Exhibit 99 - d(2)
Flag Investors Series Funds, Inc.
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of the 29th day of December, 2000 by and
among FLAG INVESTORS SERIES FUNDS, INC. a Maryland corporation (the "Series
Funds"), INVESTMENT COMPANY CAPITAL CORP., a Maryland corporation (the
"Advisor"), and XXXXXXXX ASSOCIATES LLC, a Delaware limited liability company
(the "Sub-Advisor").
WHEREAS, the Advisor is the investment advisor to the Series Funds,
which is an open-end, diversified management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), consisting of
several series of shares, each having its own investment policies.
WHEREAS, the Board of Series Funds (the "Board") has selected the
Advisor to provide overall investment advice and management, and to provide
certain other services, under the terms and conditions provided in the Advisory
Agreement, dated December 29, 2000, between Investment Company Capital Corp. and
Flag Investors Series Funds, Inc. (the "Advisory Agreement").
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Sub-Advisor. The Series Funds hereby appoints the
Sub-Advisor to act as the Sub-Advisor of each series listed in Schedule A to
this Agreement (each such series, together with all other series subsequently
established by the Series Funds and made subject to this Agreement in accordance
with Section 10, being herein referred to as "a Series", and collectively as
"the Series") under the supervision of the Board and the Advisor, and the
Sub-Advisor hereby accepts such appointment, all subject to the terms and
conditions contained herein.
2. Delivery of Documents. The Series Funds has furnished the
Sub-Advisor with copies properly certified or authenticated of each of the
following:
(a) The Series Funds' Articles of Incorporation, filed with
the State of Maryland on March 16, 1993 and all amendments thereto
(such Articles of Incorporation, as presently in effect and as they
shall from time to time be amended, is herein called the "Articles of
Incorporation");
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(b) The Series Funds' By-Laws and all amendments thereto (such
By-Laws, as presently in effect and as they shall from time to time be
amended, are herein called the "By-Laws");
(c) Resolutions of the Series Funds' Board and shareholders
authorizing the appointment of the Sub-Advisor and approving this
Agreement;
(d) The Series Funds' Registration Statement on Form N-1A
under the Securities Act of 1933, as amended (the "1933 Act") (File No.
33-8479) and under the 1940 Act as filed with the Securities and
Exchange Commission ("SEC") relating to the shares of the Series Funds
on behalf of the Series listed in Schedule A, and all amendments
thereto; and
(e) Each Series' most recent prospectus (such prospectus, as
presently in effect, and all amendments and supplements thereto are
herein called "Prospectus").
The Series Funds will furnish the Sub-Advisor from time to time with
copies, properly certified or authenticated, of all amendments or supplements to
the foregoing, if any, and all documents, notices and reports filed with the
SEC.
The Sub-Advisor will provide the Series with copies of its Form ADV,
including all amendments thereto, as it is filed with the SEC.
3. Duties of Sub-Advisor. In carrying out its obligations under Section
1 hereof, the Sub-Advisor shall:
(a) provide the Series with such executive and clerical
services as are deemed advisable by the Board;
(b) determine which issuers and securities shall be
represented in the each Series' portfolio and regularly report thereon
to the Series Funds' Board;
(c) formulate and implement continuing programs for the
purchases and sales of securities and regularly report thereon to the
Series Funds' Board;
(d) take, on behalf of the Series, all actions which appear
necessary to carry into effect such purchase and sale programs as
aforesaid, including the placing of orders for each Series' purchase
and sale of securities;
(e) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally
or each Series, and whether concerning the individual issuers whose
securities are included in each Series' portfolio or the activities in
which they engage, or with respect to securities which the Advisor
considers desirable for inclusion in each Series' portfolio; and
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(f) provide the Advisor and Series Funds with records
concerning the Sub-Advisor's activities which the Series Funds is
required to maintain;
(g) render regular reports to the Advisor and the Series
Funds' officers and directors concerning the Sub-Advisor's discharge of
its responsibilities;
(h) discharge the foregoing responsibilities subject to the
control of the Board of the Series Funds and the overall supervision of
the Advisor and in compliance with such policies as the Directors or
the Advisor may from time to time establish, subject always to the
provisions of the Series Fund's Articles of Incorporation and By-Laws,
and the 1940 Act, and in compliance with the objectives, policies, and
limitations for each Series as set forth in each Series' Prospectus and
statement of additional information, as amended from time to time, and
applicable laws and regulations.
