Second Amended and Restated Sub-Advisory Agreement
Renaissance Investment Management
This Second Amended and Restated Sub-Advisory Agreement (the
"Agreement"), effective as of February 20, 2012 (the "Effective Date"),
by and among American Fidelity Dual Strategy Fund, Inc., a Maryland
corporation (the "Fund"), American Fidelity Assurance Company, an
insurance company organized under the laws of the State of Oklahoma (the
"Advisor"), and The Renaissance Group LLC (d/b/a Renaissance Investment
Management) (the "Sub-Advisor"), amends and restates in its entirety the
Amended and Restated Sub-Advisory Agreement by and among the parties
hereto dated as of January 1, 2009 (the "Previous Agreement").
RECITALS
A. The Fund is engaged in business as an open-end, diversified
management company and is registered as such under the Investment Company
Act.
B. The Advisor and the Fund are parties to a Management and
Investment Advisory Agreement dated as of May 1, 2003, as amended January
5, 2009 (the "Advisory Agreement"), pursuant to which the Advisor acts as
investment advisor to the Fund.
C. The Sub-Advisor is engaged principally in the business of
rendering investment advisory services and is registered as an investment
advisor under the Investment Advisers Act.
D. The Advisor and the Sub-Advisor previously obtained approval by
a Majority Vote of Shareholders (defined below) to retain the Sub-Advisor
to furnish investment advisory services to the Advisor with respect to
certain assets of the Fund, and the Sub-Advisor has rendered such
investment advisory services prior to the date hereof pursuant to the
Previous Agreement.
E. The parties desire to amend and restate the Previous Agreement,
as set forth herein.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS: Unless otherwise defined in this Agreement,
capitalized terms shall have the meanings commonly ascribed to them in
the federal securities laws and related rules and regulations. In
addition, the following terms shall mean:
(a) Advisor: As defined in the introductory
paragraph of this Agreement.
(b) Custodian: InvesTrust, N.A. a special purpose
bank chartered by the Office of the Comptroller of the Currency.
(c) Fund: As defined in the introductory paragraph
of this Agreement.
(d) Investment Advisers Act: The Investment
Advisers Act of 1940, as amended.
(e) Investment Assets: Those assets of the Fund as
the Advisor and the Fund shall specify in writing, from time to time,
including cash, stocks, bonds and other securities that the Advisor
deposits with the Custodian and places under the investment supervision
of the Sub-Advisor, together with any assets that are added at a
subsequent date or which are received as a result of the sale, exchange
or transfer of such Investment Assets.
(f) Investment Company Act: The Investment Company
Act of 1940, as amended.
(g) Majority Vote of Shareholders: The vote, in
accordance with Section 2(a)(42) of the Investment Company Act, at an
annual or a special meeting of the Shareholders of: (i) sixty-seven
percent (67%) or more of the voting securities present at the meeting, if
the holders of more than fifty percent (50%) of the outstanding voting
securities of the Fund are present or represented by proxy, or (ii) more
than fifty percent (50%) of the outstanding voting securities of the
Fund, whichever is less.
(h) SEC: The Securities and Exchange Commission.
(i) Securities Act: The Securities Act of 1933, as
amended.
(j) Securities Exchange Act: The Securities
Exchange Act of 1934, as amended.
(k) Shareholders: The beneficial owners of the
Fund's securities.
(l) Sub-Advisor: As defined in the introductory
paragraph of this Agreement.
2. APPOINTMENT OF THE SUB-ADVISOR. Effective as of the
date hereof, the Advisor hereby appoints the Sub-Advisor to serve as
investment advisor to the Advisor with respect to the Investment Assets
of the Fund, and the Sub-Advisor accepts such appointment and agrees to
render the services and to assume the obligations set forth in this
Agreement.
3. THE INVESTMENT ASSETS. Subject to supervision by the
Advisor and the Fund's Board of Directors, the Sub-Advisor shall manage
the investment operations of the Investment Assets. The Advisor may make
additions to or withdrawals from the Investment Assets in any amounts the
Advisor determines appropriate or necessary, and the Advisor will provide
notice of such additions and withdrawals to the Sub-Advisor.
