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EXHIBIT 5.2
INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN
XXX XXXXXX AMERICAN CAPITAL ASSET MANAGEMENT, INC.
and
XXXX XXXXXX & CO. LIMITED
THIS AGREEMENT is made as of this 31st day of August, 1995 by and between
XXXX XXXXXX & CO. LIMITED ("XXXX XXXXXX") of Xxxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx
Xxxx, Xxxxxx XX0 0XX, Xxxxxxx, and XXX XXXXXX AMERICAN CAPITAL ASSET MANAGEMENT,
INC.
("VKAC") of 0000 Xxxx Xxx Xxxxxxxxx, Xxxxxxx, Xxxxx 00000.
WHEREAS, VKAC has heretofore sponsored and acts as Investment Adviser to
Xxx Xxxxxx American Capital World Portfolio Series Trust (the "Trust") with
respect to -- Xxx Xxxxxx American Capital Global Equity Fund (the "Fund"); and
WHEREAS, XXXX XXXXXX has available a staff of experienced investment
personnel and facilities for providing investment sub-advisory services
applicable to that portion of the investment portfolio invested in non-U.S.
securities; and
WHEREAS, VKAC represents that it is a non-private investor with regard to
the Investment Management Regulatory Organization Limited ("IMRO") rules.
WHEREAS, XXXX XXXXXX is a member of IMRO, a self-regulating organization
recognized under the Financial Services Xxx 0000 of the United Kingdom and is
willing to provide VKAC with investment advisory services on the terms and
conditions hereinafter set forth; and
WHEREAS, VKAC and XXXX XXXXXX (jointly referred to as "the Advisers")
desire to enter into an agreement for XXXX XXXXXX to provide sub-advisory
services to the Fund and to VKAC with respect to the Fund's non-U.S.
investments.
NOW THEREFORE it is mutually agreed:
1. INVESTMENT SUB-ADVISORY SERVICES
1.1 INVESTMENT ADVICE
a) Subject to the overall policies, control, direction and review of the
Fund's Trustees, XXXX XXXXXX shall keep under review the non-U.S. investments of
the Fund and continuously furnish to the Fund and to VKAC (1) investment advice
primarily for investments in securities for which the principal trading
market(s) are in non-U.S. countries; (2) economic, statistical and research
information and advice, including advice on the allocation of investments among
countries, relating only to such portion of the Fund's assets as
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the Advisers shall from time to time designate ("Non-U.S. Securities"),
generally with respect to securities issued outside the United States and
Canada; (3) recommendations as to the voting of proxies solicited by or with
respect to Non-U.S. Securities; and (4) an investment program with respect to
Non-U.S. Securities and recommendations as to what securities shall be
purchased, sold or exchanged, and what portion, if any, of the Non-U.S.
Securities shall be held in money market instruments.
b) The Advisers are responsible for the allocation of the Fund's assets
among the various securities markets of the world. The Advisers will determine
at least quarterly the percentage of the assets that shall be allocated to each
of the Advisers (the "Asset Allocation"). The Asset Allocation will specify the
percentage and nature of the assets of the Fund allocated to each of the
Advisers for management on the effective date of the determination and will
apply to cash inflows or outflows and income and expense accruals thereafter
until such time as the Asset Allocation is redetermined. Each of the Advisers
will be responsible for the allocation of assets among the securities markets
within the area for which it is responsible. If the Advisers cannot agree on an
Asset Allocation, the Trustees shall make the final determination since the
Trustees retains in all events the control and management of the business and
affairs of the Fund.
c) Unless otherwise instructed by VKAC or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by VKAC or by the Trustees, XXXX XXXXXX shall determine the
Non-U.S. Securities to be purchased and sold by the Fund and shall place orders
for the purchase, sale or exchange of Non-U.S. Securities for the Fund's
accounts with brokers or dealers and to that end XXXX XXXXXX is authorized by
the Trustees to give instructions to the Custodian and any Sub-Custodian of the
Fund as to deliveries of such Non-U.S. Securities, transfers of currencies and
payments of cash for the account of the Fund.
