SUBADVISORY AGREEMENT
The Agreement made as of the 1st day of March, 2006, by and between
RiverSource Investments, LLC, a Minnesota limited liability company (formerly
American Express Financial Corporation) ("Investment Manager"), and Xxxxx
Selected Advisers, L.P., a Colorado limited partnership ("Subadvisor").
RECITALS
WHEREAS, The Fund listed in Schedule A (the "Fund") is a series of an
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, Investment Manager originally entered into an Investment
Management Services Agreement with the Fund dated May 10, 2001, pursuant to
which Investment Manager provided investment advisory services to the Fund;
WHEREAS, Shareholders of the Fund recently approved a new Investment
Management Services Agreement with Investment Manager with the Fund (the
"Advisory Agreement") pursuant to which Investment Manager provides investment
advisory services to the Fund;
WHEREAS, Shareholders approved the Subadvisory Agreement between
Investment Manager and Subadvisor; and
WHEREAS, Investment Manager desires to retain Subadvisor to provide
investment advisory services to the Fund, and Subadvisor is willing to render
such investment advisory services.
NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
1. Subadvisor's Duties.
(a) Portfolio Management. Subject to supervision by Investment
Manager and the Fund's Board of Directors (the "Board"),
Subadvisor shall manage the investment operations and the
composition of that portion of assets of the Fund which is
allocated to Subadvisor from time to time by Investment
Manager (which portion may include any or all of the Fund's
assets), including the purchase, retention, and disposition
thereof, in accordance with the Fund's investment objectives,
policies, and restrictions, and subject to the following
understandings:
(i) Investment Decisions. Subadvisor shall determine from
time to time what investments and securities will be
purchased, retained, or sold by the Fund, and what
portion of such assets will be invested or held
uninvested as cash.
(ii) Investment Limits. In the performance of its duties
and obligations under this Agreement, Subadvisor
shall act in conformity with applicable limits and
requirements, as amended from time to time, as set
forth in the (A) Fund's Prospectus and Statement of
Additional Information ("SAI"); (B)
instructions and directions of Investment Manager and
of the Board; (C) requirements of the 1940 Act, the
Internal Revenue Code of 1986, as amended, as
applicable to the Fund, and all other applicable
federal and state laws and regulations; and (D) the
procedures and standards set forth in, or established
in accordance with, the Advisory Agreement.
(iii) Portfolio Transactions.
(A) Trading. With respect to the securities and
other investments to be purchased or sold
for the Fund, Subadvisor shall place orders
with or through such persons, brokers,
dealers, or futures commission merchants
(including, but not limited to,
broker-dealers that are affiliated with
Investment Manager or Subadvisor) selected
by Subadvisor; provided, however, that such
orders shall be consistent with the
brokerage policy set forth in the Fund's
Prospectus and SAI, or approved by the
Fund's Board; conform with federal
securities laws; and be consistent with
securing the most favorable price and
efficient execution. Within the framework of
this policy, Subadvisor may consider the
research, investment information, and other
services provided by, and the financial
responsibility of, brokers, dealers, or
futures commission merchants who may effect,
or be a party to, any such transaction or
other transactions to which Subadvisor's
other clients may be a party.
(B) Aggregation of Trades. On occasions when
Subadvisor deems the purchase or sale of a
security or futures contract to be in the
best interest of the Fund as well as other
clients of Subadvisor, Subadvisor, to the
extent permitted by applicable laws and
regulations, may, but shall be under no
obligation to, aggregate the securities or
futures contracts to be sold or purchased in
order to obtain the most favorable price or
lower brokerage commissions and efficient
execution. In such event, allocation of the
securities or futures contracts so purchased
or sold, as well as the expenses incurred in
the transaction, will be made by Subadvisor
in the manner Subadvisor considers to be the
most equitable and consistent with its
fiduciary obligations to the Fund and to
such other clients.
(iv) Records and Reports. Subadvisor shall maintain such
books and records required under the 1940 Act as
shall be agreed upon from time to time in writing by
the parties hereto, shall render to the Fund's Board
such periodic and special reports as the Board of the
Fund or Investment Manager may reasonably request,
and shall meet with any persons at the request of
Investment Manager or the Board for the purpose of
reviewing Subadvisor's performance under this
Agreement at reasonable times and upon reasonable
advance written notice.
