Second Amended and Restated Sub-Advisory Agreement
Wedge Capital Management LLP
This Second Amended and Restated Sub-Advisory Agreement (the
"Agreement"), effective as of February 20, 2012 (the "Effective Date"), by and
among American Fidelity Dual Strategy Fund, Inc., a Maryland corporation (the
"Fund"), American Fidelity Assurance Company, an insurance company organized
under the laws of the State of Oklahoma (the "Advisor"), and Wedge Capital
Management LLP (the "Sub-Advisor"), amends and restates in its entirety the
Amended and Restated Sub-Advisory Agreement by and among the parties hereto
dated January 1, 2009 (the "Previous Agreement").
RECITALS
A. The Fund is engaged in business as an open-end, diversified management
company and is registered as such under the Investment Company Act.
B. The Advisor and the Fund are parties to a Management and Investment
Advisory Agreement dated as of May 1, 2003, as amended January 5,
2009 (the "Advisory Agreement"), pursuant to which the Advisor acts
as investment advisor to the Fund.
C. The Sub-Advisor is engaged principally in the business of rendering
investment advisory services and is registered as an investment
advisor under the Investment Advisers Act.
D. The Advisor and the Sub-Advisor previously obtained approval by a
Majority Vote of Shareholders (defined below) to retain the
Sub-Advisor to furnish investment advisory services to the Advisor
with respect to certain assets of the Fund, and the Sub-Advisor
has rendered such investment advisory services prior to the date
hereof pursuant to the Previous Agreement.
E. The parties desire to amend and restate the Previous Agreement,
as set forth herein.
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 the sale, exchange or transfer of such
Investment Assets.
(f) Investment Company Act: The Investment Company Act
of 1940, as amended.
(g) 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.
(h) SEC: The Securities and Exchange Commission.
(i) Securities Act: The Securities Act of 1933, as
amended.
(j) Securities Exchange Act: The Securities Exchange Act
of 1934, as amended.
(k) Shareholders: The beneficial owners of the Fund's
securities.
(l) 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 hereby appoints the Sub-Advisor to serve as
investment advisor to the 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.
4. CUSTODIANSHIP OF THE INVESTMENT ASSETS. The Investment
Assets have been deposited with the Custodian and are
maintained by the Custodian in safekeeping on its premises, in
a recognized clearing corporation, or in the Federal Reserve
book-entry system, in the name of the Fund, the Custodian or
the clearing corporation, or in the nominee name of any of
these. The Advisor will give the Sub-Advisor prior notice
if any other entity is appointed to serve as Custodian for
the Investment Assets. The term "Custodian" includes all
successors to the presently serving Custodian. The
Sub-Advisor shall have no responsibility or liability for
custody arrangements or for the actions or
omissions of the Custodian.
5. MANAGEMENT OF INVESTMENT ASSETS.
5.1 GENERAL POWERS AND DUTIES.
(a) General. For the term of this Agreement,
the Sub-Advisor, subject to the provisions
of Sections 3, 5.1 and 5.2 of this Sub-Advisory
Agreement, has complete discretion and authority
in the investment 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 necessary for
the Fund to participate fully in any transaction
undertaken by issuers of Investment Assets.
(d) Tax Lot Selection Methods for Sales. Unless
otherwise instructed in writing by the Advisor
or the Board of Directors of the Fund, the
Sub-Advisor will use the first in, first out
(FIFO) method as the default tax lot selection
method with regard to the Investment Assets.
5.2 INVESTMENT POLICY. Investment objectives, policies
and other restrictions for the management of the Investment
Assets, including requirements as to diversification,
are set forth in Exhibit A to this Agreement. The
Sub-Advisor must discharge its duties hereunder in
accordance with Exhibit A as revised or supplemented
in separate written instructions provided from time to
time by the Advisor or the Fund's Board of Directors.
5.3 PRUDENCE AND DIVERSIFICATION. The Sub-Advisor must
discharge its duties under this Agreement at all times
with the care, skill, prudence and diligence that a
prudent person acting in a like capacity and familiar
with such matters would use in conducting an enterprise
of a like character and with like aims.
5.4 MINIMUM LIQUIDITY REQUIREMENTS. The Advisor will give
the Sub-Advisor reasonable advance notice of any cash
requirements from the Investment Assets, and the
Sub-Advisor will maintain in cash or cash equivalents
sufficient assets to meet such cash requirements.
5.5 BROKERS AND DEALERS.
(a) Instructions. The Sub-Advisor is hereby
empowered to issue orders directly to a broker
or dealer for the purchase, sale or exchange
of securities with respect to the Investment
Assets. The Sub-Advisor must give the
Custodian and the Advisor prompt written
notification of each such execution in
accordance with the provisions of Section
6.1 of this Agreement, and the Sub-Advisor
must instruct the broker or dealer to forward
copies of the confirmation of the execution
of the order to the Custodian and the Advisor.
