XXXXXX FUNDS
SUB-MANAGEMENT CONTRACT
Sub-Management Contract dated as of September 13, 2004 between XXXXXX
INVESTMENT MANAGEMENT, LLC, a Delaware limited liability company (the
"Manager") and XXXXXX INVESTMENTS LIMITED, a company organized under the
laws of England and Wales (the "Sub-Manager").
WHEREAS, the Manager is the investment manager of each of the investment
companies registered under the United States Investment Company Act of 1940,
as amended, that are identified on Schedule A hereto, as it may from time to
time be amended by the Manager (the "Funds"), and a registered investment
adviser under the United States Investment Advisers Act of 1940, as amended;
WHEREAS, the Sub-Manager is licensed as an investment manager by the
Financial Services Authority of the United Kingdom (the "FSA"); and
WHEREAS, the Manager desires to engage the Sub-Manager from time to time to
manage a portion of certain of the Funds:
NOW THEREFORE, in consideration of the mutual covenants herein contained, it
is agreed as follows:
1. SERVICES TO BE RENDERED BY SUB-MANAGER
(a) The Sub-Manager, at its expense, will furnish continuously an investment
program for that portion of any Fund the management of which is allocated
from time to time by the Manager to the Sub-Manager (an "Allocated Sleeve").
The Manager shall, in its sole discretion, determine which Funds will have
an Allocated Sleeve and the amount of assets allocated from time to time to
such Allocated Sleeve; provided that, with respect to any Fund, the Trustees
of such Fund must have approved the use of the Sub-Manager prior to the
creation of an Allocated Sleeve for such Fund. The Sub-Manager will
determine what investments shall be purchased, held, sold or exchanged by
any Allocated Sleeve and what portion, if any, of the assets of the
Allocated Sleeve shall be held uninvested and shall, on behalf of the Fund,
make changes in the Fund's investments held in such Allocated Sleeve.
(b) The Manager may also, at its discretion, request the Sub-Manager to
provide assistance with purchasing and selling securities for any Fund,
including the placement of orders with broker-dealers selected in accordance
with Section 1(d), even if the Manager has not established an Allocated
Sleeve for such Fund.
(c) The Sub-Manager at its expense will furnish all necessary investment and
management facilities, including salaries of personnel, required for it to
execute its duties faithfully.
(d) The Sub-Manager shall place all orders for the purchase and sale of
portfolio investments for any Allocated Sleeve with brokers or dealers
selected by the Sub-Manager. In the selection of such brokers or dealers and
the placing of such orders, the Sub-Manager shall use its best efforts to
obtain for the related Fund the most favorable price and execution
available, except to the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described below. In using
its best efforts to obtain for the Fund the most favorable price and
execution available, the Sub-Manager, bearing in mind the Fund's best
interests at all times, shall consider all factors it deems relevant,
including by way of illustration, price, the size of the transaction, the
nature of the market for the security, the amount of the commission, the
timing of the transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker or dealer
involved and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Trustees of the Funds
may determine, the Sub-Manager shall not be deemed to have acted unlawfully
or to have breached any duty created by this Contract or otherwise solely by
reason of its having caused a Fund to pay a broker or dealer that provides
brokerage and research services to the Manager or the Sub-Manager an amount
of commission for effecting a portfolio investment transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Manager determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or its overall responsibilities
with respect to the Fund and to other clients of the Manager or the
Sub-Manager as to which the Manager or the Sub-Manager exercises investment
discretion. The Sub-Manager agrees that in connection with purchases or
sales of portfolio investments for any Fund, neither the Sub-Manager nor any
officer, director, employee or agent of the Sub-Manager shall act as a
principal or receive any commission other than as provided in Section 3.
(e) The Sub-Manager shall not be obligated to pay any expenses of or for the
Manager or any Fund not expressly assumed by the Sub-Manager pursuant to
this Section 1.
(f) In the performance of its duties, the Sub-Manager will comply with the
provisions of the Agreement and Declaration of Trust and By-Laws of each
applicable Fund and such Fund's stated investment objectives, policies and
restrictions, and will use its best efforts to safeguard and promote the
welfare of such Fund and to comply with other policies which the Manager or
the Trustees may from time to time determine and shall exercise the same
care and diligence expected of the Manager.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of a Fund may be a shareholder, director, officer or employee of,
or be otherwise interested in, the Sub-Manager, and in any person controlled
by or under common control with the Sub-Manager, and that the Sub-Manager
and any person controlled by or under common control with the Sub-Manager
may have an interest in such Fund. It is also understood that the
Sub-Manager and any person controlled by or under common control with the
Sub-Manager have and may have advisory, management, service or other
contracts with other organizations and persons, and may have other interests
and business.
3. COMPENSATION.
The Manager will pay to the Sub-Manager as compensation for the
Sub-Manager's services rendered, a fee, computed and paid quarterly at the
annual rate of 0.35% per annum of average aggregate net asset value of the
assets in equity Sleeved Accounts and 040% per annum of average aggregate
net asset value of the assets in fixed income Sleeved Accounts. Such average
net asset value shall be determined by taking an average of all of the
determinations of such net asset value during a quarter at the close of
business on each business day during such quarter while this Contract is in
effect. Such fee shall be payable for each quarter within 30 days after the
close of such quarter. The Sub-Manager shall look only to the Manager for
payment of its fees. No Fund shall have any responsibility for paying any
fees due the Sub-Manager.
