MASTERS' SELECT EQUITY FUND
MASTERS' SELECT FUNDS TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
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THIS INVESTMENT SUB-ADVISORY AGREEMENT is made as of the 27th day of
October, 2003 by and between XXXXXX/XXXXXXX FUND ADVISORS, LLC (the "Advisor")
and TCW Investment Management Company (the "Sub-Advisor").
WITNESSETH:
WHEREAS, the Advisor has been retained as the investment adviser to the
Masters' Select Equity Fund (the "Fund"), a series of the Masters' Select Funds
Trust (the "Trust"), an open-end management investment company, registered as
such under the Investment Company Act of 1940, as amended (the "Investment
Company Act"); and
WHEREAS, the Advisor has been authorized by the Trust to retain one or more
investment advisers (each an "investment manager") to serve as portfolio
managers for a specified portion of the Fund's assets (the "Allocated Portion");
and
WHEREAS, the Sub-Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"), and
is engaged in the business of supplying investment advisory services as an
independent contractor; and
WHEREAS, the Fund and the Advisor desire to retain the Sub-Advisor as an
investment manager to render portfolio advice and services to the Fund pursuant
to the terms and provisions of this Agreement, and the Sub-Advisor desires to
furnish said advice and services; and
WHEREAS, the Trust and the Fund are third party beneficiaries of such
arrangements;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, which shall include the
Trust on behalf of the Fund for purposes of the indemnification provisions of
section 11 hereof, intending to be legally bound hereby, mutually agree as
follows:
1. Appointment of Sub-Advisor.
(a) The Advisor hereby employs the Sub-Advisor, and the Sub-Advisor hereby
accepts such employment, to render investment advice and related services with
respect to the Allocated Portion of the assets of the Fund for the period and on
the terms set forth in this Agreement, subject to the supervision and direction
of the Advisor and the Trust's Board of Trustees.
(b) The Sub-Advisor's employment shall be solely with respect to an
Allocated Portion of the Fund's assets, such Allocated Portion to be specified
by the Advisor and subject to periodic increases or decreases at the Advisor's
sole discretion. The Advisor acknowledges that the Sub-Advisor shall seek to
invest such increases to the Allocated Portion as soon as practicable, subject
to market conditions and investment opportunities.
(c) Nature of Fund. The Sub-Advisor and the Advisor both acknowledge that
the Fund is a mutual fund that operates as a series of an open-end series
investment company under the plenary authority of the Trust's Board of Trustees.
In managing the Allocated Portion, the Sub-Advisor shall do so subject always to
the plenary authority of the Board of Trustees.
2. Duties of Sub-Advisor.
(a) General Duties. The Sub-Advisor shall act as one of several investment
managers to the Fund and shall invest the Sub-Advisor's Allocated Portion of the
assets of the Fund in accordance with the investment objectives, policies and
restrictions of the Fund as set forth in the 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. The Sub-Advisor makes no
warranty as to the performance of Sub-Advisor's Allocated Portion.
Without limiting the generality of the foregoing, the Sub-Advisor shall:
(i) furnish the Fund with advice and recommendations with respect to the
investment of the Sub-Advisor's Allocated Portion of the Fund's assets; (ii)
effect the purchase and sale of portfolio securities for the Sub-Advisor's
Allocated Portion; (iii) determine that portion of Manager's Allocated Portion
that will remain uninvested, if any; (iv) manage and oversee the investments of
the Sub-Advisor's Allocated Portion, subject to the ultimate supervision and
direction of the Trust's Board of Trustees; (v) vote proxies, file required
ownership reports, and take other actions with respect to the securities in the
Sub-Advisor's Allocated Portion; (vi) maintain the books and records required to
be maintained with respect to the securities in the Sub-Advisor's Allocated
Portion; (vii) furnish reports, statements and other data on securities,
economic conditions and other matters related to the investment of the Fund's
assets which the Advisor, the Trustees, or the officers of the Trust may
reasonably request in writing; and (viii) render to the Trust's Board of
Trustees such periodic and special reports with respect to the Sub-Advisor's
Allocated Portion as the Board may reasonably request.
