XXXX XXXXXXX FUNDS II
SUBADVISORY AGREEMENT
AGREEMENT made this 28th day of April, 2006, between Xxxx Xxxxxxx
Investment Management Services, LLC, a Delaware limited liability company (the
"Adviser"), and RiverSource Investments, LLC, a Minnesota limited liability
company (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 xxXxxx Xxxxxxx Funds II (the "Fund") 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 Fund or Adviser in any way except as expressly
authorized in this Agreement or another writing by the Fund and Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE FUND
a. Subject always to the direction and control of the Trustees of the Fund,
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. 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 Fund'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 Fund with respect to the
implementation of these investment programs, as reasonably requested by the
Adviser or the Trustees of the Fund; and
v. provide assistance to the Fund's Custodian regarding the fair value of
securities held by the Portfolios for which market quotations are not
readily available, as reasonably requested by the Fund's Custodian or the
Adviser, provided that the Fund's Custodian and/or other service provider
responsible for valuing the securities held by the Portfolios in accordance
with the Portfolios' fair valuation procedures, and not Subadviser, shall
be responsible for determining the fair valuation of any such securities.
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b. The Subadviser, at its expense, will furnish all necessary investment and
management facilities, including salaries of personnel required for it to
execute its duties faithfully and all other 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) in accordance with its investment management
responsibilities under this Agreement.
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 Fund's registration statement as amended. 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. Absent negligence, bad faith or willful
misconduct by the Subadviser, the Subadviser shall not be responsible for
any loss caused by any act or omission of any broker-dealer; provided,
however, that with respect to any broker-dealer that has been selected by
the Subadviser, the Subadviser has acted prudently in such selection.
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.
e. 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.
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f. The Subadviser shall vote proxies relating to the Portfolios' investment
securities in accordance with the Fund's proxy voting policies and
procedures, which provide that the Subadviser shall vote all proxies
relating to securities held by the Portfolios and, subject to the Fund's
policies and procedures, shall use proxy voting policies and procedures
adopted by the Subadviser in conformance with Rule 206(4)-6 under the
Investment Advisers Act. The Subadviser shall not be responsible for any
other corporate actions relating to the Portfolios, including
administrative filings, such as proofs of claims or claims in class
actions, but will promptly forward any materials related to such actions
received by the Subadviser to the Adviser. In addition, the Subadviser will
assist the Adviser or the Fund with respect to these matters by providing
historical transaction information as reasonably requested by the Fund's
custodian or the Adviser.
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 the Fund for any error of judgment or mistake
of law or for any loss suffered by the Adviser or Fund in connection with the
matters to which this Agreement relates except for losses resulting from willful
misfeasance, bad faith or negligence in the performance of, or from the reckless
disregard of, the duties of the Subadviser or any of its directors. Absent
negligence, willful misconduct or bad faith by them, each of the Subadviser, and
its respective directors, officers, employees and agents, shall be entitled to
rely upon any information or instructions furnished to it (or any of them as
individuals) by the Adviser which is believed in good faith to be accurate and
reliable. The Adviser understands and acknowledges that the Subadviser does not
guarantee to provide any particular rate of return, market value or performance
of any assets of the Portfolios. The federal securities laws impose liabilities
under certain circumstances on persons who act in good faith and, therefore,
nothing herein shall constitute a waiver of any right which the Adviser may have
under such laws or regulations.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of the
Fund 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 Fund as trustees, officers, shareholders or otherwise; that
the Subadviser may be interested in the Fund; 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 governing documents of the Fund 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
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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 Fund, 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 Fund 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 Fund 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 Fund.
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, by the Trustees of the Fund, by the vote of a majority of the
outstanding voting securities of the Fund, 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 Fund 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 Fund
terminates for any reason.
