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Exhibit (d)(2)
INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN
XXX XXXXXX ASSET MANAGEMENT, INC.
AND
XXXXXX XXXXXXX ASSET MANAGEMENT INC.
THIS AGREEMENT is made as of this October 1, 1998, by and between XXXXXX XXXXXXX
ASSET MANAGEMENT INC., a Delaware Corporation, located at 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and XXX XXXXXX ASSET MANAGEMENT, INC. ("VK")
a Delaware Corporation, located at 0 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx
00000.
WHEREAS, VK has heretofore sponsored and acts as Investment Adviser to Xxx
Xxxxxx Real Estate Securities Fund (the "Fund"); and
WHEREAS, XXXXXX XXXXXXX ASSET MANAGEMENT INC. ("MSAM") has available a staff of
experienced investment personnel and facilities for providing investment
sub-advisory services to the investment portfolio; and
WHEREAS, MSAM is an investment adviser registered under the Investment Advisers
Act of 1940, as amended and is willing to provide VKAC with investment advisory
services on the terms and conditions hereinafter set forth; and
WHEREAS, VK and MSAM (jointly referred to as "the Advisers") desire to enter
into an agreement for MSAM to provide sub-advisory services to the Fund and to
VK 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, MSAM shall keep under
review the investments of the Fund and continuously furnish to the Fund and to
VK (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 MSAM'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 VK or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by VK or by the Trustees, MSAM shall determine the securities to be
purchased and sold by the Fund and shall place orders for the purchase,
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sale or exchange of securities for the Fund's accounts with brokers or
dealers and to that end MSAM 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 account of the
Fund.
d) In performing these services, MSAM 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 VK or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by VK or by the Trustees, MSAM 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 VK and to other entities as
directed by VK or by the Trustees.
f) MSAM 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. MSAM shall also make an investment officer
available to attend such meetings of the Trustees as the Trustees may reasonably
request.
1.2 Restriction of MSAM's Powers
(a) MSAM shall not commit the Fund to any extent beyond the amount of the
cash and securities placed by the Fund under the control of MSAM.
(b) In carrying out its duties hereunder MSAM shall comply with all
reasonable instruction of the Fund or VK 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 MSAM.
(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 MSAM at any time during normal business hours. Such
records, in relation to each transaction effected by MSAM on behalf of the Fund
shall be maintained by MSAM 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, MSAM 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, MSAM 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, MSAM 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
MSAM 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 VK
2.1 Provision of Information
VK shall advise MSAM 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 MSAM a copy of
each registration statement relating to the Fund as filed with the Securities
and Exchange Commission. As requested by MSAM, VK shall furnish such information
to MSAM as to holdings, purchases, and sales of the securities under its
management as will reasonably enable MSAM to furnish its investment advice under
this Agreement.
2.2 Compensation to MSAM
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 VK pursuant to the investment advisory fee schedule set
forth in the Investment Advisory Agreement between the Fund and VK taking into
account any waiver or return to the Fund of any or all of such advisory fee by
VK (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 VK to MSAM within five (5)
business days after the last day of the valuation period.
3. MISCELLANEOUS
3.1 Activities of MSAM
The services of MSAM as Sub-Adviser to VK under this Agreement are not to
be deemed exclusive, MSAM and its affiliates being free to render services to
others. It is understood that shareholders, trustees, officers and employees of
MSAM may become interested in the Fund or VK as a shareholder, trustee, officer,
partner or otherwise.
3.2 Services to Other Clients
VK acknowledges that MSAM 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, VK agrees that MSAM 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 MSAM acts in good faith, and provided, further, that it
is MSAM 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. VK 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. MSAM shall have no
obligation to acquire for the Fund a position in any investment which any Client
may acquire, and VK shall have no first refusal, coinvestment or other rights in
respect of any such
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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, MSAM shall use its best professional judgment
to recommend actions which will provide favorable results for the Fund. MSAM
shall not be liable to the Fund or to any shareholder of the Fund to any greater
degree than VK.
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 October 2000, 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 VK or MSAM 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 VK and MSAM. This
Agreement shall automatically terminate in the event of the termination of the
investment advisory agreement between VK 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 MSAM shall have committed to on behalf of the Fund prior to
the time of termination. MSAM shall not effect and the Fund shall not be
entitled to instruct MSAM 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 VK or MSAM 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) MSAM 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 MSAM's possession, power or control and which are valid and in force at
the date of termination.
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
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hard copy to follow),
If to MSAM, to:
Xxxxxx Xxxxxxx Asset Management, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Atten: Xxxxxxx Xxxxx
with a copy to:
Xxxxxx Xxxxxxx Asset Management, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Atten: Xxxxxx X. Xxxxxxx, Esq.
If to VK, to:
Xxx Xxxxxx Asset Management, Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Atten: Xxxxxx X. XxXxxxxxx
with a copy to:
Xxx Xxxxxx Asset Management, Inc.
0 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Atten: Xxxxxx X. Xxxxxx, 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.
VAN XXXXXX XXXXXX XXXXXXX
ASSET MANAGEMENT, INC. ASSET MANAGEMENT INC.
By: By:
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Name: Xxxxxx X. XxXxxxxxx Name: Xxxxxxx Xxxxx
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Its: President and Chief Operating Officer Its: Principal
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