Exhibit (d)(5)
AMENDED AND RESTATED INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
XXX XXXXXX ASSET MANAGEMENT
AND
XXXXXX XXXXXXX INVESTMENT MANAGEMENT LIMITED
THIS AGREEMENT is made as of this 22nd day of May, 2006 by and between
XXX XXXXXX ASSET MANAGEMENT ("VKAM") a Delaware statutory trust, and XXXXXX
XXXXXXX INVESTMENT MANAGEMENT LIMITED (the "Local Manager"), a company organized
under the laws of England.
WHEREAS, VKAM acts as investment adviser to Xxx Xxxxxx Series Fund,
Inc. (the "Company") and each of its series identified at Schedule A (the
"Funds");
WHEREAS, the Local Manager has available a staff of experienced
investment personnel and facilities for providing investment sub-advisory
services to the Funds;
WHEREAS, the Local Manager is an investment adviser registered under
the Investment Advisers Act of 1940, as amended, and is willing to provide VKAM
with investment management services on the terms and conditions hereinafter set
forth and including the terms and conditions contained in Annex 1 to this
Agreement; and
WHEREAS, VKAM and the Local Manager (jointly referred to as "the
Advisers") desire to enter into an agreement for the Local Manager to provide
investment management services to the Company and to VKAM with respect to the
investment of the assets of each of the Funds.
NOW THEREFORE it is mutually agreed:
1. Investment Management Services.
(a) Investment Management
(i) Effective on May 22, 2006. and subject to the overall
policies, control, direction and review of the Company's Directors and
VKAM, the Local Manager shall act as discretionary investment manager
to VKAM and manage the investment and reinvestment of the assets of
each of the Funds, continuously review, supervise and administer the
investment program of each of the Funds, determine in its discretion
the securities to be purchased or sold and the portion of each Fund's
assets to be held uninvested, to provide the Company with records
concerning the Local Manager's activities which the Company is required
to maintain, and to render regular reports to the Company's officers
and Board of Directors concerning the Local Manager's discharge of the
foregoing responsibilities. VKAM and its affiliates shall for all
purposes herein be deemed an Intermediate Customer as defined under the
rules and guidance promulgated by the Financial Services Authority
(hereinafter referred to as the "FSA Rules"). The Local Manager and its
affiliates shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Funds in any
way or otherwise be deemed an agent of the Funds.
(ii) The Local Manager shall have full discretion, power and
authority on the Funds' behalf to buy, sell, retain, exchange or
otherwise deal in investments and other assets, make deposits,
subscribe to issues and offers for sale and accept placings of any
investments, enter into
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foreign currency transactions on a spot or forward basis, effect
transactions on any markets, take all day to day decisions and
otherwise act as the Local Manager judges appropriate in relation to
the investment and reinvestment of the portfolio of assets of the
Funds. This includes performing all acts and executing all documents
which the Local Manager reasonably considers incidental thereto,
including (without limitation) power to execute and deliver all
applications, requests, or claims for refund, reduction, repayment or
credit of, or exemption or relief from, any withholding tax or similar
taxes in any jurisdiction in which such applications, requests or
claims may be made. Subject to guidelines adopted by the Funds, the
Local Manager shall also make recommendations or take action as to the
manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the portfolio of assets of the Funds
shall be exercised.
(iii) In performing these services, the Local Manager shall
always adhere to the restrictions of the Company's Articles of
Incorporation and By-Laws, as they may be amended and/or restated from
time to time and as provided to the Local Manager by VKAM, the
provisions of the Investment Company Act and the statements relating to
each Fund's respective investment objective(s), investment policies
and investment restrictions as the same are set forth in the currently
effective prospectus and statement of additional information relating
to the shares of each Fund under the Securities Act of 1933, as amended
(the "Prospectus"1 and "Statement of Additional Information",
respectively), as well as to the supervision of VKAM and the Board of
Directors of the Company.
(iv) Unless otherwise instructed by VKAM or the Directors, and
subject to the provisions of this Agreement and to any guidelines or
limitations specified from time to time by VKAM or by the Directors,
the Local Manager shall have executed and performed on behalf of and at
the expense of the respective Funds:
(1) Purchases, sales, exchanges, conversions, and
placement or orders for execution; and
(2) Reporting of all transactions to VKAM and to
other entities as directed by VKAM or by the Directors.
