EXHIBIT A
FORM OF PROPOSED SUB-ADVISORY AGREEMENT WITH XXXXXXXX XXXXXXXX
Agreement made as of , 1995, between XXXXXXXX XXXXXXXX ASSET
MANAGEMENT INC. ('Xxxxxxxx Xxxxxxxx'), a Delaware corporation, and GE Investment
Management Incorporated ('Sub-Adviser'), a Delaware corporation (the
'Agreement').
RECITALS
(1) Xxxxxxxx Xxxxxxxx has entered into an Investment Advisory and
Administration Contract dated October 6, 1993, ('Management Agreement') with
Global Small Cap Fund Inc. ('Fund'), a Maryland corporation that is a closed-end
management investment company registered under the Investment Company Act of
1940, as amended ('1940 Act').
(2) Xxxxxxxx Xxxxxxxx wishes to retain the Sub-Adviser to furnish certain
investment advisory services to Xxxxxxxx Xxxxxxxx and the Fund, and the
Sub-Adviser is willing to furnish those services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. Xxxxxxxx Xxxxxxxx hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the Fund for the period and on the terms
set forth in this Agreement. The Sub-Adviser accepts that appointment and agrees
to render the services herein set forth, for the compensation herein provided.
2. Duties as Sub-Adviser.
(a) Subject to the supervision of and any guidelines adopted by the Fund's
Board of Directors (the 'Board'), the Sub-Adviser will provide a continuous
investment program for the Fund, including investment research and management.
The Sub-Adviser will determine from time to time what investments will be
purchased, retained or sold by the Fund. The Sub-Adviser will be responsible for
placing purchase and sell orders for investments and for other related
transactions. The Sub-Adviser will provide services under this Agreement in
accordance with the Fund's investment objective, policies and restrictions as
stated in the Fund's Registration Statement.
(b) The Sub-Adviser agrees that, in placing orders with brokers, it will
obtain the best net result in terms of price and execution; provided that, on
behalf of the Fund, the Sub-Adviser may, in its discretion, use brokers who
provide the Fund with research, analysis, advice and similar services to execute
portfolio transactions on behalf of the Fund, and the Sub-Adviser may pay to
those brokers in return for brokerage and research services a higher commission
than may be charged by other brokers, subject to the Sub-Adviser's determining
in good faith that such commission is reasonable in terms either of the
particular transaction or of the overall responsibility of the Sub-Adviser to
the Fund and its other clients and that the total commissions paid by the Fund
will be reasonable in relation to the benefits to the Fund over the long term.
In no instance will portfolio securities be purchased from or sold to the
Sub-Adviser, or any affiliated person thereof, except in accordance with the
federal securities laws and the rules and regulations thereunder. Whenever the
Sub-Adviser simultaneously places orders to purchase or sell the same security
on behalf of the Fund and one or more other accounts advised by the Sub-Adviser,
the orders will be allocated as to price and amount among all such accounts in a
manner believed to be equitable by the Sub-Adviser over time to each account.
Xxxxxxxx Xxxxxxxx recognizes that in some cases this procedure may adversely
affect the results obtained for the Fund.
(c) The Sub-Adviser will maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Fund, and will furnish the Board and Xxxxxxxx Xxxxxxxx with such periodic and
special reports as the Board or Xxxxxxxx Xxxxxxxx reasonably may request. In
compliance with the requirements of Rule 31a-3 under
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the 1940 Act, the Sub-Adviser hereby agrees that all records which it maintains
for the Fund are the property of the Fund, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for
the Fund and which are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Fund any records which it
maintains for the Fund upon request by the Fund.
(d) At such times as shall be reasonably requested by the Board or
Xxxxxxxx Xxxxxxxx, the Sub-Adviser will provide the Board and Xxxxxxxx Xxxxxxxx
with economic and investment analyses and reports as well as quarterly reports
setting forth the Fund's performance and make available to the Board and
Xxxxxxxx Xxxxxxxx any economic, statistical and investment services normally
available to institutional or other customers of the Sub-Adviser.
(e) In accordance with procedures adopted by the Board, as amended from
time to time, the Sub-Adviser is responsible for assisting in the fair valuation
of any illiquid portfolio securities and will assist in providing independent
sources of market value for all other portfolio securities.
