SUB-ADVISORY AGREEMENT
FINAL
AGREEMENT
made as of the 13th day of March, 2009 by and between Xxxxxx Global Investments,
Inc., a Delaware corporation (the “Advisor”), and Xxxxxx Xxxxxxx Investment
Management Inc., a Delaware Corporation (the “Sub-Advisor”).
WHEREAS,
the Advisor has been retained to act as investment adviser pursuant to an
Investment Advisory Agreement, dated July 1, 2005 (the “Advisory Agreement”),
with MGI 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”), which consists of several separate series of shares, each having
its own investment objectives and policies, and which is authorized to create
additional series in the future; and
The
Advisor will provide the Sub-Advisor with reasonable 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 Trust’s
Declaration of Trust or By-Laws; or (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 the Sub-Advisor 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.
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) quarterly reports confirming that the
Sub-Advisor has complied with the Trust Compliance Procedures in managing the
Sub-Advisor Assets; and (iii) 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 that related to the Sub-Advisor’s
management of the Sub-Advisor Assets.
In
connection with its management of the Sub-Advisor Assets and consistent with
its
fiduciary obligation to the Sub-Advisor Assets 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
or
lower brokerage commissions and 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 Sub-Advisor’s Assets and to
such other clients.
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 Fund with respect to transactions in securities for the Sub-Advisor
Assets or any other transactions of Fund assets.
The
Sub-Advisor is authorized to engage in transactions in which the Sub-Advisor,
or
an affiliate of the Sub-Advisor, acts as a broker for both the Fund and for
another party on the other side of the transaction (“agency cross
transactions”). The Sub-Advisor shall effect any such agency cross
transactions in compliance with Rule 206(3)-2 under the Advisers Act and any
other applicable provisions of the federal securities laws and shall provide
the
Advisor with periodic reports describing such agency cross
transactions. By execution of this Agreement, the Advisor authorizes
the Sub-Advisor or its affiliates to engage in agency cross transactions, as
described above. The Advisor may revoke its consent at any time by
written notice to the Sub-Advisor.
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.
(j)
Information Concerning Sub-Advisor Assets and the Sub-Advisor. From time to
time
as the Advisor, and 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 Sub-Advisor Assets held in the 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 (including
information that is required to be disclosed in the Prospectus) with respect
to
the portfolio managers responsible for Sub-Advisor Assets, any changes in the
portfolio managers responsible for Sub-Advisor Assets, any material changes
in
the ownership or management of the Sub-Advisor, or of material changes in the
control of the Sub-Advisor. The Sub-Advisor will promptly notify the Advisor
of
any pending significant investigation, material litigation, administrative
proceeding or any other significant regulatory inquiry. 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 Sub-Advisor Assets.
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 “Securities Act”), and
any rule or regulation thereunder.
(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 the state of Delaware, 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 on the part of its 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
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; and
(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 made, 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.
(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 Delaware, 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;
(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;
and
(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.
During
the term of this Agreement, the Trust and the Advisor agree to furnish to the
Sub-Advisor at its principal offices prior to use thereof copies of all
Registration Statements and amendments thereto, prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared for
distribution to shareholders of the Trust or any Series or to the public that
refer or relate in any way to the Sub-Advisor or any of its affiliates (other
than the Advisor), or that use any derivative of the Sub-Advisor’s name or logos
associated therewith. The Trust and the Advisor agree that they will not use
any
such material without the prior consent of the Sub-Advisor, which consent shall
not be unreasonably withheld. In the event of the termination of this Agreement,
the Trust and the Advisor will furnish to the Sub-Advisor copies of any of
the
above-mentioned materials that refer or relate in any way to the
Sub-Advisor. The Trust and Advisor will be deemed to have furnished
the foregoing documents by directing the Sub-Advisor to the appropriate internet
address or by sending documents as attachments to electronic mail messages
sent
to the Sub-Advisor.
The
Trust
and the Advisor will furnish to the Sub-Advisor such information relating to
either of them or the business affairs of the Trust as the Sub-Advisor shall
from time to time reasonably request in order to discharge its obligations
hereunder.
