Exhibit (d)(5)
AMENDED AND RESTATED
SUB-ADVISORY AGREEMENT
AGREEMENT dated as of the 16th day of October, 2002, and amended and
restated as of October 1, 2003 between AmSouth Asset Management Inc., a
corporation with its principal place of business in Alabama (herein called the
"Investment Advisor") and Dimensional Fund Advisors Inc., a corporation with its
principal place of business in California (herein called the "Sub-Advisor").
WHEREAS, the Investment Advisor is the investment advisor to AmSouth
Funds, a Massachusetts business trust (herein called the "Trust"), an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the AmSouth Investment Management Company, LLC (AIMCO), is a
separate, wholly-owned subsidiary of AmSouth Bank, which formerly served as
investment advisor to the Trust;
WHEREAS, the Investment Advisor is a separate, wholly-owned subsidiary of
AmSouth Bank;
WHEREAS, AmSouth Bank reorganized its investment advisory subsidiaries so
that management and investment advisory personnel that formerly provided
investment management services as personnel of AIMCO now do so as the personnel
of the Investment Advisor;
WHEREAS, the reorganization of the investment advisory subsidiaries of
AmSouth Bank does not effect an actual change in management or control of the
investment advisor within the meaning of Rule 2a-6 under the 1940 Act, and,
therefore, did not constitute an assignment of this Agreement for purposes of
Section 15(a)(4) of the 1940 Act;
WHEREAS, the Investment Advisor wishes to retain the Sub-Advisor to assist
the Investment Advisor in providing investment advisory services in connection
with such portfolios of the Trust as now or hereafter may be identified on
Schedule A hereto as such Schedule may be amended from time to time with the
consent of the parties hereto (each herein called a "Fund");
WHEREAS, the Board of Trustees of the Trust has duly approved this
Agreement upon consideration of the Trust's existing contractual arrangements
and applicable law; and
WHEREAS, the Sub-Advisor is willing to provide such services to the
Investment Advisor upon the terms and conditions and for the compensation set
forth below;
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NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT. The Investment Advisor hereby appoints the Sub-Advisor
its sub-advisor with respect to the Fund and the Sub-Advisor accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided. In the performance of its duties hereunder, the
Sub-Advisor is and shall be an independent contractor and except as otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Trust, the Fund or the Investment Advisor
in any way or otherwise be deemed to be an agent of the Trust, the Fund or the
Investment Advisor.
2. DELIVERY OF DOCUMENTS. The Investment Advisor shall furnish to the
Sub-Advisor copies of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date
hereof;
(b) The By-laws of the Trust as in effect on the date hereof;
(c) The resolutions of the Board approving the engagement of the
Sub-Advisor as sub-advisor for the Fund and approving the form of this
Agreement;
(d) The resolutions of the Board selecting the Investment Advisor as
investment advisor to the Fund and approving the form of the Investment Advisory
Agreement with the Trust, on behalf of the Fund;
(e) The Investment Advisory Agreement with the Trust, on behalf of
the Fund;
(f) Current copies of the registration statement, Prospectus and
Statement of Additional Information of the Trust relating to the Fund;
(g) Resolutions, policies and procedures adopted by the Board in
respect of the management or operation of the Fund; and
(h) A list of affiliated brokers and underwriters and other
affiliates for compliance with applicable provisions of the Investment Company
Act.
The Investment Advisor shall furnish the Sub-Advisor from time to
time with copies, properly certified or otherwise authenticated, of all
amendments of or supplements to the foregoing, if any. Such amendments or
supplements as to Items (a) through (h) above shall be provided within 30 days
of the times such materials became available to the Investment Advisor and,
until so provided, the Sub-Advisor may continue to rely on those documents
previously provided. With respect to Items (g) and (h) above, the Sub-Advisor
shall have a reasonable amount of time, giving due consideration to the nature
of the information so provided, to process such information before it becomes
effective as to the Sub-Advisor.
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3. SUB-ADVISORY SERVICES TO THE FUNDS.
