THE MASTERS' SELECT EQUITY FUND
MASTERS' SELECT INVESTMENT TRUST
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
THIS INVESTMENT MANAGEMENT AGREEMENT is made as of the ___ day
of ___________, 199__, by and between XXXXXX/XXXXXXX FUND ADVISORS, LLC
(hereinafter called the "Advisor") and SOCIETE GENERALE ASSET MANAGEMENT CORP.
(hereinafter called "Manager").
WITNESSETH:
WHEREAS, the Advisor has been retained as the investment
adviser to The Masters' Select Equity Fund (the "Fund"), a series of Masters'
Select Investment 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, Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended, and is engaged in the business
of supplying investment management services as an independent contractor; and
WHEREAS, the Fund and the Advisor desire to retain Manager as
an investment manager to render portfolio advice and services to the Fund
pursuant to the terms and provisions of this Agreement, and Manager 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 Manager.
(a) The Advisor hereby employs Manager, and Manager
hereby accepts such employment, to render investment advice and related services
with respect to an 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) Manager'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 discretion.
2. Duties of Manager.
(a) General Duties. Manager shall act as one of
several investment managers to the Fund and shall invest Manager's Allocated
Portion of the assets of the Fund in accordance with the investment objectives,
policies and restrictions of the Fund as set forth in the Fund's and the Trust's
governing documents, including, without limitation, the Trust's Agreement and
Declaration of Trust and By-Laws; the Fund's prospectus, statement of additional
information and undertakings; and such other limitations, policies and
procedures as the Advisor or the Trustees of the Trust may impose from time to
time in writing to Manager. In providing such services, Manager 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.
Without limiting the generality of the foregoing, Manager
shall: (i) furnish the Fund with advice and recommendations with respect to the
investment of the Manager's Allocated Portion of the Fund's assets, (ii) effect
the purchase and sale of portfolio securities for Manager's Allocated Portion;
(iii) manage and oversee the investments of the Manager's Allocated Portion,
subject to the ultimate supervision and direction of the Trust's Board of
Trustees; (iv) vote proxies, file required ownership reports, and take other
actions with respect to the securities in Manager's Allocated Portion; (v)
maintain the books and records required to be maintained with respect to the
securities in Manager's Allocated Portion; (vi) 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; and (vii) render to the Trust's Board of
Trustees such periodic and special reports with respect to Manager's Allocated
Portion as the Board may reasonably request.
(b) Brokerage. With respect to Manager's Allocated
Portion, Manager shall be responsible for broker-dealer selection and for
negotiation of brokerage commission rates, provided that Manager shall not
direct orders to an affiliated person of the Manager without general prior
authorization to use such affiliated broker or dealer by the Trust's Board of
Trustees. The Trust's Board of Trustees, on behalf of the Fund, has adopted
procedures pursuant to Rule 17e-1 promulgated under the Investment Company Act
to authorize Manager to direct orders
-2-
to an affiliated person of Manager. The Advisor has furnished Manager with a
copy of the resolutions adopted by the Board of Trustees of the Trust pursuant
to Rule 17e-1 promulgated under the Investment Company Act. Manager'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, Manager 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, Manager 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 Manager 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 Manager 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 Manager's overall responsibilities with respect to
Manager's Allocated Portion and Manager's other clients. Manager 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 Manager.
Such allocation shall be in such amounts and proportions as Manager shall
determine, and Manager 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. Manager 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 Manager deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients of
Manager, Manager, 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 Manager in the
manner it considers
-3-
to be the most equitable and consistent with its fiduciary obligations to the
Fund and to such other clients.
3. Representations of Manager.
(a) Manager shall use its best judgment and efforts
in rendering the advice and services to the Fund as contemplated by this
Agreement.
(b) Manager shall maintain all licenses and
registrations necessary to perform its duties hereunder in good order.
(c) Manager shall conduct its operations at all times
in conformance with the Investment Advisers Act of 1940, the Investment Company
Act and any other applicable state and/or self-regulatory organization
regulations.
(d) Manager shall be covered by errors and omissions
insurance. The company self-retention or deductible shall not exceed 20% of the
policy limits and the policy limits shall be as follows:
Total Fund Assets E & O Policy Limits
------------------------- -------------------
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
4. Independent Contractor. Manager shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Trust, the Fund, or the Advisor in any way, or in any way be
deemed an agent for the Trust, the Fund, or the Advisor. It is expressly
understood and agreed that the services to be rendered by Manager to the Fund
under the provisions of this Agreement are not to be deemed exclusive, and
Manager 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. Manager's Personnel. Manager 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 Manager shall be deemed
to include persons employed or retained by Manager to furnish
-4-
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
Manager, the Advisor or the Trust's Board of Trustees may desire and reasonably
request.