4. CUSTODIANSHIP OF THE INVESTMENT ASSETS. The Investment
Assets have been deposited with the Custodian and are maintained by the
Custodian in safekeeping on its premises, in a recognized clearing
corporation, or in the Federal Reserve book-entry system, in the name of
the Fund, the Custodian or the clearing corporation, or in the nominee
name of any of these. The Advisor will give the Sub-Advisor prior notice
if any other entity is appointed to serve as Custodian for the Investment
Assets. The term "Custodian" includes all successors to the presently
serving Custodian. The Sub-Advisor shall have no responsibility or
liability for custody arrangements or for the actions or omissions of the
Custodian.
5. MANAGEMENT OF INVESTMENT ASSETS.
5.1 GENERAL POWERS AND DUTIES.
(a) General. For the term of this Agreement,
the Sub-Advisor, subject to the provisions of Sections 3, 5.1 and 5.2 of
this Sub-Advisory Agreement, has complete discretion and authority in the
investment and reinvestment of the Investment Assets. Subject to
specific written instructions of the Advisor, the Sub-Advisor must
determine what securities or other property will be acquired, held, or
disposed of and, subject to the provisions of Section 5.4 of this
Agreement, what portion of the Investment Assets will be held uninvested.
The Sub-Advisor's investment and reinvestment authority includes, without
limitation, authority to purchase, sell, exchange, convert, trade, and
generally to deal in the Investment Assets.
(b) Instructions to Custodian. The Sub-
Advisor is hereby authorized to give instructions to the Custodian with
respect to the consummation of transactions on behalf of the Advisor in
the Investment Assets, and the Sub-Advisor has authority to direct the
Custodian with respect to the investment and management of the Investment
Assets. The Custodian is hereby authorized to act in response to
instructions given by the Sub-Advisor. The Advisor agrees to take any
action and deliver any certificates reasonably necessary to confirm this
authorization to the Custodian.
(c) Voting Rights. The Sub-Advisor's
authority includes the exercise of all voting rights pertaining to the
Investment Assets. The Sub-Advisor has the duty to maintain accurate
records as to any vote or action taken with respect to any stock or other
securities which are part of the Investment Assets and to take such
further action as may be necessary for the Fund to participate fully in
any transaction undertaken by issuers of Investment Assets.
(d) Tax Lot Selection Methods for Sales. Unless
otherwise instructed in writing by the Advisor or the Board of Directors
of the Fund, the Sub-Advisor will use the first in, first out (FIFO)
method as the default tax lot selection method with regard to the
Investment Assets.
5.2 INVESTMENT POLICY. Investment objectives,
policies and other restrictions for the management of the Investment
Assets, including requirements as to diversification, are set forth in
Exhibit A to this Agreement. The Sub-Advisor must discharge its duties
hereunder in accordance with Exhibit A as revised or supplemented in
separate written instructions provided from time to time by the Advisor
or the Fund's Board of Directors.
5.3 PRUDENCE AND DIVERSIFICATION. The Sub-Advisor
must discharge its duties under this Agreement at all times with the
care, skill, prudence and diligence that a prudent person acting in a
like capacity and familiar with such matters would use in conducting an
enterprise of a like character and with like aims.
5.4 MINIMUM LIQUIDITY REQUIREMENTS. The Advisor
will give the Sub-Advisor reasonable advance notice of any cash
requirements from the Investment Assets, and the Sub-Advisor will
maintain in cash or cash equivalents sufficient assets to meet such cash
requirements.
5.5 BROKERS AND DEALERS.
(a) Instructions. The Sub-Advisor is hereby
empowered to issue orders directly to a broker or dealer for the
purchase, sale or exchange of securities with respect to the Investment
Assets. The Sub-Advisor must give the Custodian and the Advisor prompt
written notification of each such execution in accordance with the
provisions of Section 6.1 of this Agreement, and the Sub-Advisor must
instruct the broker or dealer to forward copies of the confirmation of
the execution of the order to the Custodian and the Advisor.
