SUB-ADVISORY AGREEMENT
AGREEMENT
made as of the 31stday of May,
2007, by and between AssetMark Investment Services, Inc., a California
corporation (the “Advisor”), and Xxxxxxx Implementation Services Inc., a
Washington corporation (the “Sub-Advisor”).
WHEREAS,
the Advisor and the Sub-Advisor are registered investment advisers under the
Investment Advisers Act of 1940, as amended (the “Advisers Act”), and engage in
the business of providing investment management services.
WHEREAS,
the Advisor has been retained to act as investment adviser to manage the assets
of AssetMark Funds (the “Trust”), a Delaware statutory trust registered with the
U.S. Securities and Exchange Commission (the “SEC”) as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
“1940 Act”), pursuant to an Investment Advisory Agreement originally dated
October 20, 2006 (the “Advisory Agreement”). The Trust consists of
separate series of shares, with each having its own investment objectives and
policies, and is authorized to create additional series in the
future.
WHEREAS,
the Advisory Agreement permits the Advisor, subject to the supervision and
direction of the Trust’s Board of Trustees, to delegate certain of its duties
under the Advisory Agreement to other investment advisers, subject to the
requirements of the 1940 Act.
WHEREAS,
the Advisor desires to retain the Sub-Advisor to assist the Advisor in the
provision of a continuous investment program for one or more of the Trust’s
series as described herein (each a “Fund” and, together, the “Funds”), and the
Sub-Advisor is willing to render such services, subject to the terms and
conditions set forth in this Agreement. The Sub-Advisor will be
responsible for implementing each Fund’s investment strategy and effecting
related securities transactions, as described herein. The parties
recognize that a separate sub-advisor (the “Non-Discretionary Sub-Advisor”) will
be hired by the Advisor to provide investment advisory services as described
in
Section 2(a) of this Agreement.
NOW,
THEREFORE, in consideration of mutual covenants recited below, the
parties agree and promise as follows:
1. Appointment
as Sub-Advisor. The Advisor hereby appoints the Sub-Advisor to
act as investment adviser for each Fund listed in Exhibit A, as that Exhibit
may
be amended from time to time, and to implement each Fund’s respective investment
strategy, as determined by the Non-Discretionary Sub-Advisor, subject to the
supervision of the Advisor and the Board of Trustees of the Trust, and subject
to the terms of this Agreement; and the Sub-Advisor hereby accepts such
appointment. In such capacity, the Sub-Advisor shall be responsible
for the investment management of each Fund’s assets in accordance with the
investment advice provided by the Non-Discretionary Sub-Advisor. The
Sub-Advisor agrees to exercise the same degree of skill, care and diligence
in
performing its services under this Agreement as the Sub-Advisor exercises in
performing similar services with respect to other fiduciary accounts for which
the Sub-Advisor has investment responsibilities, and that a prudent manager
would exercise under the circumstances.
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2. Duties
of the Sub-Advisor.
(a) Investments. For
each Fund, the Non-Discretionary Sub-Advisor will provide investment advice
to
Advisor, which in turn will provide instructions to the Sub-Advisor regarding
the securities to be purchased, sold or held in each Fund’s portfolio, and the
relative weight of each securities holding. Those instructions are
collectively referred to herein as the “Investment Program.” The
Sub-Advisor is hereby authorized and directed and hereby agrees to purchase,
hold and sell investments for each Fund and to monitor such investments on
a
continuous basis, all in accordance with the Investment Program. The Advisor
agrees to provide the Sub-Advisor information concerning: (i) each Fund; (ii)
its assets available or to become available for investment; and (iii) the
conditions of a Fund’s or the Trust’s affairs as relevant to the
Sub-Advisor.
The
Sub-Advisor will not: (i) review or assess the investment decisions made by
the
Advisor or Non-Discretionary Sub-Advisor or the merits of the Investment
Program; or (ii) select securities or other instruments for investment by a
Fund, except to the extent that the Sub-Advisor has been specifically authorized
in writing by the Advisor to invest in financial futures, securities,
commodities or other instruments to carry out the Investment
Program. The Sub-Advisor is permitted to carry out the Investment
Program by investing each Fund’s assets in accordance with the Investment
Program and shall have discretion as to the timing of the purchase and sale
of
such assets. Sub-Advisor may, in its sole discretion, carry out the
Investment Program by investing portions of each Fund’s assets in financial
futures, securities, commodities or other instruments if such instruments are
authorized by Advisor as set forth above.
