SUB-ADVISORY AGREEMENT
AGREEMENT made as of the
_____day of ___________, 2007, by and between AssetMark Investment
Services, Inc., a California corporation (the “Advisor”), and Duff & Xxxxxx
Investment Management Co. (the “Sub-Advisor”).
WHEREAS, the Advisor and the
Sub-Advisor are registered investment advisers under the Investment Advisers Act
of 1940, as amended (the “Advisers Act”), and engage in the business of
providing investment management services; and
WHEREAS, the Advisor has been
retained to act as investment adviser pursuant to an Investment Advisory
Agreement dated October 20, 2006 (the “Advisory Agreement”) with 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”), currently
consisting of several separate series of shares, each having its own investment
objectives and policies, and which is authorized to create additional series in
the future; and
WHEREAS, the Advisory
Agreement permits the Advisor, subject to the supervision and direction of the
Trust’s Board of Trustees, to delegate certain of its duties under the Advisory
Agreement to other investment advisers, subject to the requirements of the 1940
Act; and
WHEREAS, the Advisor desires
to retain the Sub-Advisor to assist the Advisor in the provision of a continuous
investment program for that portion of one or more of the Trust’s series’ (each
a “Fund”) assets which the Advisor will assign to the Sub-Advisor (the
“Sub-Advisor Assets”), and the Sub-Advisor is willing to render such services,
subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in
consideration of mutual covenants recited below, the parties agree and promise
as follows:
1. Appointment as
Sub-Advisor. The Advisor hereby appoints the Sub-Advisor to
act as investment adviser for and to manage the Sub-Advisor Assets, subject to
the supervision of the Advisor and the Board of Trustees of the Trust, and
subject to the terms of this Agreement; and the Sub-Advisor hereby accepts such
appointment. In such capacity, the Sub-Advisor shall be responsible
for the investment management of the Sub-Advisor Assets. The
Sub-Advisor agrees to exercise the same degree of skill, care and diligence in
performing its services under this Agreement as the Sub-Advisor exercises in
performing similar services with respect to other fiduciary accounts for which
the Sub-Advisor has investment responsibilities, and that a prudent manager
would exercise under the circumstances.
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2. Duties of the
Sub-Advisor.
(a) Investments. The
Sub-Advisor is hereby authorized and directed and hereby agrees, subject to the
stated investment objectives, policies and restrictions of each Fund as set
forth in such Fund’s prospectus and statement of additional information as
currently in effect and as amended from time to time (collectively referred to
as the “Prospectus”) and subject to the directions of the Advisor and the
Trust’s Board of Trustees, to purchase, hold and sell investments for the
Sub-Advisor Assets and to monitor such investments on a continuous
basis. In providing these services, the Sub-Advisor will conduct an
ongoing program of investment, evaluation and, if appropriate, sale and
reinvestment of the Sub-Advisor Assets.
The
Sub-Advisor acknowledges that the Advisor is a wholly-owned subsidiary of
Genworth Financial, Inc., and the purchase, acquisition, or possession of
securities issued by Genworth and/or its affiliated entities (collectively
referred to as “Genworth Securities”) by the Fund is therefore prohibited under
the 1940 Act. Accordingly, the Sub-Advisor is directed and hereby
agrees to refrain from the purchase, acquisition, or possession on behalf of the
Fund of any securities identified by the Advisor to the Sub-Advisor as being
Genworth Securities. The Advisor acknowledges that the Sub-Advisor’s
compliance with these instructions may result in the Fund suffering a loss or
foregoing profits that it would otherwise have realized, and since the
Sub-Advisor is acting under the direction of the Advisor, the Advisor agrees
that the Sub-Advisor shall not be responsible or liable for any such losses or
foregone profits.
The
Advisor agrees to provide the Sub-Advisor information concerning: (i) a Fund;
(ii) its assets available or to become available for investment; and (iii) the
conditions of a Fund’s or the Trust’s affairs as relevant to the
Sub-Advisor.