(v) The Local Manager shall provide the Directors at least
quarterly, in advance of the regular meetings of the Directors, a
report of its activities hereunder on behalf of the Company and the
Funds and the Local Manager's proposed strategy for the next quarter,
all in such form and detail as requested by the Directors. The Local
Manager shall also make an investment officer available to attend such
meetings of the Directors as the Directors may reasonably request.
(vi) The Local Manager may, where reasonable, employ agents
(including affiliates) to perform any administrative, dealing or
ancillary services required to enable the Local Manager to perform its
services under this Sub-Advisory Agreement.
(b) Restriction of the Local Manager's Powers
(i) In carrying out its duties hereunder, the Local Manager
shall comply with all reasonable instructions of the Company or VKAM in
connection therewith. Such instructions may be given by letter, telex,
telefax or telephone confirmed by telex, by the Directors or by any
other person authorized by a resolution of the Directors provided a
certified copy of such resolution has been supplied to the Local
Manager.
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(ii) All securities, cash and other assets of the Funds shall
be placed and maintained in the care of a member bank of the Federal
Reserve System of the United States approved by the Directors as
custodian and one or more "Eligible Foreign Custodians" (as defined in
Rule 17f-5 under the investment Company Act of 1940, as amended (the
"1940 Act")).
(iii) Persons authorized by resolution of the Directors shall
have the right to inspect and copy contracts, notes, vouchers, and
copies of entries in books or electronic recording media relating to
the Company's transactions at the registered office of the Local
Manager at any time during normal business hours. Such records, in
relation to each transaction effected by the Local Manager on behalf of
the Company shall be maintained by the Local Manager for a period of
seven years from the date of such transaction.
(c) Purchase and Sale of Securities
In performing the services described above, the Local Manager shall use
its best efforts to obtain for the Funds the most favorable price and execution
available. Subject to prior authorization of appropriate policies and procedures
by the Directors, the Local Manager may, to the extent authorized by law, cause
the Funds to pay a broker or dealer who provides brokerage and research services
an amount of commission for effecting the Funds' investment transactions in
excess of the amount of commission another broker or dealer would have charged
for effecting such transactions, in recognition of the brokerage and research
services provided by the broker or dealer. To the extent authorized by law, the
Local Manager shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason of such action.
(d) Custodian
The Local Manager shall not act as custodian for the securities or any
other assets of the Company. All such assets shall be held by the custodian or
sub-custodian appointed by the Directors or by a Fund's "Foreign Custody
Manager" (as defined by Rule l7f-5 under the 1940 Act).
2. Duties of VKAM.
(a) Provision of Information
VKAM shall advise the Local Manager from time to time with respect to
each Fund of its investment objective and policies and of any changes or
modifications thereto, as well as any specific investment restrictions and
limitations by sending to the Local Manager a copy of each registration
statement and amendment thereto relating to the Company as filed with the
Securities and Exchange Commission. As requested by the Local Manager, VKAM
shall furnish such information to the Local Manager as to holdings, purchases,
and sales of the securities under its management as will reasonably enable the
Local Manager to furnish its investment advice under this Agreement.
(b) Compensation to the Local Manager
For the services rendered, the facilities furnished and expenses
assumed by the Local Manager, VKAM shall pay to the Local Manager a fee in an
amount to be determined from time to time by VKAM and the Local Manager but in
no event in excess of the amount that VKAM actually received for providing
services to the Company pursuant to the investment advisory agreement between
VKAM and the Fund.
3. Miscellaneous.
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(a) Activities of the Local Manager
The services of the Local Manager as sub-adviser to VKAM under this
Agreement are not to be deemed exclusive, the Local Manager and its affiliates
being free to render services to others. It is understood that shareholders,
directors, officers and employees of the Local Manager may become interested in
the Company or VKAM as shareholders, directors, officers, partners or otherwise.
(b) Limitation of Liability of the Local Manager
No warranty is given by the Local Manager as to the performance or
profitability of the Funds or any part of them.
If a percentage restriction contained in the Funds' investment
objective(s) or investment restrictions (as the same are set forth in the Funds'
currently effective Prospectus and Statement of Additional Information) is
adhered to at the time of investment, a later change in percentage resulting
from a change in values or assets will not constitute a violation of such
restriction.
The Local Manager will not be responsible to VKAM or the Funds for the
solvency, actions or omissions of any counterparty, broker, dealer,
market-maker, bank, custodian or sub-custodian, with whom it transacts business
on VKAM's behalf, other than affiliates of the Local Manager.
