Sub-investment Management Agreement
AGREEMENT
between
GUARDIAN ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMITED,
incorporated under the Companies Acts and
having its Registered Office at ▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (hereinafter
called "the Company") OF THE
ONE PART
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ OVERSEAS LIMITED, a company
incorporated under the Companies Acts and
having its Registered Office at ▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (hereinafter
called "the Manager") OF THE OTHER PART
--------------
WHEREAS:-
(A) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ International Fund, Inc. (hereinafter called the "Client")
proposes to engage in business as an open-end management investment
company and to register as such under the U.S. Investment Company Act of
1940, as amended.
(B) The Company proposes to engage principally in the business of rendering
investment management services and to become registered as an investment
adviser under the U.S. Investment Advisers Act of 1940, as amended, and to
become a member of, and regulated in the conduct of its investment
business by, the Investment Management Regulatory Organisation Limited.
(C) The Manager is engaged principally in the business of rendering investment
management services and is registered as an investment adviser under the
U.S. Investment Advisers Act of 1940, as amended, and is a member of, and
regulated in the conduct of its investment business by the Investment
47
Management Regulatory Organisation Limited.
(D) The Client desires the Company to render investment management services to
the Client in the manner set forth and in the terms and conditions set
forth in a separate Investment Management Agreement of even date herewith.
(E) The Company, in turn, desires the Manager to render sub-investment
management services to the Client in the manner and on the terms and
conditions hereinafter set forth.
IT IS HEREBY AGREED AND DECLARED as follows:-
1. Definitions
1.1 In this Agreement the following words and expressions shall where
not inconsistent with the context have the following meanings
respectively:
(a) "Articles" means the Articles of Association of the Company as
amended from time to time;
(b) "Associate" means and includes any corporation which in
relation to the person concerned (being a corporation) is a
Holding Company or a Subsidiary or a Subsidiary of any such
Holding Company or a corporation (or a Subsidiary of a
corporation) at least one-third of the issued share capital
of which is beneficially owned by the person concerned or an
Associate thereof under the preceding part of this definition
and includes any firm the partners of which or any one or
more of them are beneficially entitled whether directly or
indirectly or through the medium of a corporation
48
or corporations to at least three-quarters of the issued
equity share capital of the person concerned (being a
corporation) and includes any partner in any such firm. Where
the person concerned is an individual, firm or other
unincorporated body the expression "Associate" means and
includes any corporation directly or indirectly or through the
medium of a corporation or corporations controlled by such
person and any partner in any such firm;
(c) "Business Day" means a day on which the New York Stock
Exchange is open for business;
(d) "Commencement Date" means [___________] 1990 or, if later, the
date on which a copy of this Agreement signed by or on behalf
of the Manager has been signed by or on behalf of the Company
and returned to the Manager;
(e) "Custodian" means State Street Bank & Trust Company, Boston,
Massachusetts, U.S.A. and its agents and sub-custodian banks
or such other bank or banks as may in the future serve as
custodian of the Investments;
(f) "Directors" means the Board of Directors of the Company from
time to time including any duly appointed committee thereof;
(g) "Holding Company" means a holding company as defined in
Section 736 of the Companies ▇▇▇ ▇▇▇▇;
(h) "IMRO" means Investment Management Regulatory Organisation
Limited;
49
(i) "Investments" means the assets and rights from time to time of
the Company comprised in the Portfolio;
(j) "Investment Policy" means the investment objective, policies
and restrictions which are set out in the current Registration
Statement on Form N-1A as filed on behalf of the Client with
the SEC and as amended from time to time following written
notice given by the Company to the Manager;
(k) "Investment Management Agreement" means the investment
management agreement between the Company and the Client of
even date herewith.
