Execution Copy
MASTERS' SELECT SMALLER COMPANIES FUND
MASTERS' SELECT FUNDS TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT is made as of the 1st day of
October, 2003 by and between XXXXXX/XXXXXXX FUND ADVISORS, LLC (the "Advisor")
and Ranger Investment Management, L.P. (the "Sub-Advisor").
WITNESSETH:
WHEREAS, the Advisor has been retained as the investment adviser to the
Masters' Select Smaller Companies Fund (the "Fund"), a series of the Masters'
Select Funds Trust (the "Trust"), an open-end management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, the Advisor has been authorized by the Trust to retain one or more
investment advisers (each an "investment manager") to serve as portfolio
managers for a specified portion of the Fund's assets (the "Allocated Portion");
and
WHEREAS, the Sub-Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"), and
is engaged in the business of supplying investment advisory services as an
independent contractor; and
WHEREAS, the Fund and the Advisor desire to retain the Sub-Advisor as an
investment manager to render portfolio advice and services to the Fund pursuant
to the terms and provisions of this Agreement, and the Sub-Advisor desires to
furnish said advice and services; and
WHEREAS, the Trust and the Fund are third party beneficiaries of such
arrangements;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, which shall include the
Trust on behalf of the Fund for purposes of the indemnification provisions of
section 11 hereof, intending to be legally bound hereby, mutually agree as
follows:
1. Appointment of Sub-Advisor.
(a) The Advisor hereby employs the Sub-Advisor, and the Sub-Advisor
hereby accepts such employment, to render investment advice and related
services with respect to the Allocated Portion of the assets of the Fund
for the period and on the terms set forth in this Agreement, subject to the
supervision and direction of the Advisor and the Trust's Board of Trustees.
(b) The Sub-Advisor's employment shall be solely with respect to an
Allocated Portion of the Fund's assets, such Allocated Portion to be
specified by the Advisor and subject to periodic increases or decreases at
the Advisor's sole discretion. The Advisor acknowledges that the
Sub-Advisor shall seek to invest such increases to the Allocated Portion as
soon as practicable, subject to market conditions and investment
opportunities.
(c) Nature of Fund. The Sub-Advisor and the Advisor both acknowledge
that the Fund is a mutual fund that operates as a series of an open-end
series investment company under the plenary authority of the Trust's Board
of Trustees. In managing the Allocated Portion, the Sub-Advisor shall do so
subject always to the plenary authority of the Board of Trustees.
2. Duties of Sub-Advisor.
(a) General Duties. The Sub-Advisor shall act as one of several
investment managers to the Fund and shall invest the Sub-Advisor's
Allocated Portion of the assets of the Fund in accordance with the
investment objectives, policies and restrictions of the Fund as set forth
in the Fund's and the Trust's governing documents, including, without
limitation, the Trust's Agreement and Declaration of Trust and By-Laws; the
Fund's prospectus, statement of additional information and undertakings
(together, the "Fund Documents") and such other limitations, policies and
procedures as the Advisor or the Trustees of the Trust may impose from time
to time in writing to the Sub-Advisor. In providing such services, the
Sub-Advisor shall at all times adhere to the provisions and restrictions
contained in the federal securities laws, applicable state securities laws,
the Internal Revenue Code, and other applicable law. Advisor shall provide
to the Sub-Advisor such information with respect to the Fund such that the
Sub-Advisor will be able to maintain compliance with applicable
regulations, laws, policies, and restrictions with respect to the
Sub-Advisor's Allocated Portion.
Without limiting the generality of the foregoing, the Sub-Advisor
shall: (i) furnish the Fund with advice and recommendations with respect to
the investment of the Sub-Advisor's Allocated Portion of the Fund's assets;
(ii) effect the purchase and sale of portfolio securities for the
Sub-Advisor's Allocated Portion; (iii) determine that portion of Manager's
Allocated Portion that will remain uninvested, if any; (iv) manage and
oversee the investments of the Sub-Advisor's Allocated Portion, subject to
the ultimate supervision and direction of the Trust's Board of Trustees;
(v) vote proxies, file required ownership reports, and take other actions
with respect to the securities in the Sub-Advisor's Allocated Portion; (vi)
maintain the books and records required to be maintained with respect to
the securities in the Sub-Advisor's Allocated Portion; (vii) furnish
reports, statements and other data on securities, economic conditions and
other matters related to the investment of the Fund's assets which the
Advisor, the Trustees, or the officers of the Trust may reasonably request
in writing; and (viii) render to the Trust's Board of Trustees such
periodic and special reports with respect to the Sub-Advisor's Allocated
Portion as the Board may reasonably request.