(b) Compliance with Applicable Laws,
Governing Documents and Compliance
Procedures. In the performance of its duties and obligations
under this Agreement, the Sub-Advisor shall, with respect to Sub-Advisor Assets,
(i) act in conformity with: (A) the Trust’s Agreement and Declaration of Trust
(the “Declaration of Trust”) and By-Laws; (B) the Prospectus; (C) the policies
and procedures for compliance by the Trust with the Federal Securities Laws (as
that term is defined in Rule 38a-1 under the 0000 Xxx) provided to the
Sub-Advisor (together, the “Trust Compliance Procedures”); and (D) the
instructions and directions received in writing from the Advisor or the Trustees
of the Trust; and (ii) conform to, and comply with, the requirements of the 1940
Act, the Advisers Act, and all other federal laws applicable to registered
investment companies’ and the Sub-Advisors’ duties under this
Agreement. The Advisor will provide the Sub-Advisor with any
materials or information that the Sub-Advisor may reasonably request to enable
it to perform its duties and obligations under this Agreement.
The
Advisor will provide the Sub-Advisor with reasonable (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 the Sub-Advisor, in the performance of its duties and
obligations under this Agreement, shall manage the Sub-Advisor Assets
consistently with such changes, provided the Sub-Advisor has received such prior
notice of the effectiveness of such changes from the Trust or the
Advisor. In addition to such notice, the Advisor shall provide to the
Sub-Advisor a copy of a modified Prospectus and copies of the revised Trust
Compliance Procedures, as applicable, reflecting such changes. The
Sub-Advisor hereby agrees to provide to the Advisor in a timely manner, in
writing, such information relating to the Sub-Advisor and its relationship to,
and actions for, a Fund as may be required to be contained in the Prospectus or
in the Trust’s registration statement on Form N-1A, or otherwise as reasonably
requested by the Advisor.
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In order
to assist the Trust and the Trust’s Chief Compliance Officer (the “Trust CCO”)
to satisfy the requirements contained in Rule 38a-1 under the 1940 Act, the
Sub-Advisor shall provide to the Trust CCO: (i) direct access to the
Sub-Advisor’s chief compliance officer (the “Sub-Advisor CCO”), as reasonably
requested by the Trust CCO; (ii) a completed quarterly informational
questionnaire regarding the Sub-Advisor’s 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 the Sub-Advisor has
complied with the Trust Compliance Procedures in managing the Sub-Advisor
Assets; and (iv) quarterly certifications that there were no Material Compliance
Matters (as that term is defined by Rule 38a-1(e)(2)) that arose under the Trust
Compliance Procedures that related to the Sub-Advisor’s management of the
Sub-Advisor Assets.
(c) Sub-Advisor Compliance Policies and
Procedures. The Sub-Advisor shall promptly provide the Trust
CCO with copies of: (i) the Sub-Advisor’s policies and procedures for
compliance by the Sub-Advisor with the Federal Securities Laws (together, the
“Sub-Advisor Compliance Procedures”), and (ii) any material changes to the
Sub-Advisor Compliance Procedures. The Sub-Advisor shall cooperate
fully with the Trust CCO so as to facilitate the Trust CCO’s performance of the
Trust CCO’s responsibilities under Rule 38a-1 to review, evaluate and report to
the Trust’s Board of Trustees on the operation of the Sub-Advisor Compliance
Procedures, and shall promptly report to the Trust CCO any Material Compliance
Matter arising under the Sub-Advisor Compliance Procedures involving the
Sub-Advisor Assets. The Sub-Advisor shall provide to the Trust
CCO: (i) quarterly reports confirming the Sub-Advisor’s compliance
with the Sub-Advisor Compliance Procedures in managing the Sub-Advisor Assets,
and (ii) certifications that there were no Material Compliance Matters involving
the Sub-Advisor that arose under the Sub-Advisor Compliance Procedures that
affected the Sub-Advisor Assets. At least annually, the Sub-Advisor
shall provide a certification to the Trust CCO to the effect that the
Sub-Advisor has in place and has implemented policies and procedures that are
reasonably designed to ensure compliance by the Sub-Advisor with the Federal
Securities Laws.