(b) Selection of Securities Brokers and
Dealers. The Sub-Advisor may select and employ securities brokers and
dealers to effect any securities transactions concerning the investment
management of the Investment Assets. In selecting brokers and dealers and
placing orders with them, the Sub-Advisor must use its commercially
reasonable best efforts to obtain for the Investment Assets the most
favorable net price and "best execution" available, except to the extent
otherwise provided by Section 28(e) of the Securities Exchange Act or by
other applicable law; provided, however, in seeking the best execution
available with respect to securities transactions involving the
Investment Assets, the Sub-Advisor shall give consideration to the
overall quality of brokerage and research services provided, it being
understood and agreed that "best execution" is not limited to obtaining
the lowest commission for each transaction. Notwithstanding anything in
this subsection to the contrary, the Advisor may instruct the Sub-Advisor
in writing to engage securities brokers and dealers specified by the
Advisor to effect, with respect to the Investment Assets, securities
transactions or particular securities transactions, and the Sub-Advisor
must act in accordance with those instructions, so long as they are
reasonable. The Sub-Advisor will not be responsible or liable for any
acts or omissions by any broker or dealer selected pursuant to this
subsection; provided that, the Sub-Advisor has acted reasonably in the
exercise of due care in the selection of the broker or dealer and has not
otherwise directly or indirectly participated in those acts or omissions
by the broker or dealer.
(c) Affiliated Brokers. Unless authorized in
writing by the Advisor, neither the Sub-Advisor nor any parent,
subsidiary or related firm, individual or other entity related to the
Sub-Advisor will act as a securities broker with respect to any purchase
or sale of securities made on behalf of the Fund.
5.6 OTHER ACCOUNTS OF THE SUB-ADVISOR. It is
understood that the Sub-Advisor performs investment advisory services for
various clients and accounts other than the Advisor. The Sub-Advisor may
give advice and take action in the performance of its duties with respect
to other clients or accounts that may be the same as or may differ from
the timing or nature of action taken with respect to the Investment
Assets, provided that the Sub-Advisor allocates to the Investment Assets,
to the extent practicable, opportunities to acquire or dispose of
investments over a period of time on a basis no less favorable than its
allocation of such opportunities to other clients and accounts and seeks
over a period of time to obtain comparable execution of similar
transactions among its clients. It is understood that the Sub-Advisor
will not have any obligation to purchase or sell, or to recommend for
purchase or sale, for the Fund any security which the Sub-Advisor, its
principals, affiliates or employees may purchase or sell for its or their
own accounts or for the account of any other client, if in the opinion of
the Sub-Advisor such transaction or investment appears unsuitable,
impractical or undesirable for the Fund.
5.7 LIABILITY OF SUB-ADVISOR. The Sub-Advisor
shall act in good faith in rendering services in connection with this
Agreement. Nothing contained herein shall make the Sub-Advisor be liable
for any loss incurred by the Fund in connection with services provided by
the Sub-Advisor in accordance with this Agreement so long as the Sub-
Advisor acts in good faith and fulfills its duties under this Agreement;
provided, however, that nothing herein shall protect the Sub-Advisor
against liability to the Fund to which the Sub-Advisor would otherwise be
subject, by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement. Nothing in
this Agreement shall protect the Sub-Advisor from any liabilities which
it may have under the Securities Act, the Investment Company Act or the
Investment Advisers Act.
6. INFORMATION AND REPORTS.
6.1 REPORTS TO ADVISOR. The Sub-Advisor must submit
a daily written report to the Advisor promptly following the close of
regular trading on the New York Stock Exchange detailing the actions
taken by the Sub-Advisor under this Agreement during that day. The
report must contain the information in the form that the Advisor has or
will from time to time specify. In addition, the Sub-Advisor must
provide other reports on the performance of the Investment Assets at such
times, for such periods and in such form as the Advisor or the Fund's
Board of Directors reasonably request.
6.2 RECORDS AND ACCOUNTS. The Sub-Advisor must keep
accurate and detailed records and accounts of the Investment Assets and
of all receipts, disbursements and other transactions affecting the
Investment Assets. The Sub-Advisor will make all its records, accounts
and documents relating to the Investment Assets available at all
reasonable times and under reasonable conditions for inspection and audit
by any person or persons designated by the Advisor or the Fund's Board of
Directors.