Nothing in this Agreement will exclude or restrict any liability which
the Local Manager has under the Financial Services and Markets Xxx 0000, FSA
Rules or the Regulatory System in relation to VKAM and which may not be excluded
or restricted thereunder.
The Local Manager shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in the performance of investment management services rendered with
respect to the Funds, except for willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties hereunder. The exception in the previous sentence
shall apply to each limitation of the Local Manager's liability contained in
this Section 3(b). As used in this Section 3(b), the Local Manager shall
include any affiliates of the Local Manager performing services for the Local
Manager contemplated hereby and directors, officers and employees of the Local
Manager and such affiliates.
(c) Services to Other Clients
VKAM acknowledges that the Local Manager may have investment
responsibilities, or render investment advice to, or perform other investment
advisory services for, other individuals or entities ("Clients"). Subject to
the provisions of this paragraph, VKAM agrees that the Local Manager may give
advice or exercise investment responsibility and take such other action with
respect to such Clients which may differ from advice given or the timing or
nature of action taken with respect to the Company, provided that the Local
Manager acts in good faith, and provided, further, that it is the Local
Manager's policy to allocate, within its reasonable discretion, investment
opportunities to the Funds over a period of time on a fair and equitable basis
relative to the Clients, taking into account the investment objectives and
policies of the Funds and any specific investment restrictions and limitations
applicable thereto. VKAM acknowledges that one or more of the Clients may at any
time hold, acquire, increase, decrease, dispose of or otherwise deal with
positions in investments in which the Funds may have an interest from time to
time, whether in transactions which may involve the Funds or otherwise. The
Local Manager shall have no obligation to acquire for any Fund a position in any
investment which any Client may acquire, and VKAM shall have no first refusal,
coinvestment or other rights in respect of any such investment, either for the
Funds or otherwise.
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(d) Best Efforts
It is understood and agreed that in furnishing the investment advice
and other services as herein provided, the Local Manager shall use its best
professional judgment to recommend actions which will provide favorable results
for the Funds. The Local Manager shall not be liable to the Company or to any
shareholder of the Company to any greater degree than VKAM.
(e) Compliance with Applicable Laws and Regulations.
The Local Manager shall obtain and at all times maintain and comply
with the terms of all relevant authorizations, licenses, consents, approvals
and registrations and comply with all relevant laws and regulations, necessary
for the purpose of performing any of its duties and obligations under this
Agreement. The Local Manager shall inform VKAM as soon as possible if at any
time the Local Manager becomes unable to comply with the terms of or maintain
any such authorizations, licenses, consents, approvals or registrations.
(f) Duration of Agreement
(i) This Agreement, unless terminated pursuant to paragraph
(ii), (iii) or (iv) below, shall continue in effect for two years from
the date hereof, and thereafter shall continue in effect from year to
year, provided that its continued applicability is specifically
approved at least annually by the Directors or by a vote of the holders
of a majority of the outstanding shares of the appropriate Funds. In
addition, such continuation shall be approved by vote of a majority of
the Directors who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. As used in this paragraph, the term
"interested person" shall have the same meaning as set forth in the
1940 Act.
(ii) This Agreement may be terminated by sixty (60) days'
written notice by either VKAM or the Local Manager to the other party,
provided that VKAM's termination of this Agreement shall be approved by
vote of a majority of the Directors who are not parties to this
Agreement or interested persons of any such party. The Agreement may
also be terminated at any time, without the payment of any penalty,
with respect to one or more Funds (by vote of the Directors or, by the
vote of a majority of the outstanding voting securities of such
Fund(s)), on sixty (60) days' written notice to both VKAM and the Local
Manager. This Agreement shall automatically terminate in the event of
the termination of the investment advisory agreement between VKAM and
the Company.
(iii) This Agreement shall terminate in the event of its
assignment. The term "assignment" for this purpose shall have the same
meaning set forth in Section 2(a)(4) of the 1940 Act.
(iv) This Agreement shall terminate forthwith by notice in
writing on the happening of any of the following events:
(1) If VKAM or the Local Manager shall go into
liquidation (except a voluntary liquidation for the purpose of and followed by a
bona fide reconstruction or amalgamation upon terms previously approved in
writing by the party not in liquidation) or if a receiver or receiver and
manager of any of the assets of either of them is appointed; or
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(2) If either of the parties hereto shall commit any
breach of the provisions hereof and shall not have remedied such breach within
30 days after the service of notice by the party not in breach on the other
requiring the same to be remedied.
