Exhibit 5(iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
DG INVESTOR SERIES
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between ParkSouth Corporation, a
Mississippi corporation (hereinafter referred to as "Adviser") and
Xxxxxxx Xxxxxxxx Management, LLC, a New York limited liability company
(hereinafter referred to as the "Sub-Adviser").
WITNESSETH
That the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Adviser in its capacity as investment adviser to DG
Mid-Cap Fund (the "Fund"), a portfolio of DG Investor Series
("Trust"), under the Investment Advisory Contract dated as of March
31, 1997, appoints the Sub-Adviser as a discretionary investment
sub-adviser to the Fund pursuant to the terms set forth in this
Agreement.
2. (a) The Sub-Adviser will deal in good faith and with due
diligence and will use professional skill, care and judgment in the
performance of its duties under this Agreement. In so doing, the
Sub-Adviser shall formulate and implement a continuing program for the
management of the assets of the Fund. The Sub-Adviser shall amend and
update such program from time to time as financial and other economic
conditions warrant. The Sub-Adviser shall make all determinations with
respect to the investment of the assets of the Fund and shall take
such steps as may be necessary to implement the same, including the
placement of purchase and sale orders on behalf of the Fund; PROVIDED,
HOWEVER, that any assets of the Fund that the Sub-Adviser has
determined are to be held in cash and cash equivalents shall be
managed by the Adviser. The Adviser shall be responsible for the
administration of the investment activities of the Fund, including
compliance with the requirements of the Investment Company Act of
1940, except for the investment management activities specifically
delegated to the Sub-Adviser pursuant to this Agreement. The
Sub-Adviser's activities hereunder shall comply with: (i) the
Declaration and By-Laws of the Trust; (ii) the Registration Statement
of the Trust, as it may be amended from time to time, including the
investment objectives and policies set forth therein; (iii) the
Investment Company Act of 1940 and the Investment Advisers Act of 1940
and the regulations thereunder; (iv) the Internal Revenue Code and the
regulations thereunder applicable to regulated investment companies;
(v) any other applicable laws or regulations; and (vi) such other
limitations as the Adviser or the Board of Trustees of the Trust may
adopt.
(b) The Sub-Adviser will adopt or has adopted a
written code of ethics complying with the requirements of Rule 17j-1
under the Investment Company Act of 1940, will provide the Adviser
with a copy of the code of ethics and evidence of its adoption, and
will make such reports to the Trust or other persons as required by
Rule 17j-1. The Sub-Adviser will also adopt or has adopted policies
and procedures sufficient to enable the Sub-Adviser to detect and
prevent the misuse of material, nonpublic information by the
Sub-Adviser or any person associated with the Sub-Adviser, in
compliance with federal and state securities laws.
(c) The Sub-Adviser will prepare, maintain, keep
current and preserve on behalf of the Trust and the Adviser all
records concerning the Sub-Adviser's activities in connection with the
Fund that the Fund is required by law to maintain, including, but not
limited to, records required under paragraphs (b)(5), (b)(6), (b)(9),
(b)(10), and (f) of rule 31a-1 under the Investment Company Act. Any
records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 under the Investment Company
Act of 1940 that are prepared by the Sub-Adviser on behalf of the Fund
are the property of the Fund and will be surrendered promptly on
request to the Fund or any person acting on behalf of the Trust during
the term of this Agreement and at any time after the termination of
this Agreement; provided, however, that the Sub-Adviser has the right
to make and retain copies. The Sub-Adviser will comply with all
reasonable requests for information by the Adviser or the Trust's
officers or Board of Trustees, including information required for the
Fund's filings with the Securities and Exchange Commission and state
securities commissions.
(d) The Sub-Adviser will promptly after filing with the
Securities and Exchange Commission an amendment to its Form ADV furnish a copy
of such amendment to the Trust and the Adviser.
(e) The Sub-Adviser will immediately notify the
Adviser of the occurrence of any event which would disqualify the
Sub-Adviser from serving as an investment adviser of an investment
company pursuant to Section 9(a) of the Investment Company Act of 1940
or otherwise.
3. (a) The Sub-Adviser's power to direct the investment and
reinvestment of the assets of the Fund shall be exercised in
accordance with applicable law, the Fund's governing documents and the
investment objectives, policies and restrictions set forth in the
then-current Prospectus and Statement of Additional Information
(collectively the "Prospectus") relating to the Fund contained in the
Trust's Registration Statement under the Investment Company Act of
1940 and the Securities Act of 1933, as amended. The Adviser may also
place additional limitations on the Sub-Adviser's investment decisions
by written notice to the Sub-Adviser. The Adviser agrees to provide
promptly, or cause to be provided promptly, to the Sub-Adviser a copy
of the documents mentioned above and all changes made to such
documents.
(b) While the Sub-Adviser will have day-to-day
responsibility for the discretionary investment decisions to be made
on behalf of the Fund, the Sub-Adviser will be subject to oversight by
the Adviser. Such oversight, however, shall not require prior approval
of discretionary investment decisions made by the Sub-Adviser by the
Adviser pursuant to the preceding sentence.