6. Expenses.
(a) Manager 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 Manager. Manager shall not be responsible for any costs
associated with the initial approval of this Agreement by the Fund's
shareholders.
(b) Manager may voluntarily absorb certain Fund
expenses or waive some or all of Manager's own fee.
(c) To the extent Manager 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 Manager for such costs and
expenses. To the extent Manager performs services for which the Fund or the
Advisor is obligated to pay, Manager shall be entitled to prompt reimbursement
to the extent of Manager's actual costs for providing such services. In
determining Manager's actual costs, Manager may take into account an allocated
portion of the salaries and overhead of personnel performing such services.
7. Investment Management Fee.
(a) The Advisor shall pay to Manager, and Manager
agrees to accept, as full compensation for all investment management and
advisory services furnished or provided to the Fund pursuant to this Agreement,
an annual management fee based on Manager's Allocated Portion, as such Allocated
Portion may be adjusted from time to time. Such fee shall be equal to [ ]% of
the average daily net assets of the Fund attributable to the Manager's Allocated
Portion, computed on the value of such net assets as of the close of business
each day.
(b) The management fee shall be paid by the Advisor
to Manager 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 Manager 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
-5-
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 Manager under this Agreement
will be reduced to the extent of any receivable owed by Manager to the Advisor
or the Fund.
(e) Manager voluntarily may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the expenses which are the
responsibility of the Advisor of the Fund under this Agreement. Any such
reduction or payment shall be applicable only to such specific reduction or
payment and shall not constitute an agreement to reduce any future compensation
or reimbursement due to Manager hereunder or to continue future payments. Any
such reduction will be agreed to prior to accrual of the related expense or fee
and will be estimated daily and reconciled and paid on a monthly basis.
(f) Manager may agree not to require payment of any
portion of the compensation or reimbursement of expenses otherwise due to it
pursuant to this Agreement. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to Manager hereunder.
8. No Shorting; No Borrowing. Manager 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 Manager 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. Manager
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund's 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, Manager
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.
-6-
10. Reports and Access. Manager 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) Manager shall exercise reasonable care and
prudence in fulfilling its obligations under this Agreement.
(b) Manager shall have responsibility for the
accuracy and completeness (and liability for the lack thereof) of the statements
furnished by Manager to the Advisor for use in the Fund's offering materials
(including the prospectus, the statement of additional information, advertising
and sales materials) that pertain to Manager and the investment of Manager's
Allocated Portion of the Fund. Manager shall have no responsibility or liability
with respect to other disclosures.
(c) Manager shall be liable to the Fund for any loss
(including brokerage charges) incurred by the Fund as a result of any investment
made by Manager in violation of Section 2 hereof.
(d) In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the obligations or duties hereunder
on the part of Manager, Manager shall not be subject to liability to the
Advisor, the Trust, or the Fund or to any shareholder of the Fund for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security by the Fund.
(e) Each party to this Agreement, 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 Indemnified 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 other 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 other party shall not
relieve the other
-7-
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 other party or the Indemnified Party with respect to such claim.
Following such notification, the other 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 other 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 other 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, from
liability in violation of Sections 17(h) and (i) of the Investment Company Act.
12. Non-Exclusivity; Trading for Manager's Own Account. The
Advisor's employment of Manager 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, Manager 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 Manager 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 Manager 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
of 1940, a copy of which has been provided to the Board of Trustees of the
Trust.
13. 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 upon shareholder
approval 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 (l) 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
-8-
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
Manager's trade name or any name derived from the Manager'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
Manager.
14. Termination; No Assignment.
(a) This Agreement may be terminated by the 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 Manager, and by the Manager upon sixty (60) days' written notice to the
Fund. In the event of a termination, Manager 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 Manager 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 New York 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 of 1940 and any rules and regulations promulgated thereunder.
-9-
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 SOCIETE GENERALE ASSET
ADVISORS, LLC MANAGEMENT CORP.
By:_________________________ By:_________________________________
____________________________ ____________________________________
____________________________ ____________________________________
As a Third Party Beneficiary,
MASTERS' SELECT INVESTMENT TRUST
on behalf of
THE MASTERS' SELECT EQUITY FUND
By:_________________________
____________________________
____________________________
-10-