(b) Compliance
with Applicable Laws, Governing Documents and Compliance
Procedures. In the performance of its duties and obligations
under this Agreement, the Sub-Advisor shall, with respect to the management
of
each Fund’s assets, (i) act in conformity with: (A) the Trust’s Agreement and
Declaration of Trust (the “Declaration of Trust”) and By-Laws; (B) the
applicable Fund’s prospectus and statement of additional information as
currently in effect and as amended from time to time (collectively referred
to
as the “Prospectus”); (C) the policies and procedures for compliance by the
Trust with the Federal Securities Laws (as that term is defined in Rule 38a-1
under the 0000 Xxx) provided to the Sub-Advisor (together, the “Trust Compliance
Procedures”); and (D) the instructions and directions received in writing from
the Advisor or the Trustees of the Trust (including the Investment Program);
and
(ii) conform to, and comply with, the requirements of the 1940 Act, the Advisers
Act, and all other federal laws applicable to registered investment companies
and the Sub-Advisor’s duties under this Agreement. The Advisor will
provide the Sub-Advisor with any materials or information that the Sub-Advisor
may reasonably request to enable it to perform its duties and obligations under
this Agreement.
The
Advisor will provide the Sub-Advisor with reasonable (30 days) advance notice,
in writing, of: (i) any change in a Fund’s investment objectives, policies and
restrictions as stated in the Prospectus; (ii) any change to the Declaration
of
Trust or By-Laws; and (iii) any material change in the Trust Compliance
Procedures; and the Sub-Advisor, in the performance of its duties and
obligations under this Agreement, shall manage each Fund’s assets consistently
with such changes, provided the Sub-Advisor has received such prior notice
of
the effectiveness of such changes from the Trust or the Advisor. In
addition to such notice, the Advisor shall provide to the Sub-Advisor a copy
of
a modified Prospectus and copies of the revised Trust Compliance Procedures,
as
applicable, reflecting such changes. The Sub-Advisor hereby agrees to
provide to the Advisor in a timely manner, in writing, such information relating
to the Sub-Advisor and its relationship to, and actions for, a Fund as may
be
required to be contained in the Prospectus or in the Trust’s registration
statement on Form N-1A, or otherwise as reasonably requested by the
Advisor.
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In
order
to assist the Trust and the Trust’s Chief Compliance Officer (the “Trust CCO”)
to satisfy the requirements contained in Rule 38a-1 under the 1940 Act, the
Sub-Advisor shall provide to the Trust CCO: (i) direct access to the
Sub-Advisor’s chief compliance officer (the “Sub-Advisor CCO”), as reasonably
requested by the Trust CCO; (ii) a completed quarterly informational
questionnaire regarding the Sub-Advisor’s compliance program and participation
in a quarterly telephone call with the Trust CCO to discuss the responses on
the
questionnaire; (iii) quarterly reports confirming that the Sub-Advisor has
complied with the Trust Compliance Procedures in managing the Fund’s assets; and
(iv) quarterly certifications that there were no Material Compliance Matters
(as
that term is defined by Rule 38a-1(e)(2)) that arose under the Trust Compliance
Procedures related to the Sub-Advisor’s management of the Fund’s
assets.
(c) Sub-Advisor
Compliance Policies and Procedures. The Sub-Advisor shall
promptly provide the Trust CCO with copies of: (i) the Sub-Advisor’s
policies and procedures for compliance by the Sub-Advisor with the Federal
Securities Laws (together, the “Sub-Advisor Compliance Procedures”), and (ii)
any material changes to the Sub-Advisor Compliance Procedures. The
Sub-Advisor shall cooperate fully with the Trust CCO so as to facilitate the
Trust CCO’s performance of the Trust CCO’s responsibilities under Rule 38a-1 to
review, evaluate and report to the Trust’s Board of Trustees on the operation of
the Sub-Advisor Compliance Procedures, and shall promptly report to the Trust
CCO any Material Compliance Matter arising under the Sub-Advisor Compliance
Procedures involving the Fund. The Sub-Advisor shall provide to the
Trust CCO: (i) quarterly reports confirming the Sub-Advisor’s
compliance with the Sub-Advisor Compliance Procedures in managing the Fund,
and
(ii) certifications that there were no Material Compliance Matters involving
the
Sub-Advisor that arose under the Sub-Advisor Compliance Procedures that affected
the Fund. At least annually, the Sub-Advisor shall provide a
certification to the Trust CCO to the effect that the Sub-Advisor has in place
and has implemented policies and procedures that are reasonably designed to
ensure compliance by the Sub-Advisor with the Federal Securities
Laws.
