Sub-Advisory Agreement
Xxxx, Xxxx & Xxxxxx, LLC
This Sub-Advisory Agreement (the "Agreement") is effective as of April 30,
2010 (the "Effective Date"), by and among American Fidelity Dual Strategy
Fund, Inc., a Maryland corporation (the "Fund"), American Fidelity Assurance
Company, an insurance company organized under the laws of the State of
Oklahoma (the "Advisor"), and Xxxx, Xxxx & Xxxxxx, LLC (the "Sub-Advisor").
RECITALS
A. The Fund is engaged in business as an open-end, diversified
management company and is registered as such under the Investment Company
Act.
B. The Advisor has entered into a Management and Investment Advisory
Agreement dated as of May 1, 2003 with the Fund, as amended (the "Advisory
Agreement"), pursuant to which the Advisor acts as investment advisor to
the Fund.
C. The Sub-Advisor is engaged principally in the business of
rendering investment advisory services and is registered as an investment
advisor under the Investment Advisers Act.
D. The Advisor and the Fund desire to retain the Sub-Advisor to
furnish investment advisory services to the Advisor and the Fund with
respect to certain assets of the Fund, and the Sub-Advisor has agreed to
render such investment advisory services pursuant to the terms hereof.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS: Unless otherwise defined in this Agreement,
capitalized terms shall have the meanings commonly ascribed to them in
the federal securities laws and related rules and regulations. In addition,
the following terms shall mean:
(a) Advisor: As defined in the introductory paragraph of this
Agreement.
(b) Custodian: InvesTrust, N.A. a special purpose bank chartered
by the Office of the Comptroller of the Currency.
(c) Fund: As defined in the introductory paragraph of this
Agreement.
(d) Investment Advisers Act: The Investment Advisers Act of 1940,
as amended.
(e) Investment Assets: Those assets of the Fund as the Advisor
and the Fund shall specify in writing, from time to time, including cash,
stocks, bonds and other securities that the Advisor deposits with the
Custodian and places under the investment supervision of the Sub-Advisor,
together with any assets that are added at a subsequent date or which are
received as a result of a distribution from or the sale, exchange or
transfer of such Investment Assets.
(f) Investment Advisers Act: The Investment Advisers Act of
1940, as amended.
(g) Investment Company Act: The Investment Company Act of 1940,
as amended.
(h) Majority Vote of Shareholders: The vote, in accordance with
Section 2(a)(42) of the Investment Company Act, at an annual or a special
meeting of the Shareholders of: (i) sixty-seven percent (67%) or more of
the voting securities present at the meeting, if the holders of more than
fifty percent (50%) of the outstanding voting securities of the Fund are
present or represented by proxy, or (ii) more than fifty percent (50%) of
the outstanding voting securities of the Fund, whichever is less.
(i)SEC: The Securities and Exchange Commission
(j)Securities Act: The Securities Act of 1933, as amended.
(k)Securities Exchange Act: The Securities Exchange Act of 1934, as
amended.
(l)Shareholders: The beneficial owners of the Fund's securities.
(m)Sub-Advisor: As defined in the introductory paragraph of this
Agreement.
2. APPOINTMENT OF THE SUB-ADVISOR. Effective as of the date
hereof, the Advisor and Fund hereby appoint the Sub-Advisor to serve as
investment advisor with respect to the Investment Assets of the Fund, and
the Sub-Advisor accepts such appointment and agrees to render the services
and to assume the obligations set forth in this Agreement.
3. THE INVESTMENT ASSETS. Subject to supervision by the
Advisor and the Fund's Board of Directors, the Sub-Advisor shall manage
the investment operations of the Investment Assets. The Advisor may make
additions to or withdrawals from the Investment Assets in any amounts the
Advisor determines appropriate or necessary, and the Advisor will provide
notice of such additions and withdrawals to the Sub-Advisor.
