7
AMENDED AND RESTATED INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN
XXX XXXXXX ASSET MANAGEMENT
and
XXXXXX XXXXXXX INVESTMENT MANAGEMENT LIMITED
THIS AGREEMENT is made as of this 22nd day of May, 2006 by and
between XXXXXX XXXXXXX INVESTMENT MANAGEMENT LIMITED, a company
organized under the laws of England and XXX XXXXXX ASSET
MANAGEMENT ("VKAM") a Delaware statutory trust.
WHEREAS, VKAM has heretofore sponsored and acts as Investment
Adviser to Xxx Xxxxxx American Franchise Fund (the "Fund"); and
WHEREAS, XXXXXX XXXXXXX INVESTMENT MANAGEMENT LIMITED, ("the
Local Manager") is regulated by the Financial Services Authority
of the United Kingdom (the "FSA") and has available a staff of
experienced investment personnel and facilities for providing
investment sub-advisory services to the Fund; and
WHEREAS, the Local Manager is an investment adviser registered
under the Investment Advisers Act of 1940, as amended and is
willing to provide VKAM with investment management services on
the terms and conditions hereinafter set forth and including the
terms and conditions contained in Annex 1 to this Agreement; and
WHEREAS, VKAM and the Local Manager (jointly referred to as the
"Advisers") desire to enter into an agreement for the Local
Manager to provide investment management services to the Fund and
to VKAM with respect to the Fund's investments.
NOW, THEREFORE, it is mutually agreed:
1. Investment Management Services
1.1 Investment Management
(a) Effective on May 22, 2006 (the "Effective Date"), and
subject to the overall policies, control, direction and review of
the Fund's Trustees and VKAM, the Local Manager shall act as
discretionary investment manager to VKAM and to manage the
investment and reinvestment of the assets of the Fund,
continuously review, supervise and administer the investment
program of the Fund, determine in its discretion the securities
to be purchased or sold and the portion of the Fund's assets to
be held uninvested, to provide the Fund with records concerning
the Local Manager's activities which the Fund is required to
maintain, and to render regular reports as agreed with the Local
Manager to the Fund's officers and Board of Trustees concerning
the Local Manager's discharge of the foregoing responsibilities.
VKAM and its affiliates shall for all purposes herein be deemed
an Intermediate Customer as defined under the rules and guidance
promulgated by the Financial Services Authority (hereinafter
referred to as the "FSA Rules"). The Local Manager and its
affiliates shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent
the Fund in any way or otherwise be deemed an agent of the Fund.
(b) The Local Manager shall have full discretion, power and
authority on the Fund's behalf to buy, sell, retain, exchange or
otherwise deal in investments and other assets, make deposits,
subscribe to issues and offers for sale and accept placings of
any investments, enter into foreign currency transactions on a
spot or forward basis, effect transactions on any markets, take
all day to day decisions and otherwise act as the Local Manager
judges appropriate in relation to the investment and reinvestment
of the portfolio of assets of the Fund. This includes performing
all acts and executing all documents which the Local Manager
reasonably considers incidental thereto, including (without
limitation) power to execute and deliver all applications,
requests, or claims for refund, reduction, repayment or credit
of, or exemption or relief from, any withholding tax or similar
taxes in any jurisdiction in which such applications, requests or
claims may be made. The Local Manager shall take action as to the
manner in which voting rights, rights to consent to corporate
action and any other rights pertaining to the portfolio of assets
of the Fund shall be exercised as it sees fit and in accordance
with VKAM's proxy voting policy as provided to the Local Manager.
(c) In performing these services, the Local Manager shall always
adhere to the restrictions of the Declaration of Trust and By-
Laws of the Fund, as they may be amended and/or restated from
time to time and as provided to the Local Manager by VKAM, the
provisions of the Investment Company Act of 1940, as amended (the
"1940 Act") and the statements relating to the Fund's investment
objective(s), investment policies and investment restrictions as
the same are set forth in the currently effective prospectus and
statement of additional information relating to the shares of the
Fund under the Securities Act of 1933, as amended (the
"Prospectus" and "Statement of Additional Information",
respectively), as well as to the supervision of VKAM and the
Board of Trustees of the Fund.