d) In performing these services, XXXX XXXXXX shall adhere to the Fund's
investment objectives, restrictions and limitations as contained in its
Prospectus, Statement of Additional Information, or Agreement and Declaration of
Trust and shall comply with all statutory and regulatory restrictions,
limitations and requirements applicable to the activity of the Fund.
e) Unless otherwise instructed by VKAC or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by VKAC or by the Trustees, XXXX XXXXXX shall have executed and
performed on behalf of and at the expense of the Fund:
i) Purchases, sales, exchanges, conversions, and placement or
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orders for execution, and
ii) Reporting of all transactions to VKAC and to other entities as
directed by VKAC or by the Trustees.
f) XXXX XXXXXX shall provide the Trustees at least quarterly, in advance
of the regular meetings of the Trustees, a report of its activities hereunder on
behalf of the Fund and its proposed strategy for the next quarter, all in such
form and detail as requested by the Trustees. XXXX XXXXXX shall also make an
investment officer available to attend such meetings of the Trustees as the
Trustees may reasonably request.
1.2 RESTRICTION OF XXXX XXXXXX'X XXXXXX
(a) XXXX XXXXXX shall not commit the Fund to any extent beyond the amount
of the cash and securities placed by the Fund under the control of the XXXX
XXXXXX.
(b) In carrying out its duties hereunder XXXX XXXXXX shall comply with all
reasonable instruction of the Fund or VKAC in connection therewith. Such
instructions may be given by letter, telex, telefax or telephone confirmed by
telex, by the Trustees or by any other person authorized by a resolution of the
Trustees provided a certified copy of such resolution has been supplied to XXXX
XXXXXX.
(c) All securities, cash, and other assets of the Fund shall be placed and
maintained in the care of a member bank of the Federal Reserve System of the
United States approved by the Trustees as custodian and one or more "Eligible
Foreign Custodians" (as defined in Rule 17f-5 under the Investment Company Act
of 1940 (the "1940 Act")) approved by the Trustees as sub-custodians.
(d) Persons authorized by resolution of the Trustees shall have the right
to inspect and copy contracts, notes, vouchers, and copies of entries in books
or electronic recording media relating to the Fund's transactions at the
registered office of XXXX XXXXXX at any time during normal business hours. Such
records, in relation to each transaction effected by XXXX XXXXXX on behalf of
the Fund shall be maintained by XXXX XXXXXX for a period of seven years from the
date of such transaction.
1.3 PURCHASE AND SALE OF SECURITIES
In performing the services described above, XXXX XXXXXX shall use its best
efforts to obtain for the Fund the most favorable price and execution available.
Subject to prior authorization of appropriate policies and procedures by the
Trustees, XXXX XXXXXX may, to the extent authorized by law, cause the Fund to
pay a broker or dealer who provides brokerage and research services an
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amount of commission for effecting the Fund's investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, in recognition of the brokerage and research
services provided by the broker or dealer. To the extent authorized by law, XXXX
XXXXXX 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.
1.4 CUSTODIAN
XXXX XXXXXX shall not act as Custodian for the securities or any other
assets of the Fund. All such assets shall be held by the Custodian or
Sub-Custodian appointed by the Trustees.
2. DUTIES OF VKAC
2.1 PROVISION OF INFORMATION
VKAC shall advise XXXX XXXXXX from time to time with respect to the Fund of
its investment objectives and of any changes or modifications thereto, as well
as any specific investment restrictions or limitations by sending to XXXX XXXXXX
a copy of each registration statement relating to the Fund as filed with the
Securities and Exchange Commission. As requested by XXXX XXXXXX, VKAC shall
furnish such information to XXXX XXXXXX as to holdings, purchases, and sales of
the securities under its management as will reasonably enable XXXX XXXXXX to
furnish its investment advice under this Agreement.
2.2 COMPENSATION TO XXXX XXXXXX
The fee for the services provided under this Agreement will be determined
as follows:
(a) An amount for each month (or such other valuation period as may be
mutually agreed upon) equivalent, on an annual basis, to 50% of the compensation
actually received by VKAC pursuant to the investment advisory fee schedule set
forth in the Investment Advisory Agreement between the Fund and VKAC taking into
account any waiver or return to the Fund of any or all of such advisory fee by
VKAC (with any such return of fees to be treated as if not actually received).
