MASTERS' SELECT SMALLER COMPANIES FUND
MASTERS' SELECT FUNDS TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT is made as of the ____ day of ____
2003 by and between XXXXXX/XXXXXXX FUND ADVISORS, LLC (the "Advisor") and
Ariel Capital Management, Inc. (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.
(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;
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' assets which the
Advisor, the Trustees, or the officers of the Trust may reasonably request;
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-1 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 would 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). The
Sub-Advisor shall provide the Advisor and the Fund with information
regarding the policies and procedures that the Sub-Advisor uses to
determine how to vote proxies relating to the Allocated Portion. 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
31a-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 31a-2 under the Investment Company Act
the records required to be maintained by Rule 31a-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 10f-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 10f-3, Rule 17a-10 or Rule 12d3-1
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 best judgment and 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, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Trust, the Fund, or the Advisor in any way, 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-Advisor's 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
Trust's 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 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 costs of any special meetings required for the benefit of the
Sub-Advisor as well as for other purposes.
(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 rate of ____% 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 may be 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
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 any time, 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.
(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 by law,
without prior written notice to and approval of the relevant other parties,
which approval shall not be unreasonably withheld by such other parties.
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 ARIEL CAPITAL MANAGEMENT, INC.
ADVISORS, LLC
By: By:
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Name: Name:
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Title: Title:
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As a Third Party Beneficiary,
MASTERS' SELECT FUNDS TRUST
on behalf of
MASTERS' SELECT SMALLER COMPANIES FUND
By:
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Name:
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Title:
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