Exhibit 23(d)(2)
INVESTMENT SUBADVISORY AGREEMENT
This Investment Subadvisory Agreement is made the 24th day of July, 2001 by
and between Xxxxxx Asset Management, Inc., an Ohio corporation (the "Adviser"),
and CGU Fund Management, a United Kingdom corporation (the "Subadviser").
RECITALS
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A. International Equity Portfolio, a trust organized and existing under
the laws of the State of New York, is an open-end management investment company
(the "Portfolio").
B. The Portfolio is registered as an open-end investment company under
the Investment Company Act of 1940, as amended (the "1940 Act").
C. The Adviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended.
D. The Adviser has been retained by the Portfolio to provide investment
advisory services to the Portfolio.
E. The Adviser desires to retain the Subadviser to furnish it with
portfolio management services in connection with the Adviser's investment
advisory activities on behalf of the Portfolio, and the Subadviser is willing to
furnish such services to the Adviser, in the manner and on the terms and
conditions set forth herein.
F. The Subadviser is a member of and is regulated by IMRO in the conduct
of its investment business in the UK and nothing in this Agreement will exclude
any liability of the Sub-adviser to the Adviser arising under the FSA 1986, or
any rules or regulations made under it or the IMRO's Rules. The Subadviser's
services are provided to the Adviser on the basis that the Adviser has been
categorised as a Non-Private Customer pursuant to IMRO's Rules. For the
avoidance of doubt, on 30 November 2001 when the Financial Services Authority
("FSA") replaces IMRO as the UK financial services regulator of the Subadviser,
pursuant to the FISMA 2000, all references to IMRO and IMRO's Rules will be
replaced with references to the FSA and FSA Rules, respectively, and this
Investment Subadvisory Agreement will be construed mutatis mutandis.
NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
covenants of the parties herein, the parties agree as follows:
I
INVESTMENT RESPONSIBILITY
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In accordance with and subject to the Investment Advisory Agreement between
the Portfolio and the Adviser, attached hereto as Exhibit A (the "Advisory
Agreement"), the Adviser hereby appoints the Subadviser to perform the portfolio
management services described herein for the investment and reinvestment of the
Portfolio's assets, subject to the control and direction of the Adviser and the
Portfolio's Board of Trustees, for the period and on the terms hereinafter set
forth. The Subadviser shall provide the Adviser with such investment advice and
supervision as the latter may from time to time consider necessary or
appropriate for the proper supervision of the Portfolio's investment assets. The
Subadviser shall furnish continuously an investment program and shall determine
from time to time what securities shall be purchased, sold or exchanged and what
portion of the assets of the Portfolio shall be held uninvested, subject
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always to the restrictions of the Portfolio's Declaration of Trust and By-Laws,
as each may be amended from time to time (respectively, the "Declaration" and
the "By-Laws"), to the provisions of the 1940 Act and to the Portfolio's
then-current prospectus and statement of additional information. The Adviser
shall provide the Subadviser with all information concerning the investment
policies and restrictions of the Portfolio as the Subadviser may from time to
time request or which the Portfolio deems necessary. In the event of any change
in the investment policies or restrictions of the Portfolio, the Adviser will
promptly provide Subadviser with all information concerning such change
including, but not limited to, copies of all documents regarding the Portfolio
filed by the Portfolio with the Securities and Exchange Commission. In
particular, the Subadviser shall (i) continuously review, supervise and
administer the investment program of the Portfolio; (ii) shall monitor regularly
the relevant securities for the Portfolio (all such designated securities to be
as defined from time to time in the Portfolio's current prospectus and statement
of additional information) to determine if adjustments are warranted and, if so,
to make such adjustments on a periodic basis; (iii) shall determine, in the
Subadviser's discretion, the securities to be purchased or sold or exchanged in
order to keep the Portfolio in balance with its designated investment strategy;
(iv) shall determine, in the Subadviser's discretion, whether to exercise
warrants or other rights with respect to the Portfolio's securities; (v) shall
determine, in the Subadviser's discretion, whether the merit of an investment
has been substantially impaired by extraordinary events or financial conditions,
thereby warranting the removal of such securities from the Portfolio; (vi) shall
provide the Portfolio with records concerning the Subadviser's activities which
the Portfolio is required to maintain by law; and (vii) shall render regular
reports to the Portfolio's officers and Trustees concerning the Subadviser's
discharge of the foregoing responsibilities. The Subadviser shall also make
recommendations as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Portfolio's securities
shall be exercised. The Subadviser shall take, on behalf of the Portfolio, all
actions which it deems necessary to implement the investment policies determined
as provided above, and in particular to place all orders for the purchase or
sale of portfolio securities for the Portfolio's account with brokers or dealers
selected by it, and to that end the Subadviser is authorized as the agent of the
Portfolio to give instructions to the custodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
In connection with the selection of such brokers or dealers and the placing of
such orders, the Subadviser is directed to seek for the Portfolio, in its best
judgment, prompt execution in an effective manner at the most favorable price.