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(a) Subject to the supervision of the Investment Advisor, the
Sub-Advisor will provide a continual investment program for such portion, if
any, of the Fund's assets, that is allocated to the Sub-Advisor by the
Investment Advisor from time to time. With respect to such assets, the
Sub-Advisor will: (i) make investment decisions with respect to the investment
and re-investment of the Fund's assets; (ii) place orders for all purchases and
sales of the investments made for the Fund; (iii) maintain the books and records
required in connection with its duties hereunder; and (iv) keep the Investment
Advisor informed of developments materially affecting the Fund. The Investment
Advisor shall retain direct portfolio management responsibility with respect to
any assets of the Fund which are not allocated by it to the portfolio management
of the Sub-Advisor.
(b) The Sub-Advisor will use the same skill and care in providing
such services as it uses in providing services to fiduciary accounts for which
it has investment responsibilities; provided that, notwithstanding this
Paragraph 3(b), the liability of the Sub-Advisor for actions taken and
non-actions with respect to the performance of services under this Agreement
shall be subject to the limitations set forth in Paragraph 11(a) of this
Agreement.
(c) The Sub-Advisor will communicate to the Trust's custodian and
Fund accountants as instructed by the Investment Advisor on each day that a
purchase or sale of a security is effected for the Fund (i) the name of the
issuer, (ii) the amount of the purchase or sale, (iii) the name of the broker or
dealer, if any, through which the purchase or sale will be affected, (iv) the
CUSIP or SEDOL number of the security, if any, and (v) such other information as
the Investment Advisor may reasonably require for purposes of fulfilling its
obligations to the Trust under the Advisory Agreement.
(d) The Sub-Advisor will provide the services rendered by it
hereunder in accordance with the Fund's investment objectives, policies and
restrictions as stated in the Prospectus and Statement of Additional
Information, and such other guidelines as the Board of Trustees of the Trust
("Board") may establish and which are provided to Sub-Advisor in accordance with
Section 2 of this Agreement.
(e) The Sub-Advisor will maintain records of the information set
forth in Paragraph 3(c) hereof with respect to the securities transactions of
the Fund and will furnish the Trust's Board of Trustees with such periodic and
special reports as the Board may reasonably request.
(f) After each month-end, the Sub-Advisor will promptly review
all (1) reports of current security holdings in the Fund, (2) summary reports of
transactions and pending maturities (including the principal, cost and accrued
interest on each portfolio security in maturity date order) and (3) current cash
position reports (including cash available from portfolio sales and maturities
and sales of the Fund's shares less cash needed for redemptions and settlement
of portfolio purchases), all within a reasonable time after receipt thereof from
the Trust and will report any errors or discrepancies in such reports to the
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Trust or its designee within three (3) business days after discovery of such
discrepancies.
(g) At such times as reasonably requested by the Board or the
Investment Advisor, the Sub-Advisor will provide economic and investment
analysis and reports, and make available to the Board and the Investment Advisor
such economic, statistical, or investment services normally available to similar
investment company clients of the Sub-Advisor.
(h) The Sub-Advisor will make its portfolio managers and other
appropriate personnel available to the Board and the Investment Advisor at
reasonable times to review the Fund's investment policies and to consult with
the Board and the Investment Advisor regarding the investment affairs of the
Fund, including economic and statistical and investment matters relevant to the
Sub-Advisor's duties hereunder, and the portfolio strategies employed.
(i) The Sub-Advisor will provide the Investment Advisor with
quarterly compliance reports and certifications in the forms reasonably
requested by the Investment Advisor.
(j) The Sub-Advisor will provide the Trust with reasonable
evidence that, with respect to its activities on behalf of the Fund, the
Sub-Advisor is maintaining (i) adequate fidelity bond insurance; and (ii) an
appropriate Code of Ethics and related reporting procedures.