6.3 CODE OF ETHICS. The Sub-Advisor has adopted a
written code of ethics complying with the requirements of Rule 17j-1 of
the Investment Company Act and Rule 204A-1 of the Investment Advisers Act
(the "Code of Ethics") and has provided a copy of such Code of Ethics to
the Fund. The Sub-Advisor agrees to deliver a copy of the Code of Ethics
to the Fund promptly after any material changes are made, highlighting or
summarizing such material changes. Upon request, the Chief Compliance
Officer of the Sub-Advisor shall certify to the Fund that, with regard to
the period identified by the Fund in its request:
(a) The Sub-Advisor has provided to the Fund the
Sub-Advisor's Code of Ethics that is in effect;
(b) The Sub-Advisor has complied with the
requirements of Rule 17j-1 and Rule 204A-1;
(c) The Sub-Advisor has adopted procedures
reasonably necessary to prevent its "Access Persons" (as defined in Rule
17j-1 of the Investment Company Act) from violating the Code of Ethics;
and
(d) There have been no material violations of
the Code of Ethics or, if any violation has occurred, the nature of such
violation and of the action taken in response to such violation.
6.4 COMPLIANCE PROGRAM. The Sub-Advisor has adopted
written policies and procedures in compliance with the applicable
requirements of Rule 38a-1 of the Investment Company Act and Rule 206(4)-
7 of the Investment Advisers Act (the "Compliance Procedures") and has
provided a copy of such Compliance Procedures to the Fund. The Sub-
Advisor agrees to provide a copy of the Compliance Procedures to the Fund
promptly after any material changes are made, highlighting or summarizing
such material changes. Upon request, the Chief Compliance Officer of the
Sub-Advisor shall certify that:
(a) The Sub-Advisor has provided to the
Fund the Sub-Advisor's Compliance Procedures that are in effect at that
time;
(b) The Sub-Advisor has reviewed, during the
preceding 12-month period (or as otherwise required by applicable law),
the adequacy of its Compliance Procedures and the effectiveness of the
implementation of the Compliance Procedures;
(c) The Compliance Procedures are
reasonably designed to prevent violation, by the Sub-Advisor and its
Supervised Persons, of the Federal Securities Laws, including the
Investment Advisers Act and related rules issued by the SEC; and
(d) With regard to the period identified by the
Fund in its request, there have been no violations of the Compliance
Procedures or, if any violation has occurred, the nature of such
violation and of the action taken in response to such violation.
6.5 PROXY VOTING RECORDS AND POLICY.
(a) The Sub-Advisor has adopted and implemented
written policies and procedures pursuant to Rule 206(4)-6 of the
Investment Advisers Act that are reasonably designed to ensure that the
Sub-Advisor votes client securities in the best interest of its clients
(the "Proxy Voting Policy"), and the Sub-Advisor has provided a copy of
such Proxy Voting Policy to the Fund. The Sub-Advisor agrees to provide
a copy of the Proxy Voting Policy to the Fund promptly after any material
changes are made, highlighting or summarizing such material changes.
(b) The Sub-Advisor agrees to maintain an
accurate summary of any vote cast or proxy granted by the Sub-Advisor on
behalf of the Fund (the "Voting Records"), and, upon request, the Sub-
Advisor shall provide the Voting Records in the form specified in writing
to the Sub-Advisor by the Fund, and the Sub-Advisor's Chief Compliance
Officer shall certify that, with regard to the period identified by the
Fund in its request, the Voting Records accurately reflect the votes
cast and proxies granted by the Sub-Advisor on behalf of the Fund during
the identified period, each of which vote or proxy was cast or granted in
compliance with the Sub-Advisor's Proxy Voting Policy.
6.6 PAY TO PLAY POLICY. The Sub-Advisor has adopted a
"Pay to Play Policy" complying with the requirements of Rule 206(4)-5 of
the Investment Advisers Act (the "Pay to Play Rule") and has provided a
copy of such Pay to Play Policy to the Fund. The Sub-Advisor understands
that the Fund is a "Covered Investment Pool", as defined in the Pay to
Play Rule, and the Fund agrees to deliver to the Sub-Advisor such
information as the Sub-Advisor may request to ensure the Sub-Advisor's
compliance with the Pay to Play Rule.
6.7 FORM ADV. The Sub-Advisor agrees to provide a
copy of its current Form ADV (Parts I and II) to the Fund within 90 days
of the end of the calendar year.
6.8 EXCHANGE OF INFORMATION. The Advisor and the
Sub-Advisor agree to provide the information that the Sub-Advisor or the
Advisor, as the case may be, reasonably requests to enable it to carry
out its duties, obligations and responsibilities under this Agreement or
applicable law.
6.9 INFORMATION TO BE CONFIDENTIAL. All information
and advice furnished to or obtained by any party under or in connection
with this Agreement will be treated as confidential and will not be used
or disclosed to third parties except as required by law. This provision
must not be construed to limit the Advisor's or the Fund's ability to
comply with the disclosure obligations of an investment company to its
securities holders under the federal securities laws.
7. FEE PAYABLE TO SUB-ADVISOR. For services under the
Sub-Advisory Agreement, the Sub-Advisor shall be entitled to receive from
the Advisor a quarterly fee in an amount equal to 0.12% of the current
value of the Investment Assets as of the close of the last trading day of
March, June, September and December (0.48% on an annual basis). This fee
is payable in arrears as soon as practicable, but not more than ten
business days, after the last day of each calendar quarter.
8. MEETINGS WITH ADVISOR AND FUND. A representative of
the Sub-Advisor will personally meet with the Investment Committee of the
Advisor or its designated representative as reasonably requested by the
Advisor to explain the investment and management activities of the Sub-
Advisor and any reports related thereto, at such times as may be mutually
agreed upon by the Sub-Advisor and the Advisor. In addition, upon
reasonable request, each year, a representative of the Sub-Advisor will
attend one or more of the meetings of the Fund's Board of Directors and
will be prepared to discuss the Sub-Advisor's economic outlook,
investment strategy, individual holdings included in the Investment
Assets and such other related matters as the Board of Directors requests.
9. INDEMNIFICATION. In addition to any other rights the
Advisor or the Fund may have against the Sub-Advisor, the Sub-Advisor
will indemnify the Advisor and the Fund and hold them harmless with
respect to any loss or damage, or costs or expenses suffered by them as a
result of (i) a breach by the Sub-Advisor of this Agreement, or (ii) the
willful misfeasance, bad faith or gross negligence of the Sub-Advisor, or
(iii) the willful misfeasance, bad faith or gross negligence of any of
the Sub-Advisor's employees, or agents acting under its supervision or
control performing any of its obligations and duties or (iv) by reason of
the Sub-Advisor's reckless disregard of its obligations and duties under
this Agreement, the Investment Advisers Act or any other applicable law
or regulation; provided, the Sub-Advisor shall have no responsibility or
liability for any loss incurred by reason of any act or omission of the
Advisor or the Custodian.
10. The Advisor will indemnify the Sub-Advisor and hold it
harmless with respect to any loss or damage, or costs or expenses
suffered by it as a result of (i) a breach by the Advisor for this
Agreement, or (ii) the willful misfeasance, bad faith or gross negligence
of the Advisor, or (iii) the willful misfeasance, bad faith or gross
negligence of any of the Advisor's employees, or agents acting under its
supervision or control performing any of its obligations and duties or
(iv) by reason of the Advisor's reckless disregard of its obligations and
duties under this Agreement, the Investment Advisers Act, the Investment
Company Act or any other applicable law or regulation; provided, the
Advisor shall have no responsibility or liability for any loss incurred
by reason of any act or omission of the Sub-Advisor or the Custodian.
11. AMENDMENT. This Agreement may be amended at any time
by written agreement of the parties, provided that any material amendment
will not be effective unless approved in accordance with the Investment
Company Act.
