SUBADVISORY AGREEMENT
Agreement made as of the 28th day of February, 2002, by and between
American Express Financial Corporation, a Delaware corporation ("AEFC"), and
Wellington Management Company, LLP, a Massachusetts limited liability
partnership ("Subadviser").
WHEREAS the Fund or Funds listed in Schedule A are each a series of an
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); provided that references in this Agreement to "the
Fund" in the singular shall be understood to refer to all Funds so listed in
Schedule A.
WHEREAS AEFC has entered into an Investment Management Services Agreement
(the "Advisory Agreement") with the Fund pursuant to which AEFC provides
investment advisory services to the Fund.
WHEREAS both AEFC and the Fund desire to retain Subadviser to provide
investment advisory services to the Fund, and Subadviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
1. Subadviser's Duties.
(a) Portfolio Management. Subject to supervision by AEFC and the Fund's
Board of