VIRTUS OPPORTUNITIES TRUST
VIRTUS EMERGING MARKETS EQUITY INCOME FUND
VIRTUS ESSENTIAL RESOURCES FUND
INTERIM SUBADVISORY AGREEMENT
January 13, 2016
Kleinwort Xxxxxx Investors International, Ltd.
0xx Xxxxx, 0 Xxxxxxxxxxxxx Xxxxx, XXXX
Xxxxxx 0, Xxxxxxx
RE: Interim Subadvisory Agreement
Ladies and Gentlemen:
Virtus Opportunities Trust (the "Fund") is an open-end
investment company of the series type registered under the
Investment Company Act of 1940 (the "Act"), and is subject to
the rules and regulations promulgated thereunder. The shares of
the Fund are offered or may be offered in several series,
including Virtus Emerging Markets Equity Income Fund and Virtus
Essential Resources Fund (collectively, sometimes hereafter
referred to as the "Series").
Virtus Investment Advisers, Inc. (the "Adviser") evaluates and
recommends series advisers for the Series and is responsible for
the day-to-day management of the Series.
1. Employment as a Subadviser. The Adviser, being duly
authorized, hereby employs Kleinwort Xxxxxx Investors
International Ltd. (the "Subadviser") as a discretionary
series adviser to invest and reinvest that discrete portion
of the assets of the Series designated by the Adviser as
set forth on Schedule F attached hereto (the "Designated
Series") on the terms and conditions set forth herein.
2. Acceptance of Employment; Standard of Performance. The
Subadviser accepts its employment as a discretionary series
adviser of the Designated Series and agrees to use its best
professional judgment to make investment decisions for the
Designated Series in accordance with the provisions of this
Agreement and as set forth in Schedule D attached hereto
and made a part hereof.
3. Services of Subadviser. In providing management services
to the Designated Series, the Subadviser shall be subject
to the investment objectives, policies and restrictions of
the Fund as they apply to the Designated Series and as set
forth in the Fund's then current prospectus ("Prospectus")
and statement of additional information ("Statement of
Additional Information") filed with the Securities and
Exchange Commission (the "SEC") as part of the Fund's
Registration Statement, as may be periodically amended and
provided to the Subadviser by the Adviser, and to the
investment restrictions set forth in the Act and the Rules
thereunder, to the supervision and control of the Trustees
of the Fund (the "Trustees"), and to instructions from the
Adviser. The Subadviser shall not, without the Fund's
prior written approval, effect any transactions that would
cause the Designated Series at the time of the transaction
to be out of compliance with any of such restrictions or
policies.
4. Transaction Procedures. All series transactions for the
Designated Series shall be consummated by payment to, or
delivery by, the Custodian(s) from time to time designated
by the Fund (the "Custodian"), or such depositories or
agents as may be designated by the Custodian in writing, of
all cash and/or securities due to or from the Series. The
Subadviser shall not have possession or custody of such
cash and/or securities or any responsibility or liability
with respect to such custody. The Subadviser shall advise
the Custodian and confirm in writing to the Fund all
investment orders for the Designated Series placed by it
with brokers and dealers at the time and in the manner set
forth in Schedule A hereto (as amended from time to time).
The Fund shall issue to the Custodian such instructions as
may be appropriate in connection with the settlement of any
transaction initiated by the Subadviser. The Fund shall be
responsible for all custodial arrangements and the payment
of all custodial charges and fees, and, upon giving proper
instructions to the Custodian, the Subadviser shall have no
responsibility or liability with respect to custodial
arrangements or the act, omissions or other conduct of the
Custodian.
5. Allocation of Brokerage. The Subadviser shall have
authority and discretion to select brokers and dealers to
execute Designated Series transactions initiated by the
Subadviser, and to select the markets on or in which the
transactions will be executed.
A. In placing orders for the sale and purchase of
Designated Series securities for the Fund, the
Subadviser's primary responsibility shall be to seek
the best execution of orders at the most favorable
prices. However, this responsibility shall not
obligate the Subadviser to solicit competitive bids for
each transaction or to seek the lowest available
commission cost to the Fund, so long as the Subadviser
reasonably believes that the broker or dealer selected
by it can be expected to obtain a "best execution"
market price on the particular transaction and
determines in good faith that the commission cost is
reasonable in relation to the value of the brokerage
and research services (as defined in Section 28(e)(3)
of the Securities Exchange Act of 1934) provided by
such broker or dealer to the Subadviser, viewed in
terms of either that particular transaction or of the
Subadviser's overall responsibilities with respect to
its clients, including the Fund, as to which the
Subadviser exercises investment discretion,
notwithstanding that the Fund may not be the direct or
exclusive beneficiary of any such services or that
another broker may be willing to charge the Fund a
lower commission on the particular transaction.