4. BROKERAGE. The Sub-Advisor may place orders pursuant to its
investment determinations for the Fund either directly with the issuer or with
any broker or dealer. In placing orders, the Sub-Advisor will consider the
factors it deems relevant, including, as applicable, the experience and skill of
the firm's securities traders, as well as the firm's financial responsibility
and administrative efficiency. The Sub-Advisor will use its best efforts to
obtain the best price and the most favorable execution of its orders. Consistent
with these obligations, and in selecting a broker to execute a particular
transaction, the Sub-Advisor may consider the brokerage and research services
provided to the Fund and other accounts over which the Sub-Advisor exercises
investment discretion. A commission paid to such brokers may be higher than that
which another qualified broker would have charged for effecting the same
transaction, provided that the Sub-Advisor determines in good faith that the
amount of such commission is reasonable in relation to the value of the
brokerage or research services provided, viewed either in terms of a particular
transaction or the overall responsibility of the Sub-Advisor to the Fund and its
other clients. Compensation received by the Sub-Advisor pursuant to this
Agreement shall not be reduced by any benefits received by the Sub-Advisor
pursuant to this section. The Sub-Advisor may direct brokerage to whomever it
deems appropriate consistent with the foregoing. In no instance will portfolio
securities be purchased from or sold to the Trust's principal distributor, the
Investment Advisor or any affiliate thereof (as the term "affiliate" is defined
in the 1940 Act), except to the extent permitted by Securities and Exchange
Commission ("SEC") exemptive order or by applicable law.
5. COMPLIANCE WITH LAWS: CONFIDENTIALITY: CONFLICTS OF INTEREST.
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(a) The Sub-Advisor agrees that it will comply with all
applicable laws, rules and regulations of all federal and state regulatory
agencies having jurisdiction over the Sub-Advisor in performance of its duties
hereunder (herein called the "Rules").
(b) The Sub-Advisor will treat confidentially and as proprietary
information of the Trust all records and information relative to the Trust and
prior, present or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except (i) after prior notification to and approval in writing
by the Trust, which approval shall not be unreasonably withheld and may not be
withheld where the Sub-Advisor may be exposed to civil or criminal contempt
proceedings for failure to comply; (ii) after notification to the Investment
Advisor or Trust, in response to regulatory inspection requests or other
regulatory inquiries or (iii) when so requested by the Investment Advisor or the
Trust.
(c) It is understood that any non-public information or
non-public recommendation supplied by the Sub-Advisor in connection with the
performance of its obligations hereunder is to be regarded as confidential and
for use only by the Investment Advisor, Trust or such persons as the Investment
Advisor may designate in connection with the business of the Fund.
6. CONTROL BY TRUST'S BOARD OF TRUSTEES. Any recommendations concerning
the Fund's investment program proposed by the Sub-Advisor to the Fund and the
Investment Advisor pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Advisor on behalf of the Fund pursuant thereto shall at
all times be subject to any applicable directives of the Board of Trustees of
the Trust.
7. SERVICES NOT EXCLUSIVE. The Sub-Advisor's services hereunder are not
deemed to be exclusive, and the Sub-Advisor shall be free to render similar or
dissimilar services to others. The Investment Advisor understands, and has
advised the Trust's Board of Trustees, that the Sub-Advisor now acts, and may in
the future act, as an investment advisor to fiduciary and other managed
accounts, and as investment advisor, sub-investment advisor, and/or
administrator to other investment companies. The Investment Advisor has no
objection to the Sub-Advisor's acting in such capacities, provided that whenever
the purchase or sale of securities or other investments of the same issuer may
be deemed by the Sub-Advisor to be suitable for two or more Funds, investment
companies or accounts managed by the Sub-Advisor, the available securities or
investments will be allocated in a manner believed by the Sub-Advisor to be
equitable to each of them. It is recognized and acknowledged by the Investment
Advisor that in some cases this procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained for or disposed of by
the Fund. In addition, the Investment Advisor understands, and has advised the
Trust's Board of Trustees, that the persons employed by the Sub-Advisor to
assist in the Sub-Advisor's duties under this Agreement will not devote their
full time to such service and nothing contained in this Agreement will be deemed
to limit or restrict the right of the Sub-Advisor or any of its affiliates to
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engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
8. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
of the Rules, and any other applicable Rule, the Sub-Advisor hereby agrees that
all records which it maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the Trust any such records upon the
Trust's request. The Sub-Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 and any other applicable Rule, the records required to
be maintained by the Sub-Advisor hereunder pursuant to Rule 31a-1 and any other
applicable Rule.