12. TERM AND TERMINATION.
12.1 TERM.
(a) Term. This Agreement shall have an initial
term of one year from the Effective Date and thereafter shall continue
from year to year if continuance is approved at least annually by (a) the
Fund's Board of Directors or a Majority Vote of Shareholders and (b) the
vote of a majority of the members of the Fund's Board of Directors who
are not Interested Persons of the Sub-Advisor or of the Fund cast in
person at a meeting called for the purpose of voting on such approval.
(b) Duration. Unless sooner terminated as
provided herein, this Agreement shall continue in effect for an initial
period of one year from the Effective Date, and it shall continue in
effect from year to year, but only so long as such continuance is
specifically approved at least annually in accordance with the Investment
Company Act.
12.2 TERMINATION.
(a) Automatic Termination. This Agreement
shall automatically terminate in the event of its assignment, within the
meaning of Section 15(a) of the Investment Company Act, unless an order
of the SEC is issued exempting such assignment. If at any time the Sub-
Advisor ceases to be an "investment advisor" in accordance with the
Investment Advisers Act, this Agreement will automatically terminate. No
penalty or payment of any kind by the Advisor will be due upon an
automatic termination
(b) Termination by Advisor, Board of Directors
of the Fund or Shareholders of the Fund. This Agreement may be
terminated at any time, upon written notice to the Sub-Advisor, without
payment of any penalty, by the Advisor, the Board of Directors of the
Fund or by a Majority Vote of Shareholders. Notwithstanding that the
effective date of any such termination may be fewer than 30 days after
the date of notice of termination, the Sub-Advisor shall be compensated
for 30 days after the date of notice of termination, and such
compensation shall not constitute payment of a penalty in connection with
such termination. Any compensation paid pursuant to this subsection
11.2(b) shall be calculated based on the Investment Assets as of the
effective date of the termination.
(c) Termination By Sub-Advisor. The Sub-
Advisor may terminate this Agreement at any time upon 30 days' prior
written notice to the Advisor and the Fund.
(d) Prorated Fee. If this Sub-Advisory
Agreement shall terminate at any time other than at the end of a calendar
quarter, the Sub-Advisor shall be entitled to receive the fee set forth
in Section 7 hereof for the portion of the quarter elapsed prior to the
date of termination, prorated on a daily basis.
13. MISCELLANEOUS.
13.1 ERRORS AND OMISSIONS POLICY. The Sub-Advisor
agrees that, at its sole expense, it will maintain an errors and
omissions insurance policy that covers the acts, errors and omissions by
the Sub-Advisor and its employees and agents during the term of this
Agreement. Upon request of the Advisor, the Sub-Advisor will promptly
provide evidence of such insurance.
13.2 GOVERNING LAW; SEVERABILITY. This Agreement
and its performance shall be governed by and construed in accordance with
the applicable laws of the United States and, to the extent permitted by
such laws, with the laws of the State of Oklahoma. In case any provision
of this Agreement is held illegal or invalid for any reason, that
illegality or invalidity will not affect the remaining provisions of this
Agreement but will be fully severable, and this Agreement will be
construed and enforced as if the illegal or invalid provision had not
been included herein.
13.3 NOTICES. Unless the parties otherwise agree,
all notices, instructions and advice with respect to matters contemplated
by this Agreement must be in writing and are effective when received.
Delivery must be made personally, by registered or certified mail, return
receipt requested, overnight courier or confirmed facsimile and addressed
as follows:
Advisor:American Fidelity Assurance Company
X.X. Xxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Investment Department
Telephone: (000) 000-0000
Facsimile: (405) 523-5573Fund:American Fidelity Dual Strategy Fund, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Chief Compliance Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to:
Xxxxxxxx Xxxxxxx
McAfee & Xxxx A Professional Corporation
Two Leadership Square
000 Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxx.xxxxxxx@xxxxxxxxxx.xxx
Sub-Advisor:The Renaissance Group LLC (d/b/a Renaissance Investment
Management)
00 X. XxxxxXxxxxx Xxxx.
Xxxxx 0000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Managing Partner
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change any of the above information by providing notice to
the other parties in the manner set forth above. All reports required to
be delivered by the Sub-Advisor to the Advisor pursuant to Section 6.1 of
this Agreement must be delivered in the manner specified from time to
time by the Advisor.