B. The Subadviser may manage other portfolios and expects
that the Fund and other portfolios the Subadviser
manages will, from time to time, purchase or sell the
same securities. The Subadviser may aggregate orders
for the purchase or sale of securities on behalf of the
Designated Series with orders on behalf of other
portfolios the Subadviser manages. Securities
purchased or proceeds of securities sold through
aggregated orders, as well as expenses incurred in the
transaction, shall be allocated to the account of each
portfolio managed by the Subadviser that bought or sold
such securities in a manner considered by the
Subadviser to be equitable and consistent with the
Subadviser's fiduciary obligations in respect of the
Designated Series and to such other accounts.
C. The Subadviser shall not execute any Series transactions
for the Designated Series with a broker or dealer that
is (i) an "affiliated person" (as defined in the Act)
of the Fund, the Subadviser, any subadviser to any
other Series of the Fund, or the Adviser; (ii) a
principal underwriter of the Fund's shares; or (iii) an
affiliated person of such an affiliated person or
principal underwriter; in each case, unless such
transactions are permitted by applicable law or
regulation and carried out in compliance with any
applicable policies and procedures of the Fund. The
Fund shall provide the Subadviser with a list of
brokers and dealers that are "affiliated persons" of
the Fund or the Adviser, and applicable policies and
procedures.
D. Consistent with its fiduciary obligations to the Fund in
respect of the Designated Series and the requirements
of best price and execution, the Subadviser may, under
certain circumstances, arrange to have purchase and
sale transactions effected directly between the
Designated Series and another account managed by the
Subadviser ("cross transactions"), provided that such
transactions are carried out in accordance with
applicable law or regulation and any applicable
policies and procedures of the Fund. The Fund shall
provide the Subadviser with applicable policies and
procedures.
6. Proxies.
A. Unless the Adviser or the Fund gives the Subadviser
written instructions to the contrary, the Subadviser,
or a third party designee acting under the authority
and supervision of the Subadviser, shall review all
proxy solicitation materials and be responsible for
voting and handling all proxies in relation to the
assets of the Designated Series. Unless the Adviser or
the Fund gives the Subadviser written instructions to
the contrary, the Subadviser will, in compliance with
the proxy voting procedures of the Designated Series
then in effect, vote or abstain from voting, all
proxies solicited by or with respect to the issuers of
securities in which assets of the Designated Series may
be invested. The Adviser shall cause the Custodian to
forward promptly to the Subadviser all proxies upon
receipt, so as to afford the Subadviser a reasonable
amount of time in which to determine how to vote such
proxies. The Subadviser agrees to provide the Adviser
in a timely manner with a record of votes cast
containing all of the voting information required by
Form N-PX in an electronic format to enable the Fund to
file Form N-PX as required by Rule 30b1-4 under the
Act.
B. The Subadviser is authorized to deal with
reorganizations, exchange offers and other voluntary
corporate actions with respect to securities held in
the Series in such manner as the Subadviser deems
advisable, unless the Fund or the Adviser otherwise
specifically directs in writing. With the Adviser's
approval, the Subadviser shall also have the authority
to: (i) identify, evaluate and pursue legal claims,
including commencing or defending suits, affecting the
securities held at any time in the Series, including
claims in bankruptcy, class action securities
litigation and other litigation; (ii) participate in
such litigation or related proceedings with respect to
such securities as the Subadviser deems appropriate to
preserve or enhance the value of the Series, including
filing proofs of claim and related documents and
serving as "lead plaintiff" in class action lawsuits;
(iii) exercise generally any of the powers of an owner
with respect to the supervision and management of such
rights or claims, including the settlement, compromise
or submission to arbitration of any claims, the
exercise of which the Subadviser deems to be in the
best interest of the Series or required by applicable
law, including ERISA, and (iv) employ suitable agents,
including legal counsel, and to pay their reasonable
fees, expenses and related costs from the Series.
7. Prohibited Conduct. In providing the services described in
this Agreement, the Subadviser's responsibility regarding
investment advice hereunder is limited to the Designated
Series, and the Subadviser will not consult with any other
investment advisory firm that provides investment advisory
services to the Fund or any other investment company
sponsored by Virtus Investment Partners, Inc. regarding
transactions for the Fund in securities or other assets.
The Fund shall provide the Subadviser with a list of
investment companies sponsored by Virtus Investment
Partners, Inc. and the Subadviser shall be in breach of the
foregoing provision only if the investment company is
included in such a list provided to the Subadviser prior to
such prohibited action. In addition, the Subadviser shall
not, without the prior written consent of the Fund and the
Adviser, delegate any obligation assumed pursuant to this
Agreement to any affiliated or unaffiliated third party.
8. Information and Reports.
A. The Subadviser shall keep the Fund and the Adviser
informed of developments relating to its duties as
Subadviser of which the Subadviser has, or should have,
knowledge that would materially affect the Designated
Series. In this regard, the Subadviser shall provide
the Fund, the Adviser and their respective officers
with such periodic reports concerning the obligations
the Subadviser has assumed under this Agreement as the
Fund and the Adviser may from time to time reasonably
request. In addition, prior to each meeting of the
Trustees, the Subadviser shall provide the Adviser and
the Trustees with reports regarding the Subadviser's
management of the Designated Series during the most
recently completed quarter, which reports: (i) shall
include Subadviser's representation that its
performance of its investment management duties
hereunder is in compliance with the Fund's investment
objectives and practices, the Act and applicable rules
and regulations under the Act, and the diversification
and minimum "good income" requirements of Subchapter M
under the Internal Revenue Code of 1986, as amended,
and (ii) otherwise shall be in such form as may be
mutually agreed upon by the Subadviser and the Adviser.
B. Each of the Adviser and the Subadviser shall provide the
other party with a list, to the best of the Adviser's
or the Subadviser's respective knowledge, of each
affiliated person (and any affiliated person of such an
affiliated person) of the Adviser or the Subadviser, as
the case may be, and each of the Adviser and Subadviser
agrees promptly to update such list whenever the
Adviser or the Subadviser becomes aware of any changes
that should be added to or deleted from the list of
affiliated persons.
C. The Subadviser shall also provide the Adviser with any
information reasonably requested by the Adviser
regarding its management of the Designated Series
required for any shareholder report, amended
registration statement, or Prospectus supplement to be
filed by the Fund with the SEC.
9. Fees for Services. The compensation of the Subadviser for
its services under this Agreement shall be calculated and
paid by the Adviser in accordance with the attached
Schedule C. Pursuant to the Investment Advisory Agreement
between the Fund and the Adviser, the Adviser is solely
responsible for the payment of fees to the Subadviser.
10. Limitation of Liability. Except as otherwise stated
in this Agreement, the Subadviser shall not be liable for
any action taken, omitted or suffered to be taken by it in
its best professional judgment, in good faith and believed
by it to be authorized or within the discretion or rights
or powers conferred upon it by this Agreement, or in
accordance with specific directions or instructions from
the Fund, provided, however, that such acts or omissions
shall not have constituted a material breach of the
investment objectives, policies and restrictions applicable
to the Designated Series as defined in the Prospectus and
Statement of Additional Information , or a material breach
of any laws, rules, regulations or orders applicable to the
Designated Series, and that such acts or omissions shall
not have resulted from the Subadviser's willful
misfeasance, bad faith or gross negligence, or reckless
disregard of its obligations and duties hereunder.
11. Confidentiality. Subject to the duty of the
Subadviser and the Fund to comply with applicable law,
including any demand of any regulatory or taxing authority
having jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Designated
Series and the actions of the Subadviser and the Fund in
respect thereof. Notwithstanding the foregoing, the Fund
and the Adviser agree that the Subadviser may (i) disclose
in marketing materials and similar communications that the
Subadviser has been engaged to manage assets of the
Designated Series pursuant to this Agreement, and (ii)
include performance statistics regarding the Series in
composite performance statistics regarding one or more
groups of Subadviser's clients published or included in any
of the foregoing communications, provided that the
Subadviser does not identify any performance statistics as
relating specifically to the Series.
12. Assignment. This Agreement shall terminate
automatically in the event of its assignment, as that term
is defined in Section 2(a)(4) of the Act. The Subadviser
shall notify the Fund and the Adviser in writing
sufficiently in advance of any proposed change of control,
as defined in Section 2(a)(9) of the Act, as will enable
the Fund to consider whether an assignment as defined in
Section 2(a)(4) of the Act will occur, and to take the
steps necessary to enter into a new contract with the
Subadviser.
13. Representations, Warranties and Agreements
A. The Subadviser represents, warrants and agrees that:
1. It is registered as an "investment adviser" under
the Investment Advisers Act of 1940, as amended
("Advisers Act").
2. It will maintain, keep current and preserve such
records on behalf of the Fund, in the manner
required or permitted by the Act and the Rules
thereunder as are required of an investment
adviser of a registered investment company (to
the extent applicable). The Subadviser agrees
that such records are the property of the Fund,
and shall be surrendered to the Fund or to the
Adviser as agent of the Fund promptly upon
request of either. The Fund acknowledges that
Subadviser may retain copies of all records
required to meet the record retention
requirements imposed by law and regulation.
3. It shall maintain a written code of ethics (the
"Code of Ethics") complying with the requirements
of Rule 204A-1 under the Advisers Act and Rule
17j-l under the Act and shall provide the Fund
and the Adviser with a copy of the Code of Ethics
and evidence of its adoption. It shall institute
procedures reasonably necessary to prevent Access
Persons (as defined in Rule 17j-1) from violating
its Code of Ethics. The Subadviser acknowledges
receipt of the written code of ethics adopted by
and on behalf of the Fund. Each calendar quarter
while this Agreement is in effect, a duly
authorized compliance officer of the Subadviser
shall certify to the Fund and to the Adviser that
the Subadviser has complied with the requirements
of Rules 204A-1 and 17j-l during the previous
calendar quarter and that there has been no
material violation of its Code of Ethics, or of
Rule 17j-1(b), or that any persons covered under
its Code of Ethics has divulged or acted upon any
material, non-public information, as such term is
defined under relevant securities laws, and if
such a violation has occurred or the code of
ethics of the Fund, or if such a violation of its
Code of Ethics has occurred, that appropriate
action was taken in response to such violation.
Annually, the Subadviser shall furnish to the
Fund and the Adviser a written report which
complies with the requirements of Rule 17j-1
concerning the Subadviser's Code of Ethics. The
Subadviser shall permit the Fund and the Adviser
to examine the reports required to be made by the
Subadviser under Rules 204A-1(b) and 17j-l(d)(1)
and this subparagraph.
4. It has adopted and implemented, and throughout the
term of this Agreement shall maintain in effect
and implement, written policies and procedures
reasonably designed to prevent violation, by it
and its supervised persons, of the Advisers Act
and the rules that the SEC has adopted under the
Advisers Act. Throughout the term of this
Agreement, the Subadviser shall provide the
Adviser with any certifications, information and
access to personnel and resources (including
those resources that will permit testing of
Subadviser's compliance policies by the Adviser)
that the Adviser may reasonably request to enable
the Fund to comply with Rule 38a-1 under the Act.
The Subadviser has provided the Fund with true
and complete copies of its policies and
procedures (or summaries thereof) and related
information reasonably requested by the Fund
and/or the Adviser. The Subadviser agrees to
cooperate with periodic reviews by the Fund's
and/or the Adviser's compliance personnel of the
Subadviser's policies and procedures, their
operation and implementation and other compliance
matters and to provide to the Fund and/or the
Adviser from time to time such additional
information and certifications in respect of the
Subadviser's policies and procedures, compliance
by the Subadviser with federal securities laws
and related matters as the Fund's and/or the
Adviser's compliance personnel may reasonably
request. The Subadviser agrees to promptly
notify the Adviser of any compliance violations
which affect the Designated Series.
5. The Subadviser will immediately notify the Fund and
the Adviser of the occurrence of any event which
would disqualify the Subadviser from serving as
an investment adviser of an investment company
pursuant to Section 9 of the Act or otherwise.
The Subadviser will also immediately notify the
Fund and the Adviser if it is served or otherwise
receives notice of any action, suit, proceeding,
inquiry or investigation, at law or in equity,
before or by any court, public board or body,
involving the affairs of the Designated Series.
B. The Fund represents, warrants and agrees that:
1. the Fund is a statutory trust established pursuant
to the laws of State of Delaware;
2. the Fund is duly registered as an investment
company under the 1940 Act;
3. the execution, delivery and performance of this
Agreement are within the Fund's powers, have been
and remain duly authorized by all necessary
action (including without limitation all
necessary approvals and other actions required
under the 0000 Xxx) and will not violate or
constitute a default under any applicable law or
regulation or of any decree, order, judgment,
agreement or instrument binding on the Fund;
4. no consent of any applicable governmental authority
or body is necessary, except for such consents as
have been obtained and are in full force and
effect, and all conditions of which have been
duly complied with; and
5. this Agreement constitutes a legal, valid and
binding obligation enforceable against the Fund
in accordance with its terms.
C. The Adviser represents, warrants and agrees that:
1. The Adviser is a corporation duly established,
validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and is
duly qualified to do business and is in good
standing under the laws of each jurisdiction
where the failure to so qualify would have a
material adverse effect on its business;
2. Adviser is duly registered as an "investment
adviser" under the Advisers Act;
3. Adviser has been duly appointed by the Trustees and
shareholders of the Fund to provide investment
services to the Fund as contemplated by the
advisory contract;
4. the execution, delivery and performance of this
Agreement are within Adviser's powers, have been
and remain duly authorized by all necessary
corporate action and will not violate or
constitute a default under any applicable law or
regulation or of any decree, order, judgment,
agreement or instrument binding on Adviser;
5. no consent of any applicable governmental authority
or body is necessary, except for such consents as
have been obtained and are in full force and
effect, and all conditions of which have been
duly complied with; and
6. this Agreement constitutes a legal, valid and
binding obligation enforceable against Adviser.
14. No Personal Liability. Reference is hereby made to
the Declaration of Trust establishing the Fund, a copy of
which has been filed with the Secretary of the State of
Delaware and elsewhere as required by law, and to any and
all amendments thereto so filed with the Secretary of the
State of Delaware and elsewhere as required by law, and to
any and all amendments thereto so filed or hereafter filed.
The name "Virtus Opportunities Trust" refers to the
Trustees under said Declaration of Trust, as Trustees and
not personally, and no Trustee, shareholder, officer, agent
or employee of the Fund shall be held to any personal
liability in connection with the affairs of the Fund; only
the trust estate under said Declaration of Trust is liable.
Without limiting the generality of the foregoing, neither
the Subadviser nor any of its officers, directors,
partners, shareholders or employees shall, under any
circumstances, have recourse or cause or willingly permit
recourse to be had directly or indirectly to any personal,
statutory, or other liability of any shareholder, Trustee,
officer, agent or employee of the Fund or of any successor
of the Fund, whether such liability now exists or is
hereafter incurred for claims against the trust estate.
15. Entire Agreement; Amendment. This Agreement, together
with the Schedules attached hereto, constitutes the entire
agreement of the parties with respect to the subject matter
hereof and supersedes any prior written or oral agreements
pertaining to the subject matter of this Agreement. This
Agreement may be amended at any time, but only by written
agreement among the Subadviser, the Adviser and the Fund,
which amendment, other than amendments to Schedules A, B,
D, E and F, is subject to the approval of the Trustees and
the shareholders of the Series as and to the extent
required by the Act, subject to any applicable orders of
exemption issued by the SEC.
16. Effective Date; Term. This Agreement shall become
effective on the date set forth on the first page of this
Agreement, and shall continue in effect for up to 150 days
or until a new subadvisory agreement between the Adviser
and the Subadviser with respect to the Series is approved
by the Fund's shareholders at a meeting called for such
purpose, whichever is earlier.
17. Termination. This Agreement may be terminated at any
time without payment of any penalty (i) by the Board, or by
a vote of a majority of the outstanding voting securities
of the Fund (as defined in the Act), upon 30 days' prior
written notice to the Adviser and the Subadviser, (ii) by
the Subadviser upon 30 days' prior written notice to the
Adviser and the Fund, or (iii) by the Adviser upon 30 days'
written notice to the Subadviser. This Agreement may also
be terminated, without the payment of any penalty, by the
Adviser or the Board immediately upon the material breach
by the Subadviser of this Agreement or by the Subadviser
immediately upon the material breach by the Adviser of this
Agreement. This Agreement shall terminate automatically
and immediately upon termination of the Advisory Agreement.
This Agreement shall terminate automatically and
immediately in the event of its assignment, as such term is
defined in and interpreted under the terms of the Act and
the rules promulgated thereunder. Provisions of this
Agreement relating to indemnification shall survive any
termination of this Agreement.
18. Applicable Law. To the extent that state law is not
preempted by the provisions of any law of the United States
heretofore or hereafter enacted, as the same may be amended
from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the State
of Delaware.
19. Severability. If any term or condition of this
Agreement shall be invalid or unenforceable to any extent
or in any application, then the remainder of this Agreement
shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to
the fullest extent permitted by law.
20. Notices. Any notice or other communication required
to be given pursuant to this Agreement shall be deemed duly
given if delivered personally or by overnight delivery
service or mailed by certified or registered mail, return
receipt requested and postage prepaid, or sent by facsimile
addressed to the parties at their respective addresses set
forth below, or at such other address as shall be
designated by any party in a written notice to the other
party.
(a) To Virtus or the Fund at:
Virtus Investment Advisers, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxx.xxxx@xxxxxx.xxx
(b) To the Subadviser at:
Kleinwort Xxxxxx Investors International Ltd.
One Boston Place
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxx, Director - Head of Business
Development
Telephone: 0 000 000 0000
Cell Phone: x0 000 000 0000
E-mail: Xxxxx.Xxxxx@XXXxxxxxxxx.XX
21. Certifications. The Subadviser hereby warrants and
represents that it will provide the requisite
certifications reasonably requested by the chief executive
officer and chief financial officer of the Fund necessary
for those named officers to fulfill their reporting and
certification obligations on Form N-CSR and Form N-Q as
required under the Xxxxxxxx-Xxxxx Act of 2002 to the extent
that such reporting and certifications relate to the
Subadviser's duties and responsibilities under this
Agreement. Subadviser shall provide a quarterly
certification in a form substantially similar to that
attached as Schedule E.
22. Indemnification. The Subadviser shall indemnify and
hold harmless the Adviser from and against any and all
claims, losses, liabilities, or damages (including
reasonable attorney's fees and other related expenses)
(collectively, "Losses") arising from the Subadviser's
willful misfeasance, bad faith, gross negligence, or
reckless disregard of its duties under this Agreement in
the performance of its obligations under this Agreement;
provided, however, that the Subadviser's obligation under
this Paragraph shall be reduced to the extent that the
claim against, or the loss, liability, or damage
experienced by the Adviser, is caused by or is otherwise
directly related to (i) any breach by the Adviser of its
representations or warranties made herein, (ii) any willful
misconduct, bad faith, reckless disregard or negligence of
the Adviser in the performance of any of its duties or
obligations hereunder, or (iii) any untrue statement of a
material fact contained in the Prospectus or SAI, proxy
materials, reports, advertisements, sales literature, or
other materials pertaining to the Fund(s) or the omission
to state therein a material fact known to the Adviser that
was required to be stated therein or necessary to make the
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to
the Subadviser or the Trust, or the omission of such
information, by the Adviser for use therein.
The Adviser shall indemnify and hold harmless the
Subadviser from and against any and all Losses arising from
the Adviser's willful misfeasance, bad faith, gross
negligence, or reckless disregard of its duties under this
Agreement in the performance of its obligations under this
Agreement; provided, however, that the Adviser's obligation
under this Paragraph 6 shall be reduced to the extent that
the claim against, or the loss, liability, or damage
experienced by the Subadviser, is caused by or is otherwise
directly related to (i) any breach by the Subadviser of its
representations or warranties made herein, (ii) any willful
misconduct, bad faith, reckless disregard or negligence of
the Subadviser in the performance of any of its duties or
obligations hereunder, or (iii) any untrue statement of a
material fact contained in the Prospectus or SAI, proxy
materials, reports, advertisements, sales literature, or
other materials pertaining to the Fund(s) or the omission
to state therein a material fact known to the Subadviser
that was required to be stated therein or necessary to make
the statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to
the Adviser or the Trust, or the omission of such
information, by the Subadviser for use therein.
A party seeking indemnification hereunder (the "Indemnified
Party") will (i) provide prompt notice to the other of any
claim ("Claim") for which it intends to seek
indemnification, (ii) grant control of the defense and /or
settlement of the Claim to the other party, and (iii)
cooperate with the other party in the defense thereof. The
Indemnified Party will have the right at its own expense to
participate in the defense of any Claim, but will not have
the right to control the defense, consent to judgment or
agree to the settlement of any Claim without the written
consent of the other party. The party providing the
indemnification will not consent to the entry of any
judgment or enter any settlement which (i) does not
include, as an unconditional term, the release by the
claimant of all liabilities for Claims against the
Indemnified Party or (ii) which otherwise adversely affects
the rights of the Indemnified Party.
No party will be liable to another party for consequential
damages under any provision of this Agreement.
23. Relationship of Parties. By virtue of this Agreement,
the Adviser, the Fund and Subadviser are not partners or
joint venturers with each other and nothing in this
Agreement shall be construed so as to make them partners or
joint venturers or impose any liability as such on either
of them. Subadviser shall perform its duties under this
Agreement as an independent contractor and not as an agent
of the Fund, the Trustees or the Adviser.
24. Receipt of Disclosure Document. The Fund and the
Adviser acknowledge receipt, at least 48 hours prior to
entering into this Agreement, of a copy of Part II of the
Subadviser's Form ADV containing certain information
concerning the Subadviser and the nature of its business.
25. Counterparts; Fax Signatures. This Agreement may be
executed in any number of counterparts (including executed
counterparts delivered and exchanged by facsimile
transmission) with the same effect as if all signing
parties had originally signed the same document, and all
counterparts shall be construed together and shall
constitute the same instrument. For all purposes,
signatures delivered and exchanged by facsimile
transmission shall be binding and effective to the same
extent as original signatures.
[signature page follows]
VIRTUS OPPORTUNITIES TRUST
By: /s/ W. Xxxxxxx Xxxxxxx
Name: W. Xxxxxxx Xxxxxxx
Title: Vice President, Chief
Financial Officer & Treasurer
VIRTUS INVESTMENT ADVISERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice
President
ACCEPTED:
KLEINWORT XXXXXX INVESTORS INTERNATIONAL LTD.
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Chief Compliance Officer
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Director
SCHEDULES: A. Operational Procedures
B. Record Keeping Requirements
C. Fee Schedule
D. Subadviser Functions
E. Form of Sub-Certification
F. Designated Series
SCHEDULE A
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary
for a flow of information to be supplied by Subadviser to The
Bank of New York Mellon (the "Custodian") and BNY Mellon
Investment Servicing (US) Inc., (the "Sub-Accounting Agent") for
the Fund.
The Subadviser must furnish the Custodian and the Sub-Accounting
Agent with daily information as to executed trades, or, if no
trades are executed, with a report to that effect, no later than
5:00 p.m. (Eastern Time) on the day of the trade each day the
Fund is open for business. When necessary, trade information
for executed trades can be sent to the Sub-Accounting Agent on
trade date +1 by 11:00 a.m. (Subadviser will be responsible for
reimbursement to the Fund for any loss caused by the
Subadviser's failure to comply.) The necessary information can
be sent via facsimile machine or electronic delivery to the
Custodian and by facsimile machine or batch files to the Sub-
Accounting Agent. Information provided to the Custodian and the
Sub-Accounting Agent shall include the following:
1. Purchase or sale;
2. Security name;
3. CUSIP number, ISIN or Sedols (as applicable);
4. Number of shares and sales price per share or aggregate
principal amount;
5. Executing broker;
6. Settlement agent;
7. Trade date;
8. Settlement date;
9. Aggregate commission or if a net trade;
10. Interest purchased or sold from interest bearing
security;
11. Other fees;
12. Net proceeds of the transaction;
13. Exchange where trade was executed;
14. Identified tax lot (if applicable); and
15. Trade commission reason: best execution, soft dollar
or research.