(c) The Trust retains the right, on reasonable prior
written notice to the Adviser and the Sub-Adviser, to amend the Fund's
investment objectives, policies and restrictions placed on the
Sub-Adviser's investment decisions. Similarly, the Adviser retains the
right, on reasonable prior written notice to the Sub-Adviser, to amend
any additional limitations, if any, that have been placed on the
Sub-Adviser's investment decisions with respect to the Fund. Upon
receipt of such prior notice from either the Trust or the Adviser, the
Sub-Adviser will promptly notify both the Fund and the Adviser if
adoption of such amendment would interfere with the completion of any
transaction commenced on behalf of the Fund prior to the Sub-Adviser's
receipt of the notice. In the event that the Trust or the Adviser
proceeds to amend the Fund's investment objectives, policies and
restrictions or any additional limitations after being notified by the
Sub-Adviser of the pending transaction commenced on behalf of the
Fund, or in the event that the Trust or the Adviser amends the Fund's
investment objectives, policies and restrictions or any additional
limitations without providing reasonable prior notice to the
Sub-Adviser, the Sub-Adviser may complete such transaction unless
doing so would violate any applicable law, rule or regulation. In such
an event, the Sub-Adviser will not be responsible for any loss that
may result from the completion of the transaction.
(d) Except as may be qualified elsewhere in this
Agreement, the Sub-Adviser is hereby authorized, for and on behalf of the Fund,
in its discretion, to:
(i) exercise any conversion and/or
subscription rights available in connection with any securities or
other investments held in the Fund;
(ii) maintain all or part of the Fund's assets
uninvested in short-term income-producing instruments for such periods of time
as shall be deemed reasonable and prudent by the Sub-Adviser;
(iii) instruct the Custodian, to deliver for cash
received, securities or other cash and/or securities instruments sold,
exchanged, redeemed or otherwise disposed of from the Fund, and to pay
cash for securities or other cash and/or securities instruments
delivered to the Custodian and/or credited to the Fund upon
acquisition of the same for the Fund;
(iv) determine how to vote all proxies received
with respect to securities held in the Fund and direct the Custodian as to the
voting of such proxies; and
(v) generally, perform any other act
necessary to enable the Sub-Adviser to carry out its obligations under
the Agreement.
4. (a) The Sub-Adviser shall select the brokers and dealers
through which transactions on behalf of the Fund will be executed and
the markets on or in which such transactions will be executed. The
Sub-Adviser shall place, in the name of the Fund or its nominee (or
appropriate foreign equivalent), all such orders for the purchase or
sale or of securities due to or forth below and in accordance with
such operational procedures as may be agreed to from time to time by
the Adviser and the Sub-Adviser.
(b) In placing orders with brokers and/or dealers,
the Sub-Adviser shall use its best efforts to obtain the best net
price and the most favorable execution of its orders, after taking
into account all factors 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 and/or dealer, and
the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. Consistent with this
obligation, the Sub-Adviser may, to the extent permitted by law,
purchase and sell portfolio securities using brokers that provide
brokerage and research services (within the meaning of Section 28(e)
of the Securities and Exchange Act of 1934) to or for the benefit of
the Fund and/or other accounts over which the Sub-Adviser or the
Adviser exercises investment discretion. The Sub-Adviser is authorized
to pay a broker that provides such brokerage and research services a
commission for effecting a securities transaction which is in excess
of the amount of commission another broker would have charged for
effecting that transaction, if the Sub-Adviser determines in good
faith that such commission was reasonable in relation to the value of
brokerage and research services provided by such broker. This
determination may be viewed in terms of either that particular
transaction or of the overall responsibilities of the Sub-Adviser with
respect to the accounts as to which it exercises investment
discretion.
(c) Notwithstanding for foregoing, the Board of
Trustees and the Adviser periodically shall review the commissions
paid by the Fund and determine whether those commissions were
reasonable in relation to the brokerage and research services
received.
5. It is understood that certain other clients (including
other funds, portfolios and accounts) of the Sub-Adviser may have
investment objectives and policies similar to those of the Fund and
that the Sub-Adviser may, from time to time, make recommendations that
result in the purchase (or sale) or a particular security by its other
clients and the Fund during the same period of time. If transactions
on behalf of more than one client during the same period increase the
demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price or quantity. In
such event, the Sub-Adviser shall allocate the securities or
investments to be purchased or sold, as well as the expense incurred
in the transactions (including price) in a manner the Sub-Adviser
considers equitable and consistent with its obligations to the Fund
and the Sub-Adviser's other clients.
6. The Sub-Adviser agrees that it will only enter into
transactions that are covered by Section 10(f) or Section 17(e) of the
Investment Company Act of 1940 if it has (i) complied with Rule 10f-3
or Rule 17e-1 thereunder, respectively, or the terms of an appropriate
exemptive order issued to the Fund by the SEC, and (ii) has complied
with the procedures adopted thereunder by the Board of Trustees of the
Trust, which may, pursuant to authority granted by the Trust, be
supplemented by interpretive guidelines of the Adviser. Aside from
parties that are known or should be known by the Sub-Adviser, the
Adviser shall promptly notify the Sub-Adviser of any additional
parties with whom engaging in a transaction for the Fund would result
in a violation of the Investment Company Act of 1940.
