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
"IntermediateCustomers" 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
