EXHIBIT 2(g)(ii)
UM INVESTMENT TRUST
SUB-ADVISORY AGREEMENT
(UM MULTI-STRATEGY FUND)
This Sub-Advisory Agreement (this "Agreement") is entered into as of
December 11, 2001 by and among Undiscovered Managers, LLC, a Delaware limited
liability company (the "Manager"), Cadogan Management, L.L.C., a Delaware
limited liability company (the "Sub-Adviser"), and UM Investment Trust, a
Massachusetts business trust (the "Trust"), on behalf of its UM Multi-Strategy
Fund (the "Series").
WHEREAS, the Manager has entered into a Management Agreement dated
December 11, 2001 (the "Management Agreement") with the Trust, pursuant to which
the Manager provides portfolio management and administrative services to the
Series;
WHEREAS, the Management Agreement provides that the Manager may
delegate any or all of its portfolio management responsibilities under the
Management Agreement to one or more sub-advisers; and
WHEREAS, the Manager desires to retain the Sub-Adviser to render
portfolio management services in the manner and on the terms set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Manager and the Sub-Adviser agree as follows:
1. Sub-Advisory Services.
a. The Sub-Adviser shall, subject to the supervision of the
Manager and in cooperation with any administrator appointed by the Manager (the
"Administrator"), manage the investment and reinvestment of the assets of the
Series. The Sub-Adviser shall manage the Series in conformity with (1) the
investment objectives, policies and restrictions of the Series set forth in the
Trust's offering memorandum relating to the Series, (2) any additional policies
or guidelines established by the Manager or by the Trust's trustees that have
been furnished in writing to the Sub-Adviser and (3) the provisions of the
Internal Revenue Code of 1986 (the "Code") applicable to "regulated investment
companies" (as defined in Section 851 of the Code), all as from time to time in
effect (collectively, the "Policies"), and with all applicable provisions of
law, including without limitation all applicable provisions of the Investment
Company Act of 1940 (the "1940 Act") and the rules and regulations thereunder.
Subject to the foregoing, the Sub-Adviser is authorized, in its discretion and
without prior consultation with the Manager, to buy, sell, lend and otherwise
trade in any stocks, bonds and other securities and investment instruments
(including interests in pooled investment vehicles) on behalf of the Series,
without regard to the length of time the securities have been held and the
resulting rate of portfolio turnover; and the majority or the whole of the
Series may be invested in such proportions of stocks, bonds, other securities or
investment instruments, or cash, as the Sub-Adviser shall
determine. The Sub-Adviser shall be solely responsible for ensuring that
appropriate due diligence (including legal due diligence) and analyses have been
performed with respect to each investment by the Series, and shall be solely
responsible for the adequacy of such due diligence and analyses. Notwithstanding
the foregoing provisions of this Section 1.a., however, the Sub-Adviser shall,
upon written instructions from the Manager, effect such portfolio transactions
for the Series as the Manager shall determine are necessary in order for the
Series to comply with the Policies.
b. The Sub-Adviser shall furnish the Manager and the
Administrator monthly, quarterly and annual reports concerning portfolio
transactions and performance of the Series in such form as may be mutually
agreed upon, and agrees to assist the Manager from time to time in estimating
the amount of any distributions that are required to be made by the Series under
the Code and to review the Series and discuss the management of the Series with
representatives or agents of the Manager, the Administrator or the Trust at
their reasonable request. The Sub-Adviser shall permit all books and records
with respect to the Series to be inspected and audited by the Manager and the
Administrator at all reasonable times during normal business hours, upon
reasonable notice. The Sub-Adviser shall also provide the Manager, the
Administrator or the Trust with such other information and reports as may
reasonably be requested by the Manager, the Administrator or the Trust from time
to time, including without limitation all material as reasonably may be
requested by the trustees of the Trust pursuant to Section 15(c) of the 1940
Act.
c. The Sub-Adviser shall provide to the Manager a copy of the
Sub-Adviser's Form ADV as filed with the Securities and Exchange Commission and
as amended from time to time and a list of the persons whom the Sub-Adviser
wishes to have authorized to give written and/or oral instructions to custodians
of assets of the Series.
d. The Sub-Adviser shall maintain and be bound by a Code of
Ethics satisfying the requirements of Rule 17j-1 under the 1940 Act, and shall
provide to the Trust a current copy of such Code of Ethics, as amended from time
to time (the "Code of Ethics").