(v) Termination shall be without prejudice to the completion
of any transactions which the Local Manager shall have committed to on
behalf of the Funds prior to the time of termination, the Local Manager
shall not effect and the Company shall not be entitled to instruct the
Local Manager to effect any further transactions on behalf of the Funds
subsequent to the time termination takes effect.
(vi) On the termination of this Agreement and completion of all
matters referred to in the foregoing paragraph (v) the Local Manager
shall deliver or cause to be delivered to the Company copies of all
documents, records and books of the Company required to be maintained
pursuant to Rules 31 a-1 or 31 a-2 of the 1940 Act which are in the
Local Manager's possession, power or control and which are valid and in
force at the date of termination.
(g) Notices
Any notice, request, instruction, or other document to be given under
this Agreement by any party hereto to the other parties shall be in writing and
delivered personally or sent by mail or telecopy (with a hard copy to follow):
If to the Local Manager to:
Xxxxxx Xxxxxxx Investment Management Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxx
Xxxxxx Xxxxxxx, X00 0XX
If to VKAM, to:
Xxx Xxxxxx Asset Management
0 Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx Xxxxxxx, XX 0000X
Attention: Secretary
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice that is
addressed and mailed in the manner herein provided shall be presumed to have
been duly given to the party to which it is addressed, on the date three (3)
days after mailing, and in the case of delivery by telecopy, on the date the
hard copy is received.
(h) Choice of Law
This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of the United
States and the State of New York, without regard to the conflicts of laws
principles thereof.
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IN WITNESS WHEREOF, the Agreement has been executed as of the date
first above given.
XXX XXXXXX ASSET MANAGEMENT XXXXXX XXXXXXX INVESTMENT
MANAGEMENT LIMITED
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx Xxxxx
----------------------------- -------------------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxxx Xxxxx
Title: Managing Director Title: Director
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SCHEDULE A
Fund*
----
Global Franchise Fund
Global Value Equity Fund
----------
* For ease of reference, the words "Xxx Xxxxxx," which begin the name of each
Fund, have been omitted.
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SUB-ADVISORY AGREEMENT
ANNEX 1
1. Dealing and Counterparties
1.1 The Local Manager will act in good faith and with due diligence in its
choice and use of counterparties. Unless directed by VKAM or a Fund to
use a specific counterparty, the Local Manager undertakes to secure
Best Execution (as defined in the FSA Rules) of all the Fund's
transactions. In securing Best Execution, the Local Manager will
take reasonable care to obtain the best available price in accordance
with FSA Rules. Subject thereto, the Local Manager may deal on such
markets or exchanges and with such counterparties (including any
affiliate) as it thinks fit. All transactions will be effected in
accordance with the rules and regulations of the relevant market or
exchange, and the Local Manager may take all such steps as may be
required or permitted by such rules and regulations and/or by
appropriate market practice.
1.2 If any counterparty should fail to deliver any necessary documents or
to complete any transaction, the Local Manager will take all reasonable
steps on behalf of VKAM or the applicable Fund to rectify such failure
or obtain compensation. VKAM shall procure that such Fund pay all
reasonable costs and expenses properly incurred by the Local Manager.
1.3 The Local Manager may aggregate a Fund's orders with orders of other
clients (whether or not connected with the Local Manager). VKAM is
aware and has made the Funds aware that the aggregation of a Fund's
orders with those of other clients may result in such Fund obtaining on
some occasions a more favourable price and on others a less favourable
price, than if such orders had not been aggregated.
2. Material Interests
2.1 The Local Manager and any affiliate may, subject to the limitations of
the U.S. Investment Company Act of 1940 (as amended), and to the
overriding principles of suitability and Best Execution and without
prior reference to VKAM or a Fund, effect transactions in which the
Local Manager or affiliate has, directly or indirectly, a material
interest or a relationship of any description with another party, which
may involve a potential conflict with the Local Manager's duty to VKAM
or the Funds. Neither the Local Manager nor any affiliate shall be
liable to account to VKAM or a Fund for any profit, commission or
remuneration made or received from or by reason of such transactions or
any connected transactions nor will the Local Manager's fees. unless
otherwise provided, be abated. For example, such potential conflicting
interests or duties may arise because:
(a) any of the Local Manager s or affiliate's directors or
employees is a director of, holds or deals in securities of,
or is otherwise interested in any company whose securities are
held or dealt in on behalf of the Fund;
(b) the transaction is in the securities of a company for which an
affiliate has provided corporate finance advice, underwritten,
managed or arranged an issue or offer for sale;
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(c) the Local Manager deals on behalf of a Fund with an affiliate;
(e) the Local Manager may effect transactions involving placings
and/or new issues with an Affiliate who may be acting as
principal or receiving agent's commission. Affiliates may
retain any agent's commission or discount or other benefit
(including directors' fees) that accrues to them; or
(f) the transaction is in units or shares of a collective
investment scheme (regulated or unregulated) of which the
Local Manager or any affiliate is the manager, operator,
banker, adviser, custodian or director.