(d) Voting
of Proxies. Unless otherwise instructed by the Advisor or the
Trust, the Sub-Advisor shall have the power, discretion and responsibility
to
vote, either in person or by proxy, all securities in which the Fund may be
invested from time to time, and shall not be required to seek instructions
from
the Advisor, the Discretionary Sub-Advisor, the Trust or a Fund. The
Sub-Advisor shall also provide its Proxy Voting Policy (the “Proxy Policy”),
and, if requested by the Advisor, a summary of such Proxy Policy suitable for
inclusion in the Prospectus, and will provide the Advisor with any material
amendment to the Proxy Policy within a reasonable time after such amendment
has
taken effect.
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(e) Agent. Subject
to any other written instructions of the Advisor or the Trust, the Sub-Advisor
is hereby appointed the Advisor’s and the Trust’s agent and attorney-in-fact for
the limited purposes of executing account documentation, agreements, contracts
and other documents as the Sub-Advisor shall be requested by brokers, dealers,
counterparties and other persons in connection with its management of the assets
of the Funds, provided, that the Sub-Advisor’s actions in executing such
documents shall comply with federal regulations, all other federal laws
applicable to registered investment companies and the Sub-Advisor’s duties and
obligations under this Agreement and the Trust’s governing
documents.
(f) Brokerage. The
Sub-Advisor will place orders pursuant to the Investment Program, as provided
by
the Advisor. In executing portfolio transactions and selecting
brokers or dealers, the Sub-Advisor will use its best efforts to seek, on behalf
of a Fund, the best overall execution available. In assessing the
best overall terms available for any transaction, the Sub-Advisor shall consider
all factors that it deems relevant, including the breadth of the market in
the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission,
if
any, both for the specific transaction and on a continuing basis.
In
evaluating the best overall terms available, and in selecting the broker or
dealer to execute a particular transaction, the Sub-Advisor may not
consider research services (as defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”)) provided to any advisor to a
Fund for use in managing a Fund and/or other accounts over which the Sub-Advisor
may exercise investment discretion.
Under
no
circumstances may the Sub-Advisor compensate a broker or dealer for any
promotion or sale of Fund shares by directing to the broker or dealer: (i)
portfolio securities transactions on behalf of a Fund; or (ii) any remuneration,
including but not limited to any commission, xxxx-up, xxxx-down, or other fee
(or portion thereof) received or to be received from such portfolio transactions
effected through any other broker (including a government securities broker)
or
dealer (including a municipal securities dealer or a government securities
dealer).
The
Sub-Advisor may only direct a Fund’s portfolio securities transactions to a
broker or dealer that promotes or sells Fund shares as permitted by the
provisions of the 1940 Act (and the rules thereunder) and the policies and
procedures adopted by the Trust, as amended from time to
time. The Advisor will provide the Sub-Advisor with a copy of such
policies and procedures and any amendments thereto.
The
Sub-Advisor, when selecting brokers and dealers to effect the Fund’s portfolio
securities transactions, shall not take into account the brokers’ and dealers’
promotion or sale of shares of the Fund or any other registered investment
company. In addition, the Sub-Advisor shall not enter into any
agreement (whether oral or written) or other understanding under which the
Sub-Advisor directs, or is expected to direct, a Fund’s portfolio securities
transactions, or any remuneration, including but not limited to, any commission,
xxxx-up, xxxx-down, or other fee (or portion thereof) received or to be received
from such portfolio transactions effected through any other broker
(including a government securities broker) or dealer (including a municipal
securities dealer or a government securities dealer) to a broker (including
a
government securities broker) or dealer (including a municipal securities dealer
or a government securities dealer) in consideration for the promotion or sale
of
shares of the Fund or any other registered investment company.
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In
addition, the Sub-Advisor is authorized to allocate purchase and sale orders
for
portfolio securities to brokers or dealers that are affiliated with the Advisor,
the Sub-Advisor, the Trust’s principal underwriter or other sub-advisors (if
applicable) if the Sub-Advisor believes that the quality of the transaction
and
the commission are comparable to what they would be with other qualified firms
and provided that the transactions are consistent with the Trust’s Rule 17e-1
and Rule 10f-3 procedures, as applicable. The Advisor will identify
all brokers and dealers affiliated with the Trust, the Advisor, the Trust’s
principal underwriter (and any other sub-advisors of the Funds, to the extent
such information is necessary for the Sub-Advisor to comply with applicable
federal securities laws), other than those whose sole business is the
distribution of mutual fund shares, who effect securities transactions for
customers. The Advisor shall promptly furnish a written notice to the
Sub-Advisor if the information so provided is no longer accurate.
