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EXHIBIT (d)(2)
INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN
XXX XXXXXX INVESTMENT ADVISORY CORP.
AND
XXXXXX XXXXXXX XXXX XXXXXX INVESTMENT MANAGEMENT INC.
THIS AGREEMENT is made as of this January 28, 2000, by and between XXXXXX
XXXXXXX XXXX XXXXXX INVESTMENT MANAGEMENT INC. ("MSDWIM"), a Delaware
Corporation, located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
and XXX XXXXXX INVESTMENT ADVISORY CORP. ("VKIAC") a Delaware Corporation,
located at 0 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000.
WHEREAS, VKIAC has heretofore sponsored and acts as Investment Adviser to Xxx
Xxxxxx Equity Trust II (the "Trust"), on behalf of its series, Xxx Xxxxxx Tax
Managed Equity Growth Fund (the "Fund"); and
WHEREAS, MSDWIM has available a staff of experienced investment personnel and
facilities for providing investment sub-advisory services to the investment
portfolio; and
WHEREAS, MSDWIM is an investment adviser registered under the Investment
Advisers Act of 1940, as amended and is willing to provide VKIAC with investment
advisory services on the terms and conditions hereinafter set forth; and
WHEREAS, VKIAC and MSDWIM (jointly referred to as "the Advisers") desire to
enter into an agreement for MSDWIM to provide sub-advisory services to the Fund
and to VKIAC with respect to the Fund's investments.
NOW THEREFORE it is mutually agreed:
1. INVESTMENT SUB-ADVISORY SERVICES
1.1 Investment Advice
a) Effective on October 1, 1998, and subject to the overall policies, control,
direction and review of the Fund's Trustees, MSDWIM shall keep under review the
investments of the Fund and continuously furnish to the Fund and to VKIAC (1)
investment advice with respect to all or such portion of the Fund's assets as
the Advisers agree to from time to time; (2) economic, statistical and research
information and advice, including advice on the allocation of investments among
countries, relating to all or such portion of the Fund's assets as the Advisers
shall agree to from time to time; (3) recommendations as to the voting of
proxies solicited by or with respect to securities under MSDWIM's supervision;
and (4) an investment program with respect to securities and recommendations as
to what securities shall be purchased, sold or exchanged, and what portion, if
any, of the securities shall be held in money market instruments.
b) The Advisers are responsible for the allocation of the Fund's assets among
the various securities markets of the world. The Advisers will determine at
least quarterly the percentage of the assets that shall be allocated to each of
the Advisers (the "Asset Allocation"). The Asset Allocation will specify the
percentage and nature of the assets of the Fund allocated to each of the
Advisers for management on the effective date of the determination and will
apply to cash inflows or outflows and income and expense accruals thereafter
until such time as the Asset Allocation is redetermined. Each of the Advisers
will be responsible for the allocation of assets among the securities markets
within various regions as they agree to from time to time.
c) Unless otherwise instructed by VKIAC or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by VKIAC or by the Trustees, MSDWIM shall determine the securities
to be purchased and sold by the Fund and shall place orders for the purchase,
sale or exchange of securities for the Fund's accounts with brokers or dealers
and to that end MSDWIM is authorized by the Trustees to give instructions to the
Custodian and any Sub-Custodian of the Fund as to deliveries of such securities,
transfers of currencies and payments of cash for the
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account of the Fund.
d) In performing these services, MSDWIM shall adhere to the Fund's investment
objectives, restrictions and limitations as contained in its Prospectus,
Statement of Additional Information, or Agreement and Declaration of Trust and
shall comply with all statutory and regulatory restrictions, limitations and
requirements applicable to the activity of the Fund.
e) Unless otherwise instructed by VKIAC or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by VKIAC or by the Trustees, MSDWIM shall have executed and
performed on behalf of and at the expense of the Fund:
i) Purchases, sales, exchanges, conversions, and placement or orders for
execution, and
ii) Reporting of all transactions to VKIAC and to other entities as
directed by VKIAC or by the Trustees.
f) MSDWIM shall provide the Trustees at least quarterly, in advance of the
regular meetings of the Trustees, a report of its activities hereunder on behalf
of the Fund and its proposed strategy for the next quarter, all in such form and
detail as requested by the Trustees. MSDWIM shall also make an investment
officer available to attend such meetings of the Trustees as the Trustees may
reasonably request.
1.2 Restriction of MSDWIM's Powers
(a) MSDWIM shall not commit the Fund to any extent beyond the amount of the
cash and securities placed by the Fund under the control of MSDWIM.
