Exhibit 5(b)
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 31st day of May, 1997 by and between Xxxx Xxxxxx
InterCapital Inc., a Delaware corporation (herein referred to as the "Investment
Manager"), and Xxxxxx Xxxxxxxx Investment Services Limited, a British
corporation (herein referred to as the "Sub-Adviser").
WHEREAS, Xxxx Xxxxxx Global Asset Allocation Fund (herein referred to as the
"Fund") is engaged in business as an open-end management investment company and
is registered as such under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Investment Manager has entered into an Investment Management
Agreement with the Fund (the "Investment Management Agreement") wherein the
Investment Manager has agreed to provide investment management services to the
Fund; and
WHEREAS, the Sub-Adviser is registered as an investment adviser as under the
Investment Advisers Act of 1940 and is a member of the Investment Management
Regulatory Organization (IMRO), and, as such, is regulated by IMRO in the
conduct of its investment business in the U.K., and engages in the business of
acting as an investment adviser; and
WHEREAS, the Investment Manager desires to retain the services of the
Sub-Adviser to render investment advisory services for the Fund in the manner
and on the terms and conditions hereinafter set forth; and
WHEREAS, the Sub-Adviser desires to be retained by the Investment Manager to
perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to the supervision of the Fund, its officers and Trustees, and the
Investment Manager, and in accordance with the investment objectives, policies
and restrictions set forth in the then-current Registration Statement relating
to the Fund, and such investment objectives, policies and restrictions from time
to time prescribed by the Trustees of the Fund and communicated by the
Investment Manager to the Sub-Adviser, the Sub-Adviser agrees to provide the
Fund with investment advisory services with respect to the Fund's investments to
obtain and evaluate such information and advice relating to the economy,
securities markets and securities as it deems necessary or useful to discharge
its duties hereunder; to continuously manage the assets of the Fund in a manner
consistent with the investment objective and policies of the Fund; to make
decisions as to foreign currency matters and make determinations as to forward
foreign exchange contracts and options and futures contracts in foreign
currencies; shall determine the securities to be purchased, sold or otherwise
disposed of by the Fund and the timing of such purchases, sales and
dispositions; to take such further action, including the placing of purchase and
sale orders on behalf of the Fund, as it shall deem necessary or appropriate; to
furnish to or place at the disposal of the Fund and the Investment Manager such
of the information, evaluations, analyses and opinions formulated or obtained by
it in the discharge of its duties as the Fund and the Investment Manager may,
from time to time, reasonably request. The Investment Manager and the
Sub-Adviser shall each make its officers and employees available to the other
from time to time at reasonable times to review investment policies of the Fund
and to consult with each other.
2. The Sub-Adviser 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 or useful to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Sub-Adviser shall be deemed to include
persons employed or otherwise retained by the Sub-Adviser to furnish statistical
and other factual data, advice regarding economic factors and trends,
information with respect to technical and scientific developments, and such
other information, advice and assistance as the Investment Manager may desire.
The Sub-Adviser shall maintain whatever records as may be required to be
maintained by it under the Act. All such records so maintained shall be made
available to the Fund, upon the request of the Investment Manager or the Fund.
3. The Fund will, from time to time, furnish or otherwise make available to
the Sub-Adviser such financial reports, proxy statements and other information
relating to the business and affairs of the Fund as the Sub-Adviser may
reasonably require in order to discharge its duties and obligations hereunder or
to comply with any applicable law and regulations and the investment objectives,
policies and restrictions from time to time prescribed by the Trustees of the
Fund.
4. The Sub-Adviser shall bear the cost of rendering the investment advisory
services to be performed by it under this Agreement, and shall, at its own
expense, pay the compensation of the officers and employees, if any, of the
Fund, employed by the Sub-Adviser, and such clerical help and bookkeeping
services as the Sub-Adviser shall reasonably require in performing its duties
hereunder.