In
connection with its management of the Funds and consistent with its fiduciary
obligation to the Trust and other clients, the Sub-Advisor, to the extent
permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities or futures contracts to be sold or
purchased in order to obtain the most favorable price, lower brokerage
commissions or efficient execution. In such event, allocation of the
securities or futures contracts so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Sub-Advisor in the manner
the
Sub-Advisor considers to be, over time, the most equitable and consistent with
its fiduciary obligations to the Funds and to such other clients.
(g) Securities
Transactions. In no instance will any Fund’s portfolio securities
be purchased from or sold to the Advisor, the Sub-Advisor, the Trust’s principal
underwriter, or any affiliated person of the Trust, the Advisor, the Sub-Advisor
or the Trust’s principal underwriter, acting as principal in the transaction,
except to the extent permitted by the SEC and the 1940 Act, including
Rule 17a-7 thereunder.
The
Sub-Advisor acknowledges that the Advisor and the Trust may rely on Rule 17a-7,
Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the 1940 Act, and
the
Sub-Advisor hereby agrees that it shall not consult with any other sub-advisor
to the Trust with respect to transactions in securities for the Funds or any
other transactions of Trust assets.
The
Sub-Advisor hereby represents that it has implemented policies and procedures
that will prevent the disclosure by it, its employees or its agents of the
Trust’s portfolio holdings to any person or entity other than the Advisor, the
Trust’s custodian or other persons expressly designated by the
Advisor.
(h) Code
of Ethics. The Sub-Advisor hereby represents that it has adopted
policies and procedures and a code of ethics that meet the requirements of
Rule
17j-1 under the 1940 Act and Rule 204A-1 under the Advisers
Act. Copies of such policies and procedures and code of ethics and
any changes or supplements thereto shall be delivered to the Advisor and the
Trust. Any material violation of such policies, and procedures and
code of ethics by personnel of the Sub-Advisor, the sanctions imposed in
response thereto, and any issues arising under such policies and procedures
and
code of ethics shall be reported to the Advisor and the Trust at the times
and
in the format reasonably requested by the Advisor and the Board of
Trustees.
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(i) Books
and Records. The Sub-Advisor shall maintain separate detailed
records of all matters pertaining to the Funds, including, without limitation,
brokerage and other records of all securities transactions. Any records required
to be maintained and preserved pursuant to the provisions of Rule 31a-1 and
Rule
31a-2 promulgated under the 1940 Act that are prepared or maintained by the
Sub-Advisor on behalf of the Trust are the property of the Trust and will be
surrendered promptly to the Trust upon request. The Sub-Advisor
further agrees to preserve for the periods prescribed in Rule 31a-2 under the
1940 Act the records required to be maintained under Rule 31a-1 under the 1940
Act.
(j) Information
Concerning the Funds and the Sub-Advisor. From time to time as
the Advisor, any consultants designated by the Advisor, or the Trust may
request, the Sub-Advisor will furnish the requesting party reports on portfolio
transactions and reports on assets held in a Fund’s portfolio, all in such
detail as the Advisor, its consultant(s) or the Trust may reasonably
request. The Sub-Advisor will provide the Advisor with information
regarding any changes in the ownership or management of the Sub-Advisor, or
material changes in the control of the Sub-Advisor. The Sub-Advisor
will promptly notify the Advisor of any (i) material litigation; (ii) regulatory
inquiry or investigation; or (iii) administrative proceeding; to the extent
any
such item would materially and adversely affect Sub-Advisor’s management of the
Funds. Upon reasonable request, the Sub-Advisor will make available
its officers and employees to meet with the Trust’s Board of Trustees to review
the Funds.
(k) Valuation
of Funds’ Assets. As requested by the Advisor or the Trust’s
Valuation Committee, the Sub-Advisor hereby agrees to provide reasonable
assistance to the Valuation Committee of the Trust, the Advisor and the Trust’s
pricing agents in valuing assets held by the Funds. Such assistance
may include fair value pricing of portfolio securities, as requested by the
Advisor. The Sub-Advisor agrees that it will act, at all times, in
accordance with the Trust’s procedures for valuing portfolio securities, and
will provide such certifications or sub-certifications relating to its
compliance with the Trust’s procedures for valuing portfolio securities as
reasonably may be requested, from time to time, by the Advisor or the
Trust.