Subject to the provisions of this Agreement, the duties of the
Sub-Advisor, the portion of portfolio assets of each Series that the Sub-Advisor
shall manage and the fees to be paid to the Sub-Advisor by the Advisor under and
pursuant to this Agreement may be adjusted from time to time by the Advisor,
with and upon the approval of the members of the Series Funds' Board who are not
"interested persons," as defined in the 1940 Act.
4. Portfolio Transactions. The Sub-Advisor is authorized in its
discretion to select the brokers or dealers that will execute the purchases and
sales of portfolio securities for a Series and is directed to use its best
efforts to obtain the best net results as described from time to time in a
Series' prospectus and statement of additional information. The Sub-Advisor will
promptly communicate to the Advisor and to the officers and the Directors of the
Series Fund such information relating to the portfolio transactions as they may
be reasonably request.
It is understood that the Sub-Advisor will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Series Funds or be
in breach of any obligation owing to the Series Funds under this Agreement, or
otherwise, solely by reason of its having directed a securities transaction on
behalf of the Series Funds to a broker-dealer in compliance with the provisions
of Section 28(e) of the Securities Exchange Act of 1934 or as otherwise
permitted from time to time by the Series Funds prospectus and statement of
additional information.
Subject to the policies established by the Board in compliance with
applicable law, the Advisor may direct DB Alex. Xxxxx LLC or any of its
affiliates ("DB Alex. Xxxxx") to execute portfolio transactions for the Series
Funds on an agency basis. The commissions paid to DB Alex. Xxxxx must be, as
required by Rule 17e-1 under the 1940 Act, "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
during a comparable period of time." If the purchase or sale of securities
consistent with the investment policies of each Series or one or more other
accounts of the Sub-Advisor is considered at or about the same time,
transactions in such securities will be allocated among the accounts in a manner
deemed equitable by the Sub-Advisor. DB Alex. Xxxxx and the Sub-Advisor may
combine such transactions, in accordance with applicable laws and regulations,
in order to obtain the best net price and most favorable execution.
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The Series Funds on behalf of each Series will not deal with the
Sub-Advisor or DB Alex. Xxxxx in any transaction in which the Sub-Advisor or DB
Alex. Xxxxx acts as a principal with respect to any part of a Series' order. If
DB Alex. Xxxxx is participating in an underwriting or selling group, a Series
may not buy portfolio securities from the group except in accordance with
policies established by the Board in compliance with rules of the SEC.
5. Control by Series Funds' Board. Any recommendations concerning a
Series' investment program proposed by the Sub-Advisor and the Advisor pursuant
to this Agreement, as well as any other activities undertaken by the Sub-Advisor
on behalf of a Series pursuant hereto, shall at all times be subject to any
applicable directives of the Board.
6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Sub-Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder, as amended;
(b) the provisions of the Registration Statement of the Series
Funds under the 1933 Act and the 1940 Act;
(c) the provisions of the Articles of Incorporation;
(d) the provision of the By-Laws; and
(e) any other applicable provisions of state and federal law.
7. Expenses. The expenses connected with the Series Funds on behalf of
each Series shall be allocable between the Series Funds, the Sub-Advisor and the
Advisor as follows:
(a) The Sub-Advisor shall furnish at its expense and without
cost to the Series Funds, the services of one or more officers of the
Sub-Advisor, to the extent that such officers may be required by the
Series for the proper conduct of its affairs.
(b) The Sub-Advisor shall maintain, at its expense and without
cost to the Series Funds, a trading function in order to carry out its
obligations under Section 3 hereof to place orders for the purchase and
sale of portfolio securities for each Series.