If the Sub-Manager shall serve for less than the whole of a quarter, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.
This Contract shall automatically terminate without the payment of any
penalty, in the event of its assignment; and this Contract shall not be
amended with respect to any Allocated Sleeve unless such amendment be
approved at a meeting by the vote, cast in person at a meeting called for
the purpose of voting on such approval, of a majority of the Trustees of the
related Fund who are not interested persons of such Fund or of the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution, and shall remain in
full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) Either party hereto or, with respect to any Allocated Sleeve, the
related Fund may at any time terminate this Contract by not more than sixty
days' nor less than thirty days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party, or
(b) With respect to any Allocated Sleeve, if (i) the Trustees of the related
Fund or the shareholders by the affirmative vote of a majority of the
outstanding shares of such Fund, and (ii) a majority of the Trustees of such
Fund who are not interested persons of such Fund or of the Manager, by vote
cast in person at a meeting called for the purpose of voting on such
approval, do not specifically approve at least annually the continuance of
this Contract, then this Contract shall automatically terminate at the close
of business on the anniversary of its execution, or upon the expiration of
one year from the effective date of the last such continuance, whichever is
later, or
(c) With respect to any Allocated Sleeve, automatically upon termination of
the Manager's investment management contract with the related Fund.
Action by a Fund under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of
the outstanding shares of such Fund.
Termination of this Contract pursuant to this Section 5 will be without the
payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "affirmative vote of a majority of
the outstanding shares of a Fund" means the affirmative vote, at a duly
called and held meeting of shareholders of such Fund, (a) of the holders of
67% or more of the shares of such Fund present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of such Fund entitled to vote at such meeting are present
in person or by proxy, or (b) of the holders of more than 50% of the
outstanding shares of such Fund entitled to vote at such meeting, whichever
is less.
For the purposes of this Contract, the terms "affiliated person," "control,"
"interested person" and "assignment" shall have their respective meanings
defined in the United States Investment Company Act of 1940 and the Rules
and Regulations thereunder (the "1940 Act"), subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act; the term "specifically approve at least annually" shall be
construed in a manner consistent with the 1940 Act, and the Rules and
Regulations thereunder; and the term "brokerage and research services" shall
have the meaning given in the United States Securities Exchange Act of 1934
and the Rules and Regulations thereunder.
7. NON-LIABILITY OF SUB-MANAGER.
In the absence of willful misfeasance, bad faith or gross negligence on the
part of the Sub-Manager, or reckless disregard of its obligations and duties
hereunder, the Sub-Manager shall not be subject to any liability to the
Manager, any Fund or to any shareholder of any Fund, for any act or omission
in the course of, or connected with, rendering services hereunder.
8. ADDITIONAL PROVISIONS
(a) The Sub-Manager represents that it is regulated by the FSA in the
conduct of its investment business. The Sub-Manager has in operation a
written procedure in accordance with FSA rules for the effective
consideration and proper handling of complaints from customers. Any
complaint by the Manager or any Fund should be sent to the Compliance
Officer of the Sub-Manager. The Manager and any Fund is also entitled to
make any complaints about the Sub-Manager to the Financial Ombudsman
Service established by the FSA. The Manager and any Fund may also request a
statement describing its rights to compensation in the event of the
Sub-Manager's inability to meet its liabilities.
(b) The Manager represents that it and each Fund are "Intermediate
Customers" in the meaning of FSA rules.
(c) Although each Fund is not a party hereto and shall have no
responsibility for the Manager's or the Sub-Manager's obligations
hereunder, each Fund is named as explicit third party beneficiary of the
parties' agreements hereunder.
IN WITNESS WHEREOF, XXXXXX INVESTMENTS LIMITED and XXXXXX INVESTMENT
MANAGEMENT, LLC have each caused this instrument to be signed in
duplicate on its behalf by an officer duly authorized, all as of the day
and year first above written.
XXXXXX INVESTMENTS LIMITED
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
XXXXXX INVESTMENT MANAGEMENT, LLC
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Schedule A
Xxxxxx Diversified Income Trust
Xxxxxx VT Diversified Income Fund
Xxxxxx Europe Equity Fund
Xxxxxx High Yield Advantage Fund
Xxxxxx High Yield Trust
Xxxxxx VT High Yield Fund
Xxxxxx Global Equity Fund
Xxxxxx VT Global Equity Fund
Xxxxxx Global Income Trust
Xxxxxx International Equity Fund
Xxxxxx VT International Equity Fund
Xxxxxx International Growth and Income Fund
Xxxxxx VT International Growth and Income Fund
Xxxxxx High Income Bond Fund
Xxxxxx High Income Opportunities Trust
Xxxxxx Managed High Yield Trust
Xxxxxx Master Income Trust
Xxxxxx Master Intermediate Income Trust
Xxxxxx Premier Income Trust
