INVESTMENT SUBADVISORY AGREEMENT
THIS INVESTMENT SUBADVISORY AGREEMENT ("Agreement") is made as of the
27th day of January, 1998, by and among AMERICAN CENTURY CAPITAL PORTFOLIOS,
INC. ("ACCP"), a Maryland corporation acting on behalf of American Century Real
Estate Fund (the "ACRE Fund"), a series of shares of ACCP, AMERICAN CENTURY
INVESTMENT MANAGEMENT, INC. ("ACIM"), a Delaware corporation, and RREEF AMERICA
L.L.C., f/k/a ROMEO AMERICA L.L.C. (the "Subadvisor"), a Delaware limited
liability company.
WITNESSETH:
WHEREAS, ACCP is an open-end management investment company registered
with the Securities and Exchange Commission under the Investment Company Act of
1940, as amended; and
WHEREAS, ACIM and the Subadvisor are both investment advisors
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended; and
WHEREAS, ACCP has engaged ACIM to serve as the investment manager for
the ACRE Fund pursuant to a Management Agreement dated May 8, 1997; and
WHEREAS, ACCP and ACIM desire to engage the Subadvisor as a subadvisor
for the ACRE Fund, and the Subadvisor desires to accept such engagement; and
WHEREAS, the Boards of Directors of ACCP, ACIM and the Subadvisor have
determined that it is advisable to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, and intending to be legally bound hereby,
the parties hereto covenant and agree as follows:
1. INVESTMENT DESCRIPTION - APPOINTMENT. ACCP desires to appoint the
Subadvisor to provide certain advisory services to the ACRE Fund in accordance
with the ACRE Fund's Prospectus and Statement of Additional Information as in
effect and as amended from time to time, in such manner and to such extent as
may be approved by the Board of Directors of ACCP. ACCP agrees to provide the
Subadvisor copies of all amendments to the ACRE Fund's Prospectus and Statement
of Additional Information on an ongoing basis. In consideration for the
compensation set forth below, the Subadvisor accepts the appointment and agrees
to furnish the services described herein.
2. SERVICES AS INVESTMENT SUBADVISOR.
(a) Subject to the general supervision of the Board of Directors of
ACCP, and of ACIM, the Subadvisor will (i) act in conformity with the ACRE
Fund's Prospectus and Statement of Additional Information, the Investment
Company Act of 1940, the Investment Advisers Act of 1940, the nternal Revenue
Code and all other applicable federal and state laws and regulations, as the
same may from time to time be amended; (ii) make investment decisions for the
ACRE Fund in accordance with the ACRE Fund's investment objective and policies
as stated in the ACRE Fund's Prospectus and Statement of Additional Information
and with such written guidelines as ACIM may from time to time provide to the
Subadvisor; (iii) place purchase and sale orders on behalf of the ACRE Fund;
(iv) maintain books and records with respect to the securities transactions of
the ACRE Fund and furnish ACCP's Board of Directors such periodic, regular and
special reports as the Board may request; and (v) treat confidentially and as
proprietary information of ACCP all records and other information related to
ACCP and its prior, present or potential shareholders. The Subadvisor will not
use such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by ACCP, which approval shall not be unreasonably withheld.
Such records may not be withheld when the Subadvisor may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by ACCP,
but in any case the Subadvisor will provide reasonable notice to ACCP prior to
disclosing any such records or information.
(b) In providing those services, the Subadvisor will supervise the ACRE
Fund's investments and conduct a continual program of investment, evaluation
and, if appropriate, sale and reinvestment of the ACRE Fund's assets. In
addition, the Subadvisor will furnish ACCP or ACIM whatever information,
including statistical data, ACCP or ACIM may reasonably request with respect to
the instruments that the ACRE Fund may hold or contemplate purchasing.
(c) The Subadvisor will at all times comply with the policies adopted
by ACCP's Board of Directors of which it has received written notice. If the
Subadvisor shall believe that a change in any of such policies shall be
advisable, it shall recommend such change to ACIM and the Board of Directors of
ACCP. Any change to any such policies shall be approved by ACCP's Board of
Directors prior to the implementation of such change.
3. BROKERAGE.
(a) In executing transactions for the ACRE Fund and selecting brokers
or dealers, the Subadvisor will use its best efforts to obtain the best net
price and execution available and shall execute or direct the execution of all
such transactions as permitted by law and in a manner that best suits the
interest of the ACRE Fund and its shareholders. In assessing the best net price
and execution available for any ACRE Fund transaction, the Subadvisor will
consider all factors it deems relevant including, but not limited to, breadth of
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and on a continuing basis. Consistent
with this obligation, when the execution and price offered by two or more
brokers or dealers are comparable, the Subadvisor may, at its discretion,
execute transactions with brokers and dealers who provide the ACRE Fund with
research advice and other services, but in all instances best net price and
execution shall control. The Subadvisor is authorized to place purchase and sale
orders for the ACRE Fund with brokers and/or dealers subject to the supervision
of ACIM and the Board of Directors of ACCP and in accordance with the
limitations set forth in the registration statement for the ACRE Fund shares
then in effect.