(b) Brokerage. With respect to the Sub-Advisor's Allocated Portion,
the Sub-Advisor shall be responsible for broker-dealer selection and for
negotiation of brokerage commission rates. The Sub-Advisor may direct
orders to an affiliated person of the Sub-Advisor or to any other
broker-dealer who has been identified by the Advisor to the Sub-Advisor as
an affiliate of any other investment manager without prior authorization to
use such affiliated broker or dealer by the Trust's Board of Trustees,
provided that the Sub-Advisor does so in a manner consistent with Sections
17(a) and 17(e) of the Investment Company Act, Rule 17e-l thereunder and
the Rule 17e-1 procedures adopted by the Trust (a copy of which shall by
provided by the Advisor). The Sub-Advisor's primary consideration in
effecting a securities transaction will be execution at the most favorable
price. In selecting a broker-dealer to execute each particular transaction,
the Sub-Advisor may take the following into consideration: the best net
price available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the
value of the expected contribution of the broker-dealer to the investment
performance of the Fund on a continuing basis. The price to the Fund in any
transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of
the portfolio execution services offered.
Subject to such policies as the Advisor and the Board of Trustees of
the Trust may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Fund to pay a broker or
dealer that provides (directly or indirectly) brokerage or research
services to the Sub-Advisor an amount of commission for effecting a
portfolio transaction in excess of the amount of commission another broker
or dealer should have charged for effecting that transaction, if the
Sub-Advisor determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the Sub-Advisor's or the Advisor's overall
responsibilities with respect to the Fund. The Sub-Advisor is further
authorized to allocate the orders placed by it on behalf of the Fund to
such brokers or dealers who also provide research or statistical material,
or other services, to the Trust, the Advisor, any affiliate of either, or
the Sub-Advisor. Such allocation shall be in such amounts and proportions
as the Sub-Advisor shall determine, and the Sub-Advisor shall report on
such allocations regularly to the Advisor and the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis
therefor. The Sub-Advisor is also authorized to consider sales of shares of
the Fund as a factor in the selection of brokers or dealers to execute
portfolio transactions, subject to the requirements of best execution,
i.e., that such brokers or dealers are able to execute the order promptly
and at the best obtainable securities price.
On occasions when the Sub-Advisor deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients of
the Sub-Advisor, the Sub-Advisor, to the extent permitted by applicable
laws and regulations, may aggregate the securities to be so purchased or
sold in order to obtain the most favorable price or lower brokerage
commissions and the most efficient execution. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in
the transaction, will be made by the Sub-Advisor in the manner it considers
to be the most equitable and consistent. With its fiduciary obligations to
the Fund and to such other clients.
(c) Proxy Voting. The Advisor hereby delegates to the Sub-Advisor, the
Advisor's discretionary authority to exercise voting rights with respect to
the securities and other investments in the Allocated Portion. The
Sub-Advisor's proxy voting policies shall comply with any rules or
regulations promulgated by the SEC. The Sub-Advisor shall maintain and
preserve a record, in an easily-accessible place for a period of not less
than three (3) years (or longer, if required by law), of the Sub-Advisor's
voting procedures, of the Sub-Advisor's actual votes, and such other
information required for the Fund to comply with any rules or regulations
promulgated by the SEC. The Sub-Advisor shall supply updates of this record
to the Advisor or any authorized representative of the Advisor, or to the
Fund on a quarterly basis (or more frequently, if required by law).
Information regarding the policies and procedures that the Sub-Advisor uses
to determine how to vote proxies relating to the Allocated Portion is
attached hereto as Exhibit A. The Fund may request that the Sub-Advisor
vote proxies for the Allocated Portion in accordance with the Fund's proxy
voting policies.
(d) Books and Records. In compliance with the requirements of Rule 31
a-3 under the Investment Company Act, the Sub-Advisor hereby agrees that
all records which it maintains for the Fund are the property of the Fund
and further agrees to surrender promptly to the Fund copies of any of such
records upon the Fund's request. The Sub-Advisor further agrees to preserve
for the periods prescribed by Rule 31 a-2 under the Investment Company Act
the records required to be maintained by Rule 31 a-1 under the Investment
Company Act with respect to the Fund and to preserve the records required
by Rule 204-2 under the Advisers Act with respect to the Fund for the
period specified in the Rule.
(e) Custody. Title to all investments shall be made in the name of the
Fund, provided that for convenience in buying, selling, and exchanging
securities (stocks, bonds, commercial paper, etc.), title to such
securities may be held in the name of the Fund's custodian bank, or its
nominee or as otherwise provided in the Fund's custody agreement. The Fund
shall notify the Sub-Advisor of the identity of its custodian bank and
shall give the Sub-Advisor fifteen (15) days' written notice of any changes
in such custody arrangements. Neither the Sub-Advisor, nor any parent,
subsidiary or related firm, shall take possession of or handle any cash or
securities, mortgages or deeds of trust, or other indicia of ownership of
the Fund's investments, or otherwise act as custodian of such investments.