Subject to this requirement of seeking the most favorable price, securities may
be bought from or sold to broker-dealers who have furnished statistical,
research and other information or services to the Subadviser or the Portfolio,
subject to any applicable laws, rules and regulations.
II
ALLOCATION OF EXPENSES
----------------------
The Subadviser shall furnish at its own expense all necessary services,
facilities and personnel in connection with its responsibilities under Section I
above. It is understood that the Portfolio will pay all of its own expenses
including, without limitation, its share of compensation and out-of-pocket
expenses of Trustees of the Portfolio not "affiliated" with the Subadviser or
the Adviser; governmental fees; interest charges; taxes; membership dues in the
Investment
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Company Institute allocable to the Portfolio; fees and expenses of independent
auditors and legal counsel; expenses of preparing reports to governmental
officers and commissions; expenses connected with the execution, recording and
settlement of portfolio security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Portfolio, including
safekeeping of funds and securities and maintaining required books and accounts;
expenses of litigation and other extraordinary or non-recurring events and
expenses relating to the issuance, registration and qualification of interests
of the Portfolio.
III
COMPENSATION
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For the services to be rendered by the Subadviser hereunder, the Adviser
shall pay to the Subadviser an annual investment subadvisory fee, computed and
paid monthly, in an amount equal to 100% of the investment advisory fees
received by the Adviser under the Advisory Agreement with regard to the first
$10 million of average net assets of the Portfolio, 30% of such advisory fees
received by the Adviser with regard to the next $10 million of average net
assets of the Portfolio and 65% of such advisory fees received by the Adviser
with regard to average net assets of the Portfolio greater than $20 million.
IV
COVENANTS OF THE SUBADVISER
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The Subadviser agrees that it will not deal with itself, or with the Board
of Trustees of the Portfolio or the Adviser in making purchases or sales of
securities or other property for the account of the Portfolio, and except as
permitted by the 1940 Act, will not take a long or short position in the
interests of the Portfolio except as permitted by the Declaration, and will
comply with all other provisions of the Declaration and By-Laws and the
then-current prospectus and statement of additional information of the Portfolio
relative to the Subadviser, Adviser and the Portfolio's Trustees and officers.
The Adviser will provide the Subadviser with the names of all related parties of
the Board of Trustees of the Portfolio or the Adviser with whom the Subadviser
may not deal. In the event of any change in these related parties, the Adviser
will promptly notify the Subadviser.
V
LIMITATION OF LIABILITY OF THE SUBADVISER
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The Subadviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Portfolio in connection with the matters to
which this Agreement relates (including, but not limited to, loss sustained by
reason of the adoption or implementation of any investment policy or the
purchase, sale or retention of any security, in accordance with the then current
prospectus and statement of additional information of the Portfolio). As used in
this Section V, the term "Subadviser" shall include Directors, officers and
employees of the Subadviser as well as that corporation itself.
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VI
ACTIVITIES OF THE SUBADVISER
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The services of the Subadviser to the Adviser are not to be deemed to be
exclusive, the Subadviser being free to render investment advisory and/or other
services to others. It is understood that Trustees, officers and employees of
the Portfolio and holders of interests of the Portfolio are or may be or may
become interested in the Subadviser, as Directors, officers, employees,
shareholders or otherwise and that Directors, officers and employees of the
Subadviser are or may become similarly interested in the Portfolio.
