JOHN HANCOCK FUNDS III SUBADVISORY AGREEMENT
XXXX XXXXXXX FUNDS III
SUBADVISORY AGREEMENT
AGREEMENT made this 13th day of December, 2010, between Xxxx Xxxxxxx Investment
Management Services, LLC, a Delaware limited liability company (the “Adviser”), and MFC Global
Investment Management (U.S.), LLC, a Delaware 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 of Xxxx Xxxxxxx Funds III (the “Trust”) and the terms of this Agreement, to manage
the investment and reinvestment of the assets of the Portfolio(s) specified in Appendix A to this
Agreement as it shall be amended by the Adviser and the Subadviser from time to time (the
“Portfolio”). 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 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 Portfolio in
accordance with the Portfolio’s registration statement, as amended. In fulfilling its obligations
to manage the investments and reinvestments of the assets of the Portfolio, 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 Portfolio or are under consideration for inclusion in the Portfolio;
ii. formulate and implement a continuous investment program for the Portfolio consistent with
the investment objectives and related investment policies for the 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 assistance to the Trust’s Custodian regarding the fair value of securities held by
the Portfolio 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 investment affairs of the Portfolio (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 Portfolio 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 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.
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 Portfolio
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.
f. The Subadviser shall vote proxies relating to the Portfolio’s investment securities in
accordance with the Trust’s proxy voting policies and procedures, which provide that the Subadviser
shall vote all proxies relating to securities held by the Portfolio and, subject to the Trust’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 review
its proxy voting activities on a periodic basis with the Trustees.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the compensation specified
in Appendix A to this Agreement.
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4. LIABILITY OF SUBADVISER
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 the performance of, or from
the reckless disregard of, the duties of the Subadviser or any of its directors.
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, 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 and
the Limited Liability Company Agreement 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 with respect to the 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 the Portfolio, 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
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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 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 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
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.
10. 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 Portfolio in any
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security which the Subadviser, its partners, affiliates or employees may purchase or sell for
their own accounts or other clients.
11. 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.
12. 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.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the parties.
14. HEADINGS
The headings in the sections of this Agreement are inserted for convenience of reference only
and shall not constitute a part hereof.
15. 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.
16. 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.
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17. 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.
18. 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 III” 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.
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
promptly submit to the Adviser: (i) any material changes to the Compliance Policies, (ii)
notification of the commencement of a regulatory examination of the Subadviser and documentation
describing the results of any such examination and of any periodic testing of the Compliance
Policies, and (iii) notification of any material compliance matter that relates to the services
provided by the Subadviser to the Trust 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 (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.
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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/Xxxxxx X. Xxxxxx
|
|||
| Executive Vice President | ||||
| MFC GLOBAL INVESTMENT MANAGEMENT (U.S.), LLC | ||||
By:
|
/s/Xxxxx X. Xxxxx
|
|||
| Title: President, Chief Operating and Chief Fixed Income Officer | ||||
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APPENDIX A
The Subadviser shall serve as investment subadviser for the Portfolio of the Trust. The
Adviser will pay the Subadviser, as full compensation for all services provided under this
Agreement with respect to the Portfolio, the fee computed separately for such Portfolio at an
annual rate as follows (the “Subadviser Fee”):
| First | Next | Excess | ||||||||||||||||||||||
| $100 | $900 | Next | Next | Next | over | |||||||||||||||||||
| million | million | $1 billion | $1 billion | $1 billion | $4 billion | |||||||||||||||||||
| of Net |
of Net |
of Net |
of Net |
of Net |
of Net |
|||||||||||||||||||
| Portfolio | Assets | Assets | Assets | Assets | Assets | Assets | ||||||||||||||||||
Xxxx Xxxxxxx
International Value
Equity Fund |
||||||||||||||||||||||||
The Subadviser Fee for the 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 rate described in the preceding
paragraph, and multiplying this product by the net assets of the Portfolio. For purposes of
determining net assets of the Portfolio and calculating the Subadviser Fee, the net assets of the
Portfolio are determined as of the close of business on the previous business day of the Trust.
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.
A-1