All cash and the indicia of ownership of all other investments shall be
held by the Fund's custodian bank. The Fund shall instruct its custodian
bank to (a) carry out all investment instructions as may be directed by the
Sub-Advisor with respect thereto (which may be orally given if confirmed in
writing); and (b) provide the Sub-Advisor with all operational information
necessary for the Sub-Advisor to trade on behalf of the Fund.
(f) (1) Consulting with Certain Affiliated Sub-Advisors. With respect
to any transaction the Fund enters into with an affiliated sub-advisor (or
an affiliated person of such sub-advisor) in reliance on Rule l0f-3, Rule
17a-10 or Rule 12d3-1 under the Investment Company Act, the Sub-Advisor
agrees that it will not consult with the affiliated sub-advisor concerning
such transaction, except to the extent necessary to comply with the
percentage limits of paragraphs (a) and (b) of Rule 12d3-1.
(2) Transactions Among Sub-Advisors of the Fund. In any case in
which there are two or more sub-advisors responsible for providing
investment advice to the Fund, the Sub-Advisor may enter into a
transaction on behalf of the Fund with another sub-advisor of the Fund
(or an affiliated person of such sub-advisor) in reliance on Rule
l0f-3, Rule 17a10 or Rule 12d3-l under the Investment Company Act,
only if(i) the Sub-Advisor, under the terms of this Agreement, is
responsible for providing investment advice with respect to its
Allocated Portion, and (ii) the other sub-advisor is responsible for
providing investment advice with respect to a separate portion of the
portfolio of the Fund.
3. Representations of Sub-Advisor.
(a) Sub-Advisor shall use its reasonable judgment and commercially
reasonable best efforts in rendering the advice and services to the Fund as
contemplated by this Agreement.
(b) Sub-Advisor shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(c) Sub-Advisor shall conduct its operations at all times in
conformance with the Investment Advisers Act, the Investment Company Act
and any other applicable state and/or self-regulatory organization
regulations.
(d) Sub-Advisor shall be covered by errors and omissions insurance.
The company self-retention or deductible shall not exceed reasonable and
customary standards, and Sub-Advisor agrees to notify Advisor in the event
the aggregate coverage of such insurance in any annual period is reduced
below $10,000,000.
(e) The Sub-Advisor represents and warrants to the Advisor and the
Fund that (i) the retention of the Sub-Advisor as contemplated by this
Agreement is authorized by the Sub-Advisor's governing documents; (ii) the
execution, delivery and performance of this Agreement does not violate any
obligation by which the Sub-Advisor or its property is bound, whether
arising by contract, operation of law or otherwise; and (iii) this
Agreement has been duly authorized by appropriate action of the Sub-Advisor
and when executed and delivered by the Sub-Advisor will be the legal, valid
and binding obligation of the Sub-Advisor, enforceable against the
Sub-Advisor in accordance with its terms hereof, subject, as to
enforcement, to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or
law).
4. Independent Contractor. The Sub-Advisor shall, for all purposes herein,
be deemed to be an independent contractor. Other than as provided in this
Agreement, or otherwise expressly provided and authorized, the Sub-Advisor shall
have no authority to act for or represent the Trust, the Fund, or the Advisor m
anyway, or in any way be deemed an agent for the Trust, the Fund, or the
Advisor. It is expressly understood and agreed that the services to be rendered
by the Sub-Advisor to the Fund under the provisions of this Agreement are not to
be deemed exclusive, and the Sub-Advisor shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. Sub-Advisors Personnel. The Sub-Advisor shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Sub-Advisor shall be
deemed to include persons employed or retained by the Sub-Advisor to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice, and assistance as
the Sub-Advisor, the Advisor or the Trusts Board of Trustees may desire and
reasonably request.
6. Expenses.
(a) The Sub-Advisor shall be responsible for (i) providing the
personnel, office space, and equipment reasonably necessary to fulfill its
obligations under this Agreement.
(b) In the event this Agreement is terminated by an assignment in the
nature of a change of control as contemplated by Section 14(b) hereof, and
the parties agree to enter into a new agreement, the Sub-Advisor shall be
responsible for (i) the reasonable costs of any special notifications to
the Fund's shareholders and any special meetings of the Trust's Board of
Trustees convened for the primary benefit of the Sub-Advisor, or (ii) its
fair share of the reasonable costs of any special meetings required for the
benefit of the Sub-Advisor as well as for other purposes; provided,
however, that if such costs are expected to exceed $25,000 in a calendar
year, the Sub-Advisor shall bear such costs only upon Sub-Advisor's
consent.
