Exhibit 4(b)(x)(1)
THE MASTERS' SELECT VALUE FUND
MASTERS' SELECT INVESTMENT TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT is made as of the ___ day of ____2000 by
and between XXXXXX/XXXXXXX FUND ADVISORS, LLC (hereinafter called the
"Advisor"); SOUTHEASTERN ASSET MANAGEMENT, INC.(hereinafter called
"Sub-Advisor"); MASTERS' SELECT FUNDS TRUST (hereinafter called the "Trust"), on
behalf of the Masters' Select Value Fund (hereinafter called the "Fund"), a
separate series of the Trust, solely for purposes of the indemnification
provisions of Section 13 hereof; and Xxxxxx/Xxxxxxx & Company, LLC, solely for
purposes of the indemnification provisions of Section 13 hereof.
WITNESSETH:
WHEREAS, the Advisor has been retained as the investment adviser to
The Masters' Select Value Fund (the "Fund"), a series of 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, 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 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 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 and Xxxxxx Xxxxxxx & Company, LLC for
purposes of the indemnification provisions of section 13 hereof, intending to be
legally bound hereby, mutually agree as follows:
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1. DESCRIPTION OF DUTIES OF ADVISOR
Advisor is the sponsor of the Fund and has the overall responsibility for its
organization, administration, operation, and compliance with all applicable
federal and state laws and regulations, all rules or requirements of
self-regulatory organizations, as well as all policies established by the
Trusts's Board of Trustees. Such duties included but are not limited to the
overall responsibility for the investment management of the Fund's portfolio of
securities, the functions of fund accounting, preparation and filing of tax
returns, transfer agent and shareholder servicing, daily pricing of the Fund's
portfolio, registrations with the Securities and Exchange Commission and the
various states, preparation, filing and distribution of all investment company
financial reports, compliance with any contractual expense limitation
requirements and mutual fund fidelity bonding requirements, and the performance
of or supervision of all other mutual fund administrative and operational
functions. Advisor may retain other parties or entities to perform some or all
of such functions as the Advisor deems appropriate, and Advisor has the
responsibility for screening, selection, and supervision of all outside or
non-affiliated service providers to the Fund. Except as specifically delegated
to Sub-Advisor under the provisions of this Agreement, Sub-Advisor shall have no
responsibility for any administrative or operational functions, or for the
compliance with any applicable laws, regulations, rules or internal policies.
2. APPOINTMENT AND GENERAL DUTIES OF SUB-ADVISOR.
(a) APPOINTMENT. The Advisor hereby employs Sub-Advisor, and
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) GENERAL DUTIES. Sub-Advisor shall act as one of several investment
managers on behalf of the Fund and shall make recommendations to the Advisor
with respect to investment transactions for 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 prospectus and statement
of additional information and with any other limitations or requirements
established by the Trust's Board of Trustees from time to time as communicated
in writing to the Sub-Advisor
3. RESPONSIBILITIES OF ADVISOR AND SUB-ADVISOR WITH RESPECT TO PORTOFLIO
INVESTMENTS.
(a) Sub-Advisor shall furnish the Advisor with recommendations with
respect to the purchase or sale of investments for the Sub-Advisor's Allocated
Portion of the Fund's assets, in accordance with the requirements of Section 2
(b), above. Advisor shall have the responsibility for determining that the
recommended transaction does not conflict with transactions being proposed or
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implemented by other sub-advisors and that, if implemented, the recommended
transaction would satisfy all applicable diversification requirements under the
Investment Company Act, the Internal Revenue Code of 1986, as amended, or
otherwise. After the Advisor grants approval for the transaction, Sub-Advisor
shall effect the approved transaction for the Sub-Advisor's Portfolio Allocation
through its traders and shall provide Advisor with confirmation of the execution
of the transaction. Sub-Advisor shall maintain records with respect to all
transactions for its Allocated Portion, and shall furnish such other reports,
statements, and other data on the securities recommended and acquired for its
Allocation as the Advisor or the Fund's Board of Trustees may reasonably
request.
(b) Advisor shall have the responsibility for maintaining consolidated
books and records with respect to the Fund's overall portfolio of securities in
the manner required by the Investment Company Act and the Investment Adviser's
Act, for voting all proxies for the securities held in the Fund's portfolio of
securities, and for filing all required ownership reports for such securities,
including the filing with the Securities and Exchange Commission of Schedules 13
F, 13 G, and 13 D under its name or in the name of the Fund as may be
appropriate.
(c) BROKERAGE. With respect to Sub-Advisor's Allocated Portion,
Sub-Advisor shall be responsible for broker-dealer selection and for negotiation
of brokerage commission rates, provided that Sub-Advisor shall not direct orders
to an affiliated person of the Sub-Advisor without general prior authorization
to use such affiliated broker or dealer by the Trust's Board of Trustees.
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, 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, 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 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 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
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particular transaction or Sub-Advisor's or Advisor's overall responsibilities
with respect to the Fund. 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 Sub-Advisor shall determine, and 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. 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 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 Sub-Advisor,
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 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.
4. 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 responsibilities under this Agreement 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.