The
Sub-Advisor also will provide such information or perform such additional acts
as are customarily performed by a sub-advisor and may be required for a Fund
or
the Advisor to comply with their respective obligations under applicable federal
securities laws, including, without limitation, the 1940 Act, the Advisers
Act,
the 1934 Act, the Securities Act of 1933, as amended (the “1933 Act”) and any
rule or regulation thereunder.
(l) Custody
Arrangements. The Sub-Advisor, on each business day, shall
provide the Advisor, its consultant(s) and the Trust’s custodian such
information as the Advisor and the Trust’s custodian may reasonably request
relating to all transactions concerning the Funds.
(m) Regulatory
Examinations. The Sub-Advisor will cooperate promptly and fully
with the Advisor and/or Trust in responding to any regulatory or compliance
examinations or inspections (including information requests) relating to the
Trust, a Fund or the Advisor brought by any governmental or regulatory
authorities having appropriate jurisdiction (including, but not limited to,
the
SEC).
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(n) Delegation. In
performing its obligations under this Agreement, the Sub-Advisor may, at its
own
discretion and consistent with section 15(a) of the 1940 Act, delegate the
performance of its services to one or more of its affiliates, provided that
the
Sub-Advisor shall remain liable to the Advisor and the Trust for its obligations
hereunder, and that the Sub-Advisor and any applicable affiliate shall ensure
that such delegation complies with Section 15(a) of the 1940 Act.
3. Independent
Contractor. In the performance of its duties hereunder, the
Sub-Advisor is and shall be an independent contractor, and, unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent a Fund, the Trust or the Advisor in any way
or
otherwise be deemed an agent of a Fund, the Trust or the Advisor.
4. Services
to Other Clients. Nothing herein contained shall limit the
freedom of the Sub-Advisor or any affiliated person of the Sub-Advisor to render
investment advisory, supervisory and other services to other investment
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business
activities. It is understood that the Sub-Advisor may give advice and
take action for its other clients that may differ from advice given, or the
timing or nature of action taken, for a Fund. The Sub-Advisor is not
obligated to initiate transactions for a Fund in any security that the
Sub-Advisor, its principals, affiliates or employees may purchase or sell for
its or their own accounts or other clients.
5. Expenses. During
the term of this Agreement, neither the Trust nor the Advisor shall be
responsible to pay the Sub-Advisor’s expenses incurred in connection with its
activities under this Agreement other than the costs of securities, commodities
and other investments (including brokerage commissions and other transaction
charges, if any) for securities purchased or otherwise acquired, or sold or
otherwise disposed of for a Fund and as otherwise set forth in this
Agreement. The Sub-Advisor, at its sole expense, shall employ or
associate itself with such persons as it believes to be particularly fit to
assist it in the execution of its duties under this Agreement. The Trust or
the
Advisor, as the case may be, shall reimburse the Sub-Advisor for any expenses
as
may be reasonably incurred by the Sub-Advisor, at the request of and on behalf
of a Fund or the Advisor. The Sub-Advisor shall keep and supply to the Trust
and
the Advisor reasonable records of all such expenses.
6. Compensation. For
the services provided and the expenses assumed with respect to each Fund
pursuant to this Agreement, the Sub-Advisor will be entitled to the fee listed
for each Fund on Exhibit A. Such fees will be computed daily and
payable in arrears no later than the seventh (7th) business day following the
end of each month, from the Trust on behalf of each Fund, calculated at an
annual rate based on the Fund’s average daily net assets.
If
this
Agreement is terminated prior to the end of any calendar month, the fee shall
be
prorated for the portion of any month in which this Agreement is in effect
according to the proportion which the number of calendar days, during which
this
Agreement is in effect, bears to the number of calendar days in the month,
and
shall be payable within ten (10) days after the date of
termination.
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7. Representations
and Warranties of the Sub-Advisor. The Sub-Advisor represents and
warrants to the Advisor and the Trust as follows:
(a) The
Sub-Advisor is registered as an investment adviser under the Advisers
Act.
(b) The
Sub-Advisor is a corporation duly organized and validly existing under the
laws
of Washington, with the power to own and possess its assets and carry on its
business as it is now being conducted.
(c) The
execution, delivery and performance by the Sub-Advisor of this Agreement are
within the Sub-Advisor’s powers and have been duly authorized by all necessary
action, and no action by or in respect of, or filing with, any governmental
body, agency or official is required on the part of the Sub-Advisor for the
execution, delivery and performance by the Sub-Advisor of this Agreement, and
the execution, delivery and performance by the Sub-Advisor of this Agreement
do
not contravene or constitute a default under: (i) any provision of applicable
law, rule or regulation; (ii) the Sub-Advisor’s governing instruments; or (iii)
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Sub-Advisor.