(c) The Sub-Advisor may voluntarily absorb certain Fund expenses or
waive some or all of the Sub-Advisor's own fee.
(d) To the extent the Sub-Advisor incurs any costs by assuming
expenses which are an obligation of the Advisor or the Fund, the Advisor or
the Fund shall promptly reimburse the Sub-Advisor for such costs and
expenses. To the extent the Sub-Advisor performs services for which the
Fund or the Advisor is obligated to pay, the Sub-Advisor shall be entitled
to prompt reimbursement in such amount as shall be negotiated between the
Sub-Advisor and the Advisor but shall, under no circumstances, exceed the
Sub-Advisor's actual costs for providing such services.
7. Investment Sub-Advisory Fee.
(a) The Advisor shall pay to the Sub-Advisor, and the Sub-Advisor
agrees to accept, as full compensation for all investment advisory services
furnished or provided to the Fund pursuant to this Agreement, an annual
sub-advisory fee based on the Sub-Advisor's Allocated Portion, as such
Allocated Portion may be adjusted from time to time. Such fee shall be paid
at the annual rate of 0.60% of the net assets of the Fund attributable to
the Sub-Advisor's Allocated Portion, computed on the value of such net
assets as of the close of business each day.
(b) The sub-advisory fee shall be paid by the Advisor to Sub-Advisor
monthly in arrears on the tenth business day of each month.
(c) The initial fee under this Agreement shall be payable on the tenth
business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated prior to the end of any month, the fee to the Sub-Advisor shall
be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the 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.
(d) The fee payable to the Sub-Advisor under this Agreement will be
reduced to the extent of any receivable owed by the Sub-Advisor to the
Advisor or the Fund.
(e) The Sub-Advisor voluntarily may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this
Agreement and may agree to make payments to limit the expenses which are
the responsibility of the Advisor of the Fund 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 Sub-Advisor hereunder or to
continue future payments. Any such reduction will be agreed to prior to
accrual of the related expense or fee and will be estimated daily and
reconciled and paid on a monthly basis.
(f) The Sub-Advisor may agree not to require payment of any portion of
the compensation or reimbursement of expenses otherwise due to it pursuant
to this Agreement. Any such agreement shall be applicable only with respect
to the specific items covered thereby and shall not constitute an agreement
not to require payment of any future compensation or reimbursement due to
the Sub-Advisor hereunder.
8. No Shorting; No Borrowing. The Sub-Advisor agrees that neither it nor
any of its officers or employees shall take any short position in the shares of
the Fund. This prohibition shall not prevent the purchase of such shares by any
of the officers or employees of the Sub-Advisor or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act. The
Sub-Advisor agrees that neither it nor any of its officers or employees shall
borrow from the Fund or pledge or use the Funds assets in connection with any
borrowing not directly for the Fund's benefit.
9. Conflicts with Trust's Governing Documents and Applicable Laws. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Agreement and Declaration of Trust, By-Laws, or
any applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of the conduct of
the affairs of the Trust and the Fund. In this connection, the Sub-Advisor
acknowledges that the Advisor and the Trust's Board of Trustees retain ultimate
plenary authority over the Fund, including the Allocated Portion, and may take
any and all actions necessary and reasonable to protect the interests of
shareholders.
10. Reports and Access. The Sub-Advisor agrees to supply such information
to the Advisor and to permit such compliance inspections by the Advisor or the
Fund as shall be reasonably necessary to permit the administrator to satisfy its
obligations and respond to the reasonable requests of the Trustees.
11. Standard of Care. Liability and Indemnification.
(a) The Sub-Advisor shall exercise reasonable care and prudence in
fulfilling its obligations under this Agreement.
(b) The Sub-Advisor shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of the statements
furnished by the Sub-Advisor for use by the Advisor in the Fund's offering
materials (including the prospectus, the statement of additional
information, advertising and sales materials) that pertain to the
Sub-Advisor and the investment of the Sub-Advisor's Allocated Portion of
the Fund. The Sub-Advisor shall have no responsibility or liability with
respect to other disclosures.
(c) The Sub-Advisor shall be liable to the Fund for any loss
(including brokerage charges) incurred by the Fund as a result of any
investment made by the Sub-Advisor in violation of Section 2 hereof.
