MASTERS' SELECT VALUE FUND
MASTERS' SELECT FUNDS TRUST
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
THIS AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT made as of the 4th
day of December, 2002, amends and restates in its entirety the Investment
Advisory Agreement dated June 7, 2000, by and between MASTERS' SELECT FUNDS
TRUST, a Delaware business trust (the "Trust"), on behalf of THE MASTERS' SELECT
VALUE FUND (the "Fund"), a series of the Trust, and XXXXXX/XXXXXXX FUND
ADVISORS, LLC, a California limited liability company (the "Advisor").
WITNESSETH:
WHEREAS, the Trust is 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 Fund is a series of the Trust having separate assets and
liabilities; and
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") and is engaged
in the business of supplying investment management services as an independent
contractor; and
WHEREAS, the Trust desires to retain the Advisor to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Advisor desires to furnish said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1. Appointment of Advisor. The Trust hereby employs the Advisor and the
Advisor hereby accepts such employment, to render investment advice and
related services to the Fund for the period and on the terms set forth in
this Agreement, subject to the supervision and direction of the Trust's
Board of Trustees (the "Board of Trustees").
2. Duties of Advisor.
(a) General Duties. The Advisor shall act as investment advisor to the
Fund and shall supervise the investments of the Fund and provide
management services to the Fund in accordance with the investment
objectives, policies and restrictions of the Fund as set forth in the
governing documents of the Fund and the Trust, 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 Board of Trustees may impose from time to time in writing to
the Advisor. In providing such services, the Advisor shall at all
times adhere to the provisions and restrictions contained in the
federal securities laws, applicable state securities laws, the
Internal Revenue Code, the Uniform Commercial Code and other
applicable law.
Without limiting the generality of the foregoing, the Advisor shall:
(i) furnish the Fund with advice and recommendations with respect to
the selection and continued employment of investment managers to manage the
actual investment of the Fund's assets; (ii) direct the allocation of the
Fund's assets among such investment managers; (iii) oversee the investments
made by such investment managers on behalf of the Fund, subject to the
ultimate supervision and direction of the Board of Trustees; (iv) oversee
the actions of the investment managers with respect to voting proxies for
the Fund, complying with the proxy voting policies of the Fund, filing
Section 13 ownership reports for the Fund, and taking other actions on
behalf of the Fund; (v) maintain the books and records required to be
maintained by the Fund except to the extent arrangements have been made for
such books and records to be maintained by the administrator, another agent
of the Fund or an investment manager; (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 Fund's administrator or
distributor or the officers of the Trust may reasonably request; and (vii)
render to the Board of Trustees such periodic and special reports with
respect to the Fund's investment activities as the Board may reasonably
request, including at least one in-person appearance annually before the
Board of Trustees.
(b) Brokerage. The Advisor shall not be responsible for decisions to buy
and sell securities for the Fund, for broker-dealer selection, and for
negotiation of brokerage commission rates.
Subject to such policies as the Board of Trustees may determine, the
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 an
investment manager having caused the Fund to pay a broker or dealer that
provides (directly or indirectly) brokerage or research services to the
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 the Advisor determines in good
faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or
dealer, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities with respect to the Trust.
3. Representations of the Advisor.
(a) The Advisor shall use its best judgment and efforts in rendering the
advice and services to the Fund as contemplated by this Agreement.
(b) The Advisor shall maintain all licenses and registrations necessary to
perform its duties hereunder in good order.
(c) The Advisor shall conduct its operations at all times in conformance
with the Advisers Act, the Investment Company Act, and any other
applicable state and/or self-regulatory organization regulations.
(d) The Advisor shall maintain errors and omissions insurance in the
following amounts throughout the term of this Agreement:
Total Fund Assets E & O Policy Limit
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Up to $500 million $1 million
$500 million - $1 billion $2 million
$1 billion - $1.5 billion $3 million
$1.5 billion - $2 billion $4 million
Above $2 billion $5 million
4. Independent Contractor. The Advisor shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Trust or the Fund in any way, or in any way be deemed an
agent for the Trust or for the Fund. It is expressly understood and agreed
that the services to be rendered by the Advisor to the Fund under the
provisions of this Agreement are not to be deemed exclusive, and the
Advisor shall be free to render similar or different services to others so
long as its ability to render the services provided for in this Agreement
shall not be impaired thereby.