(b) In carrying out its duties hereunder MSDWIM shall comply with all
reasonable instruction of the Fund or VKIAC in connection therewith. Such
instructions may be given by letter, telex, telefax or telephone confirmed by
telex, by the Trustees or by any other person authorized by a resolution of the
Trustees provided a certified copy of such resolution has been supplied to
MSDWIM.
(c) All securities, cash, and other assets of the Fund shall be placed and
maintained in the care of a member bank of the Federal Reserve System of the
United States approved by the Trustees as custodian and one or more "Eligible
Foreign Custodians" (as defined in Rule 17f-5 under the Investment Company Act
of 1940 (the "1940 Act")) approved by the Trustees as sub-custodians.
(d) Persons authorized by resolution of the Trustees shall have the right to
inspect and copy contracts, notes, vouchers, and copies of entries in books or
electronic recording media relating to the Fund's transactions at the registered
office of MSDWIM at any time during normal business hours. Such records, in
relation to each transaction effected by MSDWIM on behalf of the Fund shall be
maintained by MSDWIM for a period of seven years from the date of such
transaction.
1.3 Purchase and Sale of Securities
In performing the services described above, MSDWIM shall use its best efforts
to obtain for the Fund the most favorable price and execution available. Subject
to prior authorization of appropriate policies and procedures by the Trustees,
MSDWIM may, to the extent authorized by law, cause the Fund to pay a broker or
dealer who provides brokerage and research services an amount of commission for
effecting the Fund's investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, in recognition of the brokerage and research services provided by
the broker or dealer. To the extent authorized by law, MSDWIM shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of such action.
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1.4 Custodian
MSDWIM shall not act as Custodian for the securities or any other assets of
the Fund. All such assets shall be held by the Custodian or Sub-Custodian
appointed by the Trustees.
2. DUTIES OF VKIAC
2.1 Provision of Information
VKIAC shall advise MSDWIM from time to time with respect to the Fund of its
investment objectives and of any changes or modifications thereto, as well as
any specific investment restrictions or limitations by sending to MSDWIM a copy
of each registration statement relating to the Fund as filed with the Securities
and Exchange Commission. As requested by MSDWIM, VKIAC shall furnish such
information to MSDWIM as to holdings, purchases, and sales of the securities
under its management as will reasonably enable MSDWIM to furnish its investment
advice under this Agreement.
2.2 Compensation to MSDWIM
The fee for the services provided under this Agreement will be determined as
follows:
(a) An amount for each month (or such other valuation period as may be
mutually agreed upon) equivalent, on an annual basis, to 50% of the compensation
actually received by VKIAC pursuant to the investment advisory fee schedule set
forth in the Investment Advisory Agreement between the Fund and VKIAC taking
into account any waiver or return to the Fund of any or all of such advisory fee
by VKIAC (with any such return of fees to be treated as if not actually
received). The value of the assets of the Fund shall be computed as of the close
of business on the last day of each valuation period for the Fund, using the
average of all the daily determinations of the net value of the assets of the
Fund.
(b) The foregoing fee shall be paid in cash by VKIAC to MSDWIM within five (5)
business days after the last day of the valuation period.
3. MISCELLANEOUS
3.1 Activities of MSDWIM
The services of MSDWIM as Sub-Adviser to VKIAC under this Agreement are not to
be deemed exclusive, MSDWIM and its affiliates being free to render services to
others. It is understood that shareholders, trustees, officers and employees of
MSDWIM may become interested in the Fund or VKIAC as a shareholder, trustee,
officer, partner or otherwise.
3.2 Services to Other Clients
VKIAC acknowledges that MSDWIM may have investment responsibilities, or render
investment advice to, or perform other investment advisory services for, other
individuals or entities, ("Clients"). Subject to the provisions of this
paragraph, VKIAC agrees that MSDWIM may give advice or exercise investment
responsibility and take such other action with respect to such Clients which may
differ from advice given or the timing or nature of action taken with respect to
the Fund, provided that MSDWIM acts in good faith, and provided, further, that
it is MSDWIM policy to allocate, within its reasonable discretion, investment
opportunities to the Fund over a period of time on a fair and equitable basis
relative to the Clients, taking into account the investment objectives and
policies of the Fund and any specific investment restrictions applicable
thereto. VKIAC acknowledges that one or more of the Clients may at any time
hold, acquire, increase, decrease, dispose of or otherwise deal with positions
in investments in which the Fund may have an interest from time to time, whether
in transactions which may involve the Fund or otherwise. MSDWIM shall have no
obligation to acquire for the Fund a position in any
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investment which any Client may acquire, and VKIAC shall have no first refusal,
coinvestment or other rights in respect of any such investment, either for the
Fund or otherwise.