(d) Voting of
Proxies. Unless otherwise instructed by the Advisor or the
Trust, the Sub-Advisor shall have the power, discretion and responsibility to
vote, either in person or by proxy, all securities in which the Sub-Advisor
Assets may be invested from time to time, and shall not be required to seek
instructions from the Advisor, the Trust or a Fund. The Sub-Advisor
shall also provide its Proxy Voting Policy (the “Proxy Policy”), and, if
requested by the Advisor, a summary of such Proxy Policy suitable for including
in the Prospectus, and will provide the Advisor with any material amendment to
the Proxy Policy within a reasonable time after such amendment has taken
effect. If both the Sub-Advisor and another person managing assets of
a Fund have invested in the same security, the Sub-Advisor and such other entity
will each have the power to vote its pro rata share of the security.
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(e) Agent. Subject
to any other written instructions of the Advisor or the Trust, the Sub-Advisor
is hereby appointed the Advisor’s and the Trust’s agent and attorney-in-fact for
the limited purposes of executing account documentation, agreements, contracts
and other documents as the Sub-Advisor shall be requested by brokers, dealers,
counterparties and other persons in connection with its management of the
Sub-Advisor Assets, provided, that the Sub-Advisor’s actions in executing such
documents shall comply with federal regulations, all other federal laws
applicable to registered investment companies and the Sub-Advisor’s duties and
obligations under this Agreement and the Trust’s governing
documents.
(f) Brokerage. The
Sub-Advisor will place orders pursuant to the Sub Advisor’s investment
determinations for a Fund either directly with an issuer or with any broker or
dealer selected by the Sub-Advisor, pursuant to this paragraph. In
executing portfolio transactions and selecting brokers or dealers, the
Sub-Advisor will use its best efforts to seek, on behalf of a Fund, the best
overall execution available. In assessing the best overall terms
available for any transaction, the 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 or
dealer to execute a particular transaction, the Sub-Advisor may also consider
the brokerage and research services (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) provided to
a Fund and/or other accounts over which the Sub-Advisor may exercise investment
discretion. The Sub-Advisor is authorized to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for any of the Funds that is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if, but only if, the Sub-Advisor determines in good faith that
such commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of that
particular transaction or in terms of the overall responsibilities of the
Sub-Advisor to a Fund. Such authorization is subject to termination
at any time by the Board of Trustees of the Trust for any reason.
Under no
circumstances will the Sub-Advisor compensate a broker or dealer for any
promotion or sale of Fund shares by directing to the broker or dealer: (i)
portfolio securities transactions on behalf of the 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).
The
Sub-Advisor may only direct the Fund’s portfolio securities transactions to a
broker or dealer that promotes or sells Fund shares as permitted by the
provisions of the 1940 Act (and the rules thereunder) and the policies and
procedures adopted the Trust, as amended from time to time. The
Advisor will provide the Sub-Advisor with a copy of such policies and procedures
and any amendments thereto.
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The
Sub-Advisor, when selecting brokers and dealers to effect the Fund’s portfolio
securities transactions, shall not take into account the brokers’ and dealers’
promotion or sale of shares of the Fund or any other registered investment
company. In addition, the Sub-Advisor shall not enter into any
agreement (whether oral or written) or other understanding under which the
Sub-Advisor directs, or is expected to direct, the Fund’s portfolio securities
transactions, or 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); and, to a broker
(including a government securities broker) or dealer (including a municipal
securities dealer or a government securities dealer) in consideration for the
promotion or sale of shares of the Fund or any other registered investment
company.
In
addition, the Sub-Advisor is authorized to allocate purchase and sale orders for
portfolio securities to brokers or dealers that are affiliated with the Advisor,
the Sub-Advisor, the Trust’s principal underwriter, or other sub-advisors (if
applicable) if the Sub-Advisor believes that the quality of the transaction and
the commission are comparable to what they would be with other qualified firms
and provided that the transactions are consistent with the Trust’s Rule 17e-1
and Rule 10f-3 procedures. The Advisor will identify all brokers and
dealers affiliated with the Trust, the Advisor, the Trust’s principal
underwriter (and the other Sub-Advisors of the Fund, to the extent such
information is necessary for the Sub-Advisor to comply with applicable federal
securities laws), other than those whose sole business is the distribution of
mutual fund shares, who effect securities transactions for
customers. The Advisor shall promptly furnish a written notice to the
Sub-Advisor if the information so provided is no longer accurate.