(1) "Portfolio" means the investments and cash which may from time
to time comprise the Client's assets which are the subject of
the Investment Management Agreement;
(m) "Rules" means the rules (including any regulations) made by
the board of IMRO, as altered, amended, added to or cancelled
from time to time whether by the board of IMRO or pursuant to
the Financial Services ▇▇▇ ▇▇▇▇, together with the Statutory
Rules;
(n) "SEC" means the U.S. Securities and Exchange Commission;
(o) "Statutory Rules" means rules or regulations made under
Chapter V of the Financial Services ▇▇▇ ▇▇▇▇ which are binding
on the Manager;
(p) "Subsidiary" means a subsidiary as defined in Section 736 of
the Companies ▇▇▇ ▇▇▇▇;
(q) "U.S." means the United States of America;
50
(r) "1940 Act" means the U.S. Investment Company Act of 1940, as
amended;
(s) any reference to the Company, Client or the Manager includes a
reference to its duly authorised agents or delegates;
(t) words importing the singular number shall be deemed to include
the plural number and vice versa;
(u) words importing the masculine gender only shall include the
feminine gender and vice versa; and
(v) words importing persons shall include companies or
associations or bodies of persons, whether corporate or not.
1.2 Words and expressions contained in this Agreement (but not defined
herein) shall bear the same meanings as in the Articles.
1.3 The headings to the Clauses of this Agreement are for convenience
only and shall not affect the construction or interpretation
thereof.
1.4 References herein to statutory provisions shall be construed as
references to those provisions as respectively amended or
re-enacted from time to time and shall include any provision of
which they are reenactments (whether with or without
modification).
2. Appointment
2.1 The Company HEREBY APPOINTS the Manager as Sub-Investment Manager in
relation to the Portfolio and the Manager accepts such appointment
on the terms and conditions of this Agreement.
51
2.2 The appointment of the Manager as Sub-Investment Manager as
aforesaid shall take effect from the Commencement Date, and shall
continue in full force and effect, provided it is initially and
continually approved in accordance with the 1940 Act, and unless and
until terminated in accordance with the provisions hereof.
3. Investment Management Functions of the Manager
3.1 During the continuance of its appointment as Sub-Investment Manager of
the Company, subject to Clause 3.2 below and without prejudice to the
generality of Clause 2.1 above the Manager shall (subject to the overall
supervision of the Directors):
(a) manage the investment and re-investment of the Portfolio on a
discretionary basis with a view to achieving the investment
objective contained in the Investment Policy;
(b) provide valuations of the Investments in accordance with the
provisions of Clause 11;
(c) as and when requested by the Company and/or the Client supply the
Company and/or the Client with such information in connection with
the Portfolio as may be in the possession of the Manager or may
reasonably be obtained from or provided by them;
3.2 Any investment activity undertaken by the Manager pursuant to this
Agreement and any other activities undertaken by the Manager on behalf of
the Company or the Client shall at all times be subject to any written
directives of the Directors or of the Board of Directors of the Client, as
the case may
52
be, any duly constituted committee of such Board, or any officer of the
Company or of the Client acting pursuant to the written directives of its
respective Board of Directors.
3.3 The Manager shall keep or cause to be kept on behalf of the Client such
books, records and statements to give a complete record of all
transactions carried out by the Manager on behalf of the Client in
relation to the investment and reinvestment of the Portfolio and such
other books, records and statements as may be required by law and as may
be necessary to give a complete record of all other transactions carried
out by the Manager on behalf of the Client and shall permit the Company
and its employees and agents and the auditors for the time being of the
Company and/or the Client to inspect such books, records and statements at
all reasonable times.
3.4 All records required to be maintained and preserved by the Manager on
behalf of the Client or the Portfolio pursuant to the provisions of rules
or regulations of the SEC under Section 31(a) of the 1940 Act are the
property of the Client and will be surrendered by the Manager promptly on
request by the Client.
2.5 The Manager hereby warrants that it holds and undertakes that it will
continue to hold, all licences, permissions, authorisations and consents
necessary to enable it to carry out its duties hereunder in the ordinary
course of business and that all such licences, permissions, authorisations
and consents are and will remain in full force and effect during the
continuance of this Agreement.
3.6 The services to be provided under this Agreement shall be so provided on
the basis that the Company and the Client are
53
"Professional Investors" as defined in the Rules.
