XXXX XXXXXXX FUNDS II
SUBADVISORY AGREEMENT
AGREEMENT made this 17th day of October, 2005, between Xxxx Xxxxxxx
Investment Management Services, LLC, a Delaware limited liability company (the
"Adviser"), and Deutsche Asset Management, Inc., a Delaware corporation (the
"Subadviser"). In consideration of the mutual covenants contained herein, the
parties agree as follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and, subject
to the supervision of the Trustees of Xxxx Xxxxxxx Funds II (the "Trust") and
the terms of this Agreement, to manage the investment and reinvestment of the
assets of the Portfolios specified in Appendix A to this Agreement as it shall
be amended by the Adviser and the Subadviser from time to time (the
"Portfolios"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the Trust,
the Subadviser will manage the investments and determine the composition of
the assets of the Portfolios in accordance with the Portfolios'
registration statement, as amended and provided to the Subadviser from time
to time. In fulfilling its obligations to manage the investments and
reinvestments of the assets of the Portfolios, the Subadviser will:
i. obtain and evaluate pertinent economic, statistical, financial and
other information affecting the economy generally and individual
companies or industries the securities of which are included in the
Portfolios or are under consideration for inclusion in the Portfolios;
ii. formulate and implement a continuous investment program for each
Portfolio consistent with the investment objectives and related
investment policies for each such Portfolio as described in the
Trust's registration statement, as amended and provided to the
Subadviser from time to time. The Adviser shall notify the Subadviser
in advance of any amendments thereto relating to the Portfolio;
Further, failure of the Subadviser to meet the investment objectives
of the Portfolio as described in the Trust's registration statement
will not constitute a breach of this Agreement.
iii. take whatever steps are necessary to implement these investment
programs by the purchase and sale of securities including the placing
of orders for such purchases and sales;
iv. regularly report to the Trustees of the Trust with respect to the
implementation of these investment programs; and
v. provide assistance to the Trust's Custodian regarding the fair value
of securities held by the Portfolios for which market quotations are
not readily available.
b. The Subadviser, at its expense, will furnish (i) all necessary investment
and management facilities, including salaries of personnel required for it
to execute its duties faithfully, and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the management of the investments of the Portfolios
(excluding determination of net asset value and shareholder accounting
services).
c. The Subadviser will have complete discretion to select brokers and dealers,
which may be brokers or dealers that are affiliated with Subadviser, to
effect all transactions subject to the following conditions: The Subadviser
will place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is directed
at all times to seek to execute brokerage transactions for the Portfolios
in accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as amended.
Subject to such policies or practices as may be described in the
registration statement, as amended, in Subadviser's selection of such
brokers and dealers, it is understood and agreed that Subadviser may take
into consideration the broker's commission rates or principal spreads,
research capabilities, executions, reliability, efficiency and other
factors, and that, subject to compliance with Section 28(e) of the
Securities Exchange Act of 1934, Subadviser shall have no duty to obtain
the lowest commission or best net price for the Portfolios on any
particular transaction The Subadviser may pay a broker-dealer which
provides research and brokerage services a higher spread or commission for
a particular transaction than otherwise might have been charged by another
broker-dealer, if the Subadviser determines that the higher spread or
commission is reasonable in relation to the value of the brokerage and
research services that such broker-dealer provides, viewed in terms of
either the particular transaction or the Subadviser's overall
responsibilities with respect to accounts managed by the Subadviser. The
Subadviser may use for the benefit of the Subadviser's other clients, or
make available to companies affiliated with the Subadviser or to its
directors for the benefit of its clients, any such brokerage and research
services that the Subadviser obtains from brokers or dealers. The Trust
shall be responsible for all brokerage fees and costs.
d. On occasions when the Subadviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other clients of the
Subadviser, the Subadviser to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold to attempt to obtain a more favorable
price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner the Subadviser considers to be the most equitable and consistent
with its fiduciary obligations to the Portfolio and to its other clients.
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e. Subject to applicable laws and regulations, including Rule 10f-3 under the
Investment Company Act of 1940, Subadviser may purchase securities from an
unaffiliated syndicate member in an underwriting in which an affiliated
broker-dealer participates in the management activities of the syndicate.
f. Physical custody of all Portfolio assets, including cash and equivalents,
shall be held by a custodian appointed thereby. Subadviser shall at no time
receive, retain nor physically control any assets forming any part of the
Portfolios. All transactions authorized by this Agreement shall be
transacted through the custodian. Subadviser shall not be liable to the
Adviser, the Trust or the Trustees for any action or omission of the
custodian.
g. The Subadviser will maintain all accounts, books and records with respect
to the Portfolios as are required of an investment adviser of a registered
investment company pursuant to the Investment Company Act of 1940 (the
"Investment Company Act") and Investment Advisers Act of 1940 (the
"Investment Advisers Act") and the rules thereunder.
h. The Subadviser shall vote all proxies relating to the Portfolio's
investment securities in accordance with the Trust's proxy voting
procedures. The Trust's voting policies and procedures provide that the
Subadviser shall vote all proxies relating to securities held by the
Portfolio and shall use proxy voting policies and procedures adopted by the
Subadviser in conformance with Rule 206(4)-6 under the Investment Advisers
Act.
i. The Subadviser shall be entitled to sub-delegate, where necessary, the
performance of any or all of the services hereunder to any member of a
company controlled by Deutsche Bank AG ("Group Companies"), provided that
if such delegation would violate the anti-assignment provisions of the
Investment Advisers Act, then it shall not be permitted without the
approval of the Trustees.
j. No warranty is given by the Subadviser as to the performance or
profitability of the Portfolio or any part of it.
k. The Adviser and the Trustees acknowledge receipt and review of a copy of
Subadviser's Form ADV Part II. The Adviser may terminate this contract
within five business days of receipt of Form ADV Part II without penalty.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
a. Neither the Subadviser nor any of its directors, officers or employees
shall be liable to the Adviser or the Trust for any error of judgment or
mistake of law or for any loss suffered by the Adviser or Trust in
connection with the matters to which this Agreement relates except for
losses resulting from willful misfeasance, bad faith or gross negligence in
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the performance of, or from the reckless disregard of, the duties of the
Subadviser or any of its directors.
b. The Subadviser and any of its directors, officers or employees shall not in
any event have any liability to the Adviser to the extent that performance
of its obligations is prevented or impeded as a consequence of any
circumstances beyond its reasonable control, including (without limitation)
nationalization, currency restrictions, acts of war, acts of God, breakdown
or failure of transmission or communications or computer facilities that is
not due to the negligence of the Subadviser or any of its affiliates,
postal or other strikes or industrial action, Government action, or the
failure or disruption of any stock exchange, clearing house, settlements
system or market.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of the
Trust are or may be interested in the Subadviser as trustees, officers, partners
or otherwise; that employees, agents and partners of the Subadviser are or may
be interested in the Trust as trustees, officers, shareholders or otherwise;
that the Subadviser may be interested in the Trust; and that the existence of
any such dual interest shall not affect the validity hereof or of any
transactions hereunder except as otherwise provided in the Agreement and
Declaration of Trust of the Trust or by specific provision of applicable law.
6. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio on the
later of (i) its execution and (ii) the date of the meeting of the Board of
Trustees of the Trust, at which meeting this Agreement is approved as described
below. The Agreement will continue in effect for a period more than two years
from the date of its execution only so long as such continuance is specifically
approved at least annually either by the Trustees of the Trust or by a majority
of the outstanding voting securities of each of the Portfolios, provided that in
either event such continuance shall also be approved by the vote of a majority
of the Trustees of the Trust who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval. Any required
shareholder approval of the Agreement or of any continuance of the Agreement
shall be effective with respect to any Portfolio if a majority of the
outstanding voting securities of the series (as defined in Rule 18f-2(h) under
the Investment Company Act) of shares of that Portfolio votes to approve the
Agreement or its continuance, notwithstanding that the Agreement or its
continuance may not have been approved by a majority of the outstanding voting
securities of (a) any other Portfolio affected by the Agreement or (b) all the
portfolios of the Trust.
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If any required shareholder approval of this Agreement or any continuance
of the Agreement is not obtained, the Subadviser will continue to act as
investment subadviser with respect to such Portfolio pending the required
approval of the Agreement or its continuance or of a new contract with the
Subadviser or a different adviser or subadviser or other definitive action;
provided, that the compensation received by the Subadviser in respect of such
Portfolio during such period is in compliance with Rule 15a-4 under the
Investment Company Act.
This Agreement may be terminated at any time, without the payment of any
penalty, (i) by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Portfolio by
the vote of a majority of the outstanding voting securities of such Portfolio,
either on sixty days' written notice to the Adviser and the Subadviser, or (ii)
by the Adviser or Subadviser on sixty days' written notice to the Trust and the
other party. This Agreement will automatically terminate, without the payment of
any penalty, in the event of its assignment (as defined in the Investment
Company Act) or in the event the Advisory Agreement between the Adviser and the
Trust terminates for any reason.
All acts done by Subadviser pursuant to this Agreement prior to the
termination date shall be fully binding upon Adviser and the Trust and upon the
successors and assigns of each. Adviser's and/or the Trust's obligations to pay
all brokerage, custodian and Subadviser compensation and other expenses of the
Trust arising under this Agreement prior to the termination date shall survive
termination of this Agreement.
8. PROVISION OF CERTAIN INFORMATION BY SUBADVISER
The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
a. the Subadviser fails to be registered as an investment adviser under the
Investment Advisers Act or under the laws of any jurisdiction in which the
Subadviser is required to be registered as an investment adviser in order
to perform its obligations under this Agreement;
b. the Subadviser is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, involving the affairs of the Trust; and
c. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
9. SERVICES TO OTHER CLIENTS
The Adviser understands, and has advised the Trust's Board of Trustees,
that the Subadviser now acts, or may in the future act, as an investment adviser
to fiduciary and other managed accounts and as investment adviser or subadviser
to other investment companies. Further, the Adviser understands, and has advised
the Trust's Board of Trustees that the Subadviser and its affiliates may give
advice and take action for its accounts, including investment companies, which
differs from advice given on the timing or nature of action taken for the
Portfolio. The Subadviser is not obligated to initiate transactions for a
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ortfolio in any security which the Subadviser, affiliates or employees may
purchase or sell for their own accounts or other clients.
10. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the Trustees of the Trust and
by the vote of a majority of the Trustees of the Trust who are not interested
persons of any party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval. Any required shareholder approval shall
be effective with respect to any Portfolio if a majority of the outstanding
voting securities of that Portfolio vote to approve the amendment,
notwithstanding that the amendment may not have been approved by a majority of
the outstanding voting securities of (a) any other Portfolio affected by the
amendment or (b) all the portfolios of the Trust.
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
13. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date delivered or mailed in accordance with this paragraph.
14. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void in
law or in equity, the Agreement shall be construed, insofar as is possible, as
if such portion had never been contained herein.
15. REPRESENTATIONS OF THE ADVISER
a. The Adviser represents, warrants and agrees on a continuing basis the
following:
1. it has the authority to enter into this Agreement, and that it has
taken all steps necessary to appoint the Subadviser to perform the
services envisaged in this Agreement;
2. it is duly authorized and empowered to perform its duties and
obligations hereunder and that the terms of this Agreement do not
constitute a breach of any obligations by which the Adviser is bound
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whether arising by contract, operation of law or otherwise;
3. as a condition of the provision of services by the Subadviser
hereunder, it will provide to the Subadviser such documents as it may
require as evidence of the Adviser's authority to enter into this
Agreement, and will forthwith advise the Subadviser of any variation
of or supplements to such documents relevant to the authority of the
Adviser to enter into this Agreement;
4. it will notify the Subadviser promptly if there is any change to the
investment policies of the Portfolio and will provide such other
relevant information as the Subadviser may from time to time
reasonably require in order to fulfill its legal, regulatory and
contractual obligations relating to fulfilling its obligations under
this Agreement. The Adviser acknowledges that a failure to provide
such information may adversely affect the quality of the services that
the Subadviser may provide;
5. it has delivered to Subadviser a true and complete copy of the
Portfolios' prospectus and statement of additional information as well
as all applicable procedures adopted by the Board of the Trustees of
the Trust and will promptly provide the Subadviser with amendments to
these documents;
6. except as Subadviser has been informed in writing to the contrary and
except as otherwise provided in the Portfolios' prospectus and
statement of additional information and any of the Trust policies that
have been provided to the Subadviser, there are no restrictions which
would prevent or limit investment of assets of the Portfolios in any
manner whatsoever and that if any such restriction should be effected,
Subadviser shall be promptly informed in writing as to the nature and
extent of any such restriction; and
7. The Subadviser is responsible for ensuring that each Portfolio
complies with all applicable investment restrictions set forth in (a)
each Portfolio's prospectus and statement of additional information,
(b) any Trust procedures that are provided to the Subadviser and (c)
in all applicable laws and regulations, including without limitation,
the Investment Company Act of 1940 and the Internal Revenue Code. The
Adviser is responsible for compliance with any applicable investment
restrictions that apply to all Trust portfolios in the aggregate.
b.
The Subadviser represents, warrants and agrees on a continuing basis the
following:
1. it is duly registered as an investment adviser under the Investment
Advisers Act of 1940;
2. it has the authority to enter into this Agreement;
3. it is duly authorized and empowered to perform its duties and
obligations hereunder and that the terms of this Agreement do not
constitute a breach of any obligations by which the Subadviser is
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bound whether arising by contract, operation of law or otherwise.
16. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
17. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the office of the
Secretary of The Commonwealth of Massachusetts, provides that the name " Xxxx
Xxxxxxx Funds II" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the Trust shall be held to any personal liability,
nor shall resort be had to their private property, for the satisfaction of any
obligation or claim, in connection with the affairs of the Trust or any
portfolio thereof, but only the assets belonging to the Trust, or to the
particular Portfolio with respect to which such obligation or claim arose, shall
be liable.
18. CONSULTATION WITH SUBADVISERS TO OTHER TRUST PORTFOLIOS
As required by Rule 17a-10 under the Investment Company Act of 1940, the
Subadviser is prohibited from consulting with the entities listed below
concerning transactions for a Portfolio in securities or other assets:
1. other subadvisers to a Portfolio
2. other subadvisers to a Trust portfolio
3. other subadvisers to a portfolio under common control with the Portfolio
19. CONFIDENTIALITY OF TRUST PORTFOLIO HOLDINGS
The Subadviser agrees to treat Trust portfolio holdings as confidential
information in accordance with the Trust's "Policy Regarding Disclosure of
Portfolio Holdings," as such policy may be amended from time to time, and to
prohibit its employees from trading on any such confidential information.
