investment advice regarding the management of the RAFI™
Portfolios, subject to the supervision of AssetMark and the Board
of Trustees of
the Trust, and subject to the terms of this Agreement; and Research Affiliates
hereby accepts such appointment. In such capacity, Research
Affiliates shall be responsible for providing investment advice regarding the
management of the RAFI™ Portfolios consistent with the RAFI™
approach and the Funds’ related investment policies, all as described in the
Funds’ prospectus and statement of additional information as currently in effect
and as amended from time to time (collectively referred to as the “Prospectus”),
which advice shall include the provision of information regarding target
portfolio structure, growth and value characteristics of the securities within
the relevant indices, and advice regarding the minimization of index tracking
error. Research Affiliates agrees to exercise the same degree of skill,
care and diligence in performing its services under this Agreement as Research
Affiliates exercises in performing advisory services with respect to other
fiduciary accounts for which Research Affiliates has investment
responsibilities, and that a prudent manager would exercise under the
circumstances.
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2. Duties
of Research Affiliates.
(a) Investments. Research
Affiliates 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 subject to the directions of AssetMark and
the Trust’s Board of Trustees, to provide investment advice and guidance
necessary for AssetMark, or any duly appointed sub-advisor, to purchase, hold
and sell investments for the RAFI™ Portfolios and Research
Affiliates agrees to monitor such investments on a continuous
basis. In providing these services, Research Affiliates will provide
advice necessary to conduct an ongoing program of investment, evaluation and,
if
appropriate, sale and reinvestment of the RAFI™ Portfolio’s
assets. AssetMark agrees to provide Research Affiliates information
concerning: (i) each 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 Research Affiliates.
(b) Compliance
with Applicable Laws, Governing Documents and Compliance
Procedures. In the performance of its duties and obligations
under this Agreement, Research Affiliates shall, with respect to the services
to
be performed hereunder (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 Research Affiliates (together, the “Trust Compliance
Procedures”); and (D) the instructions and directions received in writing from
AssetMark 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 registered investment companies’ and Research Affiliates’ duties
under this Agreement. AssetMark will provide Research Affiliates with
any materials or information that Research Affiliates may reasonably request
to
enable it to perform its duties and obligations under this
Agreement.
AssetMark
will provide Research Affiliates with reasonable (30 days) 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 Declaration
of
Trust or By-Laws; and (iii) any material change in the Trust Compliance
Procedures; and Research Affiliates, in the performance of its duties and
obligations under this Agreement, shall provide investment advice with regard
to
the RAFI™ Portfolios consistently with such changes, provided
Research Affiliates has received such prior notice of the effectiveness of
such
changes from the Trust or AssetMark. In addition to such notice,
AssetMark shall provide to Research Affiliates a copy of a modified Prospectus
and copies of the revised Trust Compliance Procedures, as applicable, reflecting
such changes. Research Affiliates hereby agrees to provide to
AssetMark in a timely manner, in writing, such information relating to Research
Affiliates 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 AssetMark.
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, Research
Affiliates shall provide to the Trust CCO: (i) direct access to
Research Affiliates’ chief compliance officer and/or an appropriate designee
(the “Research Affiliates CCO”), as reasonably requested by the Trust CCO; (ii)
a completed quarterly informational questionnaire regarding Research Affiliates’
compliance program and participation in a quarterly telephone call with the
Trust CCO to discuss the responses on the questionnaire; (iii) quarterly reports
confirming that Research Affiliates has complied with the Trust Compliance
Procedures in managing the RAFI™ Portfolios; and (iv) quarterly
certifications whether there were any Material Compliance Matters (as that
term
is defined by Rule 38a-1(e)(2)) that arose under the Trust Compliance Procedures
related to Research Affiliates’ management of the RAFI™
Portfolio.