3. Further Duties. In all matters relating to the performance of this
Agreement, the Sub-Adviser will act in conformity with the Fund's Articles of
Incorporation, By-Laws and currently effective registration statement under the
1940 Act and any amendments or supplements thereto ('Registration Statement')
and with the written instructions and directions of the Board and Xxxxxxxx
Xxxxxxxx and will comply with the requirements of the 1940 Act, the Investment
Advisers Act of 1940, as amended, ('Advisers Act'), the rules under each, and
Subchapter M of the Internal Revenue Code as applicable to regulated investment
companies. In addition, the Sub-Adviser will act in conformity with all other
applicable federal and state laws and regulations either as reflected in the
Registration Statement or otherwise provided in writing to the Sub-Adviser by
Xxxxxxxx Xxxxxxxx. Xxxxxxxx Xxxxxxxx agrees to provide to the Sub-Adviser copies
of the Fund's Articles of Incorporation, By-Laws, Registration Statement,
written instructions and directions of the Board and Xxxxxxxx Xxxxxxxx, and any
amendments or supplements to any of these materials as soon as practicable after
such materials become available.
4. Exclusivity. During the term of this Agreement, the Sub-Adviser agrees
that it will not provide investment advice on a discretionary or
non-discretionary basis for any global equity investment products offered to
retail customers in the United States by broker-dealers listed on Schedule A.
The Sub-Adviser shall deliver to Xxxxxxxx Xxxxxxxx in writing prompt and regular
reports of the Sub-Adviser's investment advisory activities in sufficient detail
to permit Xxxxxxxx Xxxxxxxx to monitor the terms of this Agreement.
5. Expenses. During the term of this Agreement, the Sub-Adviser will bear
all expenses incurred by it in connection with its investment sub-advisory
services under this Agreement.
6. Compensation.
(a) For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Agreement, Xxxxxxxx Xxxxxxxx, not the Fund, will pay to the
Sub-Adviser a fee, computed daily and payable monthly, as computed in the manner
set forth in Schedule B, together with a schedule showing the manner in which
the fee was computed.
(b) The fee shall be computed daily and payable monthly to the Sub-Adviser
on or before the fifteenth business day of the next succeeding calendar month.
(c) If this Agreement becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
7. Limitation of Liability. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund, the
Trust or its shareholders or by Xxxxxxxx Xxxxxxxx in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross
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negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
8. Indemnification.
(a) Xxxxxxxx Xxxxxxxx agrees to indemnify GEIM, its officers and
directors, and any person who controls GEIM within the meaning of Section 15 of
the Securities Act of 1933 ('1933 Act') for any loss or expense (including
attorneys' fees) arising out of any claim, demand, action or suit in the event
that GEIM has been found to be without fault and Xxxxxxxx Xxxxxxxx or its parent
company, PaineWebber Incorporated ('PaineWebber'), has been found at fault (i)
by the final judgment of a court of competent jurisdiction or (ii) in any order
of settlement of any claim, demand, action or suit that has been approved by the
Board of Directors of Xxxxxxxx Xxxxxxxx or PaineWebber.
(b) GEIM agrees to indemnify Xxxxxxxx Xxxxxxxx, its officers and
directors, and any person who controls Xxxxxxxx Xxxxxxxx within the meaning of
Section 15 of the 1933 Act for any loss or expense (including attorneys' fees)
arising out of any claim, demand, action or suit in the event that Xxxxxxxx
Xxxxxxxx has been found to be without fault and GEIM, or its parent company,
General Electric Company ('GE'), has been found at fault (i) by the final
judgment of a court of competent jurisdiction or (ii) in any order of settlement
of any claim, demand, action or suit that has been approved by the Board of
Directors of GEIM or GE.
9. Representations of Sub-Adviser. The Sub-Adviser represents, warrants
and agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act
from performing the services contemplated by this Agreement; (iii) has met, and
will seek to continue to meet for so long as this Agreement remains in effect,
any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; and (v) will promptly notify Xxxxxxxx Xxxxxxxx of the occurrence of
any event that would disqualify the Sub-Adviser from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise.
(b) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide Xxxxxxxx
Xxxxxxxx and the Board with a copy of that code of ethics, together with
evidence of its adoption. Within fifteen days of the end of the last calendar
quarter of each year that this Agreement is in effect, the president or a
vice-president of the Sub-Adviser shall certify to Xxxxxxxx Xxxxxxxx that the
Sub-Adviser has complied with the requirements of Rule 17j-1 during the previous
year and that there has been no violation of the Sub-Adviser's code of ethics
or, if such a violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of Xxxxxxxx Xxxxxxxx, the
Sub-Adviser shall permit Xxxxxxxx Xxxxxxxx, its employees or its agents to
examine the reports required to be made to the Sub-Adviser by Rule 17j-1(c)(1)
and all other records relevant to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided Xxxxxxxx Xxxxxxxx with a copy of its Form
ADV as most recently filed with the Securities and Exchange Commission ('SEC')
and promptly will furnish a copy of all amendments to Xxxxxxxx Xxxxxxxx at least
annually.