4. Manager's specific powers and obligations in relation to investment
management
4.1 Consistent with the Investment Policy and subject to any written
directions (in accordance with Clause 3.2 above) communicated to the
Manager, the Manager shall have and is hereby granted the authority,
power and right for the Portfolio and in the name of the Client to
supervise and direct the Client in its discretion and without prior
consultation with the Client as the Company:-
(a) to issue orders and instructions with respect to the
disposition of Investments, moneys and other assets of the
Portfolio;
(b) to purchase (or otherwise acquire), sell (or otherwise dispose
of) and invest in investments, moneys and other assets for the
account of the Client and effect foreign exchange transactions
on behalf of the Client and for the account of the Client in
connection with any such purchase, other acquisition, sale or
other disposal;
(c) to enter into, make and perform all contracts, agreements and
other undertakings as may in the opinion of the Manager be
necessary or advisable or incidental to the carrying out of
the objectives of this Agreement;
(d) subject to the Rules, to aggregate transactions for the
Portfolio with those of other clients and Associates without
prior reference to the Company, the Client or such other
clients. Aggregation may operate on some occasions to the
advantage of the Client and on other
54
occasions to the Client's disadvantage. Also the Manager may
act as agent for the Client in relation to transactions in
which it is also acting as agent for its Associates;
(e) to purchase and sell Investments on any Recognised or
Designated Investment Exchange as defined in the Rules
(including for this purpose over the counter markets) or
through such other intermediary as the Manager may in its
discretion consider;
(f) to purchase or subscribe for Investments Not Readily
Realisable (as defined in the Rules). However, such
investments carry a high risk of not being readily realisable,
market-makers may not be prepared to deal in them and proper
information for determining their current value may not be
available. The purchase of such investments is subject to such
restrictions as may be set out in this Agreement not
inconsistent with the Investment Policy;
(g) to accept offers of new issues, or rights issues and offers of
paper and/or cash alternatives in takeover bids on behalf of
the Client;
(h) to invest in futures, options and contracts for differences,
including margined transactions effected otherwise than under
the rules of a Recognised or Designated Investment Exchange
(as defined in the Rules) or in a contract traded thereon.
(i) for the purposes of carrying out transactions in futures and
options only, to deposit or pledge investments comprised in
the Portfolio and such other documents of
55
title and certificates evidencing title to such investments
and other property as may be required in order to satisfy the
counterparty's margin or collateral requirements. In all other
circumstances and except (a) with the written consent of and
on terms agreed with the Company and the Client or (b) if
appropriate, as may be provided in the Client's current
Registration Statement filed with the SEC (as amended from
time to time) investments comprised in the Portfolio and
documents of title and certificates evidencing title to such
investments and other property acquired under this Agreement
may not be lent to a third party nor may money be borrowed on
the Client's behalf against the security of such investments,
documents and property.
4.2 As Investments may be denominated in different currencies, a movement of
exchange rates may have a separate effect, unfavourable as well as
favourable, on the gain or loss otherwise experienced in the Investments.
4.3 The Company understands, and has informed the Manager that the Client
understands, that markets involving futures and contracts for differences
and options can be highly volatile and that such instruments carry a high
risk of loss and that a relatively small adverse market movement may
result not only in loss of the original investment but also an
unquantifiable further loss exceeding any margin deposited. The Company
further understands, and has informed the Manager that the Client
understands, that the Client may be required to pay a deposit or margin in
support of a transaction or to supplement that payment after the
transaction has been
56
effected and that the consequence of non-payment may result in the loss
of deposit or margin.
4.4 The Company confirms to the Manager that the Client has received from the
Company the appropriate risk disclosure statements required under
paragraph 12(a) of Schedule 4 of Chapter III of the Rules.
4.5 The Manager shall observe and comply with all resolutions of the Directors
of which it has written notice and other lawful orders and directions
given in writing to it from time to time by the Directors including those
orders and directions emanating from the Client and all activities engaged
in by the Manager hereunder pursuant to Clause 3 above shall at all times
be subject to the control of and review by the Directors, acting on behalf
of the Client, and without limiting the generality of the foregoing the
Directors may from time to time:
(a) prohibit the Manager from investing the Portfolio in any investment
or in any currency or country or in or with any person;
(b) require the Manager to sell any investment or (subject to the
availability of funds) to purchase, on behalf of the Company, any
investment;
(c) notify the Manager, in writing, of any amendments to the Investment
Policy;
and the Manager shall and shall procure that any person, firm or company
to whom it delegates any of its functions hereunder shall give effect to
all such decisions.
5. Payments due on Investments
The Company undertakes to the Manager that it shall be
57
responsible for any unpaid calls or other sums which may become payable
upon any of the Investments or any rates, taxes or other imposts or
similar liabilities levied or arising on or in respect of any of the
Investments but only to the extent that the Client has failed to pay same.
6. Unsolicited Calls
(4) The Company and the Manager are free under this Agreement at any time to
telephone or otherwise communicate with each other (which in the case of
the Manager, its partners, employees or representatives, may constitute an
"Unsolicited Call" in terms of IMRO's Rules) to discuss the Portfolio, its
composition and investment policy or any changes therein, or any
individual investment, current or proposed.
7. Custody Arrangements
7.1 The Company will at the written request of the Manager arrange with
the Client for the opening of bank accounts in the name of the
Client with the Custodian. All sums belonging to the Client
including proceeds of sales and income received on investments shall
be credited directly to such accounts. The Manager will hold no
moneys on behalf of the Client, and accepts no liability for any
default by the Custodian. These bank accounts and moneys are not
Client Bank Accounts or Clients' Money (as defined in the Rules).
7.2 Securities forming part of the Portfolio will be registered in the
name of the Custodian or held to its
58
order. The Manager accepts no liability for any default by the
Custodian or sub-custodian banks.
8. Settlement
The Manager will attend to the settlement and delivery of all purchases
and sales of Investments and deal with issues, rights entitlements and any
other matters affecting such investments. The Manager will also be
entitled to instruct the Custodian to make delivery of documents of title
or certificates evidencing title when settling transactions.
9. Voting
Any rights conferred by Investments of the Client shall be exercised in
such manner as the Manager may determine (subject to the rights of the
Directors to give instruction to the Manager regarding the exercise of
such rights) and subject as aforesaid the Manager may in its discretion
refrain from the exercise of such rights. The Company shall from time to
time, upon request from the Manager, procure that the Client shall execute
and deliver or cause to be executed and delivered to the Manager or its
nominee(s) such powers of attorney or proxies as may reasonably be
required authorising such attorneys or proxies to exercise any rights or
otherwise act in respect of all of any part of the Investments. Without
prejudice to the generality of the foregoing the Manager will be entitled
to give voting instructions to the Custodian in respect of the exercise of
any voting or other rights attached to any Investment at the discretion of
the Manager or as the Company and/or the Client may instruct from time to
time.
59
10. Lending and Borrowing
10.1 Subject to the Investment Policy and as provided in this Clause 10,
investments comprised in the Portfolio and documents of title and
certificates evidencing title to such investments and other property
acquired under this Agreement may not be lent to a third party nor
may money be borrowed on the Client's behalf against the security of
such investments, documents and property.
10.2 Subject to the Investment Policy, an overdraft facility or line of
credit may be established on behalf of the Client and may be used as
a temporary measure for the extraordinary or emergency needs of the
Client.
10.3 Subject to the Investment Policy and to the temporary borrowing
facility provided for in 10.2 above, the Manager may not commit the
Client to supplement the monies in the Portfolio either by borrowing
on its behalf or by committing it to a contract the performance of
which may require them to supplement the Portfolio.
11. Reporting
11.1 The Manager shall arrange to notify the Company and the Client (by
fax) of transactions on a daily basis and will instruct brokers to
send the original contract note to the Custodian and copies to the
Company and the Client.
60
11.2 The Manager shall supply quarterly to the Company and the Client the
following:
(a) reports incorporating inter alia advice as to future policy,
which will be sent within twenty five working days of the end
of the quarter to which the report relates;
(b) a Portfolio valuation prepared by Datastream or some other
mutually agreed and reputable supplier of valuation services.
Such valuations will show the number of units of each
investment or other asset held, the book cost and the
aggregate value of each as at the valuation date and will
normally use middle market prices for listed investments. In
the event of any change in this method the Manager will notify
the Company and the Client accordingly;
(c) a statement of any income received on the investments held;
(d) a schedule detailing the performance of the Client broken down
into major sectors and comparing the return of the relevant
index against the return of the Client. The returns will be
compiled by the WM Company using information supplied by the
Manager; and
(e) schedules showing transactions undertaken during the period
under review.
11.3 The Manager shall attend meetings with the Company and/or the Client
from time to time as required by the Directors. Instructions as to
the management of the
61
Portfolio given orally to the Manager at such meetings will be
confirmed in writing to the Manager as provided for in Clause 23.