(v) Transaction Reports. Subadvisor shall provide the
Fund's custodian on each business day with
information relating to all transactions concerning
the Fund's assets and shall provide Investment
Manager with such information upon Investment
Manager's request.
(b) Subadvisor's Partners, Officers, and Employees. Subadvisor
shall authorize and permit any of its partners, officers, and
employees who may be elected as Directors or officers of the
Fund to serve in the capacities in which they are elected.
Services to be furnished by Subadvisor under this Agreement
may be furnished through any such partners, officers, or
employees.
(c) Maintenance of Records. Subadvisor shall timely furnish to
Investment Manager all information relating to Subadvisor's
services hereunder which are needed by Investment Manager to
maintain the books and records of the Fund required under the
1940 Act. Subadvisor agrees that all records which it
maintains for the Fund are the property of the Fund and
Subadvisor will surrender promptly to the Fund any of such
records upon the Fund's request; provided, however, that
Subadvisor may retain a copy of such records. Subadvisor
further agrees to preserve for the periods prescribed under
the 1940 Act any such records as are required to be maintained
by it pursuant to paragraph 1(a) hereof.
(d) Fidelity Bond and Code of Ethics. Subadvisor will provide the
Fund with reasonable evidence that, with respect to its
activities on behalf of the Fund, Subadvisor is maintaining
(i) adequate fidelity bond insurance, and (ii) an appropriate
Code of Ethics and related reporting procedures.
2. Investment Manager's Duties. Investment Manager shall continue to have
responsibility for all other services to be provided to the Fund
pursuant to the Advisory Agreement and shall oversee and review
Subadvisor's performance of its duties under this Agreement. Investment
Manager shall also retain direct portfolio management responsibility
with respect to any assets of the Fund which are not allocated by it to
the portfolio management of Subadvisor as provided in paragraph 1(a)
hereof.
3. Documents Provided to Subadvisor. Investment Manager has delivered or
will deliver to Subadvisor current copies and supplements thereto of
each of the Prospectus and SAI pertaining to the Fund, and will deliver
to it all future amendments and supplements, if any.
4. Compensation of Subadvisor. For the services provided and the expenses
assumed pursuant to this Agreement, Investment Manager will pay to
Subadvisor, effective from the date of this Agreement, a fee which
shall be accrued daily and paid monthly, on or before the last business
day of the next succeeding calendar month, from the Fund's assets at
the annual rates as a percentage of the Fund's average daily net assets
set forth in the attached Schedule A, which Schedule can be modified
from time to time to reflect changes in annual rates, subject to
appropriate approvals required by the 1940 Act, if any. If this
Agreement becomes effective or terminates before the end of any month,
the fee for the period from the effective date to the end of the month
or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion that such
month bears to the full month in which such effectiveness or
termination occurs.
5. Liability of Subadvisor. Subadvisor agrees to perform faithfully the
services required to be rendered to the Fund under this Agreement, but
nothing herein contained shall make Subadvisor or any of its officers,
partners, or employees liable for any loss sustained by the Fund or its
officers, Directors, or shareholders, or any other person on account of
the services which Subadvisor may render or fail to render under this
Agreement; provided, however, that nothing herein shall protect
Subadvisor against liability to the Fund or to any of its shareholders,
to which Subadvisor 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 Subadvisor from any liabilities which it may have under
the 1933 Act or the 1940 Act.
6. Representations of Subadvisor. Subadvisor represents and warrants as
follows:
(a) Subadvisor (i) is registered as an investment advisor under
the Advisers Act of 1940 (the "Advisers Act") and will
continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the 1940 Act or
the Advisers Act from performing the services contemplated by
this Agreement, (iii) has met and will seek to continue to met
for so long as this Agreement remains in effect, any other
applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory
agency necessary to be met in order to perform the services
contemplated by this Agreement; (iv) has the authority to
enter into and perform the services contemplated by this
Agreement; and (v) will promptly notify Advisor of the
occurrence of any event that would disqualify Subadvisor from
serving as an investment advisor of an investment company
pursuant to Section 9(a) of the 1940 Act or otherwise.