2. Obligations of the Manager.
a. The Manager shall provide (or cause the Trust's custodian
to provide) timely information to the Sub-Adviser regarding such matters as the
composition of assets in the Series, cash requirements and cash available for
investment in the Series, and all other information as may be reasonably
necessary for the Sub-Adviser to perform its responsibilities hereunder.
b. The Manager has furnished the Sub-Adviser a copy of the
offering memorandum of the Series and agrees during the continuance of this
Agreement to furnish the Sub-Adviser copies of any revisions or supplements
thereto at, or, if practicable, before the time the revisions or supplements
become effective. The Manager agrees to furnish the Sub-Adviser with minutes of
meetings of the trustees of the Trust applicable to the Series to the extent
they may affect the duties of the Sub-Adviser, and with copies of any financial
statements or reports made by the Series to its shareholders, and any further
materials or information which the Sub-Adviser may reasonably request to enable
it to perform its functions under this Agreement.
3. Custodian. The Manager shall provide the Sub-Adviser with a copy of
the Series' agreement with the custodian designated to hold the assets of the
Series (the "Custodian") and any modifications thereto (the "Custody
Agreement"), copies of such modifications to be provided to the Sub-Adviser a
reasonable time in advance of the effectiveness of such modifications. The
assets of the Series shall be maintained in the custody of the Custodian
identified in, and in accordance with the terms and conditions of, the Custody
Agreement (or any sub-custodian properly appointed as provided in the Custody
Agreement). The Sub-Adviser shall have no liability for the acts or omissions of
the Custodian, unless such act or omission is required by and taken in reliance
upon instructions given to the Custodian by a representative of the Sub-Adviser
properly authorized to give such instructions under the Custody Agreement. Any
assets added to the Series shall be delivered directly to the Custodian.
4. Expenses. Except for expenses specifically assumed or agreed to be
paid by the Sub-Adviser pursuant hereto, the Sub-Adviser shall not be liable for
any expenses of the Manager or the Trust including, without limitation, (a)
interest and taxes, (b) brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments with respect
to the Series and (c) custodian fees and expenses. The Sub-Adviser will pay its
own expenses incurred in furnishing the services to be provided by it pursuant
to this Agreement.
5. Compensation of the Sub-Adviser. As full compensation for all
services rendered, facilities furnished and expenses borne by the Sub-Adviser
hereunder, the Manager shall pay the Sub-Adviser compensation, within forty-five
days after the end of each calendar quarter, at the Performance Fee Rate. For
purposes of this Agreement, "Performance Fee Rate" shall mean, with respect to
each calendar quarter, the annual percentage rate of the average monthly net
assets of the Series during such quarter that is determined by adding to (or
subtracting from) 0.55% one-eighth of the number of basis points by which the
total return of the Series (expressed as a percentage, and calculated after
giving effect to the Series' fees and expenses, excluding any fees paid to the
Manager pursuant to the Management Agreement) during the one-year period ending
at the end of such quarter exceeds (or falls short of) the Benchmark (as
hereinafter defined); provided, however, that the Performance Fee Rate shall in
no event exceed the annual rate of 1.05% of such average monthly net assets and
shall in no event be less than the annual rate of 0.05% of such average monthly
net assets; and provided, further, that, until the end of the first calendar
quarter that ends on or after the 364th day following commencement of the
Series' investment operations, the Performance Fee Rate shall be the annual rate
of 0.80% of the average monthly net assets of the Series. For purposes of this
Agreement, (a) "Benchmark" shall mean, with respect to the calculation of the
Performance Fee Rate following the end of each calendar quarter, the total
return (on a dividends-reinvested basis and expressed as a percentage) of the XX
Xxxxxx GBI Global Hedged US Dollar Index during the one-year period ending at
the end of such quarter, and (b) with respect to any month, the net assets of
the Series for such month shall be determined by averaging the value of the
Series' net assets on the last business day of such month with the value of the
Series' net assets on the last business day of the month immediately prior to
such month. The Manager may from time to time waive the compensation it is
entitled to receive from the Trust; however, any such waiver will have no effect
on the Manager's obligation to pay the Sub-Adviser the compensation provided for
herein.
