INVESTMENT ADVISORY AGREEMENT
ASSETMARK FUNDS
AGREEMENT made this __ day of _________, 2001, by and between AssetMark
Funds, a Delaware business trust (the "Trust"), and AssetMark Investment
Services, Inc., a California corporation (the "Advisor").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Trust is authorized to create and currently consists of several
separate series shares, each having its own investment objectives and policies;
and
WHEREAS, the Advisor is a registered investment advisor under the
Investment Advisers Act of 1940, as amended and engages in the business of
providing investment management services; and
WHEREAS, the Trust desires to retain the Advisor to render investment
management services with respect to the series listed on Schedule A, as may be
amended from time to time, attached hereto and made a part of this Agreement
(each a "Fund" and collectively the "Funds"), and the Advisor is willing to
render such services on the following terms and conditions.
NOW, THEREFORE, in consideration of mutual covenants recited below, the
parties agree as follows:
1. DUTIES OF THE TRUST.
(a) The Trust, except as otherwise provided in this Agreement, is
responsible for conducting its own business and affairs and for all
necessary and incidental expenses and salaries including, but not limited
to, the costs incurred in: the maintenance of its corporate existence; the
maintenance of its own books, records and procedures; dealing with its own
shareholders; the payment of dividends; transfer of stock, including
issuance, redemption and repurchase of shares; preparation of share
certificates; preparation and filing of such forms as may be required by
the various jurisdictions in which the Trust's shares may be sold;
preparation, printing and mailing of reports and notices to shareholders;
calling and holding of shareholders' meetings; miscellaneous office
expenses; brokerage commissions; custodian fees; legal and accounting fees;
taxes, and state and federal registration fees.
(b) In the conduct of the respective businesses of the parties and in
the performance of this Agreement, the Trust and the Advisor may share
facilities common to each, with appropriate proration of expenses between
them.
(c) To the extent the Advisor incurs any costs by assuming expenses
that are an obligation of the Trust as set forth herein, the Trust shall
promptly reimburse the Advisor for such costs and expenses, except to the
extent the Advisor has otherwise agreed to bear such expenses. To the
extent the services for which the Trust is obligated to pay are performed
by the Advisor, the Advisor shall be entitled to recover from the Trust to
the extent of the Advisor's actual costs for providing such services.
2. DUTIES OF THE ADVISOR.
(a) The Trust employs the Advisor generally to manage the investment
and reinvestment of the assets of the Funds. In so doing, the Advisor may
hire one or more sub-advisors for each Fund to carry out the investment
program of the Fund(s) (subject to the approval of the Trust's Board of
Trustees and, except as otherwise permitted under the terms of any
exemptive relief obtained by the Advisor from the U.S. Securities and
Exchange Commission, or by rule or regulation, a majority of the
outstanding voting securities of any affected Fund(s). To the extent that
the Advisor does hire any sub-advisor, it will thereafter continuously
review, supervise and (where appropriate) administer the investment program
of the Fund(s).
(b) The Advisor will provide, or direct any sub-advisor to provide to
the Administrator and the Trust records concerning the Advisor's and
sub-advisor(s)' activities which the Trust is required to maintain, and to
render regular reports to the Administrator and to the Trust's officers and
Trustees concerning the Advisor's and sub-advisor(s)' performance of the
foregoing responsibilities. The retention of a sub-advisor by the Advisor
shall not relieve the Advisor of its responsibilities under this Agreement.
(c) The Advisor shall discharge the foregoing responsibilities subject
to the control of the Board of Trustees of the Trust and in compliance with
such policies as the Trustees may from time to time establish, and in
compliance with the objectives, policies, and limitations for each such
Fund set forth in the Trust's prospectus and statement of additional
information, as amended from time to time (referred to collectively as the
"Prospectus"), and applicable laws and regulations. The Trust will furnish
the Advisor from time to time with copies of all amendments or supplements
to the Prospectus, if any.
(d) The Advisor accepts such employment and agrees, at its own
expense, to render the services and to provide the office space,
furnishings and equipment and the personnel (including the costs of
retaining any sub-advisors) required by it to perform the services on the
terms and for the compensation provided herein. The Advisor will not,
however, pay for the cost of securities, commodities, and other investments
(including brokerage commissions and other transaction charges, if any)
purchased or sold for the Trust.
3. DELIVERY OF DOCUMENTS.
(a) The Trust has furnished Advisor with copies properly certified or
authenticated of each of the following and will furnish any amendments and
restatements as they are effected:
(i) The Trust's Agreement and Declaration of Trust, as filed
with the Secretary of State of Delaware (such Agreement and
Declaration of Trust, as presently in effect and as it shall
from time to time be amended, is herein called the
"Declaration of Trust");
(ii) By-Laws of the Trust (such By-Laws, as in effect on the date
of this Agreement and as amended from time to time, are
herein called the "By-Laws");
(iii)Prospectus(es) of the Fund(s).