(b) Brokerage. With respect to the Sub-Advisor's Allocated Portion, the
Sub-Advisor shall be responsible for broker-dealer selection and for negotiation
of brokerage commission rates. The Sub-Advisor may direct orders to an
affiliated person of the Sub-Advisor or to any other broker-dealer who has been
identified by the Advisor to the Sub-Advisor as an affiliate of any other
investment manager without prior authorization to use such affiliated broker or
dealer by the Trust's Board of Trustees, provided that the Sub-Advisor does so
in a manner consistent with Sections 17(a) and 17(e) of the Investment Company
Act, Rule 17e-l thereunder and the Rule 17e-1 procedures adopted by the Trust (a
copy of which shall be provided by the Advisor). The Sub-Advisor's primary
consideration in effecting a securities transaction will be best execution. In
selecting a broker-dealer to execute each particular transaction, the
Sub-Advisor may take the following into consideration: the best net price
available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis. The price to the Fund in any transaction may
be less favorable than that available from another broker-dealer if the
difference is reasonably justified by other aspects of the portfolio execution
services offered.
Subject to such policies as the Advisor and the Board of Trustees of the
Trust may determine, the Sub-Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker or dealer that
provides (directly or indirectly) brokerage or research services to the
Sub-Advisor an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer should have charged
for effecting that transaction, if the Sub-Advisor determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Sub-Advisor's or the
Advisor's overall responsibilities with respect to the Fund. The Sub-Advisor is
further authorized to allocate the orders placed by it on behalf of the Fund to
such brokers or dealers who also provide research or statistical material, or
other services, to the Trust, the Advisor, any affiliate of either, or the
Sub-Advisor. Such allocation shall be in such amounts and proportions as the
Sub-Advisor shall determine, and the Sub-Advisor shall report on such
allocations regularly to the Advisor and the Trust, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
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 l0f-3, Rule 17a-10 or
Rule 12d3-1 under the Investment Company Act, the Sub-Advisor agrees that it
will not consult with the affiliated sub-advisor concerning such transaction,
except to the extent necessary to comply with the percentage limits of
paragraphs (a) and (b) of Rule 12d3-1.
(2) Transactions Among Sub-Advisors of the Fund. In any case in which there
are two or more sub-advisors responsible for providing investment advice to the
Fund, the Sub-Advisor may enter into a transaction on behalf of the Fund with
another sub-advisor of the Fund (or an affiliated person of such sub-advisor) in
reliance on Rule l0f-3, Rule 17a-10 or Rule 12d3-l under the Investment Company
Act, only if (i) the Sub-Advisor, under the terms of this Agreement, is
responsible for providing investment advice with respect to its Allocated
Portion, and (ii) the other sub-advisor is responsible for providing investment
advice with respect to a separate portion of the portfolio of the Fund.
3. Representations of Sub-Advisor.
(a) Sub-Advisor shall use its reasonable judgment and commercially
reasonable best efforts in rendering the advice and services to the Fund as
contemplated by this Agreement.
(b) Sub-Advisor shall maintain all licenses and registrations necessary to
perform its duties hereunder in good order.
(c) Sub-Advisor shall conduct its operations at all times in conformance
with the Investment Advisers Act, the Investment Company Act and any other
applicable state and/or self-regulatory organization regulations.
(d) Sub-Advisor shall be covered by errors and omissions insurance. The
company self-retention or deductible shall not exceed reasonable and customary
standards, and Sub-Advisor agrees to notify Advisor in the event the aggregate
coverage of such insurance in any annual period is reduced below $10,000,000.
(e) The Sub-Advisor represents and warrants to the Advisor and the Fund
that (i) the retention of the Sub-Advisor as contemplated by this Agreement is
authorized by the Sub-Advisor's governing documents; (ii) the execution,
delivery and performance of this Agreement does not violate any obligation by
which the Sub-Advisor or its property is bound, whether arising by contract,
operation of law or otherwise; and (iii) this Agreement has been duly authorized
by appropriate action of the Sub-Advisor and when executed and delivered by the
Sub-Advisor will be the legal, valid and binding obligation of the Sub-Advisor,
enforceable against the Sub-Advisor in accordance with its terms hereof,
subject, as to enforcement, to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity or law).
4. Independent Contractor. The Sub-Advisor shall, for all purposes herein,
be deemed to be an independent contractor, 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 anyway, or in any way be deemed an agent for
the Trust, the Fund, or the Advisor. It is expressly understood and agreed that
the services to be rendered by the Sub-Advisor to the Fund under the provisions
of this Agreement are not to be deemed exclusive, and the Sub-Advisor shall be
free to render similar or different services to others so long as its ability to
render the services provided for in this Agreement shall not be impaired
thereby.
5. Sub-Advisors Personnel. The Sub-Advisor shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Sub-Advisor shall be
deemed to include persons employed or retained by the Sub-Advisor to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice, and assistance as
the Sub-Advisor, the Advisor or the 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 reasonable costs of any special notifications to the
Fund's shareholders and any special meetings of the Trust's Board of Trustees
convened for the primary benefit of the Sub-Advisor, or (ii) its fair share of
the costs of any special meetings required for the benefit of the Sub-Advisor as
well as for other purposes.
(c) To the extent the Sub-Advisor incurs any costs by assuming expenses
which are an obligation of the Advisor or the Fund, the Advisor or the Fund
shall promptly reimburse the Sub-Advisor for such costs and expenses. To the
extent the Sub-Advisor performs services for which the Fund or the Advisor is
obligated to pay, the Sub-Advisor shall be entitled to prompt reimbursement in
such amount as shall be negotiated between the Sub-Advisor and the Advisor but
shall, under no circumstances, exceed the Sub-Advisor's actual costs for
providing such services.
7. Investment Sub-Advisory Fee.
(a) The Advisor shall pay to the Sub-Advisor, and the Sub-Advisor agrees to
accept, as full compensation for all investment advisory services furnished or
provided to the Fund pursuant to this Agreement, an annual sub-advisory fee
based on the Sub-Advisor's Allocated Portion, as such Allocated Portion may be
adjusted from time to time. Such fee shall be paid at the annual rate of 0.60%
of the net assets of the Fund attributable to the Sub-Advisor's Allocated
Portion, computed on the value of such net assets as of the close of business
each day.
(b) The sub-advisory fee shall be paid by the Advisor to Sub-Advisor
monthly in arrears on the tenth business day of each month.
(c) The initial fee under this Agreement shall be payable on the tenth
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Sub-Advisor shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(d) The fee payable to the Sub-Advisor under this Agreement will be reduced
to the extent of any receivable owed by the Sub-Advisor to the Advisor or the
Fund.
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 any material inaccuracies
or omissions in 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 the Sub-Advisor's
negligence in connection with any investment in the Allocated Portion in
violation of Section 2 (a) and (b) hereof.
(d) Except as otherwise provided in this Agreement, in the absence of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
obligations or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor
shall not be subject to liability to the Advisor, the Trust, or the Fund or to
any shareholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that maybe
sustained in the purchase, holding or sale of any security by the Fund.
(e) Except as otherwise provided in this Agreement, including without
limitation paragraphs (c) and (d) above, 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
anytime, without the payment of any penalty, by the Advisor or the Sub-Advisor
upon sixty (60) days' written notice to the Trust and the other party. In the
event of a termination, Sub-Advisor shall cooperate in the orderly transfer of
the Fund's affairs and, at the request of the Board of Trustees, transfer any
and all books and records of the Fund maintained by Sub-Advisor on behalf of the
Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act.
15. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
16. Captions. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
17. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the Investment Company Act and the Investment Advisers Act and
any rules and regulations promulgated thereunder.
18. Nonpublic Personal Information. Notwithstanding any provision herein to
the contrary, the Sub-Advisor hereto agrees on behalf of itself and its
directors, trustees, shareholders, officers, and employees (1) to treat
confidentially and as proprietary information of the Advisor (on behalf of
itself and the Fund) and the Trust (a) all records and other information
relative to the Fund's prior, present, or potential shareholders (and clients of
said shareholders) and (b) any Nonpublic Personal Information, as defined under
Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated under the
Xxxxx-Xxxxx-Xxxxxx Act (the "G-L-B Act"), and (2) except after prior
notification to and approval in writing by the Advisor or the Trust, not to use
such records and information for any purpose other than the performance of its
responsibilities and duties hereunder, or as otherwise permitted by Regulation
S-P or the G-L-B Act, and if in compliance therewith, the privacy policies
adopted by the Advisor and the Fund and communicated in writing to the
Sub-Advisor. Such written approval shall not be unreasonably withheld by the
Advisor or the Trust and may not be withheld where the Sub-Advisor may be
exposed to civil or criminal contempt or other proceedings for failure to comply
after being requested to divulge such information by duly constituted
authorities.
19. Anti-Money Laundering Compliance. The Sub-Advisor acknowledges that, in
compliance with the Bank Secrecy Act, as amended, the USA PATRIOT Act, and any
respective implementing regulations (together, "AML Laws"), the Fund has adopted
an Anti-Money Laundering Policy. The Sub-Advisor agrees to comply with the
Fund's Anti-Money Laundering Policy and the AML Laws, as the same may apply to
the Sub-Advisor, now and in the future. The Sub-Advisor further agrees to
provide to the Fund and/or the Advisor such reports, certifications and
contractual assurances as may be requested by the Fund or the Advisor. The
Advisor may disclose information respecting the Sub-Advisor to governmental
and/or regulatory or self-regulatory authorities to the extent required by
applicable law or regulation and may file reports with such authorities as may
be required by applicable law or regulation.
20. Certifications: Disclosure Controls and Procedures. The Sub-Advisor
acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act, and the
implementing regulations promulgated thereunder, the Fund is required to make
certain certifications and has adopted disclosure controls and procedures. To
the extent reasonably requested by the Advisor, the Sub-Advisor agrees to use
its best efforts to assist the Advisor and the Fund in complying with the
Xxxxxxxx-Xxxxx Act and implementing the Fund's disclosure controls and
procedures. The Sub-Advisor agrees to inform the Fund of any material
development related to the Allocated Portion that the Sub-Advisor reasonably
believes is relevant to the Fund's certification obligations under the
Xxxxxxxx-Xxxxx Act.
21. Provision of Certain Information by the Sub-Advisor. The Sub-Advisor
will promptly notify the Advisor in writing of the occurrence of any of the
following events:
(a) the Sub-Advisor fails to be registered as investment adviser under the
Advisers Act or under the laws of any jurisdiction in which the Sub-Advisor is
required to be registered as investment adviser in order to perform its
obligations under this Agreement;
(b) the Sub-Advisor is served or otherwise receives notice of any action,
suit, proceeding, inquiry, or investigation, at law or in equity, before or by
any court, public board, or body, involving the affairs of the Advisor or the
Fund;
(c) the Sub-Advisor suffers financial impairment which materially
interferes with its ability to manage the Allocated Portion or otherwise fulfill
its duties under this Agreement;
(d) the Sub-Advisor, its principal officers or its controlling stockholders
are the subject of a government investigation or inquiry, administrative
proceeding or any other type of legal action which, under the Investment Company
Act, would make it ineligible to serve as an investment adviser to an investment
company;
(e) a change in the Sub-Advisor's personnel materially involved in the
management of the Allocated Portion; or
(f) a change in control or management of the Sub-Advisor.