The value of the assets of the Fund shall be computed as of the close of
business on the last day of each valuation period for the Fund, using the
average of all the daily determinations of the net value of the assets of the
Fund.
(b) The foregoing fee shall be paid in cash by VKAC to XXXX XXXXXX within
five (5) business days after the last day of the valuation period.
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3. MISCELLANEOUS
3.1 ACTIVITIES OF XXXX XXXXXX
The services of XXXX XXXXXX as Sub-Adviser to VKAC under this Agreement are
not to be deemed exclusive, XXXX XXXXXX and its affiliates being free to render
services to others. It is understood that shareholders, trustees, officers and
employees of XXXX XXXXXX may become interested in the Fund or VKAC as a
shareholder, trustee, officer, partner or otherwise.
3.2 SERVICES TO OTHER CLIENTS
VKAC acknowledges that XXXX XXXXXX 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, VKAC agrees that XXXX XXXXXX may give advice or exercise investment
responsibility and take such other action with respect to such Clients which may
differ from advice given or the timing or nature of action taken with respect to
the Fund, provided that XXXX XXXXXX acts in good faith, and provided, further,
that it is XXXX XXXXXX policy to allocate, within its reasonable discretion,
investment opportunities to the Fund over a period of time on a fair and
equitable basis relative to the Clients, taking into account the investment
objectives and policies of the Fund and any specific investment restrictions
applicable thereto. VKAC acknowledges that one or more of the Clients may at any
time hold, acquire, increase, decrease, dispose of or otherwise deal with
positions in investments in which the Fund may have an interest from time to
time, whether in transactions which may involve the Fund or otherwise. XXXX
XXXXXX shall have no obligation to acquire for the Fund a position in any
investment which any Client may acquire, and VKAC shall have no first refusal,
coinvestment or other rights in respect of any such investment, either for the
Fund or otherwise.
3.3 BEST EFFORTS
It is understood and agreed that in furnishing the investment advice and
other services as herein provided, XXXX XXXXXX shall use its best professional
judgment to recommend actions which will provide favorable results for the Fund.
XXXX XXXXXX shall not be liable to the Fund or to any shareholder of the Fund to
any greater degree than VKAC.
3.4 INDEMNITY FOR TAXES
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a) Notwithstanding any other provision of this Agreement, VKAC shall
indemnify and save XXXX XXXXXX and each of its affiliates, officers, trustees
and employees (each an "Indemnified Party") harmless from, against, for and in
respect of all taxes imposed by the United Kingdom on VKAC or the Fund, in
relation to the matters contemplated by this Agreement in the event that any
such tax is assessed or charged on an Indemnified Party as a branch or agent of
VKAC or the Fund.
b) VKAC will not be liable under this indemnification provision with
respect to any liabilities incurred by reason of an Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the Fund.
c) VKAC will not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified VKAC in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent). In case any such action is brought against the Indemnified Parties, VKAC
will be entitled to participate, at its own expense, in the defense thereof.
VKAC also will be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from VKAC to such
party of VKAC's election to assume the defense thereof, the Indemnified Party
will bear the fees and expenses of any additional counsel retained by it, and
VKAC will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof.
3.5 DURATION OF AGREEMENT
a) This Agreement, unless terminated pursuant to paragraph b or c below,
shall have an initial term of two years, and thereafter shall continue in effect
from year to year, provided its continued applicability is specifically approved
at least annually by the Trustees or by a vote of the holders of a majority of
the outstanding shares of the Fund. In addition, such continuation shall be
approved by vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. As used in this paragraph,
the term "interested person" shall have the same meaning as set forth in the
1940 Act.
b) This Agreement may be terminated by sixty (60) days' written notice by
either VKAC or XXXX XXXXXX to the other party. The Agreement may also be
terminated at any time, without the payment
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of any penalty, by the Fund (by vote of the Trustees or, by the vote of a
majority of the outstanding voting securities of such Fund), on sixty (60) days'
written notice to both VKAC and XXXX XXXXXX. This Agreement shall automatically
terminate in the event of the termination of the investment advisory agreement
between VKAC and the Fund.