12. Material Interests
12.1 Except as specified in Clause 4.1(d) of this Agreement, the Manager
may not effect transactions for the Portfolio in which it has
directly or indirectly a material interest or any relationship with
another party which may involve a conflict of the Manager's duty to
the Company and/or the Client without prior reference to the
Company, other than transactions in units in unit trusts managed by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Limited, an Associate of the Manager, in
accordance with the provisions of sub-clause 12.2 of this
Agreement.
12.2 For the purposes of sub-clause 12.1 of this Agreement, the Manager
may not effect transactions for the Portfolio in units in unit
trusts managed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Limited unless the Manager
shall first have been issued with an order of exemption by SEC in
accordance with sub-section 17(a) (1) (b) of the 1940 Act.
13. Relevant Arrangements
The Manager may not effect transactions for the Portfolio with or through
the agency of a person who provides services under any arrangement where
that person will from time to time provide to or procure for the Manager
services or other benefits which result, or are designed to result, in an
improvement in the services which the Manager provides to its
62
clients and for which it may make no direct payment but may undertake to
place business with that person.
14. Taxation
Bank statements and vouchers will be sent to the Client to enable the
Client to reclaim any credits in respect of or tax deducted from the
income of the Portfolio.
15. Fees
15.1 In consideration for the services to be provided by the Manager as
Sub-Investment Manager under this Agreement the Company shall,
during the continuance of this Agreement, pay to the Manager, in the
manner hereinafter provided, fees calculated by reference to the
value of the Portfolio all in accordance with the following
provisions of this Clause 15.
15.2 The Company shall pay to the Manager in respect of each calendar
month a fee (exclusive of Value Added Tax) calculated at the rate of
one-thirtieth of one per cent (0.033%) of:-
A
--- where:
B
"A" means the aggregate of the Values of the Portfolio
as at the close of business on each Business Day falling
in that calendar month; and "B" means the number of
Business Days falling in that calendar month.
15.3 Said fees due to the Manager shall be invoiced by the Manager to the
Company following the end of each calendar month and shall be due
and payable within ten
63
days of the relevant invoice. The Company shall be entitled to make
such payments on account as it may in its absolute discretion
determine.
15.4 For the purposes of sub-clause 15.2 of this Clause:
(i) the "Value of the Portfolio" means the aggregate of the values
of the assets of the Portfolio at the close of business on a
Business Day. The aggregate of the value of the assets shall
be calculated by taking the value of securities held in the
Portfolio, plus any cash or other assets (including dividends
payable and declared but not collected) less all liabilities
(including accrued expenses, but excluding capital and
surplus);
(ii) the "value of an asset" shall be taken:-
(1) in the case of an investment quoted on a Stock Exchange
where market price is the recognised basis of quotation,
at the price of such investment at the close of business
of the appropriate exchange on the relevant Valuation
Date or, if there have been no sales during the day, at
the mean of the closing bid and asked prices;
(2) in the case of an investment traded only on the
over-the-counter market, at the mean between the bid and
asked prices;
(3) in the case of unquoted investments and other
investments for which market
64
quotations are not readily available, at the value
ascertained in accordance with such manner as the Board
of Directors of the Client have deemed appropriate to
reflect the fair value thereof;
(iii) when any asset is held or liability is outstanding in a
currency other than U.S. dollars, such asset or
liability shall be notionally converted into the U.S.
dollar equivalents at the prevailing market rates quoted
by the Custodian at the close of business on the
Business Day, on the relevant Valuation Date or, if such
Valuation Date is not a Business Day, on the immediately
preceding Business Day.
15.5 The Manager shall procure that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co shall be
responsible for furnishing such office space, facilities and
equipment and such clerical help, administrative and bookkeeping
services in Edinburgh as the Company shall reasonably require in the
conduct of its business in accordance with the Administrative and
Secretarial Agreement between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. and the Company
of even date herewith.