(d) Except as otherwise provided in this Agreement, in the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of
the obligations or duties hereunder on the part of the Sub-Advisor, the
Sub-Advisor shall not be subject to liability to the Advisor, the Trust, or
the Fund or to any shareholder of the Fund for any act or omission in the
course of, or connected with, rendering services hereunder or for any
losses that maybe sustained in the purchase, holding or sale of any
security by the Fund.
(e) Each party to this Agreement (as an "Indemnifying Party"),
including the Trust on behalf of the Fund, shall indemnify and hold
harmless the other party and the shareholders, directors, officers, and
employees of the other party (any such person, an "Indemnified Party")
against any loss, liability, claim, damage, or expense (including the
reasonable cost of investigating and defending any alleged loss, liability,
claim, damage, or expense and reasonable counsel fees incurred in
connection therewith) arising out of the Indemnifying Party's performance
or non-performance of any duties under this Agreement provided, however,
that nothing herein shall be deemed to protect any Indemnified Party
against any liability to which such Indemnified Party would otherwise be
subject by reason of willful misfeasance, bad faith, or negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties under this Agreement.
If indemnification is to be sought hereunder, then the Indemnified
Party shall promptly notify the Indemnifying Party of the assertion of any
claim or the commencement of any action or proceeding in respect thereof;
provided, however, that the failure so to notify the Indemnifying Party
shall not relieve the Indemnifying Party from any liability that it may
otherwise have to the Indemnified Party provided such failure shall not
affect in a material adverse manner the position of the Indemnifying Party
or the Indemnified Party with respect to such claim. Following such
notification, the Indemnifying Party may elect in writing to assume the
defense of such action or proceeding and, upon such election, it shall not
be liable for any legal costs incurred by the Indemnified Party (other than
reasonable costs of investigation previously incurred) in connection
therewith, unless (i) the Indemnifying Party has failed to provide counsel
reasonably satisfactory to the Indemnified Party in a timely manner or (ii)
counsel which has been provided by the Indemnifying Party reasonably
determines that its representation of the Indemnified Party would present
it with a conflict of interest.
The provisions of this paragraph 11(e) shall not apply in any action
where the Indemnified Party is the party adverse, or one of the parties
adverse, to the other party.
(f) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or officer of the Advisor or the
Sub-Advisor, from liability in violation of Sections 17(h) and (i) of the
Investment Company Act.
12. Non-Exclusivity: Trading for Sub-Advisor's Own Account: Code of
Ethics. The Advisor's employment of the Sub-Advisor is not an exclusive
arrangement. The Advisor anticipates that it will employ other individuals or
entities to furnish it with the services provided for herein. Likewise, the
Sub-Advisor may act as investment adviser for any other person, and shall not in
any way be limited or restricted from buying, selling, or trading any securities
for its or their own accounts or the accounts of others for whom it or they may
be acting, provided, however, that the Sub-Advisor expressly represents that it
will undertake no activities which will materially adversely affect the
performance of its obligations to the Fund under this Agreement; and provided
further that the Sub-Advisor will adhere to a code of ethics governing employee
trading and trading for proprietary accounts that conforms to the requirements
of the Investment Company Act and the Investment Advisers Act, a copy of which
has been provided to the Board of Trustees of the Trust. The Sub-Advisor will
make such reports to the Advisor and the Fund as are required by Rule 17j-1
under the Investment Company Act. The Sub-Advisor agrees to provide the Advisor
and the Fund with any information required to satisfy the code of ethics
reporting or disclosure requirements of the Xxxxxxxx-Xxxxx Act of 2002 and any
rules or regulations promulgated by the SEC thereunder (the "Xxxxxxxx-Xxxxx
Act"). To the extent the Sub-Advisor adopts or has adopted a separate code of
ethics or amends or has amended its code of ethics to comply with such rules or
regulations, the Sub-Advisor shall provide the Advisor with a copy of such code
of ethics and any amendments thereto.
13. Term.
(a) This Agreement shall become effective upon approval by the Board
of Trustees of the Trust and shall remain in effect for a period of two (2)
years, unless sooner terminated as hereinafter provided. This Agreement
shall continue in effect thereafter for additional periods not exceeding
one (1) year so long as such continuation is approved for the Fund at least
annually by (i) the Board of Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Fund and (ii) the vote
of a majority of the Trustees of the Trust who are not parties to this
Agreement nor interested persons thereof, cast in person at a meeting
called for the purpose of voting on such approval, and (iii) the Advisor.
The terms "majority of the outstanding voting securities" and "interested
persons" shall have the meanings as set forth in the Investment Company
Act.