6. Non-Exclusivity. The Manager and the Series agree that the services
of the Sub-Adviser are not to be deemed exclusive and that the Sub-Adviser and
its affiliates are free to act as investment manager and provide other services
to various investment companies and other managed accounts, except as the
Sub-Adviser and the Manager may otherwise agree from time to time in writing
before or after the date hereof. This Agreement shall not in any way limit or
restrict the Sub-Adviser or any of its directors, officers, employees or agents
from buying, selling or trading any securities or other investment instruments
for its or their own account or for the account of others for whom it or they
may be acting, provided that such activities do not violate any applicable laws,
rules or regulations or the Code of Ethics. The Manager and the Series recognize
and agree that the Sub-Adviser may provide advice to or take action with respect
to other clients, which advice or action, including the timing and nature of
such action, may differ from or be identical to advice given or action taken
with respect to the Series. The Sub-Adviser shall for all purposes hereof be
deemed to be an independent contractor and shall, unless otherwise provided or
authorized, have no authority to act for or represent the Trust or the Manager
in any way or otherwise be deemed an agent of the Trust or the Manager.
7. Liability and Indemnification.
a. Except as may otherwise be provided by the 1940 Act or
other federal securities laws, neither the Sub-Adviser nor any of its officers,
directors, employees or agents shall be subject to any liability to the Manager,
the Trust, the Series or any shareholder of the Series for any error of
judgment, any mistake of law or any loss arising out of any investment or other
act or omission in the course of, connected with, or arising out of any service
to be rendered under this Agreement, except by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Sub-Adviser's duties or
by reason of reckless disregard by the Sub-Adviser of its obligations and
duties, including the Sub-Adviser's duties relating to the diligence and
analyses undertaken in connection with investments made by the Series.
b. The Trust agrees to indemnify out of the assets of the
Series each of the Sub-Adviser and all of its officers, directors and employees
(each such entity or person hereinafter referred to as a "Covered Person")
against all liabilities and expenses, including but not limited to amounts paid
in satisfaction of judgments, in compromise or as fines and penalties, and
counsel fees reasonably incurred by any such Covered Person in connection with
the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or legislative body, in
which such Covered Person may be or may have been involved as a party or
otherwise or with which such Covered Person may be or may have been threatened,
while in office or thereafter, by reason of any investment or other alleged act
or omission in the course of, connected with or arising out of any service to be
rendered under this Agreement, except with respect to any matter as to which
such Covered Person shall have been finally adjudicated in any such action, suit
or other proceeding not to have acted in good faith in the reasonable belief
that such Covered Person's action was in the best interests of the Series, and
except that no Covered Person shall be indemnified against any liability to
which such Covered Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the Covered
Person's obligations and duties, including the Covered Person's duties relating
to the diligence and analyses undertaken in connection with investments made by
the Series. Expenses, including counsel fees so incurred by any such Covered
Person, may be paid from time to time by the Trust in advance of the final
disposition
of any such action, suit or proceeding on the condition that the amounts so paid
shall be repaid to the Trust if it is ultimately determined that indemnification
of such expenses is not authorized under this Section 7.b.
c. As to any matter disposed of by a compromise payment by any
such Covered Person referred to in Section 7.b. above, pursuant to a consent
decree or otherwise, no such indemnification either for said payment or for any
other expenses shall be provided unless such compromise shall be approved as in
the best interests of the Series, after notice that it involved such
indemnification, (i) by a disinterested majority of the trustees of the Trust
then in office; or (ii) by a majority of the disinterested trustees of the Trust
then in office; or (iii) by any disinterested person or persons to whom the
question may be referred by the trustees of the Trust; or (iv) by vote of
shareholders of the Series holding a majority of the shares entitled to vote
thereon, exclusive of any shares beneficially owned by any interested Covered
Person; provided, however, that such indemnification would not protect such
Covered Person against any liability to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the Covered Person's duties or obligations.