5. Advisor's Personnel. The 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. Personnel of the
Advisor may serve as officers of the Trust provided they do so without
compensation from the Trust. Without limiting the generality of the
foregoing, the staff and personnel of the Advisor shall be deemed to
include persons employed or retained by the Advisor to furnish statistical
information, research, and other factual information, advice regarding
economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance
as the Advisor or the Trust's Board of Trustees may desire and reasonably
request.
6. Expenses.
(a) With respect to the operation of the Fund, the Advisor shall be
responsible for (i) providing the personnel, office space and
equipment reasonably necessary for the operation of the Trust and the
Fund including the provision of persons qualified to serve as officers
of the Trust; (ii) compensating the investment managers selected to
invest the assets of the Fund; (iii) the expenses of printing and
distributing extra copies of the Fund's prospectus, statement of
additional information, and sales and advertising materials (but not
the legal, auditing or accounting fees attendant thereto) to
prospective investors (but not to existing shareholders); and (iv) the
costs of any special Board of Trustees meetings or shareholder
meetings convened for the primary benefit of the Advisor or any
investment manager. If the Advisor has agreed to limit the operating
expenses of the Fund, the Advisor shall also be responsible on a
monthly basis for any operating expenses that exceed the agreed upon
expense limit.
(b) The Trust and the Fund are responsible for and have assumed the
obligation for payment of all of the Fund's expenses, other than as
stated in Subparagraph 6(a) above, including but not limited to: fees
and expenses incurred in connection with the issuance, registration
and transfer of the Fund's shares; brokerage and commission expenses;
all expenses of transfer, receipt, safekeeping, servicing and
accounting for the cash, securities and other property of the Trust
for the benefit of the Fund including all fees and expenses of the
Fund's custodian, shareholder services agent and accounting services
agent; interest charges on any borrowings; costs and expenses of
pricing and calculating the Fund's daily net asset value and of
maintaining the Fund's books of account required under the Investment
Company Act; taxes, if any; a pro rata portion of expenditures in
connection with meetings of the Fund's shareholders and the Trust's
Board of Trustees that are properly payable by the Fund; salaries and
expenses of officers and fees and expenses of members of the Trust's
Board of Trustees or members of any advisory board or committee who
are not members of, affiliated with or interested persons of the
Advisor; insurance premiums on property or personnel of the Fund which
inure to the Fund's benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy
statements, prospectuses and statements of additional information of
the Fund or other communications for distribution to existing
shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of registering and
maintaining registration of the Fund's shares for sale under federal
and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges
for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and
all other charges and costs of the Fund's operations plus any
extraordinary and non-recurring expenses, except as herein otherwise
prescribed.
(c) The Advisor may voluntarily absorb certain Trust and Fund expenses or
waive or reduce the Advisor's own advisory fee.
(d) To the extent the Advisor incurs any costs by assuming expenses which
are an obligation of the Fund as set forth herein, the Fund shall
promptly reimburse the Advisor for such costs and expenses, except to
the extent the Advisor has otherwise agreed to bear such expenses. To
the extent the services for which the Trust or the Fund is obligated
to pay are performed by the Advisor, the Advisor shall be entitled to
recover from the Fund to the extent of the Advisor's actual costs for
providing such services. In determining the Advisor's actual costs,
the Advisor may take into account an allocated portion of the salaries
and overhead of personnel performing such services.
7. Investment Advisory Fee.
(a) The Fund shall pay to the Advisor, and the Advisor agrees to accept,
as full compensation for all investment advisory and management
services furnished or provided to the Fund pursuant to this Agreement,
an annual advisory fee equal to 1.10% of the Fund's daily net assets,
computed on the value of the net assets of the Fund as of the close of
business each day.