(d) Unless otherwise instructed by VKAM or the Trustees, and
subject to the provisions of this Agreement and to any guidelines
or limitations specified from time to time by VKAM or by the
Trustees, the Local Manager 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 VKAM and to other entities
as directed by VKAM or by the Trustees.
(e) The Local Manager shall provide the Trustees at least
quarterly, in advance of the regular meetings of the Trustees, a
report as agreed by the Local Manager of its activities hereunder
on behalf of the Fund and the Local Manager's proposed strategy
for the next quarter, all in such form and detail as requested by
the Trustees. The Local Manager shall also make an investment
officer available to attend such meetings of the Trustees as the
Trustees may reasonably request.
(f) The Local Manager may, where reasonable, employ agents
(including affiliates) to perform any administrative, dealing or
ancillary services required to enable the Local Manager to
perform its services under this Sub-Advisory Agreement.
1.2 Restriction of the Local Manager's Powers
(a) The Local Manager shall not commit the Fund to any extent
beyond the amount of the cash and securities placed by the Fund
under the control of the Local Manager.
(b) In carrying out its duties hereunder the Local Manager shall
comply with all reasonable instruction of the Fund or VKAM in
connection therewith. Such instructions may be given by letter,
fax or e-mail, 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 the Local Manager.
(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 1940 Act).
(d) Upon reasonable prior notice, 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 the Local Manager at any time during
normal business hours. Such records, in relation to each
transaction effected by the Local Manager on behalf of the Fund
shall be maintained by the Local Manager for a period of seven
years from the date of such transaction. Confidential data or
information relating to other clients of the Local Manager will
not be disclosed by the Local Manager.
1.3 Purchase and Sale of Securities
In performing the services described above and unless
directed by VKAM or the Trustees to use a specific counterparty,
the Local Manager shall use its best efforts to obtain for the
Fund best execution for all Fund transactions.
1.4 Custodian
The Local Manager 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 or by the Fund's "Foreign Custody Manager" (as defined
by Rule 17f-5 under the 1940 Act). VKAM will make arrangements
for any such custodian to act in accordance with the Local
Manager's instructions promptly to receive or deliver cash or
investments and to deliver or cause to be delivered such
certificates (or other documents constituting or evidencing
title), instruments of transfer, power of attorney and other
documents as the Local Manager may require in order to transfer
title to any investment and/or funds for the Fund.
2. Duties of VKAM
2.1 Provision of Information
VKAM shall advise the Local Manager from time to time with
respect to the Fund of its investment objectives and policies and
of any changes or modifications thereto, as well as any specific
investment restrictions and limitations by sending to the Local
Manager a copy of each registration statement and amendments
thereto relating to the Fund as filed with the Securities and
Exchange Commission. VKAM shall furnish such information to the
Local Manager as to holdings, purchases, and sales of the
securities under its management as reasonably requested by the
Local Manager.
2.2 Compensation to the Local Manager
For the services rendered, the facilities furnished and
expenses assumed by the Local Manager, VKAM shall pay to the
Local Manager a fee in an amount to be determined from time to
time by VKAM and the Local Manager but in no event in excess of
the amount that VKAM actually received for providing services to
the Fund pursuant to the investment advisory agreement between
VKAM and the Fund.
3. Miscellaneous
3.1 Activities of the Local Manager
The services of the Local Manager as sub-adviser to VKAM
under this Agreement are not to be deemed exclusive, the Local
Manager and its affiliates being free to render services to
others. It is understood that shareholders, officers and
employees of the Local Manager may become interested in the Fund
or VKAM as a shareholder, director, officer, partner or
otherwise.
3.2 Limitation of Liability of the Local Manager
No warranty is given by the Local Manager as to the performance
or profitability of the Fund or any part of them.
If a percentage restriction contained in the Fund's investment
objective(s) or investment restrictions (as the same are set
forth in the Fund's currently effective Prospectus and Statement
of Additional Information) is adhered to at the time of
investment, a later change in percentage resulting from a change
in values or assets will not constitute a violation of such
restriction.
The Local Manager will not be responsible to VKAM or the Fund for
the solvency, actions or omissions of any counterparty, broker,
dealer, market-maker, bank, custodian or sub-custodian, with whom
it transacts business on VKAM's behalf, other than affiliates of
the Local Manager.