7. For its services under this Agreement, Sub-Adviser shall
receive from Adviser an annual fee ("the Sub-Advisory Fee"), as set forth in
Exhibit A hereto.
8. This Agreement shall take effect on the date that the
parties execute the exhibit to this Agreement relating to such Fund
and shall continue in effect for the Fund for two years from the date
of its execution and from year to year thereafter, subject to the
provisions for termination and all of the other terms and conditions
hereof if: (a) such continuation shall be specifically approved at
least annually by the vote of a majority of the Trustees of the Trust,
including a majority of the Trustees who are not parties to this
Agreement or interested persons of any such party (other than as
Trustees of the Trust) cast in person at a meeting called for that
purpose; and (b) the Adviser shall not have notified the Trust in
writing at least sixty (60) days prior to the anniversary date of this
Agreement in any year thereafter that it does not desire such
continuation with respect to the Fund.
9. Notwithstanding any provision in this Agreement, it may be
terminated at any time without the payment of any penalty: (a) by the
Trustees of the Trust or by a vote of a majority of the outstanding
voting securities (as defined in Section 2(a)(42) of the Act) of the
Fund on sixty (60) days' written notice to the Adviser; (b) by the
Sub-Adviser or the Adviser upon sixty (60) days' written notice to the
other party to the Agreement. Termination of this Agreement will not
affect (i) the validity of any action previously taken by the Adviser
or the Sub-Adviser under this Agreement or (ii) liabilities or
obligations of the parties from transactions initiated before
termination of this Agreement.
10. This Agreement shall automatically terminate:
(a) in the event of its assignment (as defined in the
Investment Company Act of 1940); or
(b) in the event of termination of the Investment
Advisory Contract for any reason whatsoever.
11. So long as both the Adviser and the Sub-Adviser shall be
legally qualified to act as an investment adviser, neither the Adviser
nor the Sub-Adviser shall act as an investment adviser (as such term
is defined in the Investment Company Act of 1940) to the Fund except
as provided herein and in the Investment Advisory Contract or in such
other manner as may be expressly agreed between the Adviser and the
Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser shall
resign prior to the end of any term of this Agreement or for any
reason by unable or unwilling to serve for a successive term which has
been approved by the Trustees of the Trust pursuant to the provisions
of Paragraph 8 of this Agreement or Paragraph 6 of the Investment
Advisory Contract, the remaining party, the Sub-Adviser or the
Adviser, as the case may be, shall not be prohibited from serving as
an investment adviser to such Fund by reason of the provisions of this
Paragraph 11.
12. This Agreement may be amended from time to time by
agreement of the parties hereto provided that such amendment shall be
approved both by the vote of a majority of Trustees of the Trust,
including a majority of Trustees who are not parties to this Agreement
or interested persons, as defined in Section 2(a)(19) of the
Investment Company Act of 1940, of any such party at a meeting called
for that purpose, and, where required by Section 15(a)(2) of the
Investment Company Act of 1940, by the holders of a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the
Investment Company Act of 1940) of the Fund.
13. This Agreement shall be construed in accordance with the
laws of the Commonwealth of Pennsylvania without giving effect to the
choice of law previsions thereof, to the extent that such laws are
consistent with provisions of the Investment Company Act of 1940 and
the regulations thereunder. The failure of either party to insist, in
one or more instances, upon strict performance of the obligations of
this Agreement, or to exercise any rights contained herein, shall not
be construed as a waiver, or relinquishment for the future of such
obligation or right, which shall remain and continue in full force and
effect. Should any part of this Agreement be held or made invalid by a
court decision, statute, regulation, or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
EXHIBIT A
DG INVESTOR SERIES
DG MID-CAP FUND
Sub-Advisory Agreement
For all services rendered by Sub-Adviser hereunder, the
Adviser shall pay the Sub-Adviser a Sub-Advisory Fee based on the
average daily net assets of the Fund, as follows:
FUND ASSETS ANNUAL RATE
Any assets up to and including $5 million 0.75%
Any assets over $5 million up to and including $10 million 0.65%
Any assets over $10 million 0.55%
The Sub-Advisory Fee shall be calculated by the Adviser and shall be
accrued daily, and paid quarterly in arrears, as set forth in the
Investment Advisory Contract dated March 31, 1997.
This Exhibit incorporates by reference the Sub-Advisory
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Exhibit to be executed on their behalf by their duly authorized
officers, and their corporate seals to be affixed hereto this 6th day
of August, 1997.
ATTEST: ParkSouth Corporation
/S/J. XXXXXXXX XXXXXXXX By: /S/XXXXXXX X. XXXXXXXX, XX.
Secretary Chief Executive Officer
Xxxxxxx Xxxxxxxx Management, LLC
/S/XXXXX XXXXX XXXXX By: /S/ XXX XXXXXXXXX
Name: Xxxxx Xxxxx Xxxxx Managing Member
Title: Director of Administration