13.4 COMPLIANCE WITH LAWS. Nothing in this
Agreement shall be deemed to authorize the Sub-Advisor to effect any
transactions in contravention of its fiduciary obligations, duties or
responsibilities under the Investment Advisers Act, this Agreement or any
other applicable federal or state laws or regulations (including all
applicable securities laws and regulations) or the rules of any national
securities exchange. Each party will at all times comply with the
Investment Advisers Act and other applicable laws, regulations and rules
in performing its duties under this Agreement.
13.5 COUNTERPARTS. This Agreement may be executed
in one or more separate counterparts, each of which shall be deemed to be
an original, and all of which taken together shall be deemed to
constitute one and the same instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
FUND:AMERICAN FIDELITY DUAL STRATEGY FUND, INC.
By: ____________________________
Name: Xxxxx X. Xxxxxxxxx
Title: PresidentADVISOR:AMERICAN FIDELITY ASSURANCE COMPANY
By: ____________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice PresidentSUB-ADVISOR:THE RENAISSANCE GROUP
LLC (d/b/a Renaissance Investment Management)
By: ____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Partner
EXHIBIT A
American Fidelity Assurance Company
American Fidelity Dual Strategy Fund
Investment Objectives, Policies and Other Restrictions
I. INVESTMENT OBJECTIVES:
The Fund's investment objectives are, primarily, long-term growth of
capital and, secondarily, the production of income. Such objectives do
not preclude infrequent investments for short-term capital appreciation.
The Fund normally invests in a diversified portfolio consisting primarily
of common stocks based upon an assessment of particular industries or
companies. The Fund attempts to maintain sufficient cash balances to meet
variable annuity contract payments. The Fund's assets may be held in cash
or cash equivalents or in United States Government securities for this
purpose. The Fund does not engage in the purchase or sale of puts, calls
or other options or in writing such options.
The Sub-Advisor, after consulting with the Advisor and obtaining Advisor
approval, may determine that prevailing market and economic conditions
indicate that investments other than common stocks may be advantageous,
in which event investments may be made on a short-term basis in United
States Government securities, bonds, notes or other evidences of
indebtedness, issued publicly, of a type customarily purchased for
investment by institutional investors.
II. FUNDAMENTAL INVESTMENT POLICIES:
The Sub-Advisor must comply with the following:
A. Not purchase securities that would cause more than five percent
(5%) of the value of the Investment Assets placed with the Sub-Advisor to
be invested in securities of any one issuer, except obligations of the
United States Government and instrumentalities thereof.
B. Not more than ten percent (10%) of the voting securities of any one
issuer will be acquired.
C. Not more than twenty-five (25%) of the value of the Investment
Assets placed with the Sub-Advisor will be invested in any one industry.
D. No borrowings will be made.
E. The Sub-Advisor will ensure that the Fund does not act as an
underwriter of securities of other issuers.
F. Investment in real estate will be limited to shares of real estate
investment trusts investing in equity real estate, up to ten percent
(10.0%) of Investment Assets placed with the Sub-Advisor. Investment in
private placements and other illiquid assets will not be made.
G. No purchase of commodities or commodity contracts will be effected.
H. Puts, calls or other options will not be purchased.
I. Loans will not be made except through the acquisition of publicly
traded bonds, debentures or other evidences of indebtedness of a type
customarily purchased by institutional investors.
J. Investment will not be made in the securities of a company for the
purpose of exercising management or control.
K. Investment in securities of other investment companies will not be
made except for money market funds. Up to ten percent (10%) of Investment
Assets placed with the Sub-Advisor may be invested in money market funds,
provided that not more than three percent (3%) of the total outstanding
voting stock of any one investment company may be held.
L. Investments in repurchase agreements will be limited to the top
thirty-five (35) U.S. banks, by deposits, that are rated at least "B/C"
by Xxxxx, Bruyette, Woods, a national bank rating agency or a comparable
rating from a similar bank rating service. Additionally, there must be an
appropriate amount of excess collateralization depending upon the length
of the agreement, to protect against downward market fluctuation and the
Fund must take delivery of the collateral. The market value of the
securities held as collateral will be valued daily. In the event the
market value of the collateral falls below the repurchase price, the bank
issuing the repurchase agreement will be required to provide additional
collateral sufficient to cover the repurchase price.