(b) Subadvisor has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will
provide Advisor with a copy of the code of ethics, together
with evidence of its adoption. Within 45 days of the end of
the last calendar quarter of each year that this Agreement is
in effect, a duly authorized officer of Subadvisor shall
certify to Advisor that Subadvisor has complied with the
requirements of Rule 17j-1 during the previous year and that
has been no material violation of Subadvisor's code of ethics
or, if such a violation has occurred, that appropriate action
was taken in response to such violation. Upon the written
request of Advisor, Subadvisor shall permit Advisor, its
employees, or its agents to examine the reports required to be
made to Subadvisor by Rule 17j-1(c)(1) and all other records
relevant to Subadvisor's code of ethics.
(c) Subadvisor has provided Advisor with a copy of its Form ADV,
which as of the date of this Agreement is its Form ADV as most
recently filed with the Securities and Exchange Commission
("SEC") and promptly will furnish a copy of all amendments to
Advisor at least annually.
(d) Subadvisor will promptly notify Advisor of any changes in the
controlling general partner or partners, in the key personnel
who are either the portfolio manager(s) responsible for the
Fund or senior management of Subadvisor, or if there is
otherwise an actual change in control or management of
Subadvisor.
(e) Subadvisor agrees that neither it nor any of its affiliates
will in any way refer directly or indirectly to its
relationship with the Fund or Advisor, or any of their
respective affiliates in offering, marketing, or other
promotional materials without the prior written consent of
Advisor.
7. Liability and Indemnification.
(a) Except as may otherwise be provided by the 1940 Act or any
other federal securities law, Subadvisor, any of its
affiliates and any of the officers, directors, employees,
consultants, or agents thereof shall not be liable for any
losses, claims, damages, liabilities, or litigation (including
legal and other expenses) incurred or suffered by Investment
Manager or the Fund as a result of any error of judgment or
mistake of law by Subadvisor with respect to the Fund, except
that nothing in this Agreement shall operate or purport to
operate in any way to exculpate, waive, or limit the liability
of Subadvisor for, and Subadvisor shall indemnify and hold
harmless the Fund, Investment Manager, all affiliated persons
thereof (within the meaning of Section 2(a)(3) of the 0000
Xxx) and all controlling persons (as described in Section 15
of the Securities Act of 1933, as amended ("1933 Act"))
(collectively, "Investment Manager Indemnitees") against any
and all losses, claims, damages, liabilities, or litigation
(including reasonable legal and other expenses) to which any
of the Investment Manager Indemnitees may become subject under
the 1933 Act, the 1940 Act, the Advisers Act, or under any
other statute, at common law, or otherwise arising out of or
based on (i) any willful misconduct, bad faith, reckless
disregard, or gross negligence of Subadvisor in the
performance of any of its duties or obligations hereunder;
(ii) any untrue statement of a material fact contained in the
Prospectus and SAI, proxy materials, reports, advertisements,
sales literature, or other materials pertaining to the Fund or
the omission to state therein a material fact known to
Subadvisor which was required to be stated therein or
necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to Investment Manager or the Fund by the
Subadvisor Indemnitees (as defined below) for use therein; or
(iii) any violation of federal or state statutes or
regulations by Subadvisor. It is further understood and agreed
that Subadvisor may rely upon information furnished to it by
Investment Manager that it reasonably believes to be accurate
and reliable. The federal securities laws impose liabilities
in certain circumstances on persons who act in good faith, and
therefore nothing herein shall in any way constitute a waiver
of limitation of any rights which Investment Manager may have
under any securities laws.
(b) Except as may otherwise be provided by the 1940 Act or any
other federal securities law, Investment Manager and the Fund
shall not be liable for any losses, claims, damages,
liabilities, or litigation (including legal and other
expenses) incurred or suffered by Subadvisor as a result of
any error of judgment or mistake of law by Investment Manager
with respect to the Fund, except that nothing in this
Agreement shall operate or purport to operate in any way to
exculpate, waive, or limit the liability of Investment Manager
for, and Investment Manager shall indemnify and hold harmless
Subadvisor, all affiliated persons thereof (within the meaning
of Section 2(a)(3) of the 0000 Xxx) and all controlling
persons (as described in Section 15 of the 1933 Act)
(collectively, "Subadvisor Indemnitees")
against any and all losses, claims, damages, liabilities, or
litigation (including reasonable legal and other expenses) to
which any of the Subadvisor Indemnitees may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, or under
any other statute, at common law, or otherwise arising out of
or based on (i) any willful misconduct, bad faith, reckless
disregard, or gross negligence of Investment Manager in the
performance of any of its duties or obligations hereunder;
(ii) any untrue statement of a material fact contained in the
Prospectus and SAI, proxy materials, reports, advertisements,
sales literature, or other materials pertaining to the Fund or
the omission to state therein a material fact known to
Investment Manager which was required to be stated therein or
necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon
information furnished to Investment Manager or the Fund by a
Subadvisor Indemnitee for use therein, or (iii) any violation
of federal or state statutes or regulations by Investment
Manager or the Fund.
(c) After receipt by Investment Manager or Subadvisor, its
affiliates, or any partner, officer, director, employee, or
agent of any of the foregoing, entitled to indemnification as
stated in (a) or (b) above ("Indemnified Party") of notice of
the commencement of any action, if a claim in respect thereof
is to be made against any person obligated to provide
indemnification under this section ("Indemnifying Party"),
such Indemnified Party shall notify the Indemnifying Party in
writing of the commencement thereof as soon as practicable
after the summons or other first written notification giving
information of the nature of the claim has been served upon
the Indemnified Party; provided that the failure to so notify
the Indemnifying Party will not relieve the Indemnifying Party
from any liability under this section, except to the extent
that the omission results in a failure of actual notice to the
Indemnifying Party and such Indemnifying Party is damaged
solely as a result of the failure to give such notice. The
Indemnifying Party, upon the request of the Indemnified Party,
shall retain counsel satisfactory to the Indemnified Party to
represent the Indemnified Party in the proceeding, and shall
pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any Indemnified Party
shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such
Indemnified Party unless (1) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention
of such counsel, or (2) the named parties to any such
proceeding (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and
representation by both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but
if settled with such consent or if there be a final judgment
for the plaintiff, the Indemnifying Party agrees to indemnify
the Indemnified Party from and against any loss or liability
by reason of such settlement or judgment.
8. Duration and Termination.
(a) Unless sooner terminated as provided herein, this Agreement
shall continue in effect for a period of more than two years
from the date written above only so
long as such continuance is specifically approved at least
annually in conformity with the requirements of the 1940 Act.
Thereafter, if not terminated, this Agreement shall continue
automatically for successive periods of 12 months each,
provided that such continuance is specifically approved at
least annually (i) by a vote of a majority of the Fund's
directors who are not parties to this Agreement or interested
persons (as defined in the 0000 Xxx) of any such party, cast
in person at a meeting called for the purpose of voting on
such approval, and (ii) by the Fund's Board or by a vote of
the holders of a majority of the outstanding voting securities
(as defined in the 1940 Act) of the Fund.
(b) Notwithstanding the foregoing, this Agreement may be
terminated at any time, without the payment of any penalty, by
the Fund's Board or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of the Fund on
60 days' written notice to Subadvisor. This Agreement may also
be terminated, without the payment of any penalty, by Advisor
(i) upon 60 days' written notice to Subadvisor; (ii) upon
material breach by Subadvisor of any representations and
warranties set forth in this Agreement, if such breach has not
been cured within 20 days after written notice of such breach;
or (iii) immediately if, in the reasonable judgment of
Advisor, Subadvisor becomes unable to discharge its duties and
obligations under this Agreement, including circumstances such
as the insolvency of Subadvisor or other circumstances that
could adversely affect the Fund. Subadvisor may terminate this
Agreement at any time, without payment of any penalty, on 60
days' written notice to Advisor. This Agreement shall
terminate automatically in the event of its assignment (as
defined in the 0000 Xxx) or upon the termination of the
Advisory Agreement.