4. CUSTODIANSHIP OF THE INVESTMENT ASSETS. The Investment
Assets have been deposited with the Custodian and are maintained by the
Custodian in safekeeping on its premises, in a recognized clearing
corporation, or in the Federal Reserve book-entry system, in the name of
the Fund, the Custodian or the clearing corporation, or in the nominee
name of any of these. The Advisor will give the Sub-Advisor prior notice
if any other entity is appointed to serve as Custodian for the Investment
Assets. The term "Custodian" includes all successors to the presently
serving Custodian. The Sub-Advisor shall have no responsibility or
liability for custody arrangements or for the actions or omissions of the
Custodian.
0.XXXXXXXXXX OF INVESTMENT ASSETS.
5.1GENERAL POWERS AND DUTIES.
(a) General. For the term of this Agreement, the Sub-Advisor,
subject to the provisions of Sections 3 and 5.2 of this Sub-Advisory
Agreement, has complete discretion and authority in the investment and
reinvestment of the Investment Assets. Subject to specific written
instructions of the Advisor, the Sub-Advisor must determine what
securities or other property will be acquired, held, or disposed of and,
subject to the provisions of Section 5.4 of this Agreement, what portion
of the Investment Assets will be held uninvested. The Sub-Advisor's
investment and reinvestment authority includes, without limitation,
authority to purchase, sell, exchange, convert, trade, and generally
to deal in the Investment Assets.
(b) Instructions to Custodian. The Sub-Advisor is hereby
authorized to give instructions to the Custodian with respect to the
consummation of transactions on behalf of the Advisor in the Investment
Assets, and the Sub-Advisor has authority to direct the Custodian with
respect to the investment and management of the Investment Assets. The
Custodian is hereby authorized to act in response to instructions given
by the Sub-Advisor. The Advisor agrees to take any action and deliver
any certificates reasonably necessary to confirm this authorization to
the Custodian.
(c) Voting Rights. The Sub-Advisor's authority includes the
exercise of all voting rights pertaining to the Investment Assets. The
Sub-Advisor has the duty to maintain accurate records as to any vote
or action taken with respect to any stock or other securities which are
part of the Investment Assets and to take such further action as may be
appropriate for the Fund to participate in any transaction undertaken by
issuers of Investment Assets.
5.2 INVESTMENT POLICY. Investment objectives, policies and
other restrictions for the management of the Investment Assets, including
requirements as to diversification, are set forth in Exhibit A to this
Agreement. The Sub-Advisor must discharge its duties hereunder in accordance
with Exhibit A as revised or supplemented in separate written instructions
provided from time to time by the Advisor or the Fund's Board of Directors.
5.3 PRUDENCE AND DIVERSIFICATION. The Sub-Advisor must discharge
its duties under this Agreement at all times with the care, skill, prudence
and diligence that a prudent person acting in a like capacity and familiar
with such matters would use in conducting an enterprise of a like character
and with like aims.
5.4 MINIMUM LIQUIDITY REQUIREMENTS. The Advisor will give the
Sub-Advisor reasonable advance notice of any cash requirements from the
Investment Assets, and the Sub-Advisor will maintain in cash or cash
equivalents sufficient assets to meet such cash requirements.
5.5BROKERS AND DEALERS.
(a) Instructions. The Sub-Advisor is hereby empowered to issue
orders directly to a broker or dealer for the purchase, sale or exchange
of securities with respect to the Investment Assets. The Sub-Advisor must
give the Custodian and the Advisor prompt written notification of each such
execution in accordance with the provisions of Section 6.1 of this Agreement,
and the Sub-Advisor must instruct the broker or dealer to forward copies of
the confirmation of the execution of the order to the Custodian and the
Advisor.