3.3 Best Efforts
It is understood and agreed that in furnishing the investment advice and other
services as herein provided, MSDWIM shall use its best professional judgment to
recommend actions which will provide favorable results for the Fund. MSDWIM
shall not be liable to the Fund or to any shareholder of the Fund to any greater
degree than VKIAC.
3.4 Duration of Agreement
a) This Agreement, unless terminated pursuant to paragraph b or c below or
Section 2.2(c), shall continue in effect through January 28, 2002, and
thereafter shall continue in effect from year to year, provided its continued
applicability is specifically approved at least annually by the Trustees or by a
vote of the holders of a majority of the outstanding shares of the Fund. In
addition, such continuation shall be approved by vote of a majority of the
Trustees 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. As used in this paragraph, the term "interested person" shall have the
same meaning as set forth in the 1940 Act.
b) This Agreement may be terminated by sixty (60) days' written notice by
either VKIAC or MSDWIM to the other party. The Agreement may also be terminated
at any time, without the payment of any penalty, by the Fund (by vote of the
Trustees or, by the vote of a majority of the outstanding voting securities of
such Fund), on sixty (60) days' written notice to both VKIAC and MSDWIM. This
Agreement shall automatically terminate in the event of the termination of the
investment advisory agreement between VKIAC and the Fund.
c) This Agreement shall terminate in the event of its assignment. The term
"assignment" for this purpose shall have the same meaning set forth in Section
2(a)(4) of the 0000 Xxx.
d) Termination shall be without prejudice to the completion of any
transactions which MSDWIM shall have committed to on behalf of the Fund prior to
the time of termination. MSDWIM shall not effect and the Fund shall not be
entitled to instruct MSDWIM to effect any further transactions on behalf of the
Fund subsequent to the time termination takes effect.
e) This Agreement shall terminate forthwith by notice in writing on the
happening of any of the following events:
i) If VKIAC or MSDWIM shall go into liquidation (except a voluntary
liquidation for the purpose of and followed by a bona fide reconstruction or
amalgamation upon terms previously approved in writing by the party not in
liquidation) or if a receiver or receiver and manager of any of the assets of
any of them is appointed; or
ii) If either of the parties hereto shall commit any breach of the
provisions hereof and shall not have remedied such breach within 30 days after
the service of notice by the party not in breach on the other requiring the same
to be remedied.
f) On the termination of this Agreement and completion of all matters referred
to in the foregoing paragraph (d) MSDWIM shall deliver or cause to be delivered
to the Fund copies of all documents, records and books of the Fund required to
be maintained pursuant to Rules 31a-1 or 31a-2 of the 1940 Act which are in
MSDWIM's possession, power or control and which are valid and in force at the
date of termination.
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3.5 Notices
Any notice, request, instruction, or other document to be given under this
Agreement by any party hereto to the other parties shall be in writing and
delivered personally or sent by mail or telecopy (with a hard copy to follow),
If to MSDWIM, to:
Xxxxxx Xxxxxxx Xxxx Xxxxxx Investment Management, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
with a copy to:
Xxxxxx Xxxxxxx Xxxx Xxxxxx Investment Management Inc
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
If to VKIAC, to:
Xxx Xxxxxx Investment Advisory Corp.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxxxxx
with a copy to:
Xxx Xxxxxx Investments Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: A. Xxxxxx Xxxxx III, Esq.
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice that is
addressed and mailed in the manner herein provided shall be presumed to have
been duly given to the party to which it is addressed, on the date three (3)
days after mailing, and in the case of delivery by telecopy, on the date the
hard copy is received.
3.6 Choice of Law
This Agreement shall be construed according to, and the rights and liabilities
of the parties hereto shall be governed by, the laws of the United States and
the State of New York, without regard to the conflicts of laws principles
thereof.
3.7 Miscellaneous Provisions
The execution of this Agreement has been authorized by the Fund's Trustees and
by the shareholders. This Agreement is executed on behalf of the Fund or the
Trustees of the Fund as Trustees and not individually and that the obligations
of this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Fund individually but are binding only upon the assets and
property of the Fund. A Certificate of Trust in respect of the Fund is on file
with the Secretary of State of Delaware.
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IN WITNESS WHEREOF, the Agreement has been executed as of the date first above
given.
XXX XXXXXX INVESTMENT XXXXXX XXXXXXX XXXX XXXXXX
ADVISORY CORP. INVESTMENT MANAGEMENT INC.
By: /s/ Xxxxxx X. XxXxxxxxx By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------- -------------------------------
Name: Xxxxxx X. XxXxxxxxx Name: Xxxxxxx Xxxxxxxx
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Its: President Its:
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executed in counterpart