(b) The advisory fee shall be accrued daily by the Fund and paid to the
Advisor on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement
is terminated prior to the end of any month, the fee to the Advisor
shall be prorated for the portion of any month in which this Agreement
is in effect which is not a complete month according to the proportion
which the number of calendar days in the month during which the
Agreement is in effect bears to the number of calendar days in the
month, and shall be payable within ten (10) days after the date of
termination.
(d) The fee payable to the Advisor under this Agreement will be reduced to
the extent of any receivable owed by the Advisor to the Fund and as
required under any expense limitation applicable to the Fund.
(e) Fee Reduction. The Advisor may, but is not required to, reduce all or
a portion of its fees and/or reimburse the Fund for other expenses in
order to decrease the operating expenses of the Fund. Any such
reduction, reimbursement, or payment (collectively "subsidies") shall
be applicable only to such specific subsidy and shall not constitute
an agreement to continue such subsidy in the future. Any such subsidy
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.
The Advisor may also agree contractually to limit the Fund's operating
expenses. To the extent such an expense limitation has been agreed to
by the Advisor and such limit has been disclosed to shareholders of
the Fund in the Prospectus, the Advisor may not change the limitation
without first disclosing the change in an updated Prospectus.
The Advisor may seek reimbursement of any subsidies made by the
Advisor either voluntarily or pursuant to contract. The reimbursement
of any subsidy must be approved by the Board of Trustees and must be
sought no later than the end of the third fiscal year following the
year to which the subsidy relates. The Advisor may not request or
receive reimbursement for any subsidies before payment of the Fund's
ordinary operating expenses for the current year and cannot cause the
Fund to exceed any more restrictive limitation to which the Advisor
has agreed in making such reimbursement.
(f) The Advisor 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 the Advisor hereunder.
8. No Shorting; No Borrowing. The Advisor agrees that neither it nor any of
its officers or employees shall take any short position in the shares of
the Fund. This prohibition shall not prevent the purchase of such shares by
any of the officers or employees of the Advisor or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates
thereof, at a price not less than the net asset value thereof at the time
of purchase, as allowed pursuant to rules promulgated under the Investment
Company Act. The Advisor 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. For this
purpose, failure to pay any amount due and payable to the Fund for a period
of more than thirty (30) days shall constitute a borrowing.
9. Conflicts with Trust's Governing Documents and Applicable Laws. Nothing
herein contained shall be deemed to require the Trust or the Fund to take
any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive
the Board of Trustees of the Trust of its responsibility for and control of
the conduct of the affairs of the Trust and the Fund. In this connection,
the Advisor acknowledges that the Trustees retain ultimate plenary
authority over the Fund and may take any and all actions necessary and
reasonable to protect the interests of shareholders.
10. Reports and Access. The Advisor agrees to supply such information to the
Fund's administrator and to permit such compliance inspections by the
Fund's administrator as shall be reasonably necessary to permit the
administrator to satisfy its obligations and respond to the reasonable
requests of the Trustees.
11. Advisor's Liabilities and Indemnification.
(a) The 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), except
for information supplied by the administrator or another third party
for inclusion therein.
(b) The Advisor shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper
investment made by any investment manager if the impropriety of such
investment should have been known by the Advisor.
(c) In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties hereunder on the part
of the Advisor, the Advisor shall not be subject to liability to 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.
(d) Each party to this Agreement 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 expenses 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.
(e) 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 Advisor's Own Account; Code of Ethics. The
Trust's employment of the Advisor is not an exclusive arrangement. The
Trust may from time to time employ other individuals or entities to furnish
it with the services provided for herein. Likewise, the Advisor may act as
investment adviser for any other person, and shall not in any way be
limited or restricted from buying, selling or trading any securities for
its or their own accounts or the accounts of others for whom it or they may
be acting, provided, however, that the Advisor expressly represents that it
will undertake no activities which will adversely affect the performance of
its obligations to the Fund under this Agreement.