(b) Selection of Securities Brokers and Dealers. Subject to the
restrictions described in Exhibit A hereto, the Sub-Advisor may select and
employ securities brokers and dealers to effect any securities transactions
concerning the investment management of the Investment Assets. In selecting
brokers and dealers and placing orders with them, the Sub-Advisor must use
its commercially reasonable best efforts to obtain for the Investment Assets
the most favorable net price and "best execution" available, except to the
extent otherwise provided by Section 28(e) of the Securities Exchange Act
or by other applicable law; provided, however, in seeking the best execution
available with respect to securities transactions involving the Investment
Assets, the Sub-Advisor shall give consideration to the overall quality of
brokerage and research services provided, it being understood and agreed that
"best execution" is not limited to obtaining the lowest commission for each
transaction. Notwithstanding anything in this subsection to the contrary, the
Advisor may instruct the Sub-Advisor in writing to engage securities brokers
and dealers specified by the Advisor to effect, with respect to the Investment
Assets, securities transactions or particular securities transactions, and the
Sub-Advisor must act in accordance with those instructions, so long as they are
reasonable. The Sub-Advisor will not be responsible or liable for any acts or
omissions by any broker or dealer selected pursuant to this subsection if the
Sub-Advisor has acted reasonably in the exercise of due care in the selection
of the broker or dealer and has not otherwise directly or indirectly
participated in those acts or omissions by the broker or dealer.
(c) Affiliated Brokers. Unless authorized in writing by the Advisor,
neither the Sub-Advisor nor any parent, subsidiary or related firm, individual
or other entity related to the Sub-Advisor will act as a securities broker
with respect to any purchase or sale of securities made on behalf of the Fund.
5.6 OTHER ACCOUNTS OF THE SUB-ADVISOR. It is understood that the
Sub-Advisor performs investment advisory services for various clients and
accounts other than the Advisor. The Sub-Advisor may give advice and take
action in the performance of its duties with respect to other clients or
accounts which may be the same as or may differ from the timing or nature
of action taken with respect to the Investment Assets, provided that the
Sub-Advisor allocates to the Investment Assets, to the extent practicable,
opportunities to acquire or dispose of investments over a period of time
on a basis no less favorable than its allocation of such opportunities to
other clients and accounts and seeks over a period of time to obtain comparable
execution of similar transactions among its clients. It is understood that the
Sub-Advisor will not have any obligation to purchase or sell, or to recommend
for purchase or sale, for the Fund any security which the Sub-Advisor, its
principals, affiliates or employees may purchase or sell for its or their own
accounts or for the account of any other client, if in the opinion of the
Sub-Advisor such transaction or investment appears unsuitable, impractical
or undesirable for the Fund.
5.7 In addition, it is understood that the Sub-Advisor may aggregate
purchase or sale orders for the Investment Assets with purchase or sale orders
in a particular security for other clients' accounts when appropriate. However,
the Sub-Advisor is under no obligation to aggregate orders. Where, because of
prevailing market conditions, it is not possible to obtain the same price or
time of execution for all of the securities or other investments purchased or
sold for the various accounts in an aggregated order, the Sub-Advisor may
average the various execution prices and charge or credit the accounts with
the average price.
5.8 LIABILITY OF SUB-ADVISOR. The Sub-Advisor shall act in good
faith in rendering services in connection with this Agreement. Nothing
contained herein shall make the Sub-Advisor be liable for any loss incurred
by the Fund in connection with services provided by the Sub-Advisor in
accordance with this Agreement except for any loss attributable to the
Sub-Advisor's willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard of its obligations and
duties under this Agreement. Nothing in this Agreement shall protect the
Sub-Advisor from any liabilities which it may have under the Securities
Act, the Investment Company Act or the Investment Advisers Act. Without
limiting the foregoing, the Sub-Advisor does not assume responsibility
for the accuracy of information furnished to it by the Fund, Advisor,
Custodian, broker, or by any person on whom it reasonably relies, except
to the extent any such inaccuracy should have been discovered by a similarly
situated investment advisor exercising the standard of care specified
hereunder.
6.INFORMATION AND REPORTS.
6.1 REPORTS TO ADVISOR. The Sub-Advisor must submit a daily
written report to the Advisor promptly following the close of regular
trading on the New York Stock Exchange detailing the portfolio transactions
taken by the Sub-Advisor under this Agreement during that day. The report
must contain the information in the form that the Advisor has or will from
time to time specify. In addition, the Sub-Advisor must provide other
reports on the performance of the Investment Assets at such times, for
such periods and in such form as the Advisor or the Fund's Board of
Directors reasonably request.