(b) Selection of Securities Brokers and Dealers.
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, provided the broker appears on
Sub-Advisor's list of approved brokers. The
Sub-Advisor will not be responsible or liable for
any acts or omissions by any broker or dealer
selected pursuant to this subsection; provided that,
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 that
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 and except as contemplated on Schedule
5.6, 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. Advisor
acknowledges and agrees that Sub-Advisor may aggregate
purchase or sale orders for the Fund with purchase or sale
orders for the same security for other clients' accounts
where such aggregation is likely to result generally in a
more favorable net result for its clients; however,
Sub-Advisor is under no obligation to aggregate orders. 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 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 so long as the
Sub-Advisor acts in good faith and fulfills its duties
under this Agreement; provided, however, that nothing herein
shall protect the Sub-Advisor against liability to the Fund
to which the Sub-Advisor would otherwise be subject, by
reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties, or
by reason of its 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.
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 actions 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 nvestment Company Act and Rule 204A-1 of the
Investment Advisers Act (the "Code of Ethics") and has
provided a copy of such Code of Ethics to the Fund. The
Sub-Advisor agrees to deliver a copy of the Code of Ethics
to the Fund promptly after any material changes are made,
highlighting or summarizing such material changes. Upon
request, the Chief Compliance Officer of the Sub-Advisor
shall certify to the Fund that, with regard to the
period identified by the Fund in its request:
(a) The Sub-Advisor has provided to the Fund the
Sub-Advisor's Code of Ethics that is in effect;
(b) The Sub-Advisor has complied with the requirements
of Rule 17j-1 and Rule 204A-1;
(c) The Sub-Advisor has adopted procedures reasonably
necessary to prevent its "Access Persons" (as
defined in Rule 17j-1 of the Investment Company Act)
from violating the Code of Ethics; and
(d) There have been no violations of the Code of
Ethics or, if any violation has occurred, the nature
of such violation and of the action taken in response
to such violation.
6.4 COMPLIANCE PROGRAM. The Sub-Advisor has adopted
written policies and procedures in compliance with the
requirements of Rule 38a-1 of the Investment Company Act and
Rule 206(4)-7 of the Investment Advisers Act (the "Compliance
Procedures") and has provided a copy of such Compliance
Procedures to the Fund. The Sub-Advisor agrees to provide
a copy of the Compliance Procedures to the Fund promptly after
any material changes are made, highlighting or summarizing
such material changes. Upon request, the Chief Compliance
Officer of the Sub-Advisor shall certify that:
(a) The Sub-Advisor has provided to the Fund the Sub-
Advisor's Compliance Procedures that are in effect
at that time;
(b) The Sub-Advisor has reviewed, during the preceding
12-month period, 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, 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 violations of
the Compliance Procedures or, if any violation
has occurred, the nature of such violation and
of the action taken in response to such violation.
6.5 PROXY VOTING RECORDS AND POLICY.
(a) The Sub-Advisor has adopted and implemented
written policies and procedures pursuant to Rule
206(4)-6 of the Investment Advisers Act that are
reasonably designed to ensure that the Sub-Advisor
votes client securities in the best interest of
its clients (the "Proxy Voting Policy"), and the
Sub-Advisor has provided a copy of such Proxy
Voting Policy to the Fund. The Sub-Advisor
agrees to provide a copy of the Proxy Voting Policy to
the Fund promptly after any material changes are made,
highlighting or summarizing such material changes.
(b) The Sub-Advisor agrees to maintain an accurate
summary of any vote cast or proxy granted by the
Sub-Advisor on behalf of the Fund (the "Voting
Records"), and, upon request, the Sub-Advisor
shall provide the Voting Records in the form
specified in writing to the Sub-Advisor
by the Fund, and the Sub-Advisor's Chief Compliance
Officer shall certify that, with regard to the period
identified by the Fund in its request, the Voting
Records accurately reflect the votes cast and proxies
granted by the Sub-Advisor on behalf of the Fund during
the identified period, each of which vote or proxy was
cast or granted in compliance with the Sub-Advisor's
Proxy Voting Policy.
6.6 PAY TO PLAY POLICY. The Sub-Advisor has adopted a "Pay to
Play Policy" complying with the requirements of Rule 206(4)-5
of the Investment Advisers Act (the "Pay to Play Rule") and has
provided a copy of such Pay to Play Policy to the Fund. The
Sub-Advisor understands that the Fund is a "Covered Investment
Pool", as defined in the Pay to Play Rule, and the Fund agrees
to deliver to the Sub-Advisor such information as the
Sub-Advisor may request to ensure the Sub-Advisor's compliance
with the Pay to Play Rule.