The
Advisor and the Trust agree that neither the Trust, the Advisor, nor affiliated
persons of the Trust or the Advisor shall give any information or make any
representations or statements in connection with the sale of shares of the
Series concerning the Sub-Advisor or the Series other than the information
or
representations contained in the Registration Statement, prospectus, or
statement of additional information for the Trust, as they may be amended or
supplemented from time to time, and reviewed and agreed to by the Sub-Advisor,
or in reports or proxy statements for the Trust, or in sales literature or
other
promotional material approved in advance by the Sub-Advisor, except with the
prior approval of the Sub-Advisor. Such approval will not be unreasonable
withheld by the Sub-Advisor and Sub-Advisor agrees to reasonable turnaround
times of and/all material submitted for approval.
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.
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 No Action Letter provided or 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
an Information Statement; provided that the Sub-Advisor shall not be responsible
for the amount of such costs under this section 11(b) in excess of $25,000.
Notwithstanding the foregoing, if in its sole reasonable judgment, the
Sub-Advisor determines that continuing to serve in its role as Sub-Advisor
under
this Agreement will expose it to unwanted reputational, regulatory, financial
or
other risks, then the Sub-Advisor will not assume the costs or expenses
(including the costs of mailing) associated in any way with the preparation
or
distribution of an Information Statement
This
Agreement shall extend to and bind the heirs, executors, administrators and
successors of the parties hereto.
(a)
If to the Advisor:
Xxxxxx
Global Investments, Inc.
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000
Attention: Chief
Counsel
(b)
If to the Sub-Advisor:
Xxxxxx
Xxxxxxx Investment Management
Inc.
000
Xxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx, 00000
Attention:
General Counsel
16.
Governing Law. This Agreement shall be governed by the internal laws of the
State of New York 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.
SIGNATURE
PAGE FOLLOWS – REMAINDER OF PAGE IS BLANK
XXXXXX
GLOBAL INVESTMENTS, INC.
By:
/s/ Xxxxx Xxxxxx
Name: Xxxxx
Xxxxxx
Title: Chief
Investment Officer
SUB-ADVISOR
XXXXXX
XXXXXXX INVESTMENT MANAGEMENT INC.
By:
/s/ Xxxxx Xxxxxx
Name: Xxxxx
Xxxxxx
Title: Managing
Director
EXHIBIT
A
BETWEEN
XXXXXX GLOBAL INVESTMENTS, INC.
AND
XXXXXX
XXXXXXX INVESTMENT MANAGEMENT INC.
March
13,
2009
MGI
Non-US Core Equity Fund
Fee
Schedule
Assets
Compensation
All
assets
0.43%
Computation
The
fee will be calculated (the
“Calculation”) and accrued daily and payable quarterly in arrears following the
last day of each calendar quarter. The Calculation is based on the annual fee
rate (listed above) multiplied against daily net assets of the Sub-Advisor
Assets, as provided by the Fund.
As
soon
as practicable after the end of each calendar quarter, the Sub-Advisor shall
send to the Advisor an invoice of
the Calculation in reasonable detail of the fee for the calendar quarter
then ended as of the close of business on the last day of such calendar
quarter. The Advisor may approve or disapprove the Calculation within
ten (10) business days of its receipt. In the event that the
Calculation has been accurately prepared in accordance with the terms of this
Agreement, the Advisor shall pay the fee to the Sub-Advisor within thirty (30) days after
receipt of
such invoice. In the event of a dispute between the parties
regarding the accuracy of the Calculation, it is hereby agreed that all
discussions in resolution of such dispute will be conducted promptly and in
good
faith.
The
foregoing fee shall be accrued for each calendar day (by the Fund) and the
sum
of the daily fee accruals shall be paid quarterly in arrears by the Advisor
to
the Sub-Advisor as described herein. The daily fee accruals will be
computed by multiplying the fraction of one over the number of calendar days
in
the year by the applicable annual rate set forth in the schedule above and
multiplying this product by the net assets of the Sub-Advisors Assets, as
determined in accordance with the Prospectus as of the close of business on
the
previous business day on which the Trust was open for business.
If
this
Agreement is terminated prior to the end of any calendar quarter, the fee shall
be prorated for the portion of any quarter 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 quarter,
and
shall be payable within thirty (30) days after the date of termination.
EXHIBIT
B
SUB-ADVISOR
FORM
ADV
(Please
attach)