c) This Agreement shall terminate in the event of its assignment. The term
"assignment" for this purpose shall have the same meaning set forth in Section
2(a)(4) of the 0000 Xxx.
d) Termination shall be without prejudice to the completion of any
transactions which XXXX XXXXXX shall have committed to on behalf of the Fund
prior to the time of termination. XXXX XXXXXX shall not effect and the Fund
shall not be entitled to instruct XXXX XXXXXX to effect any further transactions
on behalf of the Fund subsequent to the time termination takes effect.
e) This Agreement shall terminate forthwith by notice in writing on the
happening of any of the following events:
i) if VKAC or XXXX XXXXXX shall go into liquidation (except a voluntary
liquidation for the purpose of and followed by a bona fide reconstruction or
amalgamation upon terms previously approved in writing by the party not in
liquidation) or if a receiver or receiver and manager of any of the assets of
any of them is appointed; or
ii) if either of the parties hereto shall commit any breach of the
provisions hereof and shall not have remedied such breach within 30 days after
the service of notice by the party not in breach on the other requiring the same
to be remedied.
f) On the termination of this Agreement and completion of all matters
referred to in the foregoing paragraph (d) XXXX XXXXXX shall deliver or cause to
be delivered to the Fund copies of all documents, records and books of the Fund
required to be maintained pursuant to Rules 31a-1 or 31a-2 of the 1940 Act which
are in XXXX XXXXXX'x possession, power or control and which are valid and in
force at the date of termination.
3.6 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 XXXX XXXXXX, to:
Shackleton House
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0 Xxxxxx Xxxxxx Xxxx
Xxxxxx XX0 0XX
Xxxxxxx
attn: The Xxx. Xxxxx Xxxxxxxx
with a copy to:
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
telecopy: (000) 000-0000
attn: Xxxxxxx X. Xxxxx
and a copy to:
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
telecopy: (000) 000-0000
attn: Xxxxxx X. Xxxxxxx, Esq.
and a copy to:
Heller, Ehrman, White & XxXxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
telecopy: (000) 000-0000
attn: Xxxxxxxx X. Xxxxxxx, Esq.
If to VKAC, to:
0000 Xxxx Xxx Xxxx.
Xxxxxxx, XX 00000
telecopy: (000) 000-0000
attn: Xxx Xxxxxx
with a copy to:
0000 Xxxx Xxx Xxxx.
Xxxxxxx, XX 00000
telecopy: (000) 000-0000
attn: Xxxx X. Xxxxxx, Esq.
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice that is
addressed and mailed in the manner herein provided shall be presumed to have
been duly given to the party to which it is addressed, on the date three
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(3) days after mailing, and in the case of delivery by telecopy, on the date the
hard copy is received.
3.7 IMRO Rules
As a member of IMRO and in light of IMRO Rules, the Sub-Adviser places on
record that it regards this Agreement as not necessitating any ancillary
agreement with the Fund or VKAC on the grounds that, within meanings of the IMRO
Rules (a) the Fund is a series of an open-ended investment company and a
business investor, (b) VKAC is a professional investor and (c) the subject
matter of this Agreement is a scheme management activity.
3.8 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 California.
3.9 Miscellaneous Provisions
The execution of this Agreement has been authorized by the Trust's Trustees
and by the sole shareholder. This Agreement is executed on behalf of the Trust
or the Trustees of the Trust as Trustees and not individually and that the
obligations of this Agreement are not binding upon any of the Trustees, officers
or shareholders of the Trust individually but are binding only upon the assets
and property of the Trust. A Certificate of Trust in respect of the Trust is on
file with the Secretary of State of Delaware.
IN WITNESS WHEREOF, the Agreement has been executed as of the date first
above given.
XXXX XXXXXX & CO. LIMITED
By: /s/ XXXXX XXXXXXXX
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Name: Xxxxx Xxxxxxxx
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Its: Chief Executive
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XXX XXXXXX AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
By: /s/ XXXX X. XXXXXX
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Name: Xxxx X. Xxxxxx
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Its: Vice President
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