22. Confidentiality. The parties to this Agreement shall not, directly or
indirectly, permit their respective affiliates, directors, trustees, officers,
members, employees, or agents to, in any form or by any means, use, disclose, or
furnish to any person or entity, records or information concerning the business
of any of the other parties except as necessary for the performance of duties
under this Agreement or as required bylaw, without prior written notice to and
approval of the relevant other parties, which approval shall not be unreasonably
withheld by such other parties.
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 TWC INVESTMENT MANAGEMENT, COMPANY
ADVISORS, LLC
By: /s/Xxxx X. Xxxxxxxx By:/s/Xxxxx X. Xxxx, Xx.
-------------------------------------------- -----------------------------------
Name: Xxxx X. Xxxxxxxx Name: Xxxxx X. Xxxx, Xx.
Title: Chief Operating Officer Title: Executive Vice Presiden
By:/s/Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President
As a Third Party Beneficiary,
MASTERS' SELECT FUNDS TRUST
on behalf of
MASTERS' SELECT EQUITY FUND
By:/s/Xxxx X. Xxxxxxxx
----------------------
Name: Xxxx X. Xxxxxxxx
Title: Treasurer
MASTERS' SELECT EQUITY FUND
PROTFOLIO GUIDELINES
TWC INVESTMENT MANAGEMENT COMPANY
PORTFOLIO OBJECTIVE
Your objective is to manage a portfolio that is representative of your high
confidence ideas at any point in time. Your portfolio objective is a long-term
growth of capital; that is, the increase in value of the portfolio's investments
over the long term. In pursuing the objective please take into account the
following guidelines:
Number of Stocks: Your segment of the portfolio must be invested in at least 12
securities and not more then 15 securities at any point in time.
Types of Securities: The fund is intended to be a pure equity fund, with a heavy
emphasis on U.S. equities. However, though we do not encourage it, you may, to a
limited extent, invest in foreign stocks (not more than 20% of assets).
You may not invest in other investment companies or restricted securities.
Market Caps: Your portion of the portfolio is intended to focus on mid and
large-cap companies. While we would your portion of the portfolio to be mostly
focused on mid and large-caps, at your discretion, you may invest in any
market-cap if warranted by your conviction level.
Diversification: The positions you hold do not have to be equally weighted.
However, you may not invest more then 20% (at the time of initial investment) in
any one issue. You must notify Xxxxxx/Xxxxxxx if the industry concentration of
your portion's holding exceeds 60%.
With a total of six portfolio managers, the Master's Select Fund itself should
be broadly diversified. Xxxxxx/Xxxxxxx acknowledges that you are not responsible
for monitoring or complying with any percentage limitation or restriction
measured against the assets of the Fund.
To ensure that the Fund is in compliance with diversification or other portfolio
composition requirements, Xxxxxx/Xxxxxxx may request in writing that you reduce
a position or positions in your portion of the portfolio.
Cash Equivalents: We encourage a fully invest posture. However, if you are not
able to find stocks which meet your investment criteria you may hold cash
equivalents not to exceed 20% of assets. If you want to hold cash in excess of
20% please discuss with Xxx Xxxxxxx.
Derivatives: We discourage the use of derivatives. However, in unusual
circumstances you may use derivatives for hedging purposes. If you wish to use
derivatives to establish a long position please discuss with us first.
OTHER FACTORS
Evaluation and Performance Reporting: We do not expect to evaluate performance
over periods of less then 24 months. Any evaluation will be relative to an
appropriate peer group. With concentrated portfolios we believe it is
particularly important to focus on long-term performance. To that end, we do not
intend to disclose to shareholders, the press or anyone else, the specific
performance of any subadvisor.
Flexibility: We encourage you to take advantage of the flexibility inherent in
this portfolio's smaller asset base to the extent this is not at odds with your
investment approach.