(c) The Series Funds assumes and shall pay or cause to be paid
all other expenses of the Series Funds on behalf of each Series,
including, without limitation: payments to the Advisor under the
Investment Advisory Agreement between the Series Funds and the Advisor,
payments to the Series Funds' distributor under the Series Funds' plan
of distribution; the charges and expenses of any registrar, any
custodian or depository appointed by the Series Funds for the
safekeeping of each Series' cash, portfolio securities and other
property, and any transfer, dividend or accounting agent or agents
appointed by the Series Funds; brokers' commissions chargeable to the
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Series Funds on behalf of each Series' in connection with portfolio
securities transactions to which the Series Funds is a party; all
taxes, including securities issuance and transfer taxes, and fees
payable by the Series Funds to Federal, State or other governmental
agencies; the costs and expenses of engraving or printing of
certificates representing shares of the Series Funds; all costs and
expenses in connection with the registration and maintenance of
registration of the Series Funds and its shares with the SEC and
various states and other jurisdictions (including filing fees, legal
fees and disbursements of counsel); the costs and expenses of printing,
including typesetting, and distributing prospectuses and statements of
additional information of the Series Funds and supplements thereto to
the Series Funds' shareholders; all expenses of shareholders' and
Directors' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of
Directors or Director members of any advisory board or committee; all
expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and
expenses of any outside service used for pricing of the Series Funds'
shares; charges and expenses of legal counsel, including counsel to the
Directors of the Series Funds who are not "interested persons" (as
defined in the 0000 Xxx) of the Series Funds and of independent
certified public accountants, in connection with any matter relating to
the Series Funds; membership dues of industry associations; interest
payable on Series Funds borrowings; postage; insurance premiums on
property or personnel (including officers and Directors) of the Series
Funds which inure to its benefit; extraordinary expenses (including but
not limited to, legal claims and liabilities and litigation costs and
any indemnification related thereto); and all other charges and costs
of the Series Funds' operation unless otherwise explicitly provided
herein
8. Compensation. For the services to be rendered hereunder by the
Sub-Advisor, the Advisor shall pay to the Sub-Advisor monthly compensation in
accordance with Schedule B. Series Fund on behalf of each Series shall have no
responsibility for such compensation.
Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily and the amounts of the daily accruals paid
monthly. For any period less than a full month during which this Agreement is in
effect, the fee shall be prorated according to the proportion, which such period
bears to a full month. Payment of the Sub-Advisor's compensation for the
preceding month shall be made as promptly as possible.
9. Delegation of Responsibilities. The Sub-Advisor may, but shall not
be under any duty to, perform services on behalf of the Series Funds which are
not required by this Agreement upon the request of the Series Funds' Board. Such
services will be performed on behalf of the Series Funds and the Sub-Advisor's
charges in rendering such services will be billed monthly to the Series Funds,
subject to examination by the Series Funds' independent certified public
accountants. Payment or assumption by the Sub-Advisor of any Series Funds
expense that the Sub-Advisor is not required to pay or assume under this
Agreement shall not relieve the Sub-Advisor of any of its obligations to the
Series Funds nor obligate the Sub-Advisor to pay or assume any similar Series
Funds expenses on any subsequent occasions.
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10. Additional Series Funds and Classes. In the event that the Series
Funds establishes one or more series of Shares or one or more classes of Shares
after the effectiveness of this Agreement, such series of shares or classes of
shares, as the case may be, shall become Series and Classes under this Agreement
upon approval of this Agreement by the Series Funds with respect to the series
of shares or class of shares and the execution of an amended Appendix A
reflecting the applicable names and terms.
11. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall remain in effect with respect to a Series until two
years from the date first set forth above, and thereafter, for periods of one
year so long as such continuance thereafter is specifically approved at least
annually (a) by the vote of a majority of those members of the Board of the
Series Funds who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval, and, except as may be otherwise permitted by then current law as
modified or interpreted by any applicable order or orders of the SEC or any
rules or regulations adopted by, or interpretative releases of, the SEC, (b) by
vote of a majority of the outstanding voting securities of a Series; provided
however, that if the shareholders of a Series fail to approve the Agreement as
provided in Section 15 of the 1940 Act, the Sub-Advisor may continue to serve
hereunder in the manner and to the extent permitted by the 1940 Act and rules
and regulations thereunder. The foregoing requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed in a
manner consistent with the 1940 Act as modified or interpreted by any applicable
order or orders of the SEC or any rules or regulations adopted by, or
interpretative releases of, the SEC.
This Agreement may be terminated as to a Series at any time, without
the payment of any penalty by vote of a majority of the members of the Board of
the Series Funds or by vote of a majority of the outstanding voting securities
of a Series or the Advisor on not less than 30 days nor more than 60 days
written notice to the Sub-Advisor, or by the Sub-Advisor at any time without the
payment of any penalty, on 60 days written notice to the Advisor and the Series
Funds. This Agreement will automatically and immediately terminate in the event
of its assignment. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any office of
such party.