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(c) Research
Affiliates Compliance Policies and Procedures. Research
Affiliates shall promptly provide the Trust CCO with copies of: (i)
Research Affiliates’ policies and procedures for compliance by Research
Affiliates with the Federal Securities Laws (together, the “Research Affiliates
Compliance Procedures”), and (ii) any material changes to Research Affiliates
Compliance Procedures. Research Affiliates 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 Research Affiliates Compliance Procedures,
and shall promptly report to the Trust CCO any Material Compliance Matter
arising under Research Affiliates Compliance Procedures involving the
RAFI™ Portfolios. Research Affiliates shall provide to the
Trust CCO: (i) quarterly reports confirming Research Affiliates’
compliance with Research Affiliates Compliance Procedures in managing , the
RAFI™ Portfolio and (ii) certifications that there were no Material
Compliance Matters involving Research Affiliates that arose under Research
Affiliates Compliance Procedures that affected the RAFI™
Portfolios. At least annually, Research Affiliates shall provide a
certification to the Trust CCO to the effect that Research Affiliates has in
place and has implemented policies and procedures that are reasonably designed
to ensure compliance by Research Affiliates with the Federal Securities
Laws.
(d) Voting
of Proxies. Unless otherwise instructed by AssetMark or the
Trust, Research Affiliates shall not have the power, discretion or
responsibility to vote, either in person or by proxy, securities in which a
Fund
may be invested from time to time, and shall not be required to seek
instructions from AssetMark, the Trust or a Fund.
(e) Agent. Subject
to any other written instructions of AssetMark or the Trust, Research Affiliates
is hereby appointed AssetMark’s and the Trust’s agent and attorney-in-fact for
the limited purposes of communicating investment advice regarding the Funds
to
AssetMark or, at the direction of AssetMark, to any sub-advisor, broker, dealer,
counterparty and other person in connection with the management of the
RAFI™ Portfolios.
(f) Brokerage. Research
Affiliates will not have discretion or authority to place orders for securities
transactions for a Fund pursuant to Research Affiliates’ investment advice
relating to the Fund. Instead, AssetMark or a separate sub-advisor
will exercise such brokerage discretion and will perform the brokerage and
trading activity necessary to implement the Fund’s investment
strategy. Research Affiliates will use its best efforts to cooperate
with AssetMark or other sub-advisor in support of their efforts to implement
the
Fund’s investment strategy, including engaging in discussions, as appropriate,
regarding the investment and reinvestment of the assets in the Fund’s portfolio
and the related trading strategies.
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Research
Affiliates acknowledges that brokers or dealers may not be compensated for
any promotion or sale of Fund shares by directing to the broker or dealer:
(i)
portfolio securities transactions on behalf of a Fund; or (ii) any remuneration,
including but not limited to any commission, xxxx-up, xxxx-down or other fee
(or
portion thereof) received or to be received from such portfolio transactions
effected through any other broker (including a government securities broker)
or
dealer (including a municipal securities dealer or a government securities
dealer).
(g) Confidentiality
of Securities
Transactions. With
respect to each series of the Trust for which it serves as sub-adviser
under this agreement, Research Affiliates agrees that it shall not consult
with
any sub-adviser of another AssetMark Fund regarding the specific and unique
securities transactions that are or may be effected for such series of the
Trust. The parties understand, recognize and agree that this provision
does not mean, and should not be interpreted to mean or suggest,
that Research Affiliates is in any manner restricted from providing
information about securities within its proprietary indices to various third
parties in the normal course of its business operations, nor is it restricted
from providing information to such parties about trading techniques that may
be
similar to those that are or may be employed in connection with the management
of the specific series of the Trust described above. This section is
solely intended to ensure that the Trust need not treat the securities
transactions of the series of the Trust sub-advised by Research
Affiliates as affiliated transactions under Rule 17a-10 under the 1940 Act
and its related rules.
(h) Code
of Ethics. Research Affiliates 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 be delivered to AssetMark and the
Trust. Any material violation of such policies and procedures and
code of ethics by personnel of Research Affiliates, the sanctions imposed in
response thereto, and any issues arising under such policies and procedures
and
code of ethics shall be reported to AssetMark and the Trust at the times and
in
the format reasonably requested by AssetMark and the Board of
Trustees.