9. EXPENSES. During the term of this Agreement, the Sub-Advisor will
bear all expenses incurred by it in connection with the performance of its
services under this Agreement other than the cost of securities (including
brokerage commissions, if any) purchased for the Fund. Notwithstanding the
foregoing, the Sub-Advisor shall not bear expenses related to the operation of
the Trust or any Fund including, but not limited to, taxes, interest, brokerage
fees and commissions and any extraordinary expense items.
10. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Investment Advisor will pay the Sub-Advisor and
the Sub-Advisor will accept as full compensation therefor a fee computed daily
and paid monthly in arrears on the first business day of each month equal to the
lesser of (i) the fee at the applicable annual rates set forth on Schedule A
hereto or (ii) such fee as may from time to time be agreed upon in writing by
the Investment Advisor and the Sub-Advisor. If the fee payable to the
Sub-Advisor pursuant to this paragraph begins to accrue after the beginning of
any month or if this Agreement terminates before the end of any month, the fee
for the period from such date to the end of such 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. For purposes of calculating fees, the
value of a Fund's net assets shall be computed in the manner specified in the
Prospectus and the Statement of Additional Information for the computation of
the value of the Fund's net assets in connection with the determination of the
net asset value of the Fund's shares. Payment of said compensation shall be the
sole responsibility of the Investment Advisor and shall in no way be an
obligation of the Fund or of the Trust.
11. LIMITATION OF LIABILITY.
(a) The Sub-Advisor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Investment Advisor, the Trust
or the Fund in connection with the matters to which Agreement relates, except
that Sub-Advisor shall be liable to the Investment Advisor for a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of
Sub-Advisor in the performance of its duties or from reckless disregard by it of
its obligations or duties under this Agreement. In no case shall the Sub-Advisor
be liable for actions taken or non-actions with respect to the performance of
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services under this Agreement based upon specific information, instructions or
requests given or made to the Sub-Advisor by the Investment Advisor.
(b) The Investment Advisor shall be responsible at all times for
supervising the Sub-Advisor, and this Agreement does not in any way limit the
duties and responsibilities that the Investment Advisor has agreed to under the
Advisory Agreement.
12. DURATION AND TERMINATION. This Agreement shall become effective as
of the date first written above provided that it shall have been approved (a) by
a vote of a majority of the members of the Board who are not parties to this
Agreement or interested persons of the Trust, the Investment Advisor or the
Sub-Advisor ("Independent Trustees"), cast in person at a meeting called for the
purposes of voting on such approval; and (b) by a vote of a majority of the
outstanding voting securities of the Fund. Unless sooner terminated as provided
herein, this Agreement shall continue with respect to the Fund until October 16,
2004. Thereafter, if not terminated, this Agreement shall continue in effect for
successive 12-month periods ending on October 15 of each year, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of Independent Trustees, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Board or by vote of a
majority of the outstanding voting securities of the Fund; PROVIDED, HOWEVER,
that this Agreement may be terminated with respect to the Fund (i) by the Trust
at any time without the payment of any penalty by the Board, (ii) by vote of a
majority of the outstanding voting securities of the Fund, (iii) by the
Investment Advisor on 60 days written notice to the Sub-Advisor or (iv) by the
Sub-Advisor on 60 days written notice to the Investment Advisor. Any notice of
termination served on the Sub-Advisor by the Trust or the Investment Advisor
shall be without prejudice to the obligation of the Sub-Advisor to complete
transactions already initiated or acted upon with respect to the Fund. This
Agreement will also immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities", "interested person" and "assignment" shall have the same meaning as
such terms have in the 1940 Act.)