When opening accounts with brokers for, and in the name of, the
Fund, the account must be a cash account. No margin accounts
are to be maintained in the name of the Fund. Delivery
instructions are as specified by the Custodian. The Custodian
will supply the Subadviser daily with a cash availability report
via access to the Custodian website, or by email or by facsimile
and the Sub-Accounting Agent will provide a five day cash
projection. This will normally be done by email or, if email is
unavailable, by another form of immediate written communication,
so that the Subadviser will know the amount available for
investment purposes.
SCHEDULE B
RECORDS TO BE MAINTAINED BY THE SUBADVISER
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order,
and all other series purchases and sales, given by the
Subadviser on behalf of the Fund for, or in connection
with, the purchase or sale of securities, whether executed
or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any
modifications or cancellations thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of
the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter,
completed within ten (10) days after the end of the
quarter, showing specifically the basis or bases upon which
the allocation of orders for the purchase and sale of
series securities to named brokers or dealers was effected,
and the division of brokerage commissions or other
compensation on such purchase and sale orders. Such
record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or
dealers.
(ii) The supplying of services or benefits by brokers
or dealers to:
(a) The Fund,
(b) The Adviser,
(c) The Subadviser, and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as
such.
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general
or specific formula or other determinant used in
arriving at such allocation of purchase and sale
orders and such division of brokerage commissions or
other compensation.
D. Shall show the name of the person responsible for making
the determination of such allocation and such division
of brokerage commissions or other compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate
memorandum identifying the person or persons, committees or
groups authorizing the purchase or sale of series
securities. Where a committee or group makes an
authorization, a record shall be kept of the names of its
members who participate in the authorization. There shall
be retained as part of this record: any memorandum,
recommendation or instruction supporting or authorizing the
purchase or sale of series securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as
are required to be maintained by registered investment
advisers by rule adopted under Section 204 of the Advisers
Act, to the extent such records are necessary or
appropriate to record the Subadviser's transactions for the
Fund.
5. Records as necessary under Board approved Virtus Mutual Funds
policies and procedures, including without limitation those
related to valuation determinations.
SCHEDULE C
SUBADVISORY FEE
(a) For services provided to the Fund, the Adviser will pay
to the Subadviser a fee, payable monthly in arrears, at the
annual rate stated below. The fee shall be prorated for any
month during which this Agreement is in effect for only a
portion of the month. In computing the fee to be paid to the
Subadviser, the net asset value of each Designated Series shall
be valued as set forth in the then current registration
statement of the Fund.
(b)
Name of Series
Proposed Subadvisory Fee to be Paid by VIA to
Kleinwort Xxxxxx Investors International Ltd.
Virtus Essential Resources Fund
50% of the net advisory fee payable to the
adviser
Virtus Emerging Markets Equity Income Fund
50% of the net advisory fee payable to the
adviser
For this purpose, the "net advisory fee" means the
advisory fee paid to the Adviser after accounting for any
applicable fee waiver and/or expense limitation agreement, which
shall not include reimbursement of the Adviser for any expenses
or recapture of prior waivers. In the event that the Adviser
waives its entire fee and also assumes expenses of the Fund
pursuant to an applicable expense limitation agreement, the
Subadviser will similarly waive its entire fee and will share in
the expense assumption by contributing 50% of the assumed
amount. However, because the Subadviser shares the fee waiver
and/or expense assumption equally with the Adviser, if during
the term of this Agreement the Adviser later recaptures some or
all of the fees so waived or expenses so assumed by the Adviser
and the Subadviser together, the Adviser shall pay to the
Subadviser 50% of the amount recaptured.
SCHEDULE D
SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment of
the Designated Series' assets, the Subadviser shall provide, at
its own expense:
(a) An investment program for the Designated Series
consistent with its investment objectives based upon
the development, review and adjustment of buy/sell
strategies approved from time to time by the Board of
Trustees and the Adviser in paragraph 3 of this
Subadvisory Agreement and implementation of that
program;
(b) Periodic reports, on at least a quarterly basis, in
form and substance acceptable to the Adviser, with
respect to: i) compliance with the Code of Ethics and
the Fund's code of ethics; ii) compliance with
procedures adopted from time to time by the Trustees
of the Fund relative to securities eligible for resale
under Rule 144A under the Securities Act of 1933, as
amended; iii) diversification of Designated Series
assets in accordance with the then prevailing
Prospectus and Statement of Additional Information
pertaining to the Designated Series and governing
laws, regulations, rules and orders; iv) compliance
with governing restrictions relating to the fair
valuation of securities for which market quotations
are not readily available or considered "illiquid" for
the purposes of complying with the Designated Series'
limitation on acquisition of illiquid securities; v)
any and all other reports reasonably requested in
accordance with or described in this Agreement; and
vi) the implementation of the Designated Series'
investment program, including, without limitation,
analysis of Designated Series performance;
(c) Promptly after filing with the SEC an amendment to its
Form ADV, a copy of such amendment to the Adviser and
the Trustees;