Approval by the trustees of the Trust pursuant to clause (i) or (ii) or by any
disinterested person or persons pursuant to clause (iii) of this Section 7.c.
shall not prevent the recovery from any Covered Person of any amount paid as
indemnification to such Covered Person in accordance with any of such clauses if
such Covered Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief that such
Covered Person's action was in the best interests of the Series or to have been
liable by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the Covered Person's duties or obligations.
8. Effective Date and Termination. This Agreement shall become
effective as of the date of its execution, and
a. unless otherwise terminated, this Agreement shall continue
in effect for two years from the date of execution, and from year to year
thereafter so long as such continuance is specifically approved at least
annually (i) by the Board of Trustees of the Trust or by vote of a majority of
the outstanding voting securities of the Series, and (ii) by vote of a majority
of the trustees of the Trust who are not interested persons of the Trust, the
Manager or the Sub-Adviser, cast in person at a meeting called for the purpose
of voting on such approval;
b. this Agreement may at any time be terminated on sixty days'
written notice to the Sub-Adviser by the Manager, by vote of the Board of
Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Series;
c. this Agreement may at any time be terminated by the
Sub-Adviser on one hundred twenty days' written notice to the Manager and the
Trust in the event that, and only in the event that, the Manager consents in
writing to such termination; and
d. this Agreement shall automatically terminate in the event
of its assignment.
Termination of this Agreement pursuant to this Section 8 shall be
without the payment of any penalty.
9. Amendment. This Agreement may be amended at any time by mutual
consent of the Manager, the Board of Trustees of the Trust and the Sub-Adviser,
provided that, if required by law, such amendment shall also have been approved
by vote of a majority of the outstanding voting securities of the Series and by
vote of a majority of the trustees of the Trust who are not interested persons
of the Trust, the Manager or the Sub-Adviser, cast in person at a meeting called
for the purpose of voting on such approval.
10. Certain Definitions. For the purpose of this Agreement, the terms
"vote of a majority of the outstanding voting securities," "interested person,"
"affiliated person" and "assignment" shall have their respective meanings
defined in the 1940 Act, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under the 1940 Act.
11. General.
a. If any term or provision of this Agreement or the
application thereof to any person or circumstances is held to be invalid,
illegal or otherwise unenforceable to any extent, then, to the fullest extent
permitted by law: (i) such invalidity, illegality or unenforceability shall not
affect any other term or provision of this Agreement; (ii) all other terms and
provisions of this Agreement shall remain in full force and effect and shall be
liberally construed in order to carry out the intent of the parties hereto as
nearly as may be possible; and (iii) the parties hereto shall use all reasonable
efforts to substitute a valid, legal and enforceable provision which, insofar as
practicable, implements the purpose and intents of this Agreement.
b. This Agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts.
UNDISCOVERED MANAGERS, LLC
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx
Chairman and Chief Executive Officer
CADOGAN MANAGEMENT, L.L.C.
By: /s/ Xxxx Xxxxx
-----------------------------------------
Xxxx Xxxxx
Chief Investment Officer
UM INVESTMENT TRUST
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx
President
NOTICE
A copy of the Agreement and Declaration of Trust establishing UM
Investment Trust (the "Trust") is on file with the Secretary of The Commonwealth
of Massachusetts, and notice is hereby given that this Agreement is executed
with respect to the Trust's UM Multi-Strategy Fund series (the "Series") on
behalf of the Trust by officers of the Trust as officers and not individually
and that the obligations of or arising out of this Agreement are not binding
upon any of the trustees, officers or shareholders individually but are binding
only upon the assets and property belonging to the Series.