Nothing in this Agreement will exclude or restrict any liability
which the Local Manager has under the Financial Services and
Markets Xxx 0000, FSA Rules or the Regulatory System in relation
VKAM and which may not be excluded or restricted thereunder.
The Local Manager shall not be liable for any error of judgment
or mistake of law or for any loss arising out of any investment
or for any act or omission in the performance of investment
management services rendered with respect to the Fund, except for
willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of
its obligations and duties hereunder. The exception in the
previous sentence shall apply to each limitation of the Local
Manager's liability contained in this Section 3.2. As used in
this Section 3.2, the Local Manager shall include any affiliates
of the Local Manager performing services for the Local Manager
contemplated hereby and Trustees, officers and employees of the
Local Manager and such affiliates.
3.3 Services to Other Clients
VKAM acknowledges that the Local Manager 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, VKAM agrees that the Local Manager 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 the Local Manager acts in good faith, and provided,
further, that it is the Local Manager's 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 and
limitations applicable thereto. VKAM 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. The Local Manager shall have no obligation to acquire
for the Fund a position in any investment which any Client may
acquire, and VKAM shall have no first refusal, coinvestment or
other rights in respect of any such investment, either for the
Fund or otherwise.
3.4 Best Efforts
It is understood and agreed that in furnishing the
investment management services as herein provided, the Local
Manager shall use its best professional judgment to recommend
actions which will provide favorable results for the Fund. The
Local Manager shall not be liable to the Fund or to any
shareholder of the Fund to any greater degree than VKAM.
3.5 Compliance with Applicable Laws and Regulations
The Local Manager shall obtain and at all times maintain and
comply with the terms of all relevant authorizations, licenses,
consents, approvals and registrations and comply with all
relevant laws and regulations, necessary for the purpose of
performing any of its duties and obligations under this
Agreement. The Local Manager shall inform VKAM as soon as
possible if at any time the Local Manager becomes unable to
comply with the terms of or maintain any such authorizations,
licenses, consents, approvals or registrations.
3.6 Effective Date
This Agreement will come into force and effect on the
Effective Date. VKAM acknowledges that, where it is delivering
cash to the Local Manager at the Effective Date, the Local
Manager will require time to invest the cash for the Fund.
Accordingly, and depending on prevailing market conditions, all
or a part of the Fund may remain uninvested for a period after
the Effective Date.
3.7 Duration of Agreement
(a) This Agreement, unless terminated pursuant to paragraph (b),
(c) or (d) below, shall continue in effect for two years from the
date hereof, 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 VKAM or the Local Manager to the other party.
The Agreement may also be terminated at any time, with payment of
any fees owing but 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 the Fund), on sixty (60)
days' written notice to both VKAM and the Local Manager. This
Agreement shall automatically terminate in the event of the
termination of the investment advisory agreement between VKAM 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 1940 Act.
(d) This Agreement shall terminate forthwith by notice in
writing on the happening of any of the following events:
(i) If VKAM or the Local Manager 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
either 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.
(e) Termination shall be without prejudice to the completion of
any transactions which the Local Manager shall have committed to
on behalf of the Fund prior to the time of termination. The
Local Manager shall not effect and the Fund shall not be entitled
to instruct the Local Manager to effect any further transactions
on behalf of the Fund subsequent to the time termination takes
effect.
(f) On the termination of this Agreement and completion of all
matters referred to in the foregoing paragraph (e) the Local
Manager 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 the Local Manager's possession, power or control and which
are valid and in force at the date of termination.
3.8 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 fax (with a hard copy to follow).
If to the Local Manager, to:
Xxxxxx Xxxxxxx Investment Management Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx, X00 0XX
Xxxxxx Xxxxxxx
If to VKAM, to:
Xxx Xxxxxx Asset Management
0 Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Secretary
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 seven (7) business days after mailing, and
in the case of fax, upon transmission.
3.9 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.
3.10 Miscellaneous Provisions
The execution of this Agreement has been authorized by the
Fund's Trustees. This Agreement is executed on behalf of the
Fund or the Trustees of the Fund as Trustees and not individually
and 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.