9. Subadvisor's Services Are Not Exclusive. Nothing in this Agreement
shall limit or restrict the right of any of Subadvisor's partners,
officers, or employees who may also be a director, officer, or employee
of the Fund to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any
business, whether of a similar or a dissimilar nature, or limit or
restrict Subadvisor's right to engage in any other business or to
render services of any kind to any other corporation, firm, individual,
or association.
10. References to Subadvisor. During the term of this Agreement, Investment
Manager agrees to furnish to Subadvisor at its principal office all
prospectuses, proxy statements, reports to shareholders, sales
literature, or other material prepared for distribution to sales
personnel, shareholders of the Fund or the public, which refer to
Subadvisor or its clients in any way, prior to use thereof and not to
use such material if Subadvisor reasonably objects in writing five
business days (or such other time as may be mutually agreed upon) after
receipt thereof. Sales literature may be furnished to Subadvisor
hereunder by first-class or overnight mail, facsimile transmission, or
hand delivery.
11. Notices. Any notice under this Agreement must be given in writing as
provided below or to another address as either party may designate in
writing to the other.
Subadvisor:
Chief Operating Officer
Xxxxx Selected Advisers, L.P.
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax:
INVESTMENT MANAGER:
Xxx X. Xxxxxxx
Vice President, Funds Operations and Compliance
Ameriprise Financial
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Fax: 000-000-0000
with a copy to:
Xxxxxxxxxxx X. Xxxxxxxx
Counsel
Ameriprise Financial
00000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
12. Amendments. This Agreement may be amended by mutual consent, subject to
approval by the Fund's Board and the Fund's shareholders to the extent
required by the 1940 Act.
13. Assignment. No assignment (as defined in the 0000 Xxx) shall be made by
Advisor without the prior written consent of the Fund and Investment
Manager. Notwithstanding the foregoing, no assignment shall be deemed
to result from any changes in the directors, officers, or employees of
Advisor except as may be provided to the contrary in the 1940 Act or
the rules and regulations thereunder.
14. Governing Law. This Agreement shall be governed by the laws of the
State of Minnesota, without giving effect to the conflicts of laws
principles thereof, or any applicable provisions of the 1940 Act. To
the extent that the laws of the State of Minnesota, or any of the
provision of this Agreement, conflict with applicable provisions of the
1940 Act, the latter shall control.
15. Entire Agreement. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter hereof.
16. Severability. Should any part of this Agreement be held invalid by a
court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors.
17. Interpretation. Any questions of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by
reference to such term or provision in the 1940 Act and to
interpretation thereof, if any, by the federal courts or, in the
absence of any controlling decision of any such court, by rules,
regulations, or orders of the SEC validly issued pursuant to the 1940
Act. Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation, or order
of the SEC, whether of special or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation, or
order.
18. Headings. The headings in this Agreement are intended solely as a
convenience and are not intended to modify any other provision herein.
19. Authorization. Each of the parties represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized
by all necessary corporate action by such party and when so executed
and delivered, this Agreement will be the valid and binding obligation
of such party in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
RIVERSOURCE INVESTMENTS, LLC XXXXX SELECTED ADVISERS, L.P.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx Xxxx
------------------- -------------------
Signature Signature
Xxxxx X. Xxxxx Xxxxxx Xxxx
Senior Vice President Vice President
SUBADVISORY AGREEMENT
SCHEDULE A
RIVERSOURCE FUNDAMENTAL VALUE FUND
Compensation pursuant to Paragraph 4 of Subadvisory Agreement shall be
calculated in accordance with the following schedule:
Average Daily Net Assets* Rate
First $100 million 0.45bp
$100 million-$500 million 0.40bp
$500 million-$1 billion 0.30bp
Over $1 billion 0.25bp
Dated: March 1, 2006
----------------------
*Applies to average daily net assets that are subject to the Subadvisor's
investment discretion.