20. COMPLIANCE
Upon execution of this Agreement, the Subadviser shall provide the Adviser
with the Subadviser's written policies and procedures ("Compliance Policies"),
as required by Rule 206(4)-7 under the Investment Advisers Act. Throughout the
term of this Agreement, the Subadviser shall submit to the Adviser: (i) no less
frequently than annually any material changes (or summaries thereof) to the
Compliance Policies, (ii) no less frequently than the next regular report to the
Adviser, notification of any litigation or investigation that, in the
Subadviser's reasonable determination, would have a material impact on the
Subadviser's ability to perform its obligations under this Agreement, and (iii)
no less frequently than the next regular report to the Adviser, notification of
any material compliance matter that, in the Subadviser's reasonable
determination, relates to the services provided by the Subadviser to the Trust,
including but not limited to any material violation of the Compliance Policies,
or the commencement or results of any regulatory examination or periodic testing
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of the Compliance Policies. Throughout the term of this Agreement, the
Subadviser shall provide the Adviser with any certifications, information and
access to personnel and resources (including those resources that will permit
testing of the Compliance Policies by the Adviser) that the Adviser may
reasonably request to enable the Trust to comply with Rule 38a-1 under the
Investment Company Act.
(THE REMAINDER OF THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
XXXX XXXXXXX INVESTMENT MANAGEMENT
SERVICES, LLC
By: Xxxx Xxxxxxx Life Insurance Company (U.S.A.),
Managing Member
By: /s/Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President & Chief Financial Officer,
Xxxx Xxxxxxx Funds
DEUTSCHE ASSET MANAGEMENT, INC.
By: /s/Xxxxxx X. Thomchak
Name: Xxxxxx X. Thomchak
Title: Director
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APPENDIX A
The Subadviser shall serve as investment subadviser for each Portfolio of
the Trust listed below. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement with respect to each
Portfolio, the fee computed separately for such Portfolio at an annual rate as
follows (the "Subadviser Fee"):
First Excess Over
$500 million $500 million
of Aggregate of Aggregate
Portfolio Net Assets* Net Assets*
Real Estate Securities Fund 0.250% 0.250%
Dynamic Growth Fund 0.500% 0.450%
All Cap Core Fund 0.350% 0.300%
*The term Aggregate Net Assets includes the net assets of a Portfolio of the
Trust. It also includes with respect to each Portfolio the net assets of one or
more other portfolios as indicated below, but in each case only for the period
during which the Subadviser for the Portfolio also serves as the subadviser for
the other portfolio(s). For purposes of determining Aggregate Net Assets and
calculating the Subadviser Fee, the net assets of the Portfolio and each other
portfolio of the Trust are determined as of the close of business on the
previous business day of the Trust, and the net assets of each portfolio of each
other fund are determined as of the close of business on the previous business
day of that fund.
Trust Portfolio(s) Other Portfolio(s)
Real Estate Securities Fund -- Real Estate Trust, a series of Xxxx Xxxxxxx Trust
Dynamic Growth Fund Dynamic Growth Trust, a series of Xxxx Xxxxxxx Trust
All Cap Core Fund All Cap Core Trust, a series of Xxxx Xxxxxxx Trust
The Subadviser Fee for a Portfolio shall be equal to (i) the total fee
determined by applying the annual percentage rates in the table above to the
Aggregate Net Assets times (ii) the net assets for such Portfolio, divided by
(iii) the Aggregate Net Assets (the "Applicable Annual Fee"). The Subadviser Fee
for each Portfolio shall be accrued for each calendar day, and the sum of the
daily fee accruals shall be paid monthly to the Subadviser within 30 calendar
days of the end of each month. The daily fee accruals will be computed by
multiplying the fraction of one over the number of calendar days in the year by
the Applicable Annual Fee. The Adviser shall provide Subadviser with such
information as Subadviser may reasonably request supporting the calculation of
the fees paid to it hereunder. Fees shall be paid either by wire transfer or
check, as directed by Subadviser.
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If, with respect to any Portfolio, this Agreement becomes effective or
terminates, or if the manner of determining the Applicable Annual Fee Rate
changes, before the end of any month, the fee (if any) for the period from the
effective date to the end of such month or from the beginning of such month to
the date of termination or from the beginning of such month to the date such
change, as the case may be, shall be prorated according to the proportion which
such period bears to the full month in which such effectiveness or termination
or change occurs.
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