8. PROVISION OF CERTAIN INFORMATION
a. The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
i. 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;
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ii. 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 Fund; and
iii. any change in actual control or management of the Subadviser or the
portfolio manager of any Portfolio.
b. The Adviser will promptly notify the Adviser in writing if the Adviser 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 Portfolios.
c. The Adviser will provide the Subadviser with the Fund's current Prospectus
and Statement of Additional information and any amendments thereto on a
timely basis, including reasonable advance notice of any investment
guideline changes. The Adviser will provide the Subadviser such other
information relating to the Portfolios and to the services to be provided
by the Subadviser under this agreement as the Adviser and Subadviser
mutually agree is necessary or appropriate.
9. SERVICES TO OTHER CLIENTS
The Adviser understands, and has advised the Fund'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 Fund'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
Portfolio in any security which the Subadviser, its partners, affiliates or
employees may purchase or sell for their own accounts or other clients.
10. CONSULTATION WITH SUBADVISERS TO OTHER FUND 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 Fund portfolio;
3. other subadvisers to a portfolio under common control with the
Portfolio.
The Adviser agrees to furnish a list of any such subadvisers to the
Subadviser, and to advise the Subadviser of any changes to the list. The Adviser
shall make a good faith effort to ensure that the advisory contracts of each
such subadviser contain the same prohibitions as this Section 10.
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11. 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 Fund and
by the vote of a majority of the Trustees of the Fund 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 Fund.
12. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
13. HEADINGS
The headings in the sections of this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
14. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Fund 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.
15. 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.
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,
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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. CONFIDENTIALITY OF FUND PORTFOLIO HOLDINGS
The Subadviser agrees to treat Fund portfolio holdings as confidential
information in accordance with the Fund'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. The
Adviser agrees to furnish the Subadviser with a copy of any such portfolio
holdings disclosure policy it has adopted and that remains in effect from time
to time.
All information and advice furnished by the Subadviser to the Adviser under
this Agreement shall be confidential and shall not be disclosed to third
parties, except as required by law, permitted by the Fund's Policy Regarding
Disclosure of Portfolio Holdings or authorized in writing by the Subadviser, as
applicable. All information furnished by the Adviser to the Subadviser and its
affiliates under this Agreement shall be confidential and shall not be disclosed
to any unaffiliated third party, except as required by law, permitted by the
Fund's Policy Regarding Disclosure of Portfolio Holdings, authorized in writing
by the Adviser, or where it is necessary to provide services to the Adviser or
the Portfolios in connection with this Agreement, as applicable. The Sub-Adviser
may share information provided by the Adviser with the Subadviser's affiliates
in accordance with the Subadviser's privacy policies in effect from time to
time, as communicated in writing by Subadviser to Adviser and not otherwise
objected to by Adviser, or in accordance with the Fund's Policy Regarding
Disclosure of Portfolio Holdings, as applicable.
19. COMPLIANCE
Upon execution of this Agreement, the Subadviser shall provide the Adviser
with a summary of the Subadviser's written policies and procedures relating to
the Subadviser's management of the Portfolios ("Compliance Policies") as
required by Rule 206(4)-7 under the Investment Advisers Act. Throughout the term
of this Agreement, the Subadviser shall promptly submit to the Adviser: (i)
notification of any material changes to the Compliance Policies, (ii)
notification of the commencement of a regulatory examination of the Subadviser
relating to the Subadviser's management of the Portfolios and documentation
describing the results of any such examination, (iii) documentation describing
the results of the Subadviser's assessment regarding testing of the Compliance
Policies, and (iv) notification of any material compliance matter (as defined in
Rule 38a-1 under the Investment Company Act) that relates to the services
provided by the Subadviser to the Fund including but not limited to any material
violation of the Compliance Policies or of the Subadviser's code of ethics
and/or related code. Throughout the term of this Agreement, the Subadviser shall
provide the Adviser with any certifications, information and access to personnel
and resources in order to allow the Adviser to test the Compliance Policies of
the Subadviser, as the Adviser may reasonably request to enable the Fund to
comply with Rule 38a-1 under the Investment Company Act.