(i) Books
and Records. Research Affiliates shall maintain separate detailed
records of all matters pertaining to the Fund, 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 Research Affiliates on behalf of the Trust are the property of
the
Trust and will be surrendered promptly to the Trust upon
request. Research Affiliates 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 the RAFI™ Portfolios and
Research Affiliates. From time to time as AssetMark, any
sub-advisors or consultants designated by AssetMark or the Trust may request,
Research Affiliates will furnish the requesting party reports on the
RAFI™ Portfolios, all in such detail as AssetMark, its consultant(s) or
the Trust may reasonably request. Research Affiliates will provide
AssetMark with information (including information that is required to be
disclosed in the Prospectus) with respect to the portfolio managers responsible
for the RAFI™ Portfolios, any changes in the portfolio managers
responsible for the RAFI™ Portfolios, any material changes in the
ownership or management of Research Affiliates, or material changes in the
control of Research Affiliates. Research Affiliates will promptly
notify AssetMark of any pending investigation, material litigation,
administrative proceeding or any other significant regulatory
inquiry. Upon reasonable request, Research Affiliates will make
available its officers and employees to meet with the Trust’s Board of Trustees
to review the RAFI™ Portfolios.
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(k) Valuation
of the RAFI™
Portfolios. Research Affiliates agrees to
monitor the
RAFI™ Portfolios and to notify AssetMark or its designee on any day
that Research Affiliates determines that a significant event has occurred with
respect to one or more securities held in the RAFI™
Portfolio. As requested by AssetMark or the Trust’s Valuation
Committee, Research Affiliates hereby agrees to provide additional assistance
to
the Valuation Committee of the Trust, AssetMark and the Trust’s pricing agents
in valuing the Fund portfolio as it relates to RAFI™. Such
assistance may include fair value pricing of portfolio securities, as requested
by AssetMark. Research Affiliates agrees that it will act, at all
times, in accordance with the Trust’s procedures for valuing portfolio
securities, and will provide such certifications or sub-certifications relating
to its compliance with the Trust’s procedures for valuing portfolio securities
as reasonably may be requested, from time to time, by AssetMark or the
Trust.
Research
Affiliates also will provide such information or perform such additional acts
as
are customarily performed by a sub-advisor and may be required for a Fund or
AssetMark to comply with their respective obligations under applicable federal
securities laws, including, without limitation, the 1940 Act, the Advisers
Act,
the 1934 Act, the Securities Act of 1933, as amended (the “1933 Act”) and any
rule or regulation thereunder.
(l) Historical
Performance Information. To the extent agreed upon by the
parties, Research Affiliates 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.
(m) Regulatory
Examinations. Research Affiliates will cooperate promptly and
fully with AssetMark and/or Trust in responding to any regulatory or compliance
examinations or inspections (including information requests) relating to the
Trust, a Fund or AssetMark brought by any governmental or regulatory authorities
having appropriate jurisdiction (including, but not limited to, the
SEC).
3. Definitions. As
used in this Agreement:
(a) “Territory”
shall mean the United States, its territories and possessions.
(b) “Know
How” shall mean Research Affiliates’ present and future specialized, novel, and
unique techniques, inventions, practices, knowledge, trade secrets, skill,
experience, and other proprietary information related to the enhanced version
of
the RAFI™ approach.
(c) “Field
of Use” shall mean the five series of the Trust designated as AssetMark
Fundamental Index™ Funds, as described in the Preliminary Prospectus filed with
the Securities and Exchange Commission by AssetMark on January 31,
2007.
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4. License
Grant.