6.7 FORM ADV. Advisor acknowledges receipt of Sub-
Advisor's Disclosure Statement, as required by Rule 204-3
under the Investment Advisers Act of 1940, prior to the
execution of this Agreement. If provided less than 48 hours
prior to the date of execution of this Agreement, Advisor
shall have the option to terminate this Agreement without
penalty in writing within five business days after that date
of execution; provided, however, that any investment action
taken by Sub-Advisor with respect to the Investment Assets
prior to the effective date of such termination shall be at
the Fund's risk. 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 each calendar year.
6.8 EXCHANGE OF INFORMATION. The Advisor and the Sub-
Advisor agree to provide the 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.
6.9 INFORMATION TO BE CONFIDENTIAL. All information and
advice furnished to or obtained by the Advisor or the
Sub-Advisor under or in connection with this Agreement will
be treated as confidential and will not be 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. Notwithstanding the foregoing,
the Fund agrees to allow Sub-Advisor to inform others
that they are a client of Sub-Advisor by appearance on a
representative list or other means.
7. FEE PAYABLE TO SUB-ADVISOR. For services under this
Agreement, the Sub-Advisor shall be entitled to receive from the
Advisor a fee in an amount equal to 0.50% per year on the first
$25,000,000 of Investment Assets, 0.40% per year on the next
$75,000,000 of Investment Assets, and 0.30% per year on all
Investment Assets over $100,000,000. Fees will be billed
quarterly in arrears, based on market value as of the last
business day of the quarter. Sub-Advisor shall not be
compensated on the basis of a share of capital gains upon,
or capital appreciation of, the Investment Assets. 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 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) the Sub-Advisor's failure to provide
notice within one day to the Advisor or the Fund of any trade,
transfer, exchange, redemption or other corporate action that
occurs with regard to a portfolio security held by the Fund,
or (ii) a breach by the Sub-Advisor of this Agreement, or
(iii) the willful misfeasance, bad faith or gross negligence
of the Sub-Advisor, or (iv) 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 (v) 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.
10. AMENDMENT. This Agreement may be amended at any time by
written agreement of the parties, provided that any material
amendment will not be effective unless approved in accordance
with the Investment Company Act.
11. TERM AND TERMINATION.
11.1 TERM.
(a) Term. This Agreement shall have an initial term
of one year from the Effective Date and thereafter
shall continue from year to year if continuance is
approved at least annually by (a) the Fund's Board
of Directors or a Majority Vote of Shareholders and
(b) the vote of a majority of the members of the
Fund's Board of Directors who are not Interested
Persons of the Sub-Advisor or of the Fund cast in
person at a meeting called for the purpose of
voting on such approval.
(b) Duration. Unless sooner terminated as
provided herein, this Agreement shall continue in
effect for an initial period of one year from the
Effective Date, and it shall continue in effect
from year to year, but only so long as such
continuance is specifically approved at least
annually in accordance with the Investment Company
Act.
11.2 TERMINATION.
(a) Automatic Termination. This Agreement shall
automatically terminate 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.
If at any time the Sub-Advisor ceases to be an
"investment advisor" in accordance with the
Investment Advisers Act, this Agreement will
automatically terminate. No penalty or payment
of any kind by the Advisor will be due upon an
automatic termination
(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
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Attention: Investment Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (405) 523-5573Fund:American Fidelity Dual Strategy Fund, Inc.
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Attention: Chief Compliance Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
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McAfee & ▇▇▇▇ A Professional Corporation
Two Leadership Square
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
Sub-Advisor:Wedge Capital Management LLP
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇,
Executive Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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. The Sub-Advisor 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 NOTICE OF PARTNERSHIP CHANGES. Sub-Advisor will
notify Fund of any change in the membership of its
partnership within a reasonable time after such
change.
12.6 W-9. Advisor authorizes Sub-Adviser to execute
and deliver for the Fund IRS Form W-9 (Request for
Taxpayer Identification Number and Certification).
The Fund is not now (and will promptly notify
Sub-Advisor should it become) subject to
back-up withholding.
12.7 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. Each party
represents that it is duly authorized and empowered to enter into and perform
this Agreement.
FUND: AMERICAN FIDELITY DUAL STRATEGY FUND, INC.
By: ____________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President ADVISOR:AMERICAN FIDELITY ASSURANCE COMPANY
By: ____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President SUB-ADVISOR:WEDGE CAPITAL MANAGEMENT
LLP
By: ____________________________
Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: General Partner
Schedule 5.6
Other Accounts of Sub-Advisor
Sub-Advisor, at its sole discretion, may execute transactions relating to
the
Investment Assets separately from, and subsequent to, transactions
relating to
assets held on behalf of other clients in order to accommodate the Fund's
Investment Guidelines that necessitate manual, rather than electronic,
review
by the Sub-Advisor.