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought.
14. NOTIFICATION OF INVESTMENT ADVISOR. The Sub-Advisor will promptly
notify the Investment Advisor in writing of the occurrence of any of the
following events: (a) the Sub-Advisor shall fail to be registered as an
investment advisor under the Investment Advisors Act of 1940, as amended; (b)
the Sub-Advisor shall have been served or otherwise have notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before or by
any court, public board or body, involving the affairs of the Fund or the Trust;
or (c) any other occurrence that reasonably could have a material adverse impact
on the ability of the Sub-Advisor to provide the services provided for in this
Agreement.
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15. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof.
16. PRIVACY POLICY. The Sub-Advisor acknowledges that nonpublic customer
information (as defined in Regulation S-P, including any amendments thereto) of
customers of the Fund received from the Investment Advisor is subject to the
limitations on redisclosure and reuse set forth in Section 248.11 of Regulation
S-P, and agrees that such information: (i) shall not be disclosed to any third
party for any purpose without the written consent of the Investment Advisor
unless permitted by exceptions set forth in Sections 248.14 or 248.15 of
Regulation S-P; and (ii) shall be safeguarded pursuant to procedures adopted
under Section 248.30 of Regulation S-P if so required.
17. REFERENCES TO THE INVESTMENT ADVISOR AND SUB-ADVISOR. During the
term of this Agreement, each party agrees to furnish to the other party at its
principal office all prospectuses, proxy statements, reports to stockholders,
sales literature or other material prepared for distribution to sales personnel,
shareholders of the Trust or the public, which refer to the other party or its
clients in any way, prior to use thereof and not to use such material if the
other party reasonably objects in writing five business days (or such other time
as may be mutually agreed upon) after receipt thereof. Sales literature may be
furnished to the other party by first-class or overnight mail, facsimile
transmission equipment or hand delivery.
18. CLIENT SUITABILITY. The Investment Advisor understands and agrees
that the Sub-Advisor, as part of its duties hereunder, is not responsible for
determining whether or not the Fund is suitable and appropriate investments for
the clients who invest in such.
19. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any 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 herein and their respective successors and shall be governed by
Massachusetts law.
The names "AmSouth Funds" and "Trustees of AmSouth Funds" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Amended and
Restated Declaration of Trust dated as of March 19, 2003 to which reference is
hereby made and a copy of which is on file at the office of the Secretary of
State of The Commonwealth of Massachusetts and elsewhere as required by law, and
to any and all amendments thereto so filed or hereafter filed. The obligations
of "AmSouth Funds" entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, shareholders or
representatives of the Trust personally, but bind only the assets of the Trust,
and all persons dealing with any series of shares of the Trust must look solely
to the assets of the Trust belonging to such series for the enforcement of any
claims against the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
(SEAL) AMSOUTH ASSET MANAGEMENT INC.
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
By: Xxxxxx X. Xxxxxxx
Title: Chairman
(SEAL) DIMENSIONAL FUND ADVISORS INC.
/s/ Xxxxxxx X. Xxxxx
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By: Xxxxxxx X. Xxxxx
Title: Vice President and Assistant
Secretary
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Dated: October 1, 2003
SCHEDULE A
To Sub-Advisory Agreement
dated as of October 1, 2003
between AmSouth Asset Management Inc.
and Dimensional Fund Advisors Inc.
NAME OF FUND ANNUAL FEE AS A PERCENTAGE OF
------------ AVERAGE DAILY NET ASSETS
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AmSouth International Equity Fund .40% on the first $40 million of average
aggregate daily net assets and .20% on
assets in excess of $40 million
Consented to by:
Date: 10/02/03 AMSOUTH ASSET MANAGEMENT INC.
---------------
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
By: Xxxxxx X. Xxxxxxx
Title: Chairman
Date: 10/02/03 DIMENSIONAL FUND ADVISORS INC.
--------------
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
By: Xxxxxxx X. Xxxxx
Title: Vice President and Assistant
Secretary
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