(b) On occasions when the Subadvisor deems the purchase or sale of a
security to be in the best interest of the ACRE Fund as well as one or more of
its other clients, the Subadvisor may to the extent permitted by applicable law,
but shall not be obligated to, aggregate the securities to be sold or purchased
with those of its other clients. In such event, allocation of the securities so
purchased or sold will be made by the Subadvisor in a manner it considers to be
equitable and consistent with its fiduciary obligations to ACCP and to such
other clients. Securities so allocated will be delivered in proportion to the
consideration paid. The expenses incurred in the transaction shall be allocated
pro-rata.
4. INFORMATION PROVIDED TO ACCP.
(a) The Subadvisor will keep ACCP and ACIM informed of developments
materially affecting the ACRE Fund and will take initiative to furnish ACCP and
ACIM on at least quarterly basis with whatever information the Subadvisor and
ACIM believe is appropriate for this purpose. Such regular quarterly reports
shall include (i) a discussion of the ACRE Fund's performance relative to its
benchmark; (ii) an assessment of investment decisions and analysis of the
components of the ACRE Fund's performance; (iii) the decisions it has made with
respect to the ACRE Fund's assets and the purchase and sale of its portfolio
securities; (iv) the reasons for such decisions and related actions; and (v) the
extent to which those decisions have been implemented.
(b) The Subadvisor will provide ACCP and ACIM with such investment
records, ledgers, accounting and statistical data, and other information as ACCP
and ACIM require for the preparation of registration statements, periodic and
other reports and other documents required by federal and state laws and
regulations, and particularly as may be required for the periodic review,
renewal, amendment or termination of this Agreement, and such additional
documents and information as ACCP and ACIM may reasonably request for the
management of their affairs. At least twice annually a representative of the
Subadvisor shall attend a meeting of the Board of Directors to make a
presentation on the ACRE Fund's performance during the preceding six and twelve
months periods, as well as such other time periods as the Subadvisor and ACIM
believe is appropriate.
(c) The Subadvisor shall furnish to regulatory authorities any
information or reports in connection with such services as may be lawfully
requested. The Subadvisor shall also, at ACCP's request, certify to ACCP's
independent auditors that sales or purchases aggregated with those of other
clients of the Subadvisor, as described in Section 3 above, were equitably
allocated.
(d) In compliance with the requirements of the Investment Company Act,
the Subadvisor hereby agrees that all records that it maintains for the ACRE
Fund are the property of ACCP and further agrees to surrender to ACCP promptly
upon ACCP's request any of such records. In addition, the Subadvisor agrees to
cooperate with ACCP and ACIM when either of them is being examined by any
regulatory authorities, and specifically agrees to promptly comply with any
request by such authorities to provide information or records. The Subadvisor
further agrees to preserve for the periods of time prescribed by the Investment
Company Act and the Investment Advisers Act the records required to be
maintained thereunder.
5. LIABILITY AND INDEMNIFICATION.
(a) The Subadvisor shall be responsible for the exercise of reasonable
care in carrying out its responsibilities hereunder; provided, however, that no
provision of this Agreement be construed to protect any trustee, director,
officer, agent or employee of the Subadvisor or an affiliate from liability by
reason of gross negligence, willful malfeasance, bad faith in the performance of
such person's duties or by reason of reckless disregard of obligations and
duties hereunder. No party shall be liable for any actions or omissions taken or
made pursuant to this Agreement unless such actions or omissions result from
gross negligence, willful malfeasance, or bad faith in the performance of such
party's duties or by reason of reckless disregard of obligations and duties
hereunder.
(b) ACIM agrees to indemnify and hold harmless the Subadvisor and its
officers, directors, employees, agents, affiliates and each person, if any, who
controls the Subadvisor within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this Section 5(b))
against any losses, claims, expenses, damages or liabilities (including amounts
paid in settlement thereof) or litigation expenses (including legal and other
expenses) (collectively, "Losses"), to which the Indemnified Parties may become
subject, insofar as such Losses result from (a) a breach by ACCP or ACIM of a
material provision of this Agreement, (b) gross negligence, willful malfeasance
or bad faith in the performance by ACCP or ACIM of its respective duties or
reckless disregard by ACCP or ACIM of its respective duties hereunder, or (c)
any violation by ACCP or ACIM of any applicable law or regulation where the
Subadvisor was not contributing to or a part of the violation. ACIM will
reimburse any legal or other expenses reasonably incurred by the Indemnified
Parties in connection with investigating or defending any such Losses. ACIM
shall not be liable for indemnification hereunder if such Losses are
attributable to the gross negligence or misconduct of the Subadvisor in
performing its obligations under this Agreement.