5. The Fund assumes and shall pay or cause to be paid all other expenses of
the Fund, including, without limitation: any fees paid to the Investment
Manager; fees pursuant to any plan of distribution that the Fund may adopt; the
charges and expenses of any registrar, any custodian, sub-custodian or
depository appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property, and any stock transfer or dividend agent or
agents appointed by the Fund; brokers' commissions chargeable to the Fund in
connection with portfolio securities transactions to which the Fund is a party;
all taxes, including securities issuance and transfer taxes, and fees payable by
the Fund to federal, state or other governmental agencies or pursuant to any
foreign laws; the cost and expense of engraving or printing certificates
representing shares of the Fund; all costs and expenses in connection with the
registration and maintenance of registration of the Fund and its shares with the
Securities and Exchange Commission and various states and other jurisdictions or
pursuant to any foreign laws (including filing fees and legal fees and
disbursements of counsel); the cost and expense of printing (including
typesetting) and distributing prospectuses of the Fund and supplements thereto
to the Fund's shareholders; all expenses of shareholders' and Trustees' meetings
and of preparing, printing and mailing proxy statements and reports to
shareholders; fees and travel expenses of Trustees or members of any advisory
board or committee who are not employees of the Investment Manager or
Sub-Adviser; 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 Fund's shares; charges and expenses
of legal counsel, including counsel to the Trustees of the Fund who are not
interested persons (as defined in the Act) of the Fund, the Investment Manager
or the Sub-Adviser, and of independent accountants, in connection with any
matter relating to the Fund; membership dues of industry associations; interest
payable on Fund borrowings; postage; insurance premiums on property or personnel
(including officers and Trustees) of the Fund 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 Fund's operation unless otherwise explicitly
provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Sub-Adviser, the Investment Manager shall pay to the
Sub-Adviser monthly compensation equal to 30% of its monthly compensation
receivable pursuant to the Investment Management Agreement. Any subsequent
change in the Investment Management Agreement which has the effect of raising or
lowering the compensation of the Investment Manager will have the concomitant
effect of raising or lowering the fee payable to the Sub-Adviser under this
Agreement. In addition, if the Investment Manager has undertaken in the Fund's
Registration Statement as filed under the Act (the "Registration Statement") or
elsewhere to waive all or part of its fee under the Investment Management
Agreement, the Sub-Adviser's fee payable under this Agreement will be
proportionately waived in whole or in part. The calculation of the fee payable
to the Sub-Adviser pursuant to this Agreement will be made, each month, at the
time designated for the monthly calculation of the fee payable to the Investment
Manager pursuant to the Investment Management Agreement. If this Agreement
becomes effective subsequent to the first day of a month or shall terminate
before the last day of a month, compensation for the part of the month this
Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fee as set forth above. Subject to the provisions of
paragraph 7 hereof, payment of the Sub-Adviser's compensation for the preceding
month shall be made as promptly as possible after completion of the computations
contemplated by paragraph 7 hereof.
7. In the event the operating expenses of the Fund, including amounts payable
to the Investment Manager pursuant to the Investment Management Agreement, for
any fiscal year ending on a date on which this Agreement is in effect, exceed
the expense limitations applicable to the Fund imposed by state securities laws
or regulations thereunder, as such limitations may be raised or lowered from
time to time, the Sub-Adviser shall reduce its advisory fee to the extent of 30%
of such excess and, if required, pursuant to any such laws or regulations, will
reimburse the Investment Manager for annual operating expenses in the amount of
30% of such excess of any expense limitation that may be applicable, it being
understood that the Investment Manager has agreed to effect a reduction and
reimbursement of 100% of such excess in accordance with the terms of the
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Investment Management Agreement; provided, however, there shall be excluded from
such expenses the amount of any interest, taxes, brokerage commissions,
distribution fees and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Fund. Such reduction, if any, shall be computed
and accrued daily, shall be settled on a monthly basis, and shall be based upon
the expense limitation applicable to the Fund as at the end of the last business
day of the month. Should two or more such expense limitations be applicable as
at the end of the last business day of the month, that expense limitation which
results in the largest reduction in the Investment Manager's fee or the largest
expense reimbursement shall be applicable.