(a) Research
Affiliates grants to AssetMark a non-exclusive license under the Know How,
within the Field of Use, to use the RAFI™ approach in accordance with
the terms of this Agreement. AssetMark shall not have the right to
grant further sub-licenses or assign or otherwise transfer to third parties,
either directly or indirectly, any part of the rights granted hereunder without
the express written approval of Research Affiliates, which approval shall be
at
Research Affiliates sole and exclusive discretion. The parties hereto
acknowledge and agree that AssetMark’s use of Xxxxxxx Implementation Services,
Inc. as sub-advisor to implement the investment strategy for the RAFI™
Portfolios (or other sub-advisor reasonably acceptable to the
parties) shall not violate the provisions of this restriction. Any
attempt by AssetMark to violate this restriction shall subject this Agreement
to
immediate termination by Research Affiliates.
(b) AssetMark
acknowledges that the rights granted hereunder are non-exclusive and that
Research Affiliates shall retain the right to license versions of the RAFI™
approach to third parties at its sole discretion.
5. Independent
Contractor. In the performance of its duties hereunder, Research
Affiliates 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 AssetMark in any way
or
otherwise be deemed an agent of a Fund, the Trust or AssetMark.
6. Services
to Other Clients. Other than as described herein, nothing herein
contained shall limit the freedom of Research Affiliates or any affiliated
person or entity of Research Affiliates 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 Research Affiliates 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.
7. Expenses. During
the term of this Agreement, Research Affiliates 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. Research
Affiliates, at its sole expense, shall employ or associate itself with such
persons as it believes to be particularly fit to assist it in the execution
of
its duties under this Agreement. The Trust or AssetMark, as the case
may be, shall reimburse Research Affiliates for any expenses as may be
reasonably incurred by Research Affiliates, at the request of and on behalf
of a
Fund or AssetMark. Research Affiliates shall keep and supply to the
Trust and AssetMark reasonable records of all such expenses.
8. Compensation. For
the services provided and the expenses assumed with respect to a Fund pursuant
to this Agreement, Research Affiliates will be entitled to the fees listed
for
the Funds on Exhibit A. Such fees will be computed daily and payable
in arrears no later than the seventh (7th) business day following the end of
each month, from the Trust on behalf of the Funds, calculated at an annual
rate
based on the RAFI™ Portfolio’s average daily net assets.
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If
this
Agreement is terminated prior to the end of any calendar month, the fee shall
be
prorated for the portion of any month 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 month,
and
shall be payable within ten (10) days after the date of
termination.
9. Representations
and Warranties of Research Affiliates. Research Affiliates
represents and warrants to AssetMark and the Trust as follows:
(a) Research
Affiliates is registered as an investment adviser under the Advisers
Act.
(b) Research
Affiliates is a limited liability company duly organized and validly existing
under the laws of the state of California, 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 Research Affiliates of this Agreement
are
within Research Affiliates’ powers and have been duly authorized by all
necessary action, and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of Research
Affiliates for the execution, delivery and performance by Research Affiliates
of
this Agreement, and the execution, delivery and performance by Research
Affiliates of this Agreement do not contravene or constitute a default under:
(i) any provision of applicable law, rule or regulation; (ii) Research
Affiliates’ governing instruments; or (iii) any agreement, judgment, injunction,
order, decree or other instrument binding upon Research Affiliates.
(d) The
Form ADV Part II of Research Affiliates previously provided to AssetMark 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 in light of the
circumstances under which they are made, not misleading. Research
Affiliates will promptly provide AssetMark and the Trust with a complete copy
of
all subsequent amendments to its Form ADV Part II when requested by
AssetMark.
(e) Research
Affiliates represents and warrants that it has the entire right, title, and
interest in and to the Know How with full authority to grant the license to
AssetMark provided in Section 4 of this Agreement.
(f) Research
Affiliates represents and warrants that its grant of the license under Section
4
of this Agreement shall not impinge upon the rights of any third
party. Further, Research Affiliates represents and warrants that has
not granted, nor shall it grant, any rights to any third party that would
impinge in any way on the license granted to AssetMark under Section 4 of this
Agreement.
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10. Obligations
of Research Affiliates.