As used in this Section 11, the term "assignment" shall have the
meaning as set forth in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the SEC.
12. Non-Exclusivity. Each of the Advisor and the Sub-Advisor hereby
represents and warrants that it is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended. The services of the Sub-Advisor to
the Advisor and the Series Funds on behalf of each Series are not to be deemed
to be exclusive, and the Sub-Advisor shall be free to render investment advisory
or other services to others (including other investment companies) and to engage
in other activities, so long as its services under this Agreement are not
impaired thereby. It is understood and agreed that officers and directors of the
Sub-Advisor may serve as officers or members of the Board of the Series Funds,
and that officers or members of the Board of the Series Funds may serve as
officers or directors of the Sub-Advisor to the extent permitted by law; and
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that the officers and directors of the Sub-Advisor are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, officers or directors of any other firm or
corporation, including other investment companies.
13. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities for the account of the Series Funds or a Series,
neither the Sub-Advisor nor any of its directors, officers or employees will act
as principal or agent or receive any commission. The Sub-Advisor shall not
knowingly recommend that a Series purchase, sell or retain securities of any
issuer in which the Sub-Advisor has a financial interest without obtaining prior
approval of the Advisor prior to the execution of any such transaction.
14. Liability of Sub-Advisor. In the performance of its duties
hereunder, the Sub-Advisor shall be obligated to exercise care and diligence and
to act in good faith to ensure the accuracy of all services performed under this
Agreement, but the Sub-Advisor shall not be liable for any act or omission which
does not constitute willful misfeasance, bad faith or gross negligence on the
part of the Sub-Advisor or its officers, Directors or employees, or reckless
disregard by the Sub-Advisor of its duties under this Agreement.
15. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
Currently, such addresses are as follows: if for the Sub-Advisor, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; if for the Advisor and the Series Funds, Xxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
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16. Amendment of This Agreement. No provision of this Agreement may be
changed or waived orally, but only by an instrument in writing signed by the
party against which enforcement of the change or waiver is sought, and no
amendment to this Agreement shall be effective until approved by (a) the
Directors, including a majority of the members of the Board who are not
interested persons of the Advisor, the Sub-Advisor or (other than as Board
members) the Series Funds, cast in person at a meeting called for the purpose of
voting on such approval, and, except as may be otherwise permitted by then
current law as modified or interpreted by any applicable order or orders of the
SEC or any rules or regulations adopted by, or interpretative releases of, the
SEC, (b) a majority of the outstanding voting securities of a Series, as defined
in the 1940 Act.
17. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to such
term or provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such
court, by rules, regulations, orders or interpretative releases of the SEC
issued pursuant to said Act. In addition, where the effect of a requirement of
the 1940 Act reflected in any provision of this Agreement is revised by rule,
regulation, order or interpretative releases of the SEC, such provision shall be
deemed to incorporate the effect of such rule, regulation, order or
interpretative releases. Otherwise the provisions of this Agreement shall be
interpreted in accordance with the laws of Maryland.
18. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
19. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
[SEAL] FLAG INVESTORS SERIES FUNDS, INC.
Attest: /s/Xxxxxxx Xxxxxxxx By: /s/Xxx X. Xxxxxx
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Name: Xxxxxxx Xxxxxxxx Name: Xxx X. Xxxxxx
Title: Secretary
[SEAL] INVESTMENT COMPANY CAPITAL CORP.
Attest: /s/Xxxxxxx Xxxxxxxx By: /s/Xxxxxxx X. Xxxx
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Name: Xxxxxxx Xxxxxxxx Name: Xxxxxxx X. Xxxx
Title: President
[SEAL] XXXXXXXX ASSOCIATES LLC
Attest: /s/Xxxxx Xxxxx By: /s/Xxxxx X. Xxxxxx
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Name: Xxxxx Xxxxx Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
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Schedule A
Flag Investors Growth Opportunity Fund
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Schedule B
Compensation Table
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Sub-Advisory Fee as a % of
Average Daily Net Assets Average Daily Net Assets
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$0 to $250 million 0.48%
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$250 million to $500 million 0.45%
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In excess of $500 million 0.42%
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