(d) Attendance by appropriate representatives of the
Subadviser at meetings requested by the Adviser or
Trustees at such time(s) and location(s) as reasonably
requested by the Adviser or Trustees; and
(e) Notice to the Trustees and the Adviser of the
occurrence of any event which would disqualify the
Subadviser from serving as an investment adviser of an
investment company pursuant to Section 9(a) of the
1940 Act or otherwise.
(f) Provide reasonable assistance in the valuation of
securities including the participation of appropriate
representatives at fair valuation committee meetings.
SCHEDULE E
FORM OF SUB-CERTIFICATION
To:
Re: Subadviser's Form N-CSR and Form N-Q Certification for the
[Name of Designated Series].
From: [Name of Subadviser]
Representations in support of Investment Company Act Rule
30a-2 certifications of Form N-CSR and Form N-Q.
[Name of Designated Series].
In connection with your certification responsibility under
Rule 30a-2 and Sections 302 and 906 of the Xxxxxxxx-Xxxxx
Act of 2002, I have reviewed the following information
presented in the schedule of investments for the period
ended [Date of Reporting Period] (the "Report") which
forms part of the N-CSR or N-Q, as applicable, for the
Fund.
Schedule of Investments
Our organization has designed, implemented and maintained
internal controls and procedures, designed for the purpose of
ensuring the accuracy and completeness of relevant portfolio
trade data transmitted to those responsible for the preparation
of the Schedule of Investments. As of the date of this
certification there have been no material modifications to these
internal controls and procedures.
In addition, our organization has:
a. Designed such internal controls and procedures to ensure
that material information is made known to the appropriate
groups responsible for servicing the above-mentioned mutual
fund.
b. Evaluated the effectiveness of our internal controls and
procedures, as of a date within 90 days prior to the date
of this certification and we have concluded that such
controls and procedures are effective.
c. In addition, to the best of my knowledge, there has been no
fraud, whether or not material, that involves our
organization's management or other employees who have a
significant role in our organization's control and
procedures as they relate to our duties as subadviser to
the Designated Series.
I have read the draft of the Report which I understand to be
current as of [Date of Reporting Period] and based on my
knowledge, such draft of the Report does not, with respect to
the Designated Series, contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the information contained therein, in light of the circumstances
under which such information is presented, not misleading with
respect to the period covered by such draft Report.
I have disclosed, based on my most recent evaluation, to the
Designated Series' Chief Accounting Officer:
a. All significant changes, deficiencies and material
weakness, if any, in the design or operation of the
Subadviser's internal controls and procedures which could
adversely affect the Registrant's ability to record,
process, summarize and report financial data with respect
to the Designated Series in a timely fashion;
b. Any fraud, whether or not material, that involves the
Subadviser's management or other employees who have a
significant role in the Subadviser's internal controls and
procedures for financial reporting.
I certify that to the best of my knowledge:
a. The Subadviser's Portfolio Manager(s) has/have complied
with the restrictions and reporting requirements of the
Code of Ethics (the "Code"). The term Portfolio Manager is
as defined in the Code.
b. The Subadviser has complied with the Prospectus and
Statement of Additional Information of the Designated
Series and the Policies and Procedures of the Designated
Series as adopted by the Designated Series Board of
Trustees.
c. I have no knowledge of any compliance violations except as
disclosed in writing to the Virtus Compliance Department by
me or by the Subadviser's compliance administrator.
d. The Subadviser has complied with the rules and regulations
of the 33 Act and 40 Act, and such other regulations as may
apply to the extent those rules and regulations pertain to
the responsibilities of the Subadviser with respect to the
Designated Series as outlined above.
e. Since the submission of our most recent certification there
have not been any divestments of securities of issuers that
conduct or have direct investments in business operations
in Sudan.
This certification relates solely to the Designated Series named
above and may not be relied upon by any other fund or entity.
The Subadviser does not maintain the official books and records
of the above Designated Series. The Subadviser's records are
based on its own portfolio management system, a record-keeping
system that is not intended to serve as the Designated Series
official accounting system. The Subadviser is not responsible
for the preparation of the Report.
_______________________________ __________________________
[Name of Subadviser] Date
[Name of Authorized Signer]
[Title of Authorized Signer]
SCHEDULE F
DESIGNATED SERIES
Virtus Essential Resources Fund
Virtus Emerging Markets Equity Income Fund
*Such information might include: current financial information,
annual and quarterly reports, press releases, reports by
analysts and from brokerage firms (including their
recommendations, i.e., buy, sell, hold) or any internal reports
or subadviser review.