2.2 Nothing in this Agreement shall oblige the Local Manager or any
affiliate to accept responsibilities more extensive than those set out
in this Agreement or shall give rise to any fiduciary or equitable
duties which would prevent or hinder any affiliate acting both as
market-maker and broker, principal or agent, dealing with other
affiliates and other clients and generally effecting transactions as
provided above nor from retaining any remuneration received in respect
thereof.
3. Records and Reports
3.1 The Local Manager will keep accurate and detailed records with respect
to all receipts, investments, sales, disbursements and other
transactions carried out by the Local Manager for VKAM or with a Fund.
3.2 All records held pursuant to this clause by the Local Manager shall be
open to inspection by VKAM or the Funds and the Local Manager will
provide VKAM and the Fund with such access as it itself has to records
held by any relevant third party, in each case at reasonable times
during business hours and upon the giving of reasonable notice by VKAM
or a Fund.
3.3 The Local Manager shall, not later than 10 working days following the
end of each calendar month, furnish to VKAM a statement showing all
transactions that have occurred in the Funds and a monthly listing of
all investments and cash balances held as of the end of such month.
3.4 The monthly statement will show the cost or amount realised (in the
case of any relevant new purchase or sale) and, where available, the
current value (where applicable) of each investment held in the Funds
and any income arising on a Fund's account during the relevant calendar
month, and will also include a statement showing the measure of the
performance of the assets of the Fund. The basis of all valuations will
be as stated in the first monthly statement, unless otherwise agreed.
3.5 The Local Manager will not provide VKAM with an individual trade
confirmation of each portfolio transaction unless VKAM has specifically
requested the Local Manager to do so.
4. Force Majeure
The Local Manager shall not be responsible or liable to VKAM or the
Funds for any failure or delay in the performance of its obligations
under this Agreement arising out of or caused, directly or indirectly,
by circumstances beyond its reasonable control, including, without
limitation, acts
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of God; earthquakes; fires; floods; wars; civil or military
disturbances; sabotage; epidemics; riots; interruptions, loss or
malfunctions of utilities; computer (hardware or software) or
communications services; accidents; labor disputes; acts of civil or
military authority or governmental actions; it being understood that
the Local Manager shall use reasonable efforts which are consistent
with accepted practices in the investment management industry to resume
performance as soon as practicable under the circumstances.
5. Complaints
The Local Manager maintains procedures in accordance with FSA Rules for
the effective consideration and handling of client complaints.
Complaints will be considered promptly by the appropriate supervisory
manager who is not personally involved in the subject matter of the
complaint. Where appropriate, the complaint will be passed to the
Compliance Officer.
6. Confidentiality and Disclosure
The Local Manager and VKAM undertake to keep private and confidential
all information acquired in connection with this Agreement, and not to
disclose such information to any person except to the extent that:
(a) the other party gives prior consent; or
(b) the Local Manager is required to disclose the information by
the FSA, the Bank of England, the London Stock Exchange or any
other recognised investment exchange, the City Panel on
Takeovers and Mergers or any other regulatory authority
having jurisdiction over the Local Manager or the performance
by it of its obligations under this Agreement or by English
Law; or
(c) disclosure to a counterparty to a transaction effected for a
Fund is required as a condition to such transaction; or
(d) disclosure is necessary to enable the Local Manager to perform
its obligations under this Agreement,
7. Data Protection
7.1 The Local Manager will, in connection with the Sub-Advisory Agreement,
comply (where applicable) with the UK Data Protection Xxx 0000 and
other applicable data protection laws and regulations (together, the
"Data Protection Laws").
7.2 VKAM will comply (where applicable) with the Data Protection Laws and
(where applicable) take all reasonable steps to ensure that it has
obtained all necessary consents for the Local Manager to process any
personal data for the purposes of the Agreement.
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