In
connection with its management of the Sub-Advisor Assets and consistent with its
fiduciary obligation to the Trust and other clients, the Sub-Advisor, to the
extent permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities or futures contracts to be sold or
purchased in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the
securities or futures contracts so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Sub-Advisor in the manner the
Sub-Advisor considers to be, over time, the most equitable and consistent with
its fiduciary obligations to the Sub-Advisor Assets and to such other
clients.
(g) Securities
Transactions. In no instance will any Fund’s portfolio
securities be purchased from or sold to the Advisor, the Sub-Advisor, the
Trust’s principal underwriter, or any affiliated person of the Trust, the
Advisor, the Sub-Advisor or the Trust’s principal underwriter, acting as
principal in the transaction, except to the extent permitted by the SEC
and the 1940 Act, including Rule 17a-7
thereunder.
The
Sub-Advisor acknowledges that the Advisor and the Trust may rely on Rule 17a-7,
Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the 1940 Act, and the
Sub-Advisor hereby agrees that it shall not consult with any other sub-advisor
to the Trust with respect to transactions in securities for the Sub-Advisor
Assets or any other transactions of Trust assets.
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The
Sub-Advisor is authorized to engage in transactions in which the Sub-Advisor, or
an affiliate of the Sub-Advisor, acts as a broker for both the Fund and for
another party on the other side of the transaction (“agency cross
transactions”). The Sub-Advisor shall effect any such agency cross
transactions in compliance with Rule 206(3)-2 under the Advisers Act and any
other applicable provisions of the federal securities laws and shall provide the
Advisor with periodic reports describing such agency cross
transactions. By execution of this Agreement, the Advisor authorizes
the Sub-Advisor or its affiliates to engage in agency cross transactions, as
described above. The Advisor may revoke its consent at any time by
written notice to the Sub-Advisor.
The
Sub-Advisor hereby represents that it has implemented policies and procedures
that will prevent the disclosure by it, its employees or its agents of the
Trust’s portfolio holdings to any person or entity other than the Advisor, the
Trust’s custodian, or other persons expressly designated by the
Advisor.
(h) Code of
Ethics. The Sub-Advisor hereby represents that it has adopted
policies and procedures and a code of ethics that 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 the Advisor and the
Trust, and any material violation of such policies, and procedures and code of
ethics by personnel of the Sub-Advisor, the sanctions imposed in response
thereto, and any issues arising under such policies, and procedures and code of
ethics shall be reported to the Advisor and the Trust at the times and in the
format reasonably requested by the Advisor and the Board of
Trustees.
(i) Books and
Records. The Sub-Advisor shall maintain separate detailed
records of all matters pertaining to the Sub-Advisor Assets, including, without
limitation, brokerage and other records of all securities transactions. Any
records required to be maintained and preserved pursuant to the provisions of
Rule 31a-1 and Rule 31a-2 promulgated under the 1940 Act that are prepared or
maintained by the Sub-Advisor on behalf of the Trust are the property of the
Trust and will be surrendered promptly to the Trust upon request. The
Sub-Advisor 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
Sub-Advisor Assets and the Sub-Advisor. From time to time as
the Advisor, and any consultants designated by the Advisor, or the Trust may
request, the Sub-Advisor will furnish the requesting party reports on portfolio
transactions and reports on Sub-Advisor Assets held in the portfolio, all in
such detail as the Advisor, its consultant(s) or the Trust may reasonably
request. The Sub-Advisor will provide the Advisor with information
(including information that is required to be disclosed in the Prospectus) with
respect to the portfolio managers responsible for Sub-Advisor Assets, any
changes in the portfolio managers responsible for Sub-Advisor Assets, any
changes in the ownership or management of the Sub-Advisor, or of material
changes in the control of the Sub-Advisor. The Sub-Advisor will
promptly notify the Advisor of any pending investigation, material litigation,
administrative proceeding or any other significant regulatory
inquiry. Upon reasonable request, the Sub-Advisor will make available
its officers and employees to meet with the Trust’s Board of Trustees to review
the Sub-Advisor Assets.