(c) The Subadvisor agrees to indemnify and hold harmless ACIM and ACCP,
and their respective officers, directors, employees, agents, affiliates and each
person, if any, who controls ACIM or ACCP within the meaning of the Securities
Act of 1933 (collectively, the "Indemnified Parties" for purposes of this
Section 5(c)) against any Losses to which the Indemnified Parties may become
subject, insofar as such Losses result from (a) a breach by the Subadvisor of a
material provision of this Agreement, (b) gross negligence, willful malfeasance,
or bad faith in performance by the Subadvisor or its affiliates of their duties
or reckless disregard by the Subadvisor or its affiliates of their duties
hereunder, or (c) any violation by the Subadvisor of any applicable law or
regulation where neither ACCP or ACIM was contributing to or was a part of the
violation. The Subadvisor will reimburse any legal or other expenses reasonably
incurred by the Indemnified Parties in connection with investigating or
defending any such Losses. The Subadvisor shall not be liable for
indemnification hereunder if such Losses are attributable to the gross
negligence or misconduct of ACIM or ACCP in performing their obligations under
this Agreement.
(d) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section 5. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 5 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(e) If the indemnifying party assumes the defense of any such action,
the indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgment in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
6. COMPENSATION.
(a) In consideration of the services rendered pursuant to this
Agreement, ACIM will pay the Subadvisor a per annum management fee (the
"Applicable Fee"), as follows:
Name of Series Applicable Fee
-------------- --------------
American Century Real Estate Fund 0.425%
(b) On the first business day of each month, ACIM shall pay the
Subadvisor the Applicable Fee for the previous month. The fee for the previous
month shall be calculated by multiplying the Applicable Fee for such series by
the aggregate average daily closing value of all classes of the series' net
assets during the previous month, and further multiplying that product by a
fraction, the numerator of which shall be the number of days in the previous
month, and the denominator of which shall be 365 (366 in leap years).
(c) In the event that the Board of Directors of ACCP shall determine to
issue any additional series of shares for which it is proposed that the
Subadvisor serve as investment manager, ACCP, ACIM and the Subadvisor shall
enter into an Addendum to this Agreement setting forth the name of the series,
the Applicable Fee and such other terms and conditions as are applicable to the
management of such series of shares.
(d) The Subadvisor shall have no right to obtain compensation directly
from the ACRE Fund or ACCP for services provided hereunder and agrees to look
solely to ACIM for payment of fees due. Upon termination of this Agreement
before the end of a month, or in the event the Agreement begins after the
beginning of the month, the fee for that month shall be prorated according to
the proportion that such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
(e) Notwithstanding anything else set forth herein, ACIM shall deposit
into an interest bearing escrow account maintained by an unaffiliated financial
institution the Applicable Fee earned by the Subadvisor from and after the later
of (i) the day on which the acquisition of the Subadvisor by ROMEO U.S. Group,
Inc., a Delaware corporation, is closed (the "Closing") and (ii) the date on
which relief from Section 15(a) of the Investment Company Act of 1940 is granted
(the "Order Date") (Investment Company Act of 1940, File No. 812-10932, filed
with the Securities Exchange Commission, December 29, 1997, as amended February
___, 1998) to but not including the date on which the shareholders of the ACRE
Fund have approved this Agreement; provided, however, that any fees (other than
expenses) earned by the Subadvisor during the time period between the Closing
and the Order Date shall not be paid into the escrow account by ACIM and shall
be refunded to the ACRE Fund. As soon as practicable after the date on which
this Agreement is approved by the shareholders of the ACRE Fund in accordance
with Section 15(a) of 1940, as amended, ACIM agrees to deliver to the escrow
agent a certificate from an officer of ACIM who is not affiliated with the
Subadvisor stating that this Agreement has been approved by the shareholders of
the ACRE Fund and that moneys held in escrow are to be delivered to the
Subadvisor.
7. EXPENSES. The Subadvisor will bear all of its expenses in connection
with the performance of its services under this Agreement, which expenses shall
not include brokerage fees or commissions in connection with the execution of
securities transactions.