6.2 RECORDS AND ACCOUNTS. The Sub-Advisor must keep accurate and
detailed records and accounts of the Investment Assets and of all receipts,
disbursements and other transactions affecting the Investment Assets. The
Sub-Advisor will make all its records, accounts and documents relating to
the Investment Assets available at all reasonable times and under reasonable
conditions for inspection and audit by any person or persons designated by
the Advisor or the Fund's Board of Directors.
6.3 CODE OF ETHICS. The Sub-Advisor has adopted a written code of
ethics complying with the requirements of Rule 17j-1 of the Investment
Company Act and Rule 204A-1 of the Investment Advisers Act (the "Code of
Ethic") and has provided a copy of such Code of Ethics to the Fund. The
Sub-Advisor agrees to deliver a copy of the Code of Ethics to the Fund
promptly after any material changes are made, highlighting or summarizing
such material changes. Upon request, the Chief Compliance Officer of the
Sub-Advisor shall certify to the Fund that, with regard to the period
identified by the Fund in its request:
(a) The Sub-Advisor has provided to the Fund the Sub-Advisor's Code
of Ethics that is in effect;
(b) The Sub-Advisor has complied with the requirements of Rule 17j-1
and Rule 204A-1;
(c) The Sub-Advisor has adopted procedures reasonably necessary to
prevent its "Access Persons" (as defined in Rule 17j-1 of the Investment
Company Act) from violating the Code of Ethics; and
(d) There have been no material violations of the Code of Ethics or,
if any violation has occurred, the nature of such violation and of the
action taken in response to such violation.
6.4 COMPLIANCE PROGRAM. The Sub-Advisor has adopted written
policies and procedures in compliance with the requirements of Rule 38a-1
of the Investment Company Act and Rule 206(4)-7 of the Investment Advisers
Act (the "Compliance Procedure") and has provided a copy of such Compliance
Procedures to the Fund. The Sub-Advisor agrees to provide a copy of the
Compliance Procedures to the Fund promptly after any material changes are
made, highlighting or summarizing such material changes. Upon request, the
Chief Compliance Officer of the Sub-Advisor shall certify that:
(a) The Sub-Advisor has provided to the Fund the Sub-Advisor's
Compliance Procedures that are in effect at that time;
(b) The Sub-Advisor has reviewed, during the preceding 12-month period
(or as otherwise required by applicable law), the adequacy of its Compliance
Procedures and the effectiveness of the implementation of the Compliance
Procedures;
(c) The Compliance Procedures are reasonably designed to prevent
violation, by the Sub-Advisor and its Supervised Persons (as defined in
Section 202(a)(25) of the Investment Advisers Act), of the Federal Securities
Laws, including the Investment Advisers Act and related rules issued by the
SEC; and
(d) With regard to the period identified by the Fund in its request,
there have been no material violations of the Compliance Procedures or, if
any violation has occurred, the nature of such violation and of the action
taken in response to such violation.
6.5PROXY VOTING RECORDS AND POLICY.
(a) The Sub-Advisor has adopted and implemented written policies and
procedures pursuant to Rule 206(4)-6 of the Investment Advisers Act that are
reasonably designed to ensure that the Sub-Advisor votes client securities in
the best interest of its clients (the "Proxy Voting Policy"), and the
Sub-Advisor has provided a copy of such Proxy Voting Policy to the Fund. The
Sub-Advisor agrees to provide a copy of the Proxy Voting Policy to the Fund
promptly after any material changes are made, highlighting or summarizing
such material changes.
(b) The Sub-Advisor agrees to maintain an accurate summary of any vote
cast or proxy granted by the Sub-Advisor on behalf of the Fund (the "Voting
Records"), and, upon request, the Sub-Advisor shall provide the Voting Records
in the form specified in writing to the Sub-Advisor by the Fund, and the
Sub-Advisor's Chief Compliance Officer shall certify that, with regard to the
period identified by the Fund in its request, the Voting Records accurately
reflect the votes cast and proxies granted by the Sub-Advisor on behalf of the
Fund during the identified period, each of which vote or proxy was cast or
granted in compliance with the Sub-Advisor's Proxy Voting Policy.