M. Short sales of securities will not be made.
N. Purchases will not be made on margin, except for such short-term
credits necessary for the clearance of transactions.
O. Investments in high-yield or non-investment grade bonds will not be
made.
P. Investments in the equity securities of foreign corporations will
be limited to American Depositary Receipts ("ADRs"), other depositary
receipts and ordinary shares which are denominated in U.S. dollars and
publicly traded in the United States. Not more than thirty-five percent
(35%) of the Investment Assets placed with the Sub-Advisor will be
invested in foreign issuers. In addition, not more than twenty percent
(20%) of the Investment Assets placed with the Sub-Advisor will be
invested in issuers from any one foreign country.
III. ADDITIONAL INVESTMENT RESTRICTIONS:
The Sub-Advisor must comply with the Additional Investment
Restrictions set forth below. To the extent that these Additional
Investment Restrictions conflict with the Fundamental Investment
Policies, the Additional Investment Restrictions shall govern.
A. The Sub-Advisor shall conform to the following issuer guidelines at
the time of purchase:
1. A minimum market capitalization of one billion dollars
($1,000,000,000). .
2. Audited financial statements for at least three (3) years of
operation.
3. Fifty million dollars ($50,000,000) or more in stockholders equity.
B. Lending of securities will not be permitted.
C. The Fund will not invest in the securities of tobacco-producing
companies.
D. InvesTrust, N.A., or another custodian chosen by the Advisor, shall
be the Custodian of all Investment Assets placed with the Sub-Advisor.
The Sub-Advisor must ensure that duplicate brokerage confirmations of all
transactions are sent to the Custodian and the Advisor.
E. All money market funds used by the Sub-Advisor for a portion of
Investment Assets placed with the Sub-Advisor must be approved in advance
by the Advisor.
F. The money market funds (cash) used by the Sub-Advisor for a portion
of Investment Assets must have a balance at all times equal to at least
one percent (1.0%), but not more than three percent (3.0%), of the market
value of Investment Assets placed with the Sub-Advisor.
G. All brokers used by the Sub-Advisor to execute transactions for the
Fund must have a commercial paper rating of A1/P1 by Xxxxx' and Standard
& Poor's unless approved in advance by the Advisor.
Appendix 1 to Exhibit A
This Appendix 1 to Exhibit A is provided in order to clarify
certain matters with regard to the Fund's Fundamental Investment Policies
and Other Restrictions. The numbers below refer to the corresponding
numbers in Exhibit A.
III.C - Companies in which investment is prohibited are identified on
Attachment (a) to this Appendix.
III.G - Sub-Advisor requests, and Advisor grants, approval of, the
brokers identified on Attachment (b) to this Appendix.
Attachment (a) to Appendix 1
Company Ticker
(including any successors assignees that are tobacco-
producing companies)
DIMON CORP AOI
B.A.T. INDUSTRIES PLC BTI
LOEWS CORP CAROLINA GRP XX
XXXXX CORP DMN
ALTRIA GROUP, INC. MO
XXXXXXXX AMERICAN INC RAI
XXXXXXXXXX XXXX SWM
UST, INC. UST
UNIVERSAL CORPORATION UVV
VECTOR GROUP VGR
XXXXXXXXX FILTER WLSF
XXXX XXXXXXX CIGAR CORP ABDC.XX
XXXXXXXX BLH
IMPERIAL TOBACCO ITY
STAR SCIENTIFIC STSI
Attachment (b) to Appendix 1
CP
Broker Rating
BNY CovergEx A-1/P-1
Xxxxxx Xxxxxxx XX
Xxxxxxx Xxxxx A-1+/P-1
Jefferies XX
Xxxxxx Xxxxxxxxxx XX
Xxxxxxxxx NA
Instinet NA
UBS A-1+/P-1
Xxxxxxxx Xxx NA
Lighthouse Financial NA
2
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Execution Copy
1
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A-3
3743512_6.DOC
App-1
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3743512_6.DOC