(d) The
Form ADV of the Sub-Advisor previously provided to the Advisor (a copy of which
is attached as Exhibit B to this Agreement) is a true and complete copy of
the
form as currently filed with the SEC and the information contained therein
is
accurate and complete in all material respects and does not omit to state any
material fact necessary in order to make the statements, in light of the
circumstances under which they are made, not misleading. The
Sub-Advisor will promptly provide the Advisor and the Trust with a complete
copy
of all subsequent amendments to its Form ADV.
8. Representations
and Warranties of the Advisor. The Advisor represents and
warrants to the Sub-Advisor and the Trust as follows:
(a) The
Advisor is registered as an investment adviser under the Advisers
Act.
(b) The
Advisor is a corporation duly organized and validly existing under the laws
of
the State of California with the power to own and possess its assets and carry
on its business as it is now being conducted.
(c) The
execution, delivery and performance by the Advisor of this Agreement are within
the Advisor’s powers and have been duly authorized by all necessary action on
the part of its Board of Directors, and no action by or in respect of, or filing
with, any governmental body, agency or official is required on the part of
the
Advisor for the execution, delivery and performance by the Advisor of this
Agreement, and the execution, delivery and performance by the Advisor of this
Agreement do not contravene or constitute a default under: (i) any provision
of
applicable law, rule or regulation; (ii) the Advisor’s governing instruments; or
(iii) any agreement, judgment, injunction, order, decree or other instrument
binding upon the Advisor.
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(d) The
Advisor acknowledges that it received a copy of the Sub-Advisor’s Form ADV (a
copy of which is attached as Exhibit B) prior to the execution of this
Agreement.
(e) The
Advisor and the Trust have duly entered into the Advisory Agreement pursuant
to
which the Trust authorized the Advisor to enter into this
Agreement.
(f) The
Advisor and the Trust have policies and procedures designed to detect and deter
disruptive trading practices, including “market timing,” and the Advisor and the
Trust each agree that they will continue to enforce and abide by such policies
and procedures, as amended from time to time, and comply with all existing
and
future laws relating to such matters or to the purchase and sale of interests
in
the Funds generally.
(g) Sub-Advisor
has been duly appointed by the Trust’s Board of Trustees to provide the
investment management services with respect to the Funds as contemplated by
this
Agreement.
9. Survival
of Representations and Warranties; Duty to Update
Information. All representations and warranties made by the
Sub-Advisor and the Advisor pursuant to Sections 7 and 8, respectively, of
this
Agreement shall survive for the duration of this Agreement and the parties
hereto shall promptly notify each other in writing upon becoming aware that
any
of the foregoing representations and warranties are no longer true.
10. Liability
and Indemnification.
(a) Liability. The
duties of the Sub-Advisor shall be confined to those expressly set forth herein,
with respect to the Funds. The Sub-Advisor shall not be liable for
any loss arising out of any portfolio investment or disposition hereunder,
except a loss resulting from willful misfeasance, bad faith or negligence in
the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder, except as may otherwise be provided under provisions
of
applicable state law that cannot be waived or modified hereby.
(b) Indemnification. The
Sub-Advisor shall indemnify the Advisor, the Trust and each Fund, and their
respective affiliates and controlling persons (the “Sub-Advisor Indemnified
Persons”) for any liability and expenses, including reasonable attorneys’ fees,
which the Advisor, the Trust or a Fund and their respective affiliates and
controlling persons may sustain as a result of the Sub-Advisor’s willful
misfeasance, bad faith, negligence or reckless disregard of its duties
hereunder; provided, however, that the Sub-Advisor Indemnified
Persons shall not be indemnified for any liability or expenses which may be
sustained as a result of the Advisor’s willful misfeasance, bad faith,
negligence, or reckless disregard of the Advisors duties hereunder.
Notwithstanding
any other provision in this Agreement, the Sub-Advisor will indemnify the
Advisor, the Trust and each Fund, and their respective affiliates and
controlling persons for any liability and expenses, including reasonable
attorneys’ fees, to which they may be subjected as a result of their reliance
upon and use of the historical performance calculations provided by the
Sub-Advisor concerning the Sub-Advisor’s composite account data or historical
performance information on similarly managed investment companies or accounts,
except that the Advisor, the Trust and each Fund and their respective affiliates
and controlling persons shall not be indemnified for a loss or expense resulting
from their negligence or willful misconduct in using such numbers, or for their
failure to conduct reasonable due diligence with respect to such
information.