IN WITNESS WHEREOF, the Agreement has been executed as of the
date first above given.
XXX XXXXXX ASSET MANAGEMENT XXXXXX XXXXXXX INVESTMENT
MANAGEMENT LIMITED
By: /s/ Xxxxxx X Xxxxxxx By: /s/ Xxxxxxx
Green____________
Name: Xxxxxx X Xxxxxxx Name: Xxxxxxx Green____________
Its: Managing Director Its:
Director_____________________
SUB-ADVISORY AGREEMENT
ANNEX 1
1. Dealing and Counterparties
1.1 The Local Manager will act in good faith and with due
diligence in its choice and use of counterparties. Unless
directed by VKAM or the Fund to use a specific counterparty,
the Local Manager undertakes to secure best execution (as
defined in the FSA Rules) of all the Fund's transactions.
In securing best execution, the Local Manager will take
reasonable care to obtain the best available price in
accordance with FSA Rules. Subject thereto, the Local
Manager may deal on such markets or exchanges and with such
counterparties (including any affiliate) as it thinks fit.
All transactions will be effected in accordance with the
rules and regulations of the relevant market or exchange,
and the Local Manager may take all such steps as may be
required or permitted by such rules and regulations and/or
by appropriate market practice.
1.2 If any counterparty should fail to deliver any necessary
documents or to complete any transaction, the Local Manager
will take all reasonable steps on behalf of VKAM or the Fund
to rectify such failure or obtain compensation. VKAM shall
procure that the Fund pay all reasonable costs and expenses
properly incurred by the Local Manager.
1.3 The Local Manager may aggregate the Fund's orders with
orders of other clients (whether or not connected with the
Local Manager). VKAM is aware and has made the Fund aware
that the aggregation of the Fund's orders with those of
other clients may result in the Fund obtaining on some
occasions a more favourable price and on others a less
favourable price, than if such orders had not been
aggregated.
2. Material Interests
2.1 The Local Manager and any affiliate may, subject to the
limitations of the 1940 Act, and to the overriding
principles of suitability and best execution and without
prior reference to VKAM or the Fund, effect transactions in
which the Local Manager or affiliate has, directly or
indirectly, a material interest or a relationship of any
description with another party, which may involve a
potential conflict with the Local Manager's duty to VKAM or
the Fund. Neither the Local Manager nor any affiliate shall
be liable to account to VKAM or the Fund for any profit,
commission or remuneration made or received from or by
reason of such transactions or any connected transactions
nor will the Local Manager's fees, unless otherwise
provided, be abated. For example, such potential
conflicting interests or duties may arise because:
(a)any of the Local Manager's or affiliate's Trustees or
employees is a director of, holds or deals in securities
of, or is otherwise interested in any company whose
securities are held or dealt in on behalf of the Fund;
(b)the transaction is in the securities of a company for
which an affiliate has provided corporate finance
advice, underwritten, managed or arranged an issue or
offer for sale;
(c)the Local Manager deals on behalf of the Fund with an
affiliate;
(e)the Local Manager may effect transactions involving
placings and/or new issues with an Affiliate who may be
acting as principal or receiving agent's commission.
Affiliates may retain any agent's commission or discount
or other benefit (including Trustees' fees) that accrues
to them; or
(f)the transaction is in units or shares of a collective
investment scheme (regulated or unregulated) of which
the Local Manager or any affiliate is the manager,
operator, banker, adviser, custodian or director.
2.2 The Local Manager shall generally enter into transactions in
the course of managing the Fund as agent on behalf of the
Fund and not as principal and therefore the Fund will be
bound by the actions of the Local Manager under this
Agreement. The Local Manager or an affiliate may act as
principal in respect of a transaction for the Fund in order
to correct a transaction entered into in error. The Local
Manager may act as agent for a counterparty and also act as
agent on behalf of the Fund and in the course of so acting
may charge a commission to either the counterparty or the
Fund.
2.3 Nothing in this Agreement shall oblige the Local Manager or
any affiliate to accept responsibilities more extensive than
those set out in this Agreement or shall give rise to any
fiduciary or equitable duties which would prevent or hinder
any affiliate acting both as market-maker and broker,
principal or agent, dealing with other affiliates and other
clients and generally effecting transactions as provided
above nor from retaining any remuneration received in
respect thereof.