(a) Research
Affiliates shall communicate to AssetMark within ten (10) days, after
Research Affiliates has adopted them, all material changes and improvements
made
to the then-current enhanced version of the RAFI™
approach.
(b) During
the term of this Agreement, Research Affiliates agrees to provide AssetMark,
upon request by AssetMark, reasonable technical assistance and advice as to
the
enhanced version of the RAFI™ approach, which shall not be unreasonably
requested by AssetMark.
11. Representations
and Warranties of AssetMark. AssetMark represents and warrants to
Research Affiliates and the Trust as follows:
(a) AssetMark
is registered as an investment adviser under the Advisers Act;
(b) AssetMark
is a corporation duly organized and validly existing under the laws of the
State
of California 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 AssetMark of this Agreement are within
AssetMark’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
AssetMark for the execution, delivery and performance by AssetMark of this
Agreement, and the execution, delivery and performance by AssetMark of this
Agreement do not contravene or constitute a default under: (i) any provision
of
applicable law, rule or regulation; (ii) AssetMark’s governing instruments; or
(iii) any agreement, judgment, injunction, order, decree or other instrument
binding upon AssetMark;
(d) AssetMark
acknowledges that it received a copy of Research Affiliates’ Form ADV Part II
prior to the execution of this Agreement;
(e) AssetMark
and the Trust have duly entered into the Advisory Agreement pursuant to which
the Trust authorized AssetMark to enter into this Agreement; and
(f) AssetMark
and the Trust have policies and procedures designed to detect and deter
disruptive trading practices, including “market timing,” and AssetMark 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.
12. Survival
of Representations and Warranties; Duty to Update
Information. All representations and warranties made by Research
Affiliates and AssetMark pursuant to Sections 9 and 11, respectively, of this
Agreement 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.
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13. Liability
and Indemnification.
(a) Liability. The
duties of Research Affiliates shall be confined to those expressly set forth
herein, with respect to the RAFI™ Portfolios. Research
Affiliates 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.
(b) Indemnification. Research
Affiliates shall indemnify AssetMark, the Trust and each Fund, and their
respective affiliates and controlling persons (the “Research Affiliates
Indemnified Persons”) for any liability and expenses, which AssetMark, the Trust
or a Fund and their respective affiliates and controlling persons may sustain
as
a direct result of Research Affiliates’ willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties hereunder; provided, however,
that Research Affiliates Indemnified Persons shall not be indemnified for any
liability or expenses which may be sustained as a result of AssetMark’s willful
misfeasance, bad faith, negligence or reckless disregard of it’s duties
hereunder.
AssetMark
shall indemnify Research Affiliates, its affiliates and its controlling persons
(the “AssetMark Indemnified Persons”), for any liability and expenses, howsoever
arising from, or in connection with, AssetMark’s breach of this Agreement, or
its representations and warranties herein, or as a result of AssetMark’s willful
misfeasance, bad faith, gross negligence, reckless disregard of its duties
hereunder or violation of applicable law; provided, however, that AssetMark
Indemnified Persons shall not be indemnified for any liability or expenses
which
may be sustained as a result of Research Affiliates’ willful misfeasance, bad
faith, negligence or reckless disregard of its duties hereunder.
14. Duration
and Termination.
(a) Duration. This
Agreement, unless sooner terminated as provided herein, shall for the Funds
listed on Exhibit A attached hereto remain in effect from the later of the
date
of execution or Board approval as required under the 1940 Act (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 or by the vote of a majority of the outstanding voting securities of
the
Fund, on not more than sixty days written notice to AssetMark and Research
Affiliates; (ii) AssetMark; or (iii) Research Affiliates, provided such
termination is effective as of the time of any renewal and Research Affiliates
provides not less than 30 days written notice to AssetMark 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 material provision to this Agreement by any of
the
parties.
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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 SEC no-action letter provided pursuant to the 1940 Act,
or
upon the termination of the Advisory Agreement.