EXHIBIT A
American Fidelity Assurance Company
American Fidelity Dual Strategy Fund
Investment Objectives, Policies and Other Restrictions
I. INVESTMENT OBJECTIVES:
The Fund's investment objectives are, primarily, long-term growth of capital
and,
secondarily, the production of income. Such objectives do not preclude
infrequent
investments for short-term capital appreciation.
The Fund normally invests in a diversified portfolio consisting primarily of
common stocks based upon an assessment of particular industries or companies.
The
Fund attempts to maintain sufficient cash balances to meet variable annuity
contract payments. The Fund's assets may be held in cash or cash equivalents or
in United States Government securities for this purpose. The Fund does not
engage
in the purchase or sale of puts, calls or other options or in writing such
options.
The Sub-Advisor, after consulting with the Advisor and obtaining Advisor
approval,
may determine that prevailing market and economic conditions indicate that
investments other than common stocks may be advantageous, in which event
investments may be made on a short term basis in United States Government
securities, bonds, notes or other evidences of indebtedness, issued publicly,
of a type customarily purchased for investment by institutional investors.
II. FUNDAMENTAL INVESTMENT POLICIES:
The Sub-Advisor must comply with the following:
A. Not purchase securities that would cause more than five percent (5%) of
the value of the Investment Assets placed with the Sub-Advisor to be
invested in securities of any one issuer, except obligations of the
United States Government and instrumentalities thereof.
B. Not more than ten percent (10%) of the voting securities of any one
issuer will be acquired.
C. Not more than twenty-five (25%) of the value of the Investment Assets
placed with the Sub-Advisor will be invested in any one industry.
D. No borrowings will be made.
E. The Sub-Advisor will ensure that the Fund does not act as an
underwriter of securities of other issuers.
F. Investment in real estate will be limited to shares of real estate
investment trusts investing in equity real estate, up to ten percent
(10.0%) of Investment Assets placed with the Sub-Advisor. Investment
in private placements and other illiquid assets will not be made.
G. No purchase of commodities or commodity contracts will be effected.
H. Puts, calls or other options will not be purchased.
I. Loans will not be made except through the acquisition of publicly
traded bonds, debentures or other evidences of indebtedness of a
type customarily purchased by institutional investors.
J. Investment will not be made in the securities of a company for the
purpose of exercising management or control.
K. Investment in securities of other investment companies will not be
made except for money market funds. Up to ten percent (10%) of
Investment Assets placed with the Sub-Advisor may be invested in
money market funds, provided that not more than three percent (3%)
of the total outstanding voting stock of any one investment
company may be held.
L. Investments in repurchase agreements will be limited to the top
thirty-five (35) U.S. banks, by deposits, that are rated at least
"B/C" by ▇▇▇▇▇, Bruyette, Woods, a national bank rating agency or
a comparable rating from a similar bank rating service. Additionally,
there must be an appropriate amount of excess collateralization
depending upon the length of the agreement, to protect against
downward market fluctuation and the Fund must take delivery of the
collateral. The market value of the securities held as collateral
will be valued daily. In the event the market value of the collateral
falls below the repurchase price, the bank issuing the repurchase
agreement will be required to provide additional collateral
sufficient to cover the repurchase price.
M. Short sales of securities will not be made.
N. Purchases will not be made on margin, except for such short-term
credits necessary for the clearance of transactions.
O. Investments in high-yield or non-investment grade bonds will not
be made.
P. Investments in the equity securities of foreign corporations will
be limited to American Depositary Receipts ("ADRs"), 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 placed
with the Sub-Advisor will be invested in foreign issuers. In
addition, not more than twenty percent (20%) of the Investment
Assets placed with the Sub-Advisor will be invested in issuers
from any one foreign country.
III. ADDITIONAL INVESTMENT RESTRICTIONS:
The Sub-Advisor must comply with the Additional Investment
Restrictions set forth below. To the extent that these Additional
Investment Restrictions conflict with the Fundamental Investment
Policies, the Additional Investment Restrictions shall govern.
A. The Sub-Advisor shall conform to the following issuer guidelines
at the time of purchase.
1. A minimum market capitalization of one billion dollars
($1,000,000,000).
2. Audited financial statements for at least three (3) years
of operation.
3. Fifty million dollars ($50,000,000) or more in stockholders
equity.
B. Lending of securities will not be permitted.
C. The Fund will not invest in the securities of tobacco-producing
companies.
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
placed with the Sub-Advisor.
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
This Appendix 1 to Exhibit A is provided in order to clarify
certain matters with regard to the Fund's Investment Objectives,
Policies and Other Restrictions. The numbers below refer to the
corresponding numbers in Exhibit A.
II.B - Applies only to securities acquired on behalf of the Fund.
III.G - Sub-Advisor requests, and Advisor grants approval of, all brokers
used by Sub-Advisor.
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