(d) The Sub-Adviser will notify Xxxxxxxx Xxxxxxxx of any change of control
of the Sub-Adviser, including any change of its general partners or 25%
shareholders, as applicable, and any changes in the key personnel of the
Sub-Adviser, in each case prior to or promptly after such change.
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10. Representations and Warranties of Xxxxxxxx Xxxxxxxx. Xxxxxxxx
Xxxxxxxx represents, warrants and agrees as follows:
(a) Xxxxxxxx Xxxxxxxx (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the 1940 Act from performing the
services contemplated by the Management Agreement; (iii) has met, and will seek
to continue to meet for so long as this Agreement remains in effect, any other
applicable federal or state requirements, or the applicable requirements of any
regulatory or industry self-regulatory agency, necessary to be met in order to
perform the services contemplated by the Management Agreement; (iv) has the
authority to enter into and perform the services contemplated by the Management
Agreement; and (v) will promptly notify the Sub-Adviser of the occurrence of any
event that would disqualify Xxxxxxxx Xxxxxxxx from serving as an investment
adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise.
(b) Xxxxxxxx Xxxxxxxx agrees that it will notify GEIM, to the extent
possible, within a reasonable period of time prior to any termination of this
Agreement by Xxxxxxxx Xxxxxxxx pursuant to Section 11(c) (including any
termination by assignment resulting from a foreseeable change in control of
Xxxxxxxx Xxxxxxxx that is a matter of public information), and that it will
notify GEIM promptly following any other termination of this Agreement pursuant
to Section 11(c).
11. Duration and Termination.
(a) This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those directors of the Fund 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, and (ii)
by a vote of a majority of outstanding voting securities of the Fund.
(b) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, this Agreement will continue automatically for successive periods of
twelve months each, provided that such continuance is specifically approved at
least annually (i) by a vote of a majority of those directors of the Fund 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, and
(ii) by the Board or by the holders of a vote of a majority of the outstanding
voting securities of the Fund.
(c) Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Sub-Adviser. This Agreement may also be terminated, without the
payment of any penalty, by Xxxxxxxx Xxxxxxxx: (i) upon 120 days' written notice
to the Sub-Adviser; (ii) upon material breach by the Sub-Adviser of any of the
representations and warranties set forth in Paragraph 9 of this Agreement; or
(iii) if the Sub-Adviser becomes unable to discharge its duties and obligations
under this Agreement, including circumstances such as financial insolvency of
the Sub-Adviser or other circumstances that could adversely affect the Fund. The
Sub-Adviser may terminate this Agreement at any time, without the payment of any
penalty, on 120 days' written notice to Xxxxxxxx Xxxxxxxx. This Agreement will
terminate automatically in the event of its assignment or upon termination of
the Management Agreement.
12. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment to the terms of this
Agreement shall be effective until approved by vote of a majority of the Fund's
outstanding voting securities (unless the Fund receives an SEC order permitting
it to modify the Agreement without such vote).
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13. Governing Law. This Agreement shall be construed in accordance with
the 1940 Act and the laws of the State of Delaware, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
14. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms 'majority of the outstanding voting securities,'
'affiliated person,' 'interested person,' 'assignment,' 'broker,' 'investment
adviser,' 'net assets,' 'sale,' 'sell' and 'security' shall have the same
meaning as such terms have in the 1940 Act, subject to such exemption as may be
granted by the SEC by any rule, regulation or order. Where the effect of a
requirement of the federal securities laws reflected in any provision of this
Agreement is made less restrictive by a rule, regulation or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order. This Agreement may be
signed in counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
Attest: XXXXXXXX XXXXXXXX ASSET MANAGEMENT
INC.
By:
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Name:
Title:
Attest: GE INVESTMENT MANAGEMENT INCORPORATED
By:
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Name:
Title:
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SCHEDULE A
RETAIL BROKER DEALERS
Alex. Xxxxx & Sons Incorporated
X.X. Xxxxxxx & Sons, Inc.
Xxxx Xxxxxx Xxxxxxxx, Inc.
X.X. Xxxxx
Xxxxxx Financial Services, Xxxxxx Securities Group, Inc.
Xxxx Xxxxx Xxxx Xxxxxx Incorporated
Xxxxxxx Xxxxx Xxxxxx Xxxxxx & Xxxxx Incorporated
Prudential Securities Incorporated
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxx Xxxxxx Inc.
SCHEDULE B
FUND ANNUAL FEE RATE
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Global Small Cap Fund Inc. 0.50% of average weekly net assets