VII
DURATION AND TERMINATION
------------------------
A. This Agreement shall become effective as of the day and year first
above written and shall govern the relations between the parties hereto
thereafter, and, except as otherwise provided below, shall remain in effect for
a period of two years.
B. This Agreement may be terminated immediately by the Adviser, by the
Trustees of the Portfolio or by the "vote of a majority of the outstanding
voting securities" of the Portfolio upon the occurrence of any of the following
events:
(1) the continuance of this Agreement after such two-year term is not
"specifically approved at least annually" (a) by the vote of a majority of the
Trustees who are not "interested persons" of the Portfolio or of the Subadviser
or the Adviser at a meeting specifically called for the purpose of voting on
such approval, and (b) by the Board of Trustees of the Portfolio or by "vote of
a majority of the outstanding voting securities" of the Portfolio. However, if
the shareholders of the Portfolio fail to approve this Agreement as provided
herein, the Subadviser may continue to serve hereunder in the manner and to the
extent permitted by the 1940 Act and rules thereunder;
(2) a material breach of this Agreement by the Subadviser;
(3) the falsity in any material respect of any warranty,
representation or statement made by or on behalf of the Subadviser in connection
with this Agreement;
(4) there is an "assignment" of this Agreement;
(5) the Subadviser fails to achieve and maintain the performance
standard to be mutually agreed upon and specified in writing by the Adviser and
the Subadviser as specified in Section VIII hereof; or
(6) the Advisory Agreement is terminated or not renewed.
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C. This Agreement may be terminated at any time by the Adviser, by the
Trustees of the Portfolio or by the "vote of a majority of the outstanding
voting securities" of the Portfolio, upon at least 60 days written notice to the
Subadviser.
D. This Agreement may be amended only if such amendment is approved by
the "vote of a majority of the outstanding voting securities" of the Portfolio
and by vote of a majority of the Board of Trustees of the Portfolio 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.
E. The terms "specifically approved at least annually", "vote of a
majority of the outstanding voting securities", "assignment", "affiliated
person", and "interested persons", when used in this Agreement, shall have the
respective meanings specified in, and shall be construed in a manner consistent
with, the 1940 Act, subject, however, to such exemptions as may be granted by
the Securities and Exchange Commission thereunder.
F. This Agreement may be terminated at any time by the Subadviser,
without the payment of any penalty, upon at least 60 days written notice to the
Adviser.
G. This Agreement may be terminated immediately by the Subadviser upon
the occurrence of any of the following:
(i) a material breach of this agreement by the Adviser; or
(ii) the falsity in any material respect of any warranty,
representation or statement made by or on behalf of the Adviser
in connection with this Agreement.
VIII
PERFORMANCE
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The Adviser and the Subadviser shall negotiate in good faith and use their
best efforts to agree on a performance standard against which the Subadviser's
investment performance shall be measured. The performance standard to be agreed
upon by the Adviser and the Subadviser shall be specified in writing and shall
be attached hereto and incorporated by reference herein as Exhibit B.
IX
MISCELLANEOUS
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Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 adopted under the 1940 Act which are
prepared or maintained by the Subadviser on behalf of the Portfolio are the
property of the Portfolio and will be surrendered promptly to the Portfolio on
request.
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The holders of the record interests, Trustees, officers, employees and
agents of the Portfolio shall not be personally bound by or liable hereunder,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim hereunder.
Except to the extent the provisions of this Agreement are governed by
federal law, they shall be governed by the law of Ohio without reference to its
choice of law rules.
This Agreement represents the entire agreement between the parties hereto
with respect to the subject matter hereof.
This Agreement may be executed in two or more counterparts, each of which
shall be considered an original.
If there are any conflicts between the provisions of this Agreement and the
provisions of the 1940 Act or the regulations promulgated thereunder, the
provisions of the 1940 Act and such regulations shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first above written.
XXXXXX ASSET MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxx
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Its: Vice President
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CGU FUND MANAGEMENT
By: /s/ Xxxxxxx X. Xxxxxxx
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Its: Head of International Sales
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