15.6 The Client shall bear all expenses of its organization, operations
and business not specifically assumed or agreed to be paid by the
Company as provided in this Agreement. In particular, but without
limiting the generality of the foregoing, the Client shall pay all
of the expenses relating to the following expense
65
categories: custody and accounting services; shareholder servicing
agent; transfer and dividend disbursing agent; shareholder
communications; shareholder meetings; prospectuses; calculation of
net asset value; legal fees and expenses; accounting fees and
expenses; directors' fees and expenses; federal and state
registration fees; bonding and insurance; brokerage commissions;
taxes; trade association fees; nonrecurring and extraordinary
expenses (including but not limited to, legal claims and liabilities
and litigation costs and any indemnification related thereto); and
all other charges relating to the operation of the Client unless
otherwise specifically provided herein. All such expenses shall be
paid out of the assets of the Client.
15.7 The Company shall not be responsible for any expenses incurred in
connection with its duties and responsibilities under the terms of
this Agreement.
16. Indemnity of the Manager as Sub-Investment Manager
16.1 Neither the Manager nor any of its officers, directors, or
employees, nor any person performing executive, administrative,
trading, or other functions for the Client and/or the Company (at
the direction or request of the Manager) or the Manager in
connection with the Manager's discharge of its obligations
undertaken or reasonably assumed with respect to this Agreement,
shall be liable for any error of judgment or mistake of law or for
any loss suffered by the Client and/or the Company in connection
with the matters to which this Agreement
66
relates, except for loss resulting from wilful misfeasance or
misconduct, wilful default, bad faith, or gross negligence in the
performance of its or his/her duties on behalf of the Client and/or
the Company or from reckless disregard by the Manager or any such
person of the duties of the Manager under this Agreement.
16.2 The Manager shall not be liable for the consequences of any
investment decision made hereunder or in respect of any other fund
managed by the Manager or any of its Associates which is a permitted
investment hereunder. The Manager acts only as agent for the Client
and the Company hereby undertakes to indemnify the Manager against
all actions, proceedings, claims, demands, costs and expenses which
may be brought against, suffered or incurred by the Manager by
reason of its performance of such duties, including all legal,
professional and other expenses incurred.
16.3 Notwithstanding the provisions of Clause 16.2, the Manager will
indemnify the Company and/or the Client in respect of any loss
incurred as a result of negligence or fraud by the Manager or any of
its Associates or their respective employees in their performance of
the duties under the terms of this Agreement.
17. Term and Termination of Agreement
17.1 The term of this Agreement shall begin on [__________], subject to
the approval of the Board of Directors of the Client, including a
majority of the Directors who are not "interested persons" (as
defined in the ▇▇▇▇ ▇▇▇)
67
and to the approval of a majority of the outstanding voting
securities of the Client (as defined in the ▇▇▇▇ ▇▇▇) and, unless
sooner terminated as hereinafter provided, this Agreement shall
remain in effect until [__________]. Thereafter, this Agreement
shall continue in effect from year to year, with respect to the
Company, subject to the termination provisions and all other terms
and conditions hereof, provided such continuance is approved at
least annually by the vote of holders of a majority of the
outstanding voting securities of the Client (as defined in the ▇▇▇▇
▇▇▇) or by the Board of Directors of the Client, provided, that in
either event, such continuance is also approved annually by the vote
of a majority of the Board of Directors of the Client who are not
parties to this Agreement and are not "interested persons" (as
defined in the ▇▇▇▇ ▇▇▇) of any party, which vote must be cast in
person at a meeting called for the purpose of voting on such
approval. The Manager shall furnish to the Client, promptly upon its
request, such information as may reasonably be necessary to evaluate
the terms of this Agreement or any extension, renewal or amendment
hereof.
17.2 The Manager acknowledges that this Agreement may be terminated by
the Company in accordance with the following provisions of this
Clause 17.2. Subject to Clause 17.3 below, the Client may, either by
majority vote of its Board of Directors or by the vote of a majority
of the outstanding voting securities of the
68
Client (as defined in the 1940 Act), at any time and without the
payment of any penalty, direct the Company to terminate this
Agreement upon sixty days written notice to the Manager.