6.6 FORM ADV. The Sub-Advisor agrees to provide a copy of its
current Form ADV (Parts I and II) to the Fund within 90 days of the end of
the calendar year.
6.7 EXCHANGE OF INFORMATION. The Advisor and the Sub-Advisor agree
to provide the materials or information that the Sub-Advisor or the Advisor,
as the case may be, reasonably requests to enable it to carry out its duties,
obligations and responsibilities under this Agreement or applicable law. The
parties also agree that (a) the Advisor will instruct its personnel to notify
the Sub-Advisor in a timely fashion of any inappropriate or unsuitable
investments of the Investment Assets by the Sub-Advisor, and (b) the Sub-
Advisor will instruct its personnel to notify the Advisor in a timely fashion
of any trade, transfer, exchange, redemption or other corporate action that
occurs with regard to a portfolio security held by the Fund. The parties agree
that the foregoing obligates the Advisor and Sub-Advisor, as applicable, to
provide the necessary instruction to its personnel, but does not otherwise
create any obligation on the part of the instructing party and, notwithstanding
anything herein to the contrary, does not create liability on the part of the
instructing party for any failure of its personnel to act in accordance with
this provision.
6.8 INFORMATION TO BE CONFIDENTIAL. All information and advice
furnished to or obtained by any party under or in connection with this
Agreement will be treated as confidential and will not be used or disclosed
to third parties except as required by law. This provision must not be
construed to limit the Advisor's or the Fund's ability to comply with the
disclosure obligations of an investment company to its securities holders
under the federal securities laws.
7. FEE PAYABLE TO SUB-ADVISOR. For services under the Sub-Advisory
Agreement, the Sub-Advisor shall be entitled to receive from the Advisor a
quarterly fee in an amount equal to 0.45% per year on the first $25 million
of Investment Assets and 0.40% per year on all Investment Assets in excess of
$25 million. This fee is payable in arrears as soon as practicable, but not
more than ten business days, after the last day of each calendar quarter.
8. MEETINGS WITH ADVISOR AND FUND. A representative of the
Sub-Advisor will personally meet with the Investment Committee of the Advisor
or its designated representative as reasonably requested by the Advisor to
explain the investment and management activities of the Sub-Advisor and any
reports related thereto, at such times as may be mutually agreed upon by the
Sub-Advisor and the Advisor. In addition, upon request, each year, a
representative of the Sub-Advisor will attend one or more of the meetings of
the Fund's Board of Directors and will be prepared to discuss the Sub-Advisor's
economic outlook, investment strategy, individual holdings included in the
Investment Assets and such other related matters as the Board of Directors
reasonably requests.
9. INDEMNIFICATION. In addition to any other rights the Advisor or
the Fund may have against the Sub-Advisor, the Sub-Advisor will indemnify the
Advisor and the Fund and hold them harmless with respect to any loss or damage,
or costs or expenses suffered by them as a result of (i) a breach by the
Sub-Advisor of this Agreement, (ii) the willful misfeasance, bad faith or gross
negligence of the Sub-Advisor, (iii) the willful misfeasance, bad faith or
gross negligence of any of the Sub-Advisor's employees, or agents acting under
its supervision or control performing any of its obligations and duties, or
(iv) by reason of the Sub-Advisor's reckless disregard of its obligations and
duties under this Agreement, the Investment Advisers Act or any other
applicable law or regulation; provided, the Sub-Advisor shall have no
responsibility or liability for any loss incurred by reason of any act or
omission of the Advisor or the Custodian.
The Advisor will indemnify the Sub-Advisor and hold it harmless with respect to
any loss or damage, or costs or expenses suffered by it as a result of (i) a
breach by the Advisor of this Agreement, (ii) the willful misfeasance, bad
faith or gross negligence of the Advisor, (iii) the willful misfeasance, bad
faith or gross negligence of any of the Advisor's employees, or agents acting
under its supervision or control performing any of its obligations and duties,
or (iv) by reason of the Advisor's reckless disregard of its obligations and
duties under this Agreement, the Investment Advisers Act, the Investment
Company Act or any other applicable law or regulation; provided, the Advisor
shall have no responsibility or liability for any loss incurred by reason of
any act or omission of the Sub-Advisor or the Custodian.
10. AMENDMENT. This Agreement may be amended at any time by written
agreement signed by the parties, provided that any material amendment will not
be effective unless approved in accordance with the Investment Company Act.
11.TERM AND TERMINATION.
11.1TERM.
(a) Term. This Agreement shall have an initial term of one year from
the Effective Date and thereafter shall continue from year to year if
continuance is approved at least annually by (a) the Fund's Board of Directors
or a Majority Vote of Shareholders and (b) the vote of a majority of the
members of the Fund's Board of Directors who are not Interested Persons of the
Sub-Advisor or of the Fund cast in person at a meeting called for the purpose
of voting on such approval.
(b) Duration. Unless sooner terminated as provided herein, this
Agreement shall continue in effect for an initial period of one year from the
Effective Date, and it shall continue in effect from year to year, but only so
long as such continuance is specifically approved at least annually in
accordance with the Investment Company Act.
11.2TERMINATION.
(a) Automatic Termination. This Agreement shall automatically
terminate (i) in the event of its assignment, within the meaning of Section
15(a) of the Investment Company Act, unless an order of the SEC is issued
exempting such assignment, or (ii) if the Sub-Advisor ceases to be an
"investment advisor" in accordance with the Investment Advisers Act. The
Sub-Advisor agrees to notify the Advisor and the Fund promptly upon becoming
aware of circumstances that exist which make it likely that an automatic
termination will occur pursuant to this provision. No penalty or payment of any
kind by the Advisor will be due upon an automatic termination of this
Agreement.
(b) Termination by Advisor, Board of Directors of the Fund or
Shareholders of the Fund. This Agreement may be terminated at any time,
upon written notice to the Sub-Advisor, without payment of any penalty, by
the Advisor, the Board of Directors of the Fund or by a Majority Vote of
Shareholders. Notwithstanding that the effective date of any such termination
may be fewer than 30 days after the date of notice of termination, the
Sub-Advisor shall be compensated for 30 days after the date of notice of
termination, and such compensation shall not constitute payment of a penalty
in connection with such termination. Any compensation paid pursuant to this
subsection 11.2(b) shall be calculated based on the Investment Assets as of
the effective date of the termination.
(c) Termination By Sub-Advisor. The Sub-Advisor may terminate this
Agreement at any time upon 30 days' prior written notice to the Advisor and
the Fund.
(d) Prorated Fee. If this Sub-Advisory Agreement shall terminate at
any time other than at the end of a calendar quarter, the Sub-Advisor shall be
entitled to receive the fee set forth in Section 7 hereof for the portion of
the quarter elapsed prior to the date of termination, prorated on a daily
basis.
12.MISCELLANEOUS.
12.1 ERRORS AND OMISSIONS POLICY. The Sub-Advisor agrees that, at its
sole expense, it will maintain an errors and omissions insurance policy that
covers the acts, errors and omissions by the Sub-Advisor and its employees and
agents during the term of this Agreement. Upon request of the Advisor, the
Sub-Advisor will promptly provide evidence of such insurance.
12.2 GOVERNING LAW; SEVERABILITY. This Agreement and its performance
shall be governed by and construed in accordance with the applicable laws of
the United States and, to the extent permitted by such laws, with the laws of
the State of Oklahoma. In case any provision of this Agreement is held illegal
or invalid for any reason, that illegality or invalidity will not affect the
remaining provisions of this Agreement but will be fully severable, and this
Agreement will be construed and enforced as if the illegal or invalid provision
had not been included herein.
12.3 NOTICES. Unless the parties otherwise agree, all notices,
instructions and advice with respect to matters contemplated by this Agreement
must be in writing and are effective when received. Delivery must be made
personally, by registered or certified mail, return receipt requested,
overnight courier or confirmed facsimile and addressed as follows:
Advisor:American Fidelity Assurance Company
X.X. Xxx 00000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Investment Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Fund:American Fidelity Dual Strategy Fund, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Chief Compliance Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to:
Xxxxxxxx Xxxxxxx
McAfee & Xxxx A Professional Corporation
Two Leadership Square
000 Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxx.xxxxxxx@xxxxxxxxxx.xxx
Sub-Advisor:Xxxx, Xxxx & Xxxxxx LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: ____________
Email : x.xxxxxxx@xxxxxxxx.xxx
With copies to:
Xxxx, Xxxx & Xxxxxx LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxx
Telephone: ___________________________
Facsimile: ___________________________
Email: x.xxxxxxx@xxxxxxxx.xxx
Any party may change any of the above information by providing notice to the
other parties in the manner set forth above. All reports required to be
delivered by the Sub-Advisor to the Advisor pursuant to Section 6.1 of this
Agreement must be delivered in the manner specified from time to time by the
Advisor.
12.4 COMPLIANCE WITH LAWS. Nothing in this Agreement shall be deemed to
authorize the Sub-Advisor to effect any transactions in contravention of its
fiduciary obligations, duties or responsibilities under the Investment Advisers
Act, this Agreement or any other applicable federal or state laws or
regulations (including all applicable securities laws and regulations) or the
rules of any national securities exchange. Each party will at all times comply
with the Investment Advisers Act and other applicable laws, regulations and
rules in performing its duties under this Agreement.
12.5 COUNTERPARTS. This Agreement may be executed in one or more
separate counterparts, each of which shall be deemed to be an original, and all
of which taken together shall be deemed to constitute one and the same
instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Sub-Advisory Agreement
to be executed as of the day and year first above written.
FUND:AMERICAN FIDELITY DUAL STRATEGY FUND, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: President
ADVISOR:AMERICAN FIDELITY ASSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
SUB-ADVISOR:XXXX, XXXX & XXXXXX LLC
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title:
11
EXHIBIT A
American Fidelity Assurance Company
American Fidelity Dual Strategy Fund
Investment Objectives, Policies and Other Restrictions
I.INVESTMENT OBJECTIVES:
The Fund's investment objectives are, primarily, long-term growth of capital
and, secondarily, the production of income. Such objectives do not preclude
infrequent investments for short-term capital appreciation.
The Fund normally invests in a diversified portfolio consisting primarily of
common stocks based upon an assessment of particular industries or companies.
The Fund attempts to maintain sufficient cash balances to meet variable annuity
contract payments. The Fund's assets may be held in cash or cash equivalents or
in United States Government securities for this purpose. The Fund does not
engage in the purchase or sale of puts, calls or other options or in writing
such options.
The Sub-Advisor, after consulting with the Advisor and obtaining Advisor
approval, may determine that prevailing market and economic conditions indicate
that investments other than common stocks may be advantageous, in which event
investments may be made on a short-term basis in United States Government
securities, bonds, notes or other evidences of indebtedness, issued publicly,
of a type customarily purchased for investment by institutional investors.
II.FUNDAMENTAL INVESTMENT POLICIES:
The Sub-Advisor must comply with the following:
A.Not more than five percent (5%) of the value of the Investment Assets
will be invested in securities of any one issuer, except obligations of
the United States Government and instrumentalities thereof.
B.Not more than ten percent (10%) of the voting securities of any one
issuer will be acquired.
C.Not more than twenty-five percent (25%) of the value of the
Investment Assets will be invested in any one industry.
X.Xx borrowings will be made.
E.The Sub-Advisor will ensure that the Fund does not act as an
underwriter of securities of other issuers.
F.Investment in real estate will be limited to shares of real estate
investment trusts investing in equity real estate, up to ten percent
(10.0%) of Investment Assets. Investment in private placements and other
illiquid assets will not be made.
X.Xx purchase of commodities or commodity contracts will be effected.
H.Puts, calls or other options will not be purchased.
X.Xxxxx will not be made except through the acquisition of publicly
traded bonds, debentures or other evidences of indebtedness of a type
customarily purchased by institutional investors.