8. SERVICES TO OTHER COMPANIES OR ACCOUNTS. ACCP understands that the
Subadvisor or its affiliates now acts and will continue to act as investment
advisor to other clients. ACCP has no objection to the Subadvisor so acting,
provided that, as described in Section 3 above, whenever the ACRE Fund and one
or more other client of the Subadvisor have funds available for investment,
investments suitable and appropriate for each will be allocated equitably to
each entity in accordance with procedures, with no preference given to other
clients. Similarly, opportunities to sell securities will be allocated in an
equitable manner, with no preference given to other clients. In addition, ACCP
understands that the persons employed by the Subadvisor to assist in the
performance of the Subadvisor's duties hereunder will not devote their full time
to such service and nothing contained herein shall be deemed to limit or
restrict the right of the Subadvisor of any affiliate of the Subadvisor to
engage in and devote time and attention to other business or to render services
of whatever kind or nature. Further, from time to time, the Subadvisor may refer
or introduce certain institutional investors and existing clients of the
Subadvisor and its affiliates to ACCP. ACCP understands that nothing herein
shall be deemed to limit or restrict the right of the Subadvisor, in the event
the Subadvisor's clients purchase shares of ACCP, to subsequently suggest or
induce such clients to redeem such shares and open a separate advisory account
with the Subadvisor.
9. TERMS OF AGREEMENT. This Agreement shall become effective as of the
date first written above and shall continue until May 8, 1999 and thereafter so
long as such continuance is specifically approved at least annually by (i) the
Board of Directors of ACCP or (ii) a vote of a majority of the Fund's
outstanding voting securities, provided that in either event the continuance is
also approved by a majority of the Board of Directors who are not interested
persons (as defined in the Investment Company Act) of any party to this
Agreement, by a vote cast at a meeting called for the purpose of voting on such
approval. This Agreement is terminable without penalty on 60 days' written
notice by the Board of Directors of ACCP, or by vote of holders of a majority of
the ACRE Fund's shares, or upon six months' written notice by the Subadvisor,
and will terminate automatically upon any termination of the investment
management agreement between ACCP and ACIM. This Agreement will terminate
automatically in the event of its assignment. The Subadvisor agrees to notify
ACCP of any circumstances that might result in this Agreement being deemed to be
assigned.
10. REPRESENTATIONS OF ACIM, THE SUBADVISOR AND ACCP.
(a) ACIM and the Subadvisor each hereby represents that it is
registered as an investment advisor under the Investment Advisers Act, that it
will use its reasonable best efforts to maintain such registration, and that it
will promptly notify the other if it ceases to be so registered, if its
registration is suspended for any reason, or if it is notified by any regulatory
organization or court of competent jurisdiction that it should show cause why
its registration should not be suspended or terminated. ACIM and the Subadvisor
each further represents that it is registered under the laws of all
jurisdictions in which the conduct of its business hereunder requires such
registration.
(b) ACCP and ACIM represent and warrant that (i) the appointment of the
Subadvisor has been duly authorized; and (ii) each of them has full power and
authority to execute and deliver this Agreement and to perform the services
contemplated hereunder, and such execution, delivery and performance will not
cause either to be in violation of its Articles of Incorporation, Bylaws, or any
material laws.
(c) The Subadvisor represents and warrants that (i) its service as
subadvisor hereunder has been duly authorized; and (ii) it has full power and
authority to execute and deliver this Agreement and to perform the services
contemplated hereunder, and such execution, delivery and performance will not
cause it to be in violation of its organizational documents, its Bylaws or
material laws.
11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. LIMITATION OF LIABILITY. This Agreement has been executed on behalf
of ACCP by the undersigned officer of ACCP solely in his capacity as an officer
of ACCP.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto on the subject matter described herein.
14. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder,
the Subadvisor is and shall be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent ACCP or ACIM in any way, or otherwise be deemed to be an agent of ACCP
or ACIM.
15. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statue, rule or similar authority, the
remainder of this Agreement shall not be affected thereby.
16. NOTICES. All notices and other communications hereunder shall be
given or made in writing and shall be delivered personally, or sent by telex,
telecopy, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Subadvisor:
RREEF America, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (office number)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopy number)
To ACCP or ACIM:
American Century Investments
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (office number)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
Section shall be deemed to have been delivered on receipt.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below on the day and year first written
above.
RREEF AMERICA L.L.C. AMERICAN CENTURY CAPITAL
PORTFOLIOS, INC.
By:/s/▇▇▇ ▇. ▇▇▇▇▇▇▇ By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President Title: Vice President
AMERICAN CENTURY
INVESTMENT MANAGEMENT, INC.
By:/s/▇▇▇▇▇▇ ▇. Puff Jr.
Name: ▇▇▇▇▇▇ ▇. Puff Jr.
Title: President
