ADDENDUM TO INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN TOUCHSTONE ADVISORS, INC.
AND XXXXXX INVESTMENT PARTNERS, INC.
This Addendum is entered into as of May 15, 2008 by and between Touchstone
Advisors, Inc. (the "Advisor") and Xxxxxx Investment Partners, Inc. (the
"Sub-Advisor").
WHEREAS, the Advisor and the Sub-Advisor entered into an Investment
Sub-Advisory Agreement dated as of February 17, 2006, as amended as of April 1,
2007 and as of July 20, 2007 (the "Sub-Advisory Agreement"); and
WHEREAS, the Advisor and the Sub-Advisor wish to enter into this Addendum
to the Sub-Advisory Agreement in order to change the compensation to the
Sub-Advisor for the services to be provided to the Small Cap Value Opportunities
Fund, to address certain regulatory matters, and to add or amend other terms and
provisions as mutually agreed to by the parties;
NOW, THEREFORE, it is agreed by and between the parties that Schedule C-1
of the Sub-Advisory Agreement containing the sub-advisory fee rate payable to
the Sub-Adviser be amended as of the date of this Agreement as provided below to
reflect the revised compensation payable on behalf of the Small Cap Value
Opportunities Fund; and it is further agreed by and between the parties the
Sub-Advisory Agreement be amended to reflect the addition of the following terms
and provisions:
SCHEDULE C-1
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
LISTING OF FUNDS AND FEE RATES
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NAME OF FUND FEE RATE
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Touchstone Small Cap Value Opportunities Fund 0.55%
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Touchstone Healthcare and Biotechnology Fund* 0.50%
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Touchstone Mid Cap Fund* 0.50%
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* No change to July 20, 2007 Addendum.
1. Regulatory Compliance
(i) The Sub-Advisor agrees to comply with the requirements of the
1940 Act, the Advisers Act, the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act"), the Commodity Exchange Act and the
respective rules and regulations thereunder, as applicable, as well as
with all other applicable federal and state laws, rules, regulations and
case law that relate to the services and relationships described hereunder
and to the conduct of its business as a registered investment adviser. In
selecting the Fund's portfolio securities and performing the Sub-Adviser's
obligations hereunder, the Sub-Advisor shall cause the Fund to comply with
the diversification and source of income requirements of Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), for
qualification as a regulated investment company. The Sub-Advisor shall
maintain compliance procedures that it reasonably believes are adequate to
ensure the compliance with the foregoing. No supervisory activity
undertaken by the Advisor shall limit the Sub-Advisor's full
responsibility for any of the foregoing.
(ii) The Sub-Advisor has adopted a written code of ethics that it
reasonably believes complies with the requirements of Rule 17j-1 under the
1940 Act, which it will provide to the Advisor and the Fund. The
Sub-Advisor shall ensure that its Access Persons (as defined in the
Sub-Advisor's Code of Ethics) comply in all material respects with the
Sub-Advisor's Code of Ethics, as in effect from time to time. Upon
request, the Sub-Advisor shall provide the Fund with (i) a copy of the
Sub-Advisor's current Code of Ethics, as in effect from time to time, and
(ii) a certification that it has adopted procedures reasonably necessary
to prevent Access Persons from engaging in any conduct prohibited by the
Sub-Advisor's Code of Ethics. No less frequently than annually, the
Sub-Advisor shall furnish a written report, which complies with the
requirements of Rule 17j-1, concerning the Sub-Advisor's Code of Ethics to
the Fund and the Advisor. The Sub-Advisor shall respond to requests for
information from the Advisor as to violations of the Code by Access
Persons and the sanctions imposed by the Sub-Advisor. The Sub-Advisor
shall immediately notify the Advisor of any material violation of the
Code, whether or not such violation relates to a security held by any
Fund.
(iii) The Sub-Advisor shall notify the Trust's Chief Compliance
Officer and Advisor immediately upon detection of (i) any material failure
to manage any Fund in accordance with its investment objectives and
policies or any applicable law; or (ii) any material breach of any of the
Fund's or the Adviser's policies, guidelines or procedures. In addition,
the Sub-Advisor shall provide a quarterly report regarding each Fund's
compliance with its investment objectives and policies and applicable law,
including, but not limited to the 1940 Act, the Code, and the Fund's and
the Advisor's policies, guidelines or procedures as applicable to the
Sub-Advisor's obligations under this Agreement. The Sub-Advisor
acknowledges and agrees that the Advisor may, in its discretion, provide
such quarterly compliance certifications to the Board. The Sub-Advisor
agrees to correct any such failure promptly and to take any action that
the Board and/or the Advisor may reasonably request in connection with any
such breach. The Sub-Advisor shall also provide the officers of the Trust
with supporting certifications in connection with such certifications of
Fund financial statements and disclosure controls pursuant to the
Xxxxxxxx-Xxxxx Act. The Sub-Advisor will promptly notify the Trust in the
event (i) 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 Trust (excluding class action suits in which a Fund is a member of the
plaintiff class by reason of the Fund's ownership of shares in the
defendant) or the compliance by the Sub-Advisor with the federal or state
securities laws or (ii) the controlling stockholder of the Sub-Advisor
changes or an actual change in control resulting in an "assignment" (as
defined in the 1940 Act) has occurred or is otherwise proposed to occur.
