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XXXX XXXXXXX TRUST
SUBADVISORY AGREEMENT
AGREEMENT made this 1st day of December, 2005, between Xxxx Xxxxxxx
Investment Management Services, LLC, a Delaware limited liability company (the
"Adviser"), and Salomon Brothers 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 Trust (the "Trust") and the
terms of this Agreement, to manage the investment and reinvestment of the assets
of the portfolios of the Trust specified in Appendix A to this Agreement as it
shall be amended by the Adviser and the Subadviser from time to time (the
"Portfolio" or "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 or otherwise be deemed an agent unless 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 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;
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 determinations of the fair value of certain securities when
market quotations are not readily available for purposes of
calculating net asset value for the Trust's Custodian in accordance
with the procedures and methods established by the Trustees of the
Trust.
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 investment affairs of the Portfolios (excluding
determination of net asset value and shareholder accounting services).
c. The Subadviser will select brokers and dealers 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. The Subadviser may pay a
broker-dealer which provided research and brokerage services a higher
commission for a particular transaction than otherwise might have been
charges by another broker-dealer, if the Subadviser determines that the
higher 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 client's 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.
d. 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.
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
Neither the Subadviser nor any of its directors, officers or employees
shall be liable to the Adviser or Trust for any loss suffered by the Adviser or
Trust resulting from its acts or omissions as Subadviser to the Portfolios,
except for losses resulting from willful misfeasance, bad faith, or gross
negligence in the performance of, or from reckless disregard or, the duties of
the Subadviser or any of its directors, officers or employees.
5. SUPPLEMENTAL ARRANGEMENTS
The Subadviser may enter into arrangements with other persons affiliated
with the Subadviser to better enable it to fulfill its obligations under this
Agreement for the provision of certain personnel and facilities to the
Subadviser.
6. 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,
stockholders or otherwise; that directors, officers, agents and stockholders 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 thereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Articles of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
7. 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.
8. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective on the later of its execution or its
approval by the Board of Trustees of the Trust (as described below). Thereafter,
the Agreement will continue in effect for a period
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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.
If any required shareholder approval of the 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 any 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, 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,
on sixty days' written notice to the Adviser and the Subadviser, or 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.
9. 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 Adviser's 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. the chief executive officer or controlling stockholder of the Subadviser
or the portfolio manager of any Portfolio changes.
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 who
are not interested person 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.
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11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to the Portfolios listed in Appendix A.
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 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. 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.
16. LIMITATION OF LIABILITY
The Declaration of Trust establishing the Trust, dated September 28, 1988,
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 Trust" 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 which the obligee or claimant dealt,
shall be liable.
17. 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
18. 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.
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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 dated first
mentioned above.
Xxxx Xxxxxxx Investment Management Services, LLC
by: Xxxx Xxxxxxx Life Insurance Company (U.S.A.),
its managing member
by:_______________________________
Salomon Brothers Asset Management Inc.
by:________________________________
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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"):
BETWEEN BETWEEN $200 EXCESS OVER
FIRST $50 MILLION $50 MILLION AND $200 MILLION AND $500 $500 MILLION OF
OF AGGREGATE MILLION OF AGGREGATE MILLION OF AGGREGATE AGGREGATE NET
PORTFOLIO NET ASSETS* NET ASSETS* NET ASSETS* ASSETS*
U.S. Government Securities Trust....
Strategic Bond Trust................
High Yield Trust....................
Special Value Trust.................
*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)
-------------------------------- ----------------------------------
U.S. Government Securities Trust -- U.S. Government Securities Fund, a
series of Xxxx Xxxxxxx Funds II
Strategic Bond Trust Strategic Bond Fund, a series of Xxxx
Xxxxxxx Funds II
High Yield Trust High Yield Fund, a series of Xxxx
Xxxxxxx Funds II
Special Value Trust Special Value Fund, a series of Xxxx
Xxxxxxx Funds II
The Subadviser Fee for a Portfolio shall be based on the applicable annual
fee rate for the Portfolio which for each day shall be equal to the quotient of
(i) the sum of the amounts determined by applying the annual percentage rates in
the table to the applicable portions of Aggregate Net Assets divided by (ii)
Aggregate Net Assets (the "Applicable Annual Fee Rate"). 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 Rate, and multiplying this product by the net assets of
the Portfolio. 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.
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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