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The
Sub-Advisor will not be liable for (i) any act or omission taken in good faith
reliance on data or instructions from the Advisor or its agents; (ii) any act
or
omission of a predecessor investment manager or any other person authorized
to
invest assets of the Funds; or (iii) any act, omission or insolvency of any
broker selected by Sub-Advisor in accordance with the provisions of this
Agreement, except to the extent Sub-Advisor breaches its duty of care in
selecting or supervising such broker.
The
Advisor shall indemnify the Sub-Advisor, its affiliates and its controlling
persons (the “Advisor Indemnified Persons”), for any liability and expenses,
including reasonable attorneys’ fees, howsoever arising from, or in connection
with, the Advisor’s breach of this Agreement, or its representations and
warranties herein, or as a result of the Advisor’s willful misfeasance, bad
faith, negligence, reckless disregard of its duties hereunder or violation
of
applicable law; provided, however, that the Advisor Indemnified Persons shall
not be indemnified for any liability or expenses which may be sustained as
a
result of the Sub-Advisor’s willful misfeasance, bad faith, negligence, or
reckless disregard of its duties hereunder.
11. Duration
and Termination.
(a) Duration. This
Agreement, unless sooner terminated as provided herein, shall for the Funds
listed on Exhibit A attached hereto remain in effect from the later of the
date
of execution or Board approval as required under the 1940 Act (the “Effective
Date.”), until two years from the Effective Date, and thereafter, for periods of
one year, so long as such continuance thereafter is specifically approved at
least annually: (i) by the vote of a majority of those Trustees of the Trust
who
are not interested persons of any party to this Agreement, cast in person at
a
meeting called for the purpose of voting on such approval; and (ii) by the
Trustees of the Trust, or by the vote of a majority of the outstanding voting
securities of each Fund (except as such vote may be unnecessary pursuant to
relief granted by an exemptive order from the SEC). The foregoing
requirement that continuance of this Agreement be “specifically approved at
least annually” shall be construed in a manner consistent with the 1940 Act and
the rules and regulations thereunder.
(b) Termination. This
Agreement may be terminated as to any Fund at any time, without the payment
of
any penalty by: (i) the vote of a majority of the Trustees of the
Trust, or by the vote of a majority of the outstanding voting securities of
the
Fund, on not more than 60 days written notice to the Advisor and Sub-Advisor;
(ii) the Advisor; or (iii) the Sub-Advisor, on not less than 30 days written
notice to the Advisor and the Trust. This Agreement may also be
terminated as to any Fund at any time by any party hereto immediately upon
written notice to the other parties in the event of a breach of any material
provision to this Agreement by any of the parties.
10
This
Agreement shall not be assigned and shall terminate automatically in the event
of its assignment, except as provided otherwise by any rule, exemptive order
issued by the SEC, or SEC no-action letter provided pursuant to the 1940 Act,
or
upon the termination of the Advisory Agreement. In the event that
there is a proposed change in control of the Sub-Advisor that would act to
terminate this Agreement, if a vote of shareholders to approve continuation
of
this Agreement is at that time deemed by counsel to the Trust to be required
by
the 1940 Act or any rule or regulation thereunder, the Sub-Advisor agrees to
assume all reasonable costs associated with soliciting shareholders of the
appropriate Fund(s) of the Trust, to approve continuation of this
Agreement. Such expenses include the costs of preparation and mailing
of a proxy statement, and of soliciting proxies.
In
the
event that such proposed change in control of the Sub-Advisor shall occur
following either: (i) receipt by the Advisor and the Trust of an
exemptive order issued by the SEC with respect to the appointment of
sub-advisors absent shareholder approval, or (ii) the adoption of proposed
Rule
15a-5 under the 1940 Act, the Sub-Advisor agrees to assume all reasonable costs
and expenses (including the costs of mailing) associated with the preparation
of
a statement, required by the exemptive order or Rule 15a-5, containing all
information that would be included in a proxy statement (an “Information
Statement”). In addition, if the Sub-Advisor shall resign, the
Sub-Advisor agrees to assume all reasonable costs and expenses (including the
costs of mailing) associated with the preparation of any required Information
Statement.
This
Agreement shall extend to and bind the heirs, executors, administrators and
successors of the parties hereto.