This
Agreement shall extend to and bind the heirs, executors, administrators and
successors of the parties hereto.
15. 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 (c) unless otherwise permitted pursuant to
exemptive relief granted by the SEC or a No Action position granted by the
SEC
or its staff, by a vote of the majority of a Fund’s outstanding
securities.
16. Confidentiality. Any
information or recommendations supplied by either AssetMark or Research
Affiliates, 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 AssetMark may designate in connection with the RAFI™
Portfolio. Nothing in this Agreement shall be construed to prevent
Research Affiliates from giving other entities investment advice.
17. Use
of Research Affiliates’ Name and Marks.
(a) Name. During
the term of this Agreement, AssetMark shall have permission to use Research
Affiliates' name in the marketing of the Funds, and agrees to furnish Research
Affiliates at its principal office all Prospectuses, proxy statements and
reports to shareholders prepared for distribution to shareholders of the Funds
or the public, which refer to Research Affiliates in any way.
(b) Marks. During
the term of this Agreement, AssetMark shall have permission to use Research
Affiliates' marks, including without limitation the marks set forth on Appendix
B, in the marketing of the Funds. More specifically, Research
Affiliates grants to AssetMark the non-exclusive, non-transferable license
and
right to use, under the common law and under the auspices and privileges
provided by any registrations during the term of this Agreement, Research
Affiliates' marks in connection with the marketing of the
Funds. Research Affiliates and AssetMark acknowledge the legal
obligation placed upon Research Affiliates to control closely the use of its
marks by AssetMark. Therefore, AssetMark shall use Research
Affiliates' marks only in accordance with the guidance and directions furnished
to AssetMark by Research Affiliates, or its representatives or agents, from
time
to time, if any, but always the quality of the services offered in connection
with the marks shall be satisfactory to Research Affiliates or as specified
by
Research Affiliates. AssetMark agrees to furnish Research Affiliates
at its principal office samples of all literature, brochures, signs, and
advertising material prepared by AssetMark using one or more of Research
Affiliates' marks.
11
18. 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 AssetMark:
AssetMark
Investment Services, Inc.
0000
Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxx
Xxxx, XX 00000-0000
Attn:
Xxxxxx X. Xxxxxx
(b) If
to Research Affiliates:
Xxxxxx
Xxxxxx, Principal
Research
Affiliates, LLC
000
X. Xxxx Xxxxxx, Xxxxx
000
Xxxxxxxx,
XX 00000
19. Governing
Law. This Agreement shall be governed by the internal
laws of the State of California, 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.
20. 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.
21. 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.
22. 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
Funds for which Research Affiliates provides investment management services
and
as are listed on Exhibit A to this Agreement.
12
23. 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 on the day
and
year first written above.
ASSETMARK
INVESTMENT SERVICES, INC.
By:
/s/ Xxxxxx X.
Xxxxxx
Name:
Xxxxxx X. Xxxxxx
Title:
Chairman
RESEARCH
AFFILIATES, LLC
By:
/s/ Xxxxxx X.
Xxxxxx
Name:
Xxxxxx X. Xxxxxx
Title:
Chairman
13
EXHIBIT
A
SUBADVISORY
AGREEMENT
BETWEEN
ASSETMARK INVESTMENT SERVICES, INC.
AND
RESEARCH AFFILIATES, LLC
Effective
May 31, 2007
AssetMark
Fundamental Index™ Large Company Growth Fund
AssetMark
Fundamental Index™ Large Company Value Fund
AssetMark
Fundamental Index™ Small Company Growth Fund
AssetMark
Fundamental Index™ Small Company Value Fund
AssetMark
Fundamental Index™ International Equity Fund
FEE
SCHEDULE
|
ASSETS
|
COMPENSATION |
|
Fee
Schedule
|
|
|
Large
Growth
|
|
|
Large
Value
|
|
|
Small
Growth
|
|
|
Small
Value
|
|
|
Int'l
|
EXHIBIT
B
_______________________________________________
FORM
ADV Part II