(b) The Advisor has furnished to the Trust, a copy of its Form ADV as
filed with the U.S. Securities and Exchange Commission, and will furnish
any amendment thereto as it may be effected.
4. OTHER COVENANTS. The Advisor agrees that it:
(a) will comply with all applicable Rules and Regulations of the U.S.
Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable law;
(b) will place or will direct the sub-advisors to place orders
pursuant to its/their investment determinations for the Fund(s) either
directly with the issuer or with any broker or dealer. In executing
portfolio transactions and selecting brokers or dealers, the Advisor will,
or will direct the sub-advisors to use its/their best efforts to seek on
behalf of a Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Advisor (or any
sub-advisor) shall consider all factors 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-dealer to execute a particular
transaction the Advisor (or any 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) provided to a Fund and/or
other accounts over which the Advisor or an affiliate of the Advisor may
exercise investment discretion. The Advisor (or any sub-advisor) is
authorized, subject to the prior approval of the Trust's Board of Trustees,
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 Advisor (or any 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 terms of the overall responsibilities of the
Advisor to a Fund. In addition, the Advisor (or any sub-advisor) is
authorized to allocate purchase and sale orders for portfolio securities to
brokers or dealers (including brokers and dealers that are affiliated with
the Advisor or the Trust's principal underwriter) to take into account the
sale of shares of the Trust if the Advisor believes that the quality of the
transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will any Fund's securities
be purchased from or sold to the Advisor, any sub-advisor engaged with
respect to that Fund, the Trust's principal underwriter, or any affiliated
person of either the Trust, the Advisor, and sub-advisor or the principal
underwriter, acting as principal in the transaction, except to the extent
permitted by the U.S. Securities and Exchange Commission and the 1940 Act.
The Advisor (and any sub-advisor) is also authorized to enter into
brokerage/service arrangements with broker-dealers whereby certain
broker-dealers agree to pay all or a portion of a Fund's custodian,
administrative, transfer agency, and/or other fees in exchange for such
Fund directing certain minimum brokerage amounts to such broker-dealer, if,
and only if, the Advisor (or any sub-advisor) determines in good faith that
such arrangement was reasonable - viewed in terms of that particular
transaction or terms of the overall responsibilities of the Advisor (or
sub-advisor) to a Fund.
5. COMPENSATION OF THE ADVISOR.
(a) For the services to be rendered by the Advisor as provided in
Sections 1 and 2 of this Agreement, the Trust shall pay to the Advisor
compensation at the rate(s) specified in Schedule A, as may be amended from
time to time, attached hereto and made a part of this Agreement. Such
compensation shall be paid to the Advisor at the end of each month and
calculated by applying a daily rate to the assets of each of the Funds,
based on the annual percentage rates as specified in the attached Schedule
A. The fee shall be based on the average daily net assets for the month
involved.
(b) Any advisory fees which may be charged by sub-advisors hired by
the Advisor are the sole obligation of the Advisor, and not of the Trust.
(c) If this Agreement is terminated prior to the end of any calendar
month, the management 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 the Agreement is in effect, bears to
the number of calendar days in the month, and shall be payable within 10
days after the date of termination.
(d) The Advisor may voluntarily or contractually agree to reduce any
portion of the compensation or reimbursement of expenses due to it pursuant
to this Agreement and may similarly agree to make payments to limit
expenses which are the responsibility of the Trust under this Agreement.
Any such reduction or payment shall be applicable only to such specific
reduction or payment and shall not constitute an agreement to reduce any
future compensation or reimbursement due to the Advisor hereunder or to
continue future payments. Any such reduction will be agreed upon prior to
accrual of the related expense or fee and will be estimated daily. Any fee
withheld shall be voluntarily reduced and any Fund expense paid by the
Advisor voluntarily or pursuant to an agreed expense limitation shall be
reimbursed by the Fund to the Advisor in the first, second, or third (or
any combination thereof) fiscal year next succeeding the fiscal year of the
withholding, reduction, or payment to the extent permitted by applicable
law if the aggregate expenses for the next succeeding fiscal year, second
fiscal year or third succeeding fiscal year do not exceed any limitation to
which the Advisor has agreed.
6. EXCESS EXPENSES.
If the expenses for any Fund for any fiscal year (including fees and
other amounts payable to the Advisor, but excluding interest, taxes,
brokerage costs, litigation, and other extraordinary costs) as calculated
every business day would exceed the expense limitations imposed on
investment companies by any applicable statute or regulatory authority of
any jurisdiction in which Shares are qualified for offer and sale, the
Advisor shall bear such excess cost.
However, the Advisor will not bear expenses of the Trust or any Fund
which would result in the Trust's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code. Payment
of expenses by the Advisor pursuant to this Section 6 shall be settled on a
monthly basis (subject to fiscal year end reconciliation) by a waiver of
the Advisor's fees provided for hereunder, and such waiver shall be treated
as a reduction in the purchase price of the Advisor's services.