12. Amendment. This
Agreement may be amended by mutual consent of the parties, provided that the
terms of any material amendment shall be approved by: (a) the Trust’s Board of
Trustees, and (b) the vote of a majority of those Trustees of the Trust who
are
not interested persons of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval, if such approval
is
required by applicable law, unless otherwise permitted pursuant to exemptive
relief granted by the SEC or a No-Action position granted by the SEC or its
staff, by a vote of the majority of a Fund’s outstanding
securities.
13. Confidentiality. Any
information or recommendations supplied by either the Advisor or the
Sub-Advisor, that are not otherwise in the public domain or previously known
to
the other party in connection with the performance of its obligations and duties
hereunder, including portfolio holdings of the Trust, financial information
or
other information relating to a party to this Agreement, are to be regarded
as
confidential (“Confidential Information”) and held in the strictest
confidence. Except as may be required by applicable law or rule or as
requested by regulatory authorities having jurisdiction over a party to this
Agreement, Confidential Information may be used only by the party to which
said
information has been communicated and such other persons as that party believes
are necessary to carry out the purposes of this Agreement, the custodian, and
such persons as the Advisor may designate in connection with the management
of
the Funds. Nothing in this Agreement shall be construed to prevent
the Sub-Advisor from giving other entities investment advice about, or trading
on their behalf, in the securities of a Fund or the Advisor.
11
14. Use
of Sub-Advisor’s Name. During the term of this Agreement, the
Advisor shall not have permission to use the Sub-Advisor’s name in the marketing
of the Funds, except as set forth below and agrees to furnish the Sub-Advisor
at
its principal office all Prospectuses, proxy statements and reports to
shareholders prepared for distribution to shareholders of the Funds or the
public, which refer to the Sub-Advisor in any way and such references will
be
based solely on information provided for that purpose by the
Sub-Advisor. Advisor will not use any marketing materials that refer
to the Sub-Advisor unless those materials have been provided to Sub-Advisor
in
advance of their use, and Sub-Advisor has not objected to their use in
writing.
15. Notice. Any
notice, advice or report to be given pursuant to this Agreement shall be deemed
sufficient if delivered or mailed by registered, certified or overnight mail,
postage prepaid addressed by the party giving notice to the other party at
the
last address furnished by the other party:
(a) If
to the Advisor:
AssetMark
Investment Services, Inc.
0000
Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxx
Xxxx, XX 00000-0000
Attn:
Xxxxxx X. Xxxxxx
(b) If
to the Sub-Advisor:
Xxxxxxx
Implementation Services, Inc.
000
X
Xxxxxx
Xxxxxx,
XX 00000
Attn: Chief
Operating Officer
16. Governing
Law. This Agreement shall be governed by the internal laws of the
State of Delaware, without regard to conflict of law principles; provided,
however that nothing herein shall be construed as being inconsistent with the
1940 Act. Where the effect of a requirement of the 1940 Act reflected
in any provision of this Agreement is altered by a rule, regulation or order
of
the SEC, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
17. Entire
Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to this Agreement's subject matter. This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original, but such counterparts shall, together, constitute
only
one instrument.
18. Severability. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not
be affected thereby.
19. Certain
Definitions. For the purposes of this Agreement and except as
otherwise provided herein, “interested person,” “affiliated person,”
“affiliates,” “controlling persons” and “assignment” shall have their respective
meanings as set forth in the 1940 Act, subject, however, to such exemptions
as
may be granted by the SEC.
12
20. Captions. The
captions herein are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and
year first written above.
ASSETMARK
INVESTMENT SERVICES, INC.
By:
/s/ Xxxxxx X.
Xxxxxx
Name: Xxxxxx
X. Xxxxxx
Title:
President
XXXXXXX
IMPLEMENTATION SERVICES INC.
By: /s/Xxxxx
Xxxxxxxxxx
Name: Xxxxx
Xxxxxxxxxx
Title: Managing
Director
13
EXHIBIT
A
SUBADVISORY
AGREEMENT
BETWEEN
ASSETMARK INVESTMENT SERVICES, INC.
AND
XXXXXXX IMPLEMENTATION SERVICES INC.
Effective
as of May 31, 2007
AssetMark
Fundamental Index™ Large Company Growth Fund
AssetMark
Fundamental Index™ Large Company Value Fund
AssetMark
Fundamental Index™ Small Company Growth Fund
AssetMark
Fundamental Index™ Small Company Value Fund
AssetMark
Fundamental Index™ International Equity Fund
FEE
SCHEDULE
Pursuant
to section 6 of the Agreement, the Adviser pays the Sub-Advisor the following
annual fees #:
ASSETS COMPENSATION
EXHIBIT
B
_______________________________________________
FORM
ADV