J.Investment will not be made in the securities of a company for the
purpose of exercising management or control.
K.Investment in securities of other investment companies will not be
made except for money market funds. Up to ten percent (10%) of Investment
Assets may be invested in money market funds, provided that not more than
three percent (3%) of the total outstanding voting stock of any one
investment company may be held.
X.Xxxxxxxxxxx in repurchase agreements will be limited to the top
thirty-five (35) U.S. banks, by deposits, that are rated at least "B/C"
by Xxxxx, Bruyette, Woods, a national bank rating agency or a comparable
rating from a similar bank rating service. Additionally, there must be an
appropriate amount of excess collateralization depending upon the length
of the agreement, to protect against downward market fluctuation and the
Fund must take delivery of the collateral. The market value of the
securities held as collateral will be valued daily. In the event the
market value of the collateral falls below the repurchase price, the bank
issuing the repurchase agreement will be required to provide additional
collateral sufficient to cover the repurchase price.
M.Short sales of securities will not be made.
N.Purchases will not be made on margin, except for such short-term
credits necessary for the clearance of transactions.
X.Xxxxxxxxxxx in high-yield or non-investment grade bonds will not be
made.
X.Xxxxxxxxxxx in the equity securities of foreign corporations will be
limited to American Depositary Receipts, other depositary receipts and
ordinary shares which are denominated in U.S. dollars and publicly traded
in the United States. Not more than thirty-five percent (35%) of the
Investment Assets will be invested in foreign issuers. In addition, not
more than twenty percent (20%) of the Investment Assets will be invested
in issuers from any one foreign country.
III.ADDITIONAL INVESTMENT RESTRICTIONS:
The Sub-Advisor must comply with the following Additional Investment
Restrictions unless it requests an exception and receives written consent from
the Advisor or the Board of Directors of the Fund. To the extent that these
Additional Investment Restrictions conflict with the Fundamental Investment
Policies, the Additional Investment Restrictions shall govern.
A.The Sub-Advisor should generally conform to these issuer guidelines
with exceptions noted at the time of purchase and variances reviewed
annually with the Board of Directors of the Fund.
1.A minimum market capitalization of one billion dollars
($1,000,000,000) at the time of purchase.
2.Audited financial statements for at least three (3) years of
operation.
3.Fifty million dollars ($50,000,000) or more in stockholders equity.
B.Lending of securities will not be permitted.
C.The Fund will not invest in the securities of tobacco-producing
companies, including, but not limited to those set forth on Appendix 1
attached hereto.
D.InvesTrust, N.A., or another custodian chosen by the Advisor, shall
be the Custodian of all Investment Assets placed with the Sub-Advisor.
The Sub-Advisor must ensure that duplicate brokerage confirmations
of all transactions are sent to the Custodian and the Advisor.
E.All money market funds used by the Sub-Advisor for a portion of
Investment Assets placed with the Sub-Advisor must be approved in advance
by the Advisor.
F.The money market funds (cash) used by the Sub-Advisor for a portion
of Investment Assets must have a balance at all times equal to at least
one percent (1.0%), but not more than three percent (3.0%), of the market
value of Investment Assets.
G.All brokers used by the Sub-Advisor to execute transactions for the
Fund must have a commercial paper rating of A1/P1 by Moody's and Standard
& Poor's unless approved in advance by the Advisor.
Appendix 1 to Exhibit A
Company (including successors and assigns)Ticker
Alliance One International, Inc.AOI
Altria Group Xxx.XX
British American Tobacco PLC ADRBTI
Imperial Tobacco Group PLC ADRITYBY
Lorillard, Inc.LO
Loews CorpL
Online Vacation Center Holdings CorporationONVC
Xxxxxx Xxxxxx International Xxx.XX
Xxxxxxxx American, Inc.RAI
Xxxxxxxxxx-Xxxxxxx InternationalSWM
Star Scientific, Inc.STSI
Swedish MatchSWMA
Universal CorporationUVV
UST IncUST
Vector Group, Ltd.VGR
Xxxxxxxxx Filters, Inc.WFLR