3. Records and Reports
3.1 The Local Manager will keep accurate and detailed records
with respect to all receipts, investments, sales,
disbursements and other transactions carried out by the
Local Manager for VKAM on behalf of the Fund.
3.2 Subject to the provisions of clause 1.2(d) of the Sub-
Advisory Agreement, all records held pursuant to this clause
by the Local Manager shall be open to inspection by VKAM or
the Fund and the Local Manager will provide VKAM and the
Fund with such access as it itself has to records held by
any relevant third party, in each case at reasonable times
during business hours and upon the giving of reasonable
notice by VKAM or the Fund.
3.3 The Local Manager shall, not later than 10 working days
following the end of each calendar month, furnish to VKAM a
statement showing all transactions that have occurred in the
Fund and a monthly listing of all investments and cash
balances held as of the end of such month.
3.4 The monthly statement will show the cost or amount realised
(in the case of any relevant new purchase or sale) and,
where available, the current value (where applicable) of
each investment held in the Fund and any income arising on
the Fund's account during the relevant calendar month, and
will also include a statement showing the measure of the
performance of the assets of the Fund. The basis of all
valuations will be as stated in the first monthly statement,
unless otherwise agreed.
3.5 The Local Manager will not provide VKAM with an individual
trade confirmation of each portfolio transaction unless VKAM
has specifically requested the Local Manager to do so.
4. Force Majeure
The Local Manager shall not be responsible or liable to VKAM
or the Fund for any failure or delay in the performance of
its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation, acts of
God; earthquakes; fires; floods; wars; civil or military
disturbances; sabotage; epidemics; riots; interruptions,
loss or malfunctions of utilities; computer (hardware or
software) or communications services; accidents; labor
disputes; acts of civil or military authority or
governmental actions; it being understood that the Local
Manager shall use reasonable efforts which are consistent
with accepted practices in the investment management
industry to resume performance as soon as practicable under
the circumstances.
5. Complaints
The Local Manager maintains procedures in accordance with
FSA Rules for the effective consideration and handling of
client complaints. Complaints will be considered promptly by
the appropriate supervisory manager who is not personally
involved in the subject matter of the complaint. Where
appropriate, the complaint will be passed to the Compliance
Officer.
6. Confidentiality and Disclosure
6.1 Except as required by FSA Rules, neither the Local Manager
nor any affiliate is obliged to disclose to VKAM or the Fund
or to take into consideration information either:
(a)the disclosure of which by it to VKAM or the Fund would
or might be a breach of duty or confidence to any other
person; or
(b)which comes to the notice of an employee, officer or
agent of the Local Manager or of an affiliate, but
properly does not come to the actual notice of any
individual managing the Fund; or
(c)in respect of any investments, other than any price
quoted and sufficient and sufficient information to
identify the class of investments concerned; or
(d)relating to the nature or extent of any interest the
Local Manager or any affiliate has in any investments.
The Local Manager and VKAM undertake to keep private and
confidential all information acquired in connection with
this Agreement, and not to disclose such information to any
person except to the extent that:
(a)the other party gives prior consent; or
(b)the Local Manager is required to disclose the
information by the FSA, the Bank of England, the London
Stock Exchange or any other recognised investment
exchange, the City Panel on Takeovers and Mergers or any
other regulatory authority having jurisdiction over the
Local Manager or the performance by it of its
obligations under this Agreement or by English Law; or
(c)disclosure to a counterparty to a transaction effected
for the Fund is required as a condition to such
transaction; or
(d)disclosure is necessary to enable the Local Manager to
perform its obligations under this Agreement.
7. Data Protection
7.1 The Local Manager will, in connection with the Sub-Advisory
Agreement, comply (where applicable) with the UK Data
Protection Xxx 0000 and other applicable data protection
laws and regulations (together, the "Data Protection Laws").
7.2 VKAM will comply (where applicable) with the Data Protection
Laws and (where applicable) take all reasonable steps to
ensure that it has obtained all necessary consents for the
Local Manager to process any personal data for the purposes
of the Agreement.