For purposes of this provision, should any applicable expense limitation be
based upon the gross income of the Fund, such gross income shall include, but
not be limited to, interest on debt securities in the Fund's portfolio accrued
to and including the last day of the Fund's fiscal year, and dividends declared
on equity securities in the Fund's portfolio, the record dates for which fall on
or prior to the last day of such fiscal year, but shall not include gains from
the sale of securities.
8. The Sub-Adviser will use its best efforts in the performance of investment
activities on behalf of the Fund, but in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations hereunder, the
Sub-Adviser shall not be liable to the Investment Manager or the Fund or any of
its investors for any error of judgment or mistake of law or for any act or
omission by the Sub-Adviser or for any losses sustained by the Fund or its
investors.
9. It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee of, or
be otherwise interested in, the Sub-Adviser, and in any person controlled by or
under common control with the Sub-Adviser, and that the Sub-Adviser and any
person controlled by or under common control with the Sub-Adviser may have an
interest in the Fund. It is also understood that the Sub-Adviser and any
affiliated persons thereof or any persons controlled by or under common control
with the Sub-Adviser have and may have advisory, management service or other
contracts with other organizations and persons, and may have other interests and
businesses, and further may purchase, sell or trade any securities or
commodities for their own accounts or for the account of others for whom they
may be acting; provided, however, that neither the Sub-Adviser nor any of its
affiliates organized with a corporate name or other name under which it is
performing its business activities which contains the names "Xxxxxx Xxxxxxxx"
shall undertake to act as investment adviser or sub-adviser for any other U.S.
registered investment company with similar investment policies which is sold
primarily to retail investors, and which is sponsored, distributed or managed by
a U.S. registered broker-dealer or one of its affiliates.
10. This Agreement shall remain in effect until April 30, 1999 and from year
to year thereafter provided such continuance is approved at least annually by
the vote of holders of a majority, as defined in the Act, of the outstanding
voting securities of the Fund or by the Trustees of the Fund; provided, that in
either event such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party, which vote must
be cast in person at a meeting called for the purpose of voting on such
approval; provided, however, that (a) the Fund may, at any time and without the
payment of any penalty, terminate this Agreement upon thirty days' written
notice to the Investment Manager and the Sub-Adviser, either by majority vote of
the Trustees of the Fund or by the vote of a majority of the outstanding voting
securities of the Fund; (b) this Agreement shall immediately terminate in the
event of its assignment (within the meaning of the Act) unless such automatic
termination shall be prevented by an exemptive order of the Securities and
Exchange Commission; (c) this Agreement shall immediately terminate in the event
of the termination of the Investment Management Agreement; (d) the Investment
Manager may terminate this Agreement without payment of penalty on thirty days'
written notice to the Fund and the Sub-Adviser and; (e) the Sub-Adviser may
terminate this Agreement without the payment of penalty on thirty days' written
notice to the Fund and the Investment Manager. Any notice under this Agreement
shall be given in writing, addressed and delivered, or mailed post-paid, to the
other party at the principal office of such party.
11. This Agreement may be amended by the parties without the vote or consent
of the shareholders of the Fund to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, or if they
deem it necessary to conform this Agreement to the requirements of applicable
federal laws or regulations, but neither the Fund, the Investment Manager nor
the Sub-Adviser shall be liable for failing to do so.
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12. This Agreement shall be construed in accordance with the law of the State
of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
XXXX XXXXXX INTERCAPITAL INC.
By: ...............................................
Attest: ........................................
XXXXXX XXXXXXXX INVESTMENT
SERVICES LIMITED
BY: ...............................................
ATTEST: ........................................
ACCEPTED AND AGREED TO AS OF
THE DAY AND YEAR FIRST ABOVE WRITTEN:
XXXX XXXXXX GLOBAL
ASSET ALLOCATION FUND
BY: ................................
ATTEST: .............................
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