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20. REPRESENTATIONS, WARRANTIES AND COVENANTS
a. The Adviser represents, warrants and covenants that:
i. The Adviser: (i) is not prohibited by the Investment Company Act or the
Investment Advisers Act from performing the services contemplated by this
Agreement; (ii) has appointed a Chief Compliance Officer under Rule
206(4)-7 of the Investment Advisers Act; (iii) has adopted written policies
and procedures that are reasonably designed to prevent violations of the
Investment Advisers Act from occurring; and (iv) has the authority to enter
into and perform the services contemplated by this Agreement.
ii. The (i) the Trustees of the Fund have approved the appointment of the
Subadviser pursuant to this Agreement; and (ii) the person executing this
Agreement on behalf of the Adviser is authorized to do so.
b. The Subadviser represents, warrants and covenants that:
i. The Subadviser: (i); is not prohibited by the Investment Company Act or
the Investment Advisers Act from performing the services contemplated by
this Agreement; (ii) has appointed a Chief Compliance Officer under Rule
206(4)-7 of the Investment Advisers Act; (iii) has adopted written policies
and procedures that are reasonably designed to prevent violations of the
Investment Advisers Act from occurring; (iv) has the authority to enter
into and perform the services contemplated by this Agreement; and (v) will
promptly notify the Adviser of the occurrence of any event that would
disqualify the Subadviser from serving as an investment adviser of an
investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
ii. The person executing this Agreement on behalf of the Subadviser is
authorized to do so.
c. The Adviser or Subadviser will promptly notify the other in writing if any
of their respective representations or warranties made in this Agreement
change or become untrue for any reason.
21. ACKNOWLEDGMENTS OF ADVISER
The Adviser understands and acknowledges that:
a. The Subadviser shall have no responsibility under this Agreement for such
other assets or assets over which the Subadviser has no discretionary
investment management authority pursuant to this Agreement.
b. The Adviser has received a copy of Part II of the Subadviser's Form ADV or
other brochure meeting the requirements of Rule 204-3 under the Investment
Advisers Act ("Subadviser Disclosure Brochure").
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22. CUSTODY
The Subadviser shall not act as custodian for the Fund and shall not take
possession of any assets of the Portfolios. The Subadviser shall give notice and
directions with respect to transactions in a manner that shall be agreed upon
with the Fund's custodian. Absent negligence, bad faith, or willful misconduct
by the Subadviser, the Subadviser shall not be responsible for any loss caused
by any act or omission of the Fund's custodian.
23. MARKET DATA.
The Subadviser may provide the Adviser or the Trustees of the Fund with
third party market data relating to securities and securities markets. While the
Subadviser believes that such data is accurate, complete and timely, the
Subadviser does not guarantee the accuracy, completeness, or timeliness of such
information nor does it imply any warranty of any kind regarding the market
data.
24. USE OF NAME
The Adviser agrees that the Subadviser may identify the Adviser, the Fund
or the Portfolios by name in the Subadviser's current client list. Such list may
be used with third parties.
25. COUNTERPARTS
This Agreement may be executed in multiple counterparts, each of which
shall be an original and all of which, when taken together, shall constitute one
and the same Agreement.
(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: /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Executive Vice President and Chief Financial Officer
RIVERSOURCE INVESTMENTS, LLC
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
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APPENDIX A
The Subadviser shall serve as investment subadviser for each Portfolio of
the Fund 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 Next Next Excess Over
$250 million $250 million $500 million $1billion
of Aggregate of Aggregate of Aggregate of Aggregate
Portfolio Net Assets* Net Assets* Net Assets* Net Assets*
Mid Cap Value Equity Fund
*The term Aggregate Net Assets includes the net assets of a Portfolio of the
Fund. 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 Fund are determined as of the close of business on the previous
business day of the Fund, 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.
Fund Portfolio(s) Other Portfolio(s)
Mid Cap Value Equity Fund -- Mid Cap Value Equity Trust, a series of Xxxx Xxxxxxx Trust
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 (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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