The Advisor (i) has adopted a written code of ethics pursuant to Rule
17j-1 under the Investment Company Act; (ii) has provided the Fund with a
copy of evidence of the adoption of the code of ethics by the Advisor; and
(iii) will make such reports to the Fund as are required by Rule 17j-1
under the Investment Company Act. The Advisor's code of ethics has been
approved by the Board of Trustees. The Advisor agrees to provide the Fund
with any information required to satisfy the code of ethics reporting or
disclosure requirements of the Xxxxxxxx-Xxxxx Act and any rules or
regulations promulgated by the SEC thereunder (the "Xxxxxxxx-Xxxxx Act").
To the extent the Advisor adopts or has adopted a separate code of ethics
or amends or has amended its code of ethics to comply with such rules or
regulations, the Advisor shall provide the Fund with a copy of such code of
ethics and any amendments thereto.
13. Term. 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, as amended 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 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. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth
in the Investment Company Act.
14. Termination; No Assignment.
(a) This Agreement may be terminated by 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
Advisor, and by the Advisor upon sixty (60) days' written notice to
the Fund. In the event of a termination, the 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 the Advisor on behalf of the Fund.
(b) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company
Act.
15. Nonpublic Personal Information. Notwithstanding any provision herein to the
contrary, the Advisor agrees on behalf of itself and its directors,
partners, officers, and employees (1) to treat confidentially and as
proprietary information of the Trust and the Fund (a) all records and other
information relative to the Trust and the Fund and their prior, present, or
potential shareholders (and clients of said shareholders) and (b) any
Nonpublic Personal Information, as defined under Section 248.3(t) of
Regulation S-P ("Regulation S-P"), promulgated under the Xxxxx-Xxxxx-Xxxxxx
Act (the "G-L-B Act"), and (2) not to use such records and information for
any purpose other than the performance of its responsibilities and duties
hereunder, or as otherwise permitted by the privacy policies adopted by the
Trust and the Fund, Regulation S-P or the G-L-B Act, except after prior
notification to and approval in writing by the Trust or the Fund. Such
written approval shall not be unreasonably withheld by the Trust or the
Fund and may not be withheld where the Advisor may be exposed to civil or
criminal contempt proceedings for failure to comply after being requested
to divulge such information by duly constituted authorities, or when so
requested by the Trust or the Fund.
16. Anti-Money Laundering Compliance. The Advisor acknowledges that, in
compliance with the Bank Secrecy Act, as amended, the USA PATRIOT Act, and
any respective implementing regulations (together, "AML Laws"), the Funds
have adopted an Anti-Money Laundering Policy. The Advisor agrees to comply
with the Funds' Anti-Money Laundering Policy and the AML Laws, as the same
may apply to the Advisor, now and in the future. The Advisor further agrees
to provide to the Funds and/or the Trust such reports, certifications and
contractual assurances as may be requested by the Funds or the Trust. The
Trust and the Funds may disclose information respecting the Advisor to
governmental and/or regulatory or self-regulatory authorities to the extent
required by applicable law or regulation and may file reports with such
authorities as may be required by applicable law or regulation.
17. Certifications; Disclosure Controls and Procedures. The Advisor
acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act, and the
implementing regulations promulgated thereunder, the Fund is required to
make certain certifications and has adopted disclosure controls and
procedures. To the extent reasonably requested by the Trust or the Fund,
the Advisor agrees to use its best efforts to assist the Trust and the Fund
in complying with the Xxxxxxxx-Xxxxx Act and implementing the Fund's
disclosure controls and procedures. The Advisor agrees to inform the Trust
and the Fund of any material development related to the Trust or the Fund
that the Advisor reasonably believes is relevant to the certification
obligations of the Fund under the Xxxxxxxx-Xxxxx Act.
18. 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.
19. Notice of Declaration of Trust. The Advisor agrees that the Trust's
obligations under this Agreement shall be limited to the Fund and to its
assets, and that the Advisor shall not seek satisfaction of any such
obligation from the shareholders of the Fund nor from any trustee, officer,
employee or agent of the Trust or the Fund.
20. 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.
21. 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.
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
MASTERS' SELECT FUNDS TRUST
on behalf of
MASTERS' SELECT VALUE FUND
By: By:
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Name: Name:
Title: Title:
