Amended and Restated Sub-Advisory Agreement
Xxxx, Xxxx & Xxxxxx, LLC
This 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 Xxxx, Xxxx &
Xxxxxx, LLC (the "Sub-Advisor"), amends and restates in its entirety the
Sub-Advisory Agreement by and among the parties hereto dated 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 Fund desire to retain the Sub-Advisor to furnish
investment advisory services to the Advisor and the Fund with respect
to certain assets of the Fund, and the Sub-Advisor has agreed to
render such investment advisory services pursuant to the terms hereof.
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 a distribution
from or the sale, exchange or transfer of such
Investment Assets.
(f) Investment Advisers Act: The Investment Advisers
Act of 1940, as amended.
(g) Investment Company Act: The Investment Company
Act of 1940, as amended.
(h) 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.
(i) SEC: The Securities and Exchange Commission.
(j) Securities Act: The Securities Act of 1933,
as amended.
(k) Securities Exchange Act: The Securities
Exchange Act of 1934, as amended.
(l) Shareholders: The beneficial owners of the
Fund's securities.
(m) 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 and Fund hereby appoint the
Sub-Advisor to serve as investment 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
nd 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 appropriate for
the Fund to participate 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. Subject to the restrictions described in Exhibit A hereto, 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 if 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 which 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 In addition, it is understood that the Sub-Advisor may
aggregate purchase or sale orders for the Investment Assets with purchase or
sale orders in a particular security for other clients' accounts when
appropriate. However, the Sub-Advisor is under no obligation to aggregate
orders. Where, because of prevailing market conditions, it is not possible to
obtain the same price or time of execution for all of the securities or other
investments purchased or sold for the various accounts in an aggregated order,
the Sub-Advisor may average the various execution prices and charge or credit
the accounts with the average price.
5.8 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 except for any loss attributable to the Sub-Advisor's
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or 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. Without limiting the foregoing, the Sub-
Advisor does not assume responsibility for the accuracy of information
furnished to it by the Fund, Advisor, Custodian, broker, or by any person
on whom it reasonably relies, except to the extent any such inaccuracy should
have been discovered by a similarly situated investment advisor exercising
the standard of care specified hereunder.
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 portfolio transactions
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 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
(as defined in Section 202(a)(25) of the Investment Advisers Act), 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 material 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 materials or 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. The parties also agree that (a) the Advisor will instruct
its personnel to notify the Sub-Advisor in a timely fashion of any
inappropriate or unsuitable investments of the Investment Assets by the
Sub-Advisor, and (b) the Sub-Advisor will instruct its personnel to notify
the Advisor in a timely fashion of any trade, transfer, exchange, redemption
or other corporate action that occurs with regard to a portfolio security
held by the Fund. The parties agree that the foregoing obligates the Advisor
and Sub-Advisor, as applicable, to provide the necessary instruction to its
personnel, but does not otherwise create any obligation on the part of the
instructing party and, notwithstanding anything herein to the contrary, does
not create liability on the part of the instructing party for any failure of
its personnel to act in accordance with this provision.
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 0.45% per year on the first $25
million of Investment Assets and 0.40% per year on all Investment Assets in
excess of $25 million. 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 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 reasonably 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, (ii) the willful misfeasance, bad faith or
gross negligence of the Sub-Advisor, (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.
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 of this Agreement, (ii) the willful misfeasance,
bad faith or gross negligence of the Advisor, (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.
10. AMENDMENT. This Agreement may be amended at any time by
written agreement signed by the parties, provided that any material amendment
will not be effective unless approved in accordance with the Investment Company
Act.
11. TERM AND TERMINATION.
11.1 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.
11.2 TERMINATION.
(a) Automatic Termination. This Agreement shall
automatically terminate (i) 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, or (ii) if the Sub-Advisor ceases to be an
"investment advisor" in accordance with the Investment Advisers Act. The Sub-
Advisor agrees to notify the Advisor and the Fund promptly upon becoming aware
of circumstances that exist which make it likely that an automatic termination
will occur pursuant to this provision. No penalty or payment of any kind by
the Advisor will be due upon an automatic termination of this Agreement.
(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.
12. MISCELLANEOUS.
12.1 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.
12.2 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.
12.3 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:Xxxx, Xxxx & Xxxxxx LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Email : x.xxxxx@xxxxxxxx.xxx
With copies to:
Xxxx, Xxxx & Xxxxxx LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxx
Telephone: (000) 000-0000
Email: x.xxxxxxx@xxxxxxxx.xxx
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.
12.4 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.
12.5 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 Sub-Advisory
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:XXXX, XXXX & XXXXXX LLC
By: ____________________________
Name: Xxxxxxx X. Xxxxx
Title: 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 percent (25%) of the value of the Investment
Assets 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. 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 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, 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 will
be invested in foreign issuers. In addition, not more than twenty percent (20%)
of the Investment Assets 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,
including, but not limited to those set forth on Appendix 1 attached hereto.
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.
G. All brokers used by the Sub-Advisor to execute transactions for the Fund
must have a commercial paper rating of A1/P1 by Moody's and Standard & Poor's
unless approved in advance by the Advisor.
Appendix 1 to Exhibit A
Company (including successors and assigns) Ticker
Alliance One International, Inc. AOI
Altria Group Inc. MO
British American Tobacco PLC ADR BTI
Imperial Tobacco Group PLC ADR ITYBY
Lorillard, Inc. LO
Loews Corp L
Online Vacation Center Holdings Corporation ONVC
Xxxxxx Xxxxxx International Inc. PM
Xxxxxxxx American, Inc. RAI
Xxxxxxxxxx-Xxxxxxx International SWM
Star Scientific, Inc. STSI
Swedish Match SWMA
Universal Corporation UVV
UST Inc UST
Vector Group, Ltd. VGR
Xxxxxxxxx Filters, Inc. WFLR
12
4795733_6
Execution Copy
1
4795733_6
A-3
4795733_6
4795733_6