5. INDEPENDENT CONTRACTOR. Advisor and Sub-Advisor shall, for all purposes
herein, be deemed to be independent contractors, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Trust, the Fund, or each other in any way, or in any way be deemed
an agent for the Trust, the Fund, or each other. It is expressly understood and
agreed that Sub-Advisor is engaged in rendering investment advisory services to
a large number of other clients and that the services to be rendered pursuant to
the terms of this Agreement are not to be deemed exclusive. In the event that
Sub-Advisor determines that its ability to render the services hereunder would
be impaired by the performance of similar services for other clients,
Sub-Advisor agrees to so notify Advisor and to terminate its services hereunder
when so requested by Advisor.
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6. SUB-ADVISOR'S PERSONNEL. 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.
7. EXPENSES.
(a) Sub-Advisor shall be responsible for (i) providing the personnel,
office space, and equipment reasonably necessary to fulfill its obligations
under this Agreement, and (ii) the costs of any special meetings of the Fund's
shareholders or the Trust's Board of Trustees convened for the primary benefit
of Sub-Advisor.
(b) Advisor may voluntarily or as the result of an expense limitation
agreement absorb certain Fund expenses or waive some or all of Advisor's own
fee, but such actions shall not reduce the sub-investment advisory fee otherwise
due and payable by Advisor to to Sub-Advisor.
8. INVESTMENT SUB-ADVISORY FEE.
(a) The Advisor shall pay to Sub-Advisor, and 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 Sub-Advisor's Allocated Portion, as such Allocated Portion may be
adjusted from time to time. Such fee shall be equal to 0.75% of the average
daily net assets of the Fund attributable to 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 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.
9. NO SHORTING; NO BORROWING. 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 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. 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.
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10. 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, 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.
11. REPORTS AND ACCESS. 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.
12. STANDARD OF CARE
(a) Sub-Advisor shall exercise reasonable care and prudence in
fulfilling its obligations under this Agreement.
(b) Subject to the submission by Advisor to Sub-Advisor for approval
prior to publication or other usage, Sub-Advisor shall have responsibility for
the accuracy and completeness (and liability for the lack thereof) of the
statements in the Fund's offering materials (including the prospectus, the
statement of additional information, advertising and sales materials) that
pertain to Sub-Advisor and the investment of Sub-Advisor's Allocated Portion of
the Fund. Sub-Advisor shall have no responsibility or liability with respect to
other disclosures.
13. INSURANCE AND INDEMNIFICATION
(a) For the protection and benefit of the Trust and the Sub-Advisor,
Advisor shall maintain in full force and effect an errors and omissions
liability insurance policy providing errors and omissions liability insurance
coverage for all mutual fund operations for which Advisor and Sub-Advisor have
responsibility, as set forth in Sections 1, 2 and 3 herein. The Sub-Advisor will
be specifically named as an insured party on such policy. The company
self-retention or deductible limit shall not exceed 20% of the policy limits and
the policy limits shall be as follows:
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Total Fund Assets E&O Policy Limits
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Up to $500 million $1,000,000
$500 million - $1 billion $2,000,000
$1 billion - $1.5 billion $3,000,000
$1.5 billion - $2 billion $4,000,000
Above $2 billion $5,000,000
(b) With respect to the policy required by this Agreement, the Advisor
shall provide the other parties with an initial insurance certificate and a
certified copy of the insurance policy, and annually thereafter with insurance
certificates and certified copies of the policy, if requested.
(c) Indemnification. Each party to this Agreement, including the Trust
and Xxxxxx/Xxxxxxx & Company, LLC (each such party an "Indemnifying Party"),
shall indemnify each other Party and the shareholders, directors, officers and
employees of each 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) sustained
by the Indemnified Party and arising out of any errors or omissions of the
Indemnifying Party in its performance of any of its duties or responsibilities
under this Agreement; provided however, that nothing contained herein shall be
deemed to protect the Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of the Indemnified
Party's willful misfeasance, bad faith, negligence, or reckless disregard of its
obligations or duties under this Agreement.
(d) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or officer of the Advisor or Sub-Advisor, from
liability in violation of Sections 17(h) and (i) of the Investment Company Act.
Advisor and 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 Adviser's Act and has bee
provided the Board of Trustees of the Trust.
14. TERM.
(a) This Agreement shall become effective at the time the Fund
commences operations pursuant to an effective amendment to the Trust's
registration statement under the Securities Act of 1933, 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
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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.
15. TERMINATION; NO ASSIGNMENT.
(a) This Agreement may be terminated by the Advisor, the Sub-Advisor,
or the Trust on behalf of the Fund 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 by the Sub-Advisor upon sixty (60) days' written notice
to the Fund. 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.
16. 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.
17. 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.
18. 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.
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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 Advisors, LLC Southeastern Asset Management, Inc.
By: ______________________________ By: _______________________________
Xxxx X. Xxxxxxxx _______________________________
Chief Operating Officer _______________________________
With respect to the indemnification provisions of Section 13 hereof:
MASTERS' SELECT FUNDS TRUST Xxxxxx/Xxxxxxx & Company, LLC
on behalf of
THE MASTERS' SELECT VALUE FUND
By: ______________________________ By: _______________________________
Xxxx X. Xxxxxxxx Xxxx X. Xxxxxxxx
Treasurer Chief Financial Officer
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