17.3 The Manager acknowledges that this Agreement may also be terminated
in accordance with the following provisions of this Clause 17.3. The
Client shall also be entitled forthwith to direct the Company to
terminate the appointment of the Manager as Sub-Investment Manager
hereunder notwithstanding any period remaining in accordance with
this Clause or, no notice having been given:-
(i) if the Manager shall commit any material breach of its
obligations under this Agreement and (if such breach shall be
capable of remedy) shall fail within thirty days of receipt of
notice in writing served by the Company requiring it so to do
to make good such breach;
(ii) if an order is made or a resolution passed to wind up the
Manager or if a receiver is appointed to the whole or any part
of the property and undertaking of the Manager;
(iii) if the said Shareholders Agreement between the Guardian
Insurance & Annuity Company, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Overseas
Limited and the Company is terminated or expires by effluxion
of time.
17.4 The Manager may terminate this Agreement without payment of penalty
upon sixty days written notice to the Company.
17.5 The Manager shall also be entitled to terminate forthwith this
Agreement, notwithstanding any period
69
remaining in acccordance with this Clause or, no notice having been
given, if (i) the said Shareholders Agreement between the Guardian
Insurance & Annuity Company Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Overseas
Limited and the Company is terminated or expires by effluxion of
time, or (ii) an order is made or a resolution passed to wind up the
Company, or (iii) if the Company shall commit any material breach of
its obligations under this Agreement and (if such breach shall be
capable of remedy) shall fail within 30 days of receipt of notice in
writing served by the Manager requiring it so to do to make good
such breach, or (iv) a receiver is appointed to the whole or any
part of the property and undertaking of the Company.
17.6 This Agreement shall immediately terminate in the event of its
assignation or assignment (as that term is defined in the 1940 Act)
by either party unless such automatic termination shall be prevented
by an exemptive order or rule of the SEC.
17.7 On the termination of the appointment of the Manager under the
provisions of this Clause the Manager shall be entitled to receive
all fees accrued due and outlays incurred up to the date of such
termination but shall not in the case of termination under
sub-clause 17.2., 17.3 or 17.4 above, be entitled to compensation in
respect of such termination.
17.8 On termination of the appointment of the Manager under the
provisions of this Clause the Manager shall deliver to the Company,
or as it shall direct, all books of
70
account, records, registers, correspondence, documents and assets in
relation to the affairs of or belonging to the Company and/or the
Client in the possession of or under the control of the Manager as
Sub-Investment Manager, and take all necessary steps to vest in the
Company any assets previously held in the name of or to the order of
the Manager as Investment Adviser, on behalf of the Company.
17.9 Termination of the appointment of the Manager hereunder shall be
without prejudice to transactions already initiated, which
transactions shall be completed.
17.10 The Company and the Manager will co-operate with each other to
ensure that transactions in progress at the date of termination of
the Manager's appointment hereunder shall be completed by the
Company in accordance with the terms of such transactions and, to
this end, the Manager shall provide the Company with all necessary
information and documentation to secure implementation thereof.
18. Non-Exclusivity
18.1 The services of the Manager hereunder are not to be deemed exclusive and
the Manager or any Associate thereof shall be free to render investment
management services, investment advisory services and corporate
administrative services to other parties (including without prejudice to
the generality of the foregoing other investment companies) on such terms
as the Manager or such Associate may arrange so long as its services under
this Agreement are not thereby impaired and to
71
retain for its own use and benefit fees or other moneys payable thereby.
The Manager shall not be deemed to be affected with notice of or to be
under any duty to disclose to the Company any fact or thing which may come
to the notice of it or any servant or agent of it in the course of the
Manager rendering the said services to others or in the course of its
business in any other capacity or in any manner whatsoever otherwise than
in the course of carrying out its duties under this Agreement.
18.2 The Manager agrees to permit individuals who are directors or officers of
the Manager to serve as directors or officers of the Company and/or the
Client.
19. Confidentiality
Neither of the parties hereto shall during the continuance of this
Agreement or after its termination, disclose to any person firm or fund
whatsoever (except in the case of the Manager, with the written authority
of the Company and/or the Client or unless ordered to do so by a court of
competent jurisdiction or any regulatory body) any information of a
confidential nature relating to the business investments finances or other
matters of a confidential nature of the other party (or of the Client) of
which it may have become possessed during the period of this Agreement and
each party shall use its reasonable endeavours to prevent any such
disclosure as aforesaid.
20. Complaints
20.1 The Manager has established procedures in accordance
72
with the requirements of IMRO for the effective consideration of
complaints by the Company.