(iv) The Sub-Advisor shall maintain separate books and detailed
records of all matters pertaining to the Fund's assets advised by the
Sub-Advisor required by Rule 31a-1 under the 1940 Act (other than those
records being maintained by the Advisor, custodian or transfer agent
appointed by the Fund) relating to its responsibilities provided hereunder
with respect to the Fund, and shall preserve such records for the periods
and in a manner prescribed therefore by Rule 31a-2 under the 1940 Act (the
"Fund Books and Records" ). Copies of the Fund Books and Records shall be
available to the Advisor and the Board at any time upon request shall be
delivered to the Trust upon the termination of this Agreement and shall be
available for telecopying without delay during any day the Fund is open
for business.
2. Security Fair Value
The Sub-Advisor shall immediately notify the Advisor if the Sub-Advisor
reasonably believes that the value of any security held by the Fund may not
reflect fair value. The Sub-Advisor agrees to provide any pricing information of
which the Sub-Advisor is aware to the Advisor and/or any Fund pricing agent to
assist in the determination of the fair value of any Fund holdings for which
market quotations are not readily available or as otherwise required in
accordance with the 1940 Act or the Fund's valuation procedures for the purpose
of calculating the Fund's net asset value in accordance with procedures and
methods established by the Board.
3. Errors & Omissions Insurance Coverage
The Sub-Adviser shall maintain errors and omissions insurance coverage in
an appropriate amount and shall provide prior written notice to the Trust (i) of
any material changes in its insurance policies or insurance coverage; or (ii) if
any material claims will be made on its insurance policies. Furthermore, the
Sub-Advisor shall, upon reasonable request, provide the Trust with any
information it may reasonably require concerning the amount of or scope of such
insurance.
4. Sub-Advisor Security Selection
The Sub-Advisor represents and warrants that it has no arrangement or
understanding with any party, other than the Trust, that would influence the
decision of the Sub-Advisor with respect to its selection of securities for the
Fund, and that all selections shall be done in accordance with what is in the
best interest of the Fund in a manner consistent with Sub-Advisor's fiduciary
duty.
5. Appointment of Other Sub-Advisor
The Advisor shall notify the Sub-Advisor in writing of any intention to
appoint another sub-advisor (the "Other Sub-Advisor") to manage a portion of the
assets of the Small Cap Value Opportunities Fund and the fees it would pay the
Other Sub-Advisor. Should the Advisor appoint an Other Sub-Advisor for a fee
structure more favorable than that provided to Sub-Advisor, Sub-Advisor shall
have the right to require the Advisor to pay it in accordance with the more
favorable fee structure from the date of the appointment of the Other
Sub-Advisor.
6. Indemnification
The following paragraph replaces in its entirety paragraph 5 of the
Sub-Advisory Agreement:
5. INDEMNIFICATION. The Sub-Advisor shall indemnify and hold harmless
the Trust and all affiliated persons thereof (within the meaning of
Section 2(a)(3) of the 0000 Xxx) and all controlling persons (as
described in Section 15 of the 1933 Act) (collectively, the
"Sub-Advisor Indemnitees") against any and all losses, claims,
damages, liabilities or litigation (including reasonable legal and
other expenses) to the extent by reason of or arising out of: (a)
the Sub-Advisor being in material violation of any applicable
federal or state law, rule or regulation or any investment policy or
restriction set forth in the Funds' Registration Statement or any
written guidelines or instruction provided in writing by the Board,
or (b) the Sub-Advisor's willful misfeasance, bad faith or gross
negligence generally in the performance of its duties hereunder or
its reckless disregard of its obligations and duties under this
Agreement. As used in this Section 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any other legal entity with business
operations directly or indirectly controlling, controlled by or
under direct or indirect common control with, the Sub-Advisor.
Except for the foregoing revisions to the Sub-Advisory Agreement, the
Sub-Advisory Agreement and prior Addenda shall continue in full force and effect
and be binding upon the parties. The headings in this Addendum are for purposes
of reference only and shall not limit or define the meaning thereof. This
Addendum, together with the Sub-Advisory Agreement and prior Addenda, embody the
entire agreement and understanding between the parties hereto, supersedes all
prior agreements and understandings relating to the subject matter hereof, and
may be amended or modified only with the mutual written consent of the parties.
To the extent that this Addendum conflicts with the Sub-Advisory Agreement and
prior Addenda, this Addendum is controlling. If any term, provision, or
restriction of the Sub-Advisory Agreement or any Addendum is held by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of the
terms, provisions, and restrictions shall remain in full force and effect and
shall in no way be affected, impaired or in any way invalidated by such court
action, and such court shall have the authority to modify such term, provision,
or restriction to the extent necessary to render it valid and enforceable,
preserving as closely as possible the intent of the parties hereto. This
Addendum shall be binding upon the parties and, to the extent permitted by the
Sub-Advisory Agreement, their respective successors and assigns.
IN WITNESS WHEREOF, each of the parties hereto has caused this Addendum to
be duly executed and delivered in its name and on its behalf by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
TOUCHSTONE ADVISORS, INC. XXXXXX INVESTMENT PARTNERS, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. XxXxxxx
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Print Name: Xxxxx X. Xxxxx Print Name: Xxxxx X. XxXxxxx
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Print Title: President Print Title: General Counsel and CCO
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Date: 5-15-08 Date: 5-15-08
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