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(k) Valuation of Sub-Advisor
Assets. The Sub-Advisor agrees to monitor the Sub-Advisor
Assets and to notify the Advisor or its designee on any day that the Sub-Advisor
determines that a significant event has occurred with respect to one or more
securities held in the Sub-Advisor Assets. As requested by the
Advisor or the Trust’s Valuation Committee, the Sub-Advisor hereby agrees to
provide additional assistance to the Valuation Committee of the Trust, the
Advisor and the Trust’s pricing agents in valuing Sub-Advisor Assets held in the
portfolio. Such assistance may include fair value pricing of
portfolio securities, as requested by the Advisor. The Sub-Advisor
agrees that it will act, at all times, in accordance with the Trust’s Valuation
Procedures, and will provide such certifications or sub-certifications relating
to its compliance with the Trust’s Valuation Procedures as reasonably may be
requested, from time to time, by the Advisor or the Trust.
The
Sub-Advisor 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
the Advisor 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) Custody
Arrangements. The Sub-Advisor, on each business day, shall
provide the Advisor, its consultant(s) and the Trust’s custodian such
information as the Advisor and the Trust’s custodian may reasonably request
relating to all transactions concerning the Sub-Advisor Assets.
(m) Historical Performance
Information. To the extent agreed upon by the parties, the
Sub-Advisor will provide the Trust with historical performance information on
similarly managed investment companies or for other accounts to be included in
the Prospectus or for any other uses permitted by applicable law.
(n) Regulatory
Examinations. The Sub-Advisor and the Advisor will cooperate
promptly and fully with each other and/or the Trust in responding to any
regulatory or compliance examinations or inspections (including information
requests) relating to the Trust, the Fund or the Advisor brought by any
governmental or regulatory authorities having appropriate jurisdiction
(including, but not limited to, the SEC).
3. Independent
Contractor. In the performance of its duties hereunder, the
Sub-Advisor is and shall be an independent contractor and, unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent a Fund, the Trust or the Advisor in any way or
otherwise be deemed an agent of a Fund, the Trust or the Advisor.
4. Services to Other
Clients. Nothing herein contained shall limit the freedom of
the Sub-Advisor or any affiliated person of the Sub-Advisor to render investment
advisory, supervisory and other services to other investment companies, to act
as investment adviser or investment counselor to other persons, firms or
corporations, or to engage in other business activities. It is
understood that the Sub-Advisor may give advice and take action for its other
clients that may differ from advice given, or the timing or nature of action
taken, for a Fund. The Sub-Advisor is not obligated to initiate
transactions for a Fund in any security that the Sub-Advisor, its principals,
affiliates or employees may purchase or sell for its or their own accounts or
other clients.
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5. Expenses. During
the term of this Agreement, the Sub-Advisor will pay all expenses incurred by it
in connection with its activities under this Agreement other than the costs of
securities, commodities and other investments (including brokerage commissions
and other transaction charges, if any) purchased or otherwise acquired, or sold
or otherwise disposed of for a Fund. The Sub-Advisor, at its sole
expense, shall employ or associate itself with such persons as it believes to be
particularly fitted to assist it in the execution of its duties under this
Agreement. The Trust or the Advisor, as the case may be, shall reimburse the
Sub-Advisor for any expenses as may be reasonably incurred by the Sub-Advisor,
at the request of and on behalf of a Fund or the Advisor. The Sub-Advisor shall
keep and supply to the Trust and the Advisor reasonable records of all such
expenses.
6. Compensation. For
the services provided and the expenses assumed with respect to a Fund pursuant
to this Agreement, the Sub-Advisor will be entitled to the fee listed for the
Fund(s) on Exhibit 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 Fund(s), calculated at an annual rate
based on the Sub-Advisor Assets’ average daily net assets.
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.
7. Representations and
Warranties of the Sub-Advisor. The Sub-Advisor represents and
warrants to the Advisor and the Trust as follows:
(a) The
Sub-Advisor is registered as an investment adviser under the Advisers
Act;
(b) The
Sub-Advisor is a corporation duly organized and validly existing under the laws
of the State of Illinois, with the power to own and possess its assets and carry
on its business as it is now being conducted;
(c) The
execution, delivery and performance by the Sub-Advisor of this Agreement are
within the Sub-Advisor’s powers and have been duly authorized by all necessary
action on the part of its board of directors and no action by or in respect of,
or filing with, any governmental body, agency or official is required on the
part of the Sub-Advisor for the execution, delivery and performance by the
Sub-Advisor of this Agreement, and the execution, delivery and performance by
the Sub-Advisor of this Agreement do not contravene or constitute a default
under: (i) any provision of applicable law, rule or regulation; (ii) the
Sub-Advisor’s governing instruments; or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Sub-Advisor;
and
(d) The
Form ADV of the Sub-Advisor previously provided to the Advisor (a copy of which
is attached as Exhibit B to this Agreement) is a true and complete copy of the
form as currently filed with the SEC and the information contained therein is
accurate and complete in all material respects and does not omit to state any
material fact necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading. The
Sub-Advisor will promptly provide the Advisor and the Trust with a complete copy
of all subsequent amendments to its Form ADV.
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8. Representations and
Warranties of the Advisor. The Advisor represents and warrants
to the Sub-Advisor and the Trust as follows:
(a) The
Advisor is registered as an investment adviser under the Advisers
Act;
(b) The
Advisor 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 the Advisor of this Agreement are within
the Advisor’s powers and have been duly authorized by all necessary action on
the part of its Board of Directors, and no action by or in respect of, or filing
with, any governmental body, agency or official is required on the part of the
Advisor for the execution, delivery and performance by the Advisor of this
Agreement, and the execution, delivery and performance by the Advisor of this
Agreement do not contravene or constitute a default under: (i) any provision of
applicable law, rule or regulation; (ii) the Advisor’s governing instruments; or
(iii) any agreement, judgment, injunction, order, decree or other instrument
binding upon the Advisor;
(d) The
Advisor acknowledges that it received a copy of the Sub-Advisor’s Form ADV (a
copy of which is attached as Exhibit B) prior to the execution of this
Agreement;
(e) The
Advisor and the Trust have duly entered into the Advisory Agreement pursuant to
which the Trust authorized the Advisor to enter into this Agreement;
and
(f) The
Advisor and the Trust have policies and procedures designed to detect and deter
disruptive trading practices, including “market timing,” and the Advisor and the
Trust each agree that they will continue to enforce and abide by such policies
and procedures, as amended from time to time, and comply with all existing and
future laws relating to such matters or to the purchase and sale of interests in
the Funds generally.
(g) The
Advisor and the Trust have provided to the Sub-Advisor copies of the current
registration statement(s), prospectus(es) and statement(s) of additional
information (the “fund documents”) with respect to each Fund to be managed by
the Sub-Advisor pursuant to this Agreement. The Advisor will provide
the Sub-Advisor reasonable advance notice of any amendments and modifications to
the fund documents that relate to portfolio management of the Funds and on an
on-going basis will provide the Sub-Advisor with current copies of all fund
documents.
9. Survival of Representations
and Warranties; Duty to Update Information. All
representations and warranties made by the Sub-Advisor and the Advisor pursuant
to Sections 7 and 8, 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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10. Liability and
Indemnification.
(a) Liability. The
duties of the Sub-Advisor shall be confined to those expressly set forth herein,
with respect to the Sub-Advisor Assets. The Sub-Advisor shall not be
liable for any loss arising out of any portfolio investment or disposition
hereunder, except a loss resulting from willful misfeasance, bad faith or
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. The
Sub-Advisor shall indemnify the Advisor, the Trust and each Fund, and their
respective affiliates and controlling persons (the “Sub-Advisor Indemnified
Persons”) for any liability and expenses, including reasonable attorneys’ fees,
which the Advisor, the Trust or a Fund and their respective affiliates and
controlling persons may sustain as a result of the Sub-Advisor’s willful
misfeasance, bad faith, negligence, or reckless disregard of its duties
hereunder; provided, however, that the Sub-Advisor Indemnified
Persons shall not be indemnified for any liability or expenses which may be
sustained as a result of the Advisor’s willful misfeasance, bad faith,
negligence, or reckless disregard of its duties hereunder, directly results from
their willful misfeasance, bad faith, negligence, reckless disregard of its
duties hereunder or violation of applicable law.
Notwithstanding
any other provision in this Agreement, the Sub-Advisor will indemnify the
Advisor, the Trust and each Fund, and their respective affiliates and
controlling persons for any liability and expenses, including reasonable
attorneys’ fees, to which they may be subjected as a result of their reliance
upon and use of the historical performance calculations provided by the
Sub-Advisor concerning the Sub-Advisor’s composite account data or historical
performance information on similarly managed investment companies or accounts,
except that the Advisor, the Trust and each Fund and their respective affiliates
and controlling persons shall not be indemnified for a loss or expense resulting
from their negligence or willful misconduct in using such numbers, or for their
failure to conduct reasonable due diligence with respect to such
information.
The
Advisor shall indemnify the Sub-Advisor, its affiliates and its controlling
persons (the “Advisor Indemnified Persons”), for any liability and expenses,
including reasonable attorneys’ fees, howsoever arising from, or in connection
with, the Advisor’s breach of this Agreement, or its representations and
warranties herein, or as a result of the Advisor’s willful misfeasance, bad
faith, negligence, reckless disregard of its duties hereunder, or violation of
applicable law; provided, however, that the Advisor Indemnified Persons shall
not be indemnified for any liability or expenses which may be sustained as a
result of the Sub-Advisor’s willful misfeasance, bad faith, negligence, or
reckless disregard of its duties hereunder.
11. Duration and
Termination.
(a) Duration. This
Agreement, unless sooner terminated as provided herein, shall for the Fund(s)
listed on Exhibit 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.
10
(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, the vote of a majority of the outstanding voting securities of the Fund,
or the Advisor; or (ii) the Sub-Advisor, on not less than 60 days’ written
notice to the Advisor and the Trust. This Agreement may also be
terminated as to any Fund at any time by any party hereto immediately upon
written notice to the other parties in the event of a breach of any material
provision to this Agreement by any of the parties.
This
Agreement shall not be assigned and shall terminate automatically in the event
of its assignment, except as provided otherwise by any rule, exemptive order
issued by the SEC, or No Action Letter provided or pursuant to the 1940 Act, or
upon the termination of the Advisory Agreement. In the event that
there is a proposed change in control of the Sub-Advisor that would act to
terminate this Agreement, if a vote of shareholders to approve continuation of
this Agreement is at that time deemed by counsel to the Trust to be required by
the 1940 Act or any rule or regulation thereunder, the Sub-Advisor agrees to
assume all reasonable costs associated with soliciting shareholders of the
appropriate Fund(s) of the Trust, to approve continuation of this
Agreement. Such expenses include the costs of preparation and mailing
of a proxy statement, and of soliciting proxies.
In the
event that such proposed change in control of the Sub-Advisor shall occur
following either: (i) receipt by the Advisor and the Trust of an
exemptive order issued by the SEC with respect to the appointment of
sub-advisors absent shareholder approval, or (ii) the adoption of proposed Rule
15a-5 under the 1940 Act, the Sub-Advisor agrees to assume all reasonable costs
and expenses (including the costs of mailing) associated with the preparation of
a statement, required by the exemptive order or Rule 15a-5, containing all
information that would be included in a proxy statement (an “Information
Statement”). In addition, if the Sub-Advisor shall resign, the
Sub-Advisor agrees to assume all reasonable costs and expenses (including the
costs of mailing) associated with the preparation of an Information
Statement.
This
Agreement shall extend to and bind the heirs, executors, administrators and
successors of the parties hereto.
12. Amendment. This
Agreement may be amended by mutual consent of the parties, provided that the
terms of any material amendment shall be approved by: (a) the Trust’s Board of
Trustees, and (b) the vote of a majority of those Trustees of the Trust who are
not interested persons of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval, if such approval is
required by applicable law, and unless otherwise permitted pursuant to exemptive
relief granted by the SEC or No Action position granted by the SEC or its staff,
by a vote of the majority of a Fund’s outstanding securities.
11
13. Confidentiality. Any
information or recommendations supplied by either the Advisor or the
Sub-Advisor, that are not otherwise in the public domain or previously known to
the other party in connection with the performance of its obligations and duties
hereunder, including portfolio holdings of the Trust, financial information or
other information relating to a party to this Agreement, are to be regarded as
confidential (“Confidential Information”) and held in the strictest
confidence. Except as may be required by applicable law or rule or as
requested by regulatory authorities having jurisdiction over a party to this
Agreement, Confidential Information may be used only by the party to which said
information has been communicated and such other persons as that party believes
are necessary to carry out the purposes of this Agreement, the custodian, and
such persons as the Advisor may designate in connection with the Sub-Advisor
Assets. Nothing in this Agreement shall be construed to prevent the
Sub-Advisor from giving other entities investment advice about, or trading on
their behalf, in the securities of a Fund or the Advisor.
14. Use of
Names. During the term of this Agreement, the Advisor shall
have permission to use the Sub-Advisor’s name in the marketing of the Fund, and
agrees to furnish the Sub-Advisor at its principal office all marketing
materials, prospectuses, proxy statements and reports to shareholders prepared
for distribution to shareholders of the Fund or the public, which refer to the
Sub-Advisor in any way. During the term of this Agreement, the
Sub-Advisor (and its affiliated entities that provide marketing and other
services to the Sub-Advisor) shall have permission to use the Advisor’s name in
connection with regulatory filings (such as Form ADV) and marketing materials
(including, without limitation, in responses to requests for proposals), and
agrees to furnish the Advisor at its principal office copies of such filings and
marketing materials.
15. Notice. Any
notice, advice or report to be given pursuant to this Agreement shall be deemed
sufficient if delivered or mailed by registered, certified or overnight mail,
postage prepaid addressed by the party giving notice to the other party at the
last address furnished by the other party:
(a) If
to the Advisor:
AssetMark
Investment Services, Inc.
0000
Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxx
Xxxx, XX 00000-0000
Attn:
Xxxxxx X. Xxxxxx
(b) If
to the Sub-Advisor:
Duff & Xxxxxx Investment Management
Co.
00 Xxxx Xxxxxx Xxxxxx, Xxxxx
0000
Xxxxxxx, XX 00000
Attn: Chief Compliance
Officer
12
16. Governing Law. This Agreement shall be
governed by the internal laws of the State of Delaware, without regard to
conflict of law principles; provided, however that nothing herein shall be
construed as being inconsistent with the 1940 Act. Where the effect
of a requirement of the 1940 Act reflected in any provision of this Agreement is
altered by a rule, regulation or order of the SEC, whether of special or general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
17. Entire
Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to this Agreement’s subject matter. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but such counterparts shall, together, constitute only
one instrument.
18. Severability. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby.
19. Certain
Definitions. For the purposes of this Agreement and except as
otherwise provided herein, “interested person,” “affiliated person,”
“affiliates,” “controlling persons” and “assignment” shall have their respective
meanings as set forth in the 1940 Act, subject, however, to such exemptions as
may be granted by the SEC, and the term “Fund” or “Funds” shall refer to those
Fund(s) for which the Sub-Advisor provides investment management services and as
are listed on Exhibit A to this Agreement.
20. Captions. The
captions herein are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and
year first written above.
ADVISOR
ASSETMARK
INVESTMENT SERVICES, INC.
By:__________________________________
Name:
Xxxxxx X. Xxxxxx
Title:
Chairman
SUB-ADVISOR
DUFF
& XXXXXX INVESTMENT MANAGEMENT CO.
By:__________________________________
Name:
Title:
13
EXHIBIT
A
SUBADVISORY
AGREEMENT
BETWEEN
ASSETMARK INVESTMENT SERVICES, INC.
AND
DUFF & XXXXXX INVESTMENT MANAGEMENT CO.
Effective
____________________
Assetmark
Real Estate Securities Fund
|
FEE SCHEDULE
|
|
|
|
ASSETS
|
COMPENSATION
|
|
|
100%
of Sub-Advisor Assets
|
40
basis points
|
|
EXHIBIT
B
_______________________________________________
FORM
ADV
(Please
attach)