20.2 Should the Company and/or the Client wish to make a complaint to the
Manager about any aspect of the Manager carrying out its duties
under this Agreement or otherwise it shall in the first instance do
so by letter addressed to the partner or partners of the Manager
responsible for the performance of the Manager's duties hereunder;
if no satisfactory resolution of the complaint is achieved within
five days the Company and/or the Client may repeat the complaint by
letter addressed to the Senior Partners of the Manager. If no
satisfactory resolution is achieved within ten days of the original
complaint the Company and/or the Client may then make its complaint
(insofar as such complaint relates to the Manager's duties as
Investment Adviser hereunder) to IMRO. Notwithstanding the above
provisions the Company and/or the Client has a right of complaint
direct to IMRO.
20.3 A booklet setting out the right to investors compensation under the
Securities and Investment's Board's Scheme in the event of the
Manager's inability to meet any liabilities to the Company and/or
the Client is available on request from the Manager.
21. Arbitration
Without prejudice to the rights of the Company in accordance with Clause
20 hereof any matters of difference between the parties arising out of or
in connection with this Agreement
73
shall be submitted to arbitration to be determined under Scottish Law
before a sole Arbiter to be agreed between the parties and in default of
agreement to be appointed by the President of the Law Society of Scotland
for the time being. No action shall be brought upon any issue between the
parties arising out of or in connection with this Agreement until the same
has been submitted to arbitration pursuant hereto and an award made.
Section 3(3) of the Administration of Justice (Scotland) Act 1972 shall
not apply to this Agreement.
22. Notices
Any notice required to be given under this Agreement shall be in writing,
delivered personally or sent by first class prepaid letter or transmitted
by telex or facsimile and shall be deemed duly served if left at or served
if left at or sent or (as appropriate) transmitted to the following
addresses (or to the most recent of any other address of which a party
hereto shall have given notice to the other party pursuant to this
Clause):-
(a) if to the Company at:
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
For the attention of: G ▇▇▇▇▇▇▇
Facsimile number: 031-225-2358
(b) if to the Manager at:-
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
For the attention of: G ▇▇▇▇▇▇▇
Facsimile number: 031-225-2358
(c) if to the Client at:-
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
For the attention of: ▇.▇. ▇▇▇▇▇
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
74
Notices sent by first class prepaid letter shall be deemed to be served
seven business days after posting. Evidence that the Notice was properly
addressed, stamped and put into post shall be conclusive evidence of
posting. A notice sent by facsimile transmission shall be deemed to have
been served at the time when a complete and legible copy is received by
the addressee. In this Clause "business day" means a day on which normal
banking business is carried on in Edinburgh and New York City.
23. Reliance on documents
Wherever pursuant to any provision of this Agreement any notice,
instruction or other communication is to be given by, or on behalf of, the
Company (or its Directors) to the Manager as Sub-Investment Manager and
the Manager may accept as sufficient evidence thereof:-
(i) a document signed or purporting to be signed on behalf of the
issuing party by such person or persons whose signature the Manager
is for the time being authorised by such issuing party to accept; or
(ii) a message by tested telex, telecopier, facsimile machine or cable
transmitted by, or on behalf of, the Company (or its Directors) by
such person or persons whose messages the Manager is for the time
being authorised by the Company or its Directors to accept, and the
Manager shall not be obliged to accept any document or message
signed or transmitted or purporting to be signed or transmitted by
any other person.
75
24. Client's rights under this Agreement
The Manager agrees that the Client, in any question with the Manager in
relation to its duties as Sub-Investment Manager hereunder, may rely on
any of the provisions of this Agreement as if it were a party hereto. The
Company shall deliver a certified copy of this Agreement to the Client by
way of intimation of the Client's rights hereunder.
25. Invalidity
The invalidity or unenforceability of any part of this Agreement shall not
prejudice or affect the validity or enforceability of the remainder.
26. Proper Law
Notwithstanding any conflict of laws, principles or provisions which may
otherwise apply, this Agreement and the rights and obligations of the
parties shall be governed by and are to be construed in accordance with
the law of Scotland and, to the extent applicable, in accordance with the
1940 Act: WITNESS WHEREOF these presents typewritten on this and the
thirty preceding pages are executed as follows:-