(b) The Fund and its distributor may use the Sub-Advisor's trade name
or any name derived from the Sub-Advisor's trade name only in a manner
consistent with the nature of this Agreement for so long as this Agreement
or any extension, renewal, or amendment hereof remains in effect. Within
sixty (60) days from such time as this Agreement shall no longer be in
effect, the Fund shall cease to use such a name or any other name connected
with Sub-Advisor.
14. Termination: No Assignment.
(a) This Agreement may be terminated at any time without payment of
any penalty, by: the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Fund, upon sixty (60)
days' written notice to the Sub-Advisor and the Advisor. This Agreement
also may be terminated at anytime, without the payment of any penalty, by
the Advisor or the Sub-Advisor upon sixty (60) days' written notice to the
Trust and the other party. In the event of a termination, Sub-Advisor shall
cooperate in the orderly transfer of the Fund's affairs and, at the request
of the Board of Trustees, transfer any and all books and records of the
Fund maintained by Sub-Advisor on behalf of the Fund, provided that the
Sub-Advisor shall be permitted to keep a copy of such books and records.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
15. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
16. Captions. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
17. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act and
any rules and regulations promulgated thereunder.
18. Nonpublic Personal Information. Notwithstanding any provision herein to
the contrary, the Sub-Advisor hereto agrees on behalf of itself and its
directors, trustees, shareholders, officers, and employees (1) to treat
confidentially and as proprietary information of the Advisor (on behalf of
itself and the Fund) and the Trust (a) all records and other information
relative to the Fund's prior, present, or potential shareholders (and clients of
said shareholders) and (b) any Nonpublic Personal Information, as defined under
Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated under the
Xxxxx-Xxxxx-Xxxxxx Act (the "G-L-B Act"), and (2) except after prior
notification to and approval in writing by the Advisor or the Trust, not to use
such records and information for any purpose other than the performance of its
responsibilities and duties hereunder, or as otherwise permitted by Regulation
S-P or the G-L-B Act, and if in compliance therewith, the privacy policies
adopted by the Advisor and the Fund and communicated in writing to the
Sub-Advisor. Such written approval shall not be unreasonably withheld by the
Advisor or the Trust and may not be withheld where the Sub-Advisor may be
exposed to civil or criminal contempt or other proceedings for failure to comply
after being requested to divulge such information by duly constituted
authorities.
19. Anti-Money Laundering Compliance. The Sub-Advisor acknowledges that, in
compliance with the Bank Secrecy Act, as amended, the USA PATRIOT Act, and any
respective implementing regulations (together, "AML Laws"), the Fund has adopted
an Anti-Money Laundering Policy. The Sub-Advisor agrees to comply with the
Fund's Anti-Money Laundering Policy and the AML Laws, as the same may apply to
the Sub-Advisor, now and in the future. The Sub-Advisor further agrees to
provide to the Fund and/or the Advisor such reports, certifications and
contractual assurances as may be requested by the Fund or the Advisor. The
Advisor may disclose information respecting the Sub-Advisor to governmental
and/or regulatory or self-regulatory authorities to the extent required by
applicable law or regulation and may file reports with such authorities as may
be required by applicable law or regulation.
20. Certifications: Disclosure Controls and Procedures. The Sub-Advisor
acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act, and the
implementing regulations promulgated thereunder, the Fund is required to make
certain certifications and has adopted disclosure controls and procedures. To
the extent reasonably requested by the Advisor, the Sub-Advisor agrees to use
its best efforts to assist the Advisor and the Fund in complying with the
Xxxxxxxx-Xxxxx Act and implementing the Fund's disclosure controls and
procedures. The Sub-Advisor agrees to inform the Fund of any material
development related to the Allocated Portion that the Sub-Advisor reasonably
believes is relevant to the Fund's certification obligations under the
Xxxxxxxx-Xxxxx Act.
21. Provision of Certain Information by the Sub-Advisor. The Sub-Advisor
will promptly notify the Advisor in writing of the occurrence of any of the
following events:
(a) the Sub-Advisor fails to be registered as investment adviser under
the Advisers Act or under the laws of any jurisdiction in which the
Sub-Advisor is required to be registered as investment adviser in order to
perform its obligations under this Agreement;
(b) the Sub-Advisor is served or otherwise receives notice of any
action, suit, proceeding, inquiry, or investigation, at law or in equity,
before or by any court, public board, or body, involving the affairs of the
Advisor or the Fund;
(c) the Sub-Advisor suffers financial impairment which materially
interferes with its ability to manage the Allocated Portion or otherwise
fulfill its duties under this Agreement;
(d) the Sub-Advisor, its principal officers or its controlling
stockholders are the subject of a government investigation or inquiry,
administrative proceeding or any other type of legal action which, under
the Investment Company Act, would make it ineligible to serve as an
investment adviser to an investment company;
(e) a change in the Sub-Advisor's personnel materially involved in the
management of the Allocated Portion; or
(f) a change in control or management of the Sub-Advisor.
22. Confidentiality. The parties to this Agreement shall not, directly or
indirectly, permit their respective affiliates, directors, trustees, officers,
members, employees, or agents to, in any form or by any means, use, disclose, or
furnish to any person or entity, records or information concerning the business
of any of the other parties except as necessary for the performance of duties
under this Agreement or as required bylaw, without prior written notice to and
approval of the relevant other parties, which approval shall not be unreasonably
withheld by such other parties. Notwithstanding the above, the Advisor consents
to disclosure of Advisor's identity as a client of Sub-Advisor and Sub-Advisor's
use and disclosure of the performance of the Allocated Portion in compiling and
reporting Sub-Advisor's investment track record, both with respect to the
Allocated Portion alone and in the aggregate with other accounts of the
Sub-Advisor, to prospective investors and/or regulatory agencies; provided,
however, (1) Sub-Advisor shall ensure that any such use and disclosure of
performance of the Allocated Portion complies with all applicable law, including
the regulatory requirements applicable to performance advertising, and (2)
Sub-Advisor agrees to maintain the confidentiality of the performance of the
portions of the Fund allocated to other sub-advisors.
23. Counterparts. This Agreement may be executed in counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered, shall be deemed an original and all of which
counterparts shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
XXXXXX/XXXXXXX FUND RANGER INVESTMENT MANAGEMENT, L.P.
ADVISORS, LLC By: Ranger Investment Group, L.L.C.
its general partner
By: /s/Xxxx Xxxxxxxx By:/s/ Nim Hacker
------------------------------------------- -----------------------------------
Name: Xxxx Xxxxxxxx Name: Nim Hacker
Title: Chief Operating Officer Title: General Counsel
As a Third Party Beneficiary,
MASTERS' SELECT FUNDS TRUST,
on behalf of
MASTERS' SELECT SMALLER COMPANIES FUND
By:/s/Xxxx Xxxxxxxx
-------------------------------------------
Name: Xxxx Xxxxxxxx
Title:Treasurer
EXHIBIT A
PROXY VOTING
RANGER
INVESTMENTS
PROXY VOTING POLICY
Ranger Investment Management, L.P. ("Ranger Investments") views seriously its
responsibility to exercise voting authority over securities which form part of
its clients' portfolios. Proxy statements increasingly contain controversial
issues involving shareholder rights and corporate governance, among others,
which deserve careful review and consideration.
It is Ranger Investments' policy to review each proxy statement on an individual
basis and to base its voting decision exclusively on its judgment of what will
best serve the financial interests of the beneficial owners of the security.
These beneficial owners include members of pooled investment funds for which
Ranger Investments acts as investment manager or general partner, and client
accounts for which Ranger Investments acts as investment manager.
A number of recurring issues can be identified with respect to the governance of
a company and actions proposed by that company's board. The company follows
internal Proxy Voting procedures (described below) that allow Ranger Investments
to vote on these issues in a uniform manner. Proxies are generally considered by
the investment officer responsible for monitoring the security being voted. That
person will cast his or her votes in accordance with this Proxy Voting Policy
and the Proxy Voting procedures. Any non-routine matters are referred to Xxxxx
Xxxxxxx as the Senior Investment Officer.
Ranger Investments, in exercising its voting powers, also has regard to the
statutes and rules applicable to registered investment advisors. The manner in
which votes are cast by Ranger Investments is reported to clients by delivery of
this Proxy Voting Policy. In addition, Ranger Investments will provide, upon
request, a list of how each proxy was voted for a client.
Key Proxy Voting Issues:
o Election of Directors and Appointment of Accountants
We vote for management's proposed directors in uncontested elections. For
contested elections, we vote for candidates that best serve shareholders'
interests. We vote to ratify management's appointment of independent
auditors.
o Increase Authorized Capital
We vote for these proposals in the absence of unusual circumstances. There
are many business reasons for companies to increase their authorized
capital. The additional shares often are intended to be used for general
corporate purposes - to raise new investment capital for acquisitions,
stock splits, recapitalizations or debt restructurings.
o Preference Shares
We will carefully review proposals to authorize new issues of preference
shares or increase the shares authorized for existing issues. We recognize
that new issues of authorized preference shares can provide flexibility to
corporate issuers as the shares can be issued quickly without further
shareholder approval in connection with financings or acquisitions.
Therefore, generally we will not oppose proposals to authorize the issuance
of preferred shares. We will, however, scrutinize any such proposals which
give the Board the authority to assign disproportionate voting rights at
the time the shares are issued.
o Dual Capitalization, other Preferential Voting Rights
We will generally vote against proposals to divide share capital into two
or more classes or to otherwise create classes of shares with unequal
voting and dividend rights. We are concerned that the effect of these
proposals, over time, is to consolidate voting power in the hands of
relatively few insiders, disproportionate to their percentage ownership of
the company's share capital as a whole. This concentration of voting power
can effectively block any takeover which management opposes and dilute
accountability to shareholders.
o Merger/Acquisition
All proposals are reviewed on a case by case basis by taking the following
into consideration:
- whether the proposed acquisition price represents fair value;
- whether shareholders could realize greater value through other
means; and
- whether all shareholders receive equal/fair treatment under the
merger acquisition terms.
o Restructuring/Recapitalization
All proposals are reviewed on a case by case basis taking the following
into consideration:
- whether the proposed restructuring/recapitalization is the best
means of enhancing shareholder value; and
- whether the company's longer term prospects will be positively
affected by the proposal.
o Provide Director Indemnification
We will vote for proposals to provide corporate indemnification for
directors if consistent with all relevant laws. Corporations face great
obstacles in attracting and retaining capable directors. We believe such
proposals will contribute to corporations' ability to attract qualified
individuals and will enhance the stability of corporate management.
o Share Option Plans
We will generally vote against proposals which authorize:
- more than 10% of the company's outstanding shares to be reserved
for the award of share options; or
- the award of share options to employees and/or non-employees of
the company (for instance, outside directors and consultants) if
the exercise price is less than the share's fair market value at
the date of the grant of the options and does not carry relevant
performance hurdles for exercise; or
- the exchange of outstanding options for new ones at lower
exercise prices.
Shareholder Proposals - Corporate Governance Issues:
o Majority Independent Board
We will generally vote for proposals calling for a majority outside board.
We believe that a majority of independent directors can be an important
factor in facilitating objective decision making and enhancing
accountability to shareholders.
o Executive Compensation
We will generally vote against proposals to restrict employee compensation.
We feel that the specific amounts and types of employee compensation are
within the ordinary business responsibilities of the Board of Directors and
company management; provided, however, that share option plans meet our
guidelines for such plans as set forth herein. On a case-by-case basis, we
will vote for proposals requesting more detailed disclosure of employee
compensation, especially if the company does not have a majority outside
board.
Potential Conflicts of Interest:
In connection with any security which is the subject of a proxy vote, Ranger
Investments will determine whether any conflict of interest exists between
Ranger Investments or its Affiliates, on the one hand, and the beneficial owners
of the securities, on the other hand.
If a conflict of interest is identified, Ranger Investments will first seek to
apply the general guidelines discussed above without regard to the conflict. If
the guidelines discussed above do not apply, or the conflict of interest is of a
nature sufficient to prevent Ranger Investments from exercising the voting
rights in the best interest of its clients, Ranger Investments will notify the
beneficial owners of such conflict, describe how Ranger Investments proposes to
vote and the reasons therefore, and request the client to provide written
instructions if the client desires the voting tights to be exercised in a
different manner (which may include not voting the proxy). If a client does not
deliver contrary written instructions, Ranger Investments will vote as indicated
in its notice to clients.
Recordkeeping and Reports:
In order to comply with all applicable recordkeeping and reporting requirements,
Ranger Investments will do the following:
1. Ranger Investments will keep a copy of this Proxy Voting Policy and provide
the same to clients upon request.
2. Ranger Investments will retain a copy of each proxy statement that Ranger
Investments receives regarding client securities. A third party may be
authorized to make and retain, on Ranger Investments' behalf, a copy of a
proxy statement (provided that Ranger Investments has obtained an
undertaking from the third party to provide a copy of the proxy statement
promptly upon request) or Ranger Investments may rely on obtaining a copy
of a proxy statement from the Commission's Electronic Data Gathering,
Analysis, and Retrieval (XXXXX) system.
3. Ranger Investments will retain a record of each vote cast by Ranger
Investments on behalf of a client. A third party may be authorized to make
and retain, on Ranger Investments' behalf a record of the vote cast
(provided that Ranger Investments has obtained an undertaking from the
third party to provide a copy of the record promptly upon request).
4. Ranger Investments will retain a copy of any document created by Ranger
Investments that was material to making a decision how to vote proxies on
behalf of a client or that memorializes the basis for that decision.
5. Ranger Investments will retain a copy of each written client request for
information on how Ranger Investments voted proxies on behalf of the
client, and a copy of any written response by Ranger Investments to any
(written or oral) client request for information on how Ranger Investments
voted proxies on behalf of the requesting client.