7. REPORTS.
The Trust and the Advisor agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request. The Advisor further agrees to furnish to the Trust, if applicable,
the same such documents and information pertaining to any sub-advisor as
the Trust may reasonably request.
8. STATUS OF THE ADVISOR.
The services of the Advisor to the Trust are not to be deemed
exclusive, and the Advisor shall be free to render similar services to
others so long as its services to the Trust are not impaired thereby. The
Advisor shall be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Trust in any way or otherwise be deemed an agent of the
Trust. To the extent that the purchase or sale of securities or other
investments of any issuer may be deemed by the Advisor to be suitable for
two or more accounts managed by the Advisor, the available securities or
investments may be allocated in a manner believed by the Advisor to be
equitable to each account. It is recognized that in some cases this may
adversely affect the price paid or received by the Trust or the size or
position obtainable for or disposed by the Trust or any Fund.
9. USE OF ASSETMARK NAME.
In accordance with the Agreement and Declaration of Trust of the
Trust, in the event that the Advisor ceases to be the Trust's investment
manager for any reason, the Trust will (unless the Advisor otherwise agrees
in writing) take all necessary steps to cause the Trust to change to a name
not including the word "AssetMark," within a reasonable period of time.
10. CERTAIN RECORDS.
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
which are prepared or maintained by the Advisor (or any sub-advisor) on
behalf of the Trust are the property of the Trust and will be surrendered
promptly to the Trust on request. The 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.
11. LIMITATION OF LIABILITY OF THE ADVISOR.
The duties of the Advisor shall be confined to those expressly set
forth herein, and no implied duties are assumed by or may be asserted
against the Advisor hereunder. The Advisor shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in carrying out its duties hereunder,
except a loss resulting from willful malfeasance, 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 which cannot be waived
or modified hereby. (As used in this Section 11, the term "Advisor" shall
include directors, officers, employees and other corporate agents of the
Advisor as well as that corporation itself).
12. PERMISSIBLE INTERESTS.
Trustees, agents, and shareholders of the Trust are or may be
interested in the Advisor (or any successor thereof) as directors,
partners, officers, or shareholders, or otherwise; directors, partners,
officers, agents, and shareholders of the Advisor are or may be interested
in the Trust as Trustees, officers, shareholders or otherwise; and the
Advisor (or any successor) is or may be interested in the Trust as a
shareholder or otherwise subject to the provisions of applicable law. All
such interests shall be fully disclosed between the parties on an ongoing
basis and in the Trust's Prospectus as required by law. In addition,
brokerage transactions for the Trust may be effected through affiliates of
the Advisor or any sub-advisor if approved by the Board of Trustees,
subject to the rules and regulations of the U.S. Securities and Exchange
Commission.
13. DURATION AND TERMINATION.
This Agreement, unless sooner terminated as provided herein, shall for
each Fund listed on Schedule A attached hereto remain in effect from the
date of execution or, if later, the date the initial capital to a series of
the Trust is first provided (the "Effective Date."), until one year from
the Effective Date, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a) by
the vote of a majority of those Trustees of the Trust who are not parties
to this Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by
the Trustees of the Trust or by vote of a majority of the outstanding
voting securities of each Fund; provided, however, that if the shareholders
of any Fund fail to approve the Agreement as provided herein, the Advisor
may continue to serve hereunder in the manner and to the extent permitted
by the 1940 Act and rules and regulations thereunder. 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.
This Agreement may be terminated as to any Fund at any time, without
the payment of any penalty by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
Fund on not less than 30 days nor more than 60 days written notice to the
Advisor, or by the Advisor at any time without the payment of any penalty,
on 90 days written notice to the Trust. This Agreement will automatically
and immediately terminate in the event of its assignment.
This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
As used in this Section 13, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting securities"
shall have the respective meanings set forth in the 1940 Act and the rules
and regulations thereunder, subject to such exemptions as may be granted by
the U.S. Securities and Exchange Commission.
14. 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.
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:
To the Advisor at: To the Trust at:
AssetMark Investment Services, Inc. AssetMark Funds
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 000 c/o AssetMark Investment Services, Inc.
Xxxxxxxx Xxxx, XX 00000-0000 0000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Attn: Xxxxxx X. Xxxxxx Xxxxxxxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx
00. 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.
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.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of State of Delaware, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees,
and is not binding upon any of the Trustees, officers, or shareholders of
the Trust individually but binding only upon the assets and property of the
Trust.
No series of the Trust shall be liable for the obligations of any
other series of the Trust. Without limiting the generality of the
foregoing, the Advisor shall look only to the assets of a particular Fund
for payment of fees for services rendered to that Fund.
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 U.S. Securities and Exchange Commission, whether of special or general
application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
ASSETMARK INVESTMENT SERVICES, INC. ASSETMARK FUNDS
By:__________________________________ By:________________________________
Attest:______________________________ Attest:____________________________
Title:_______________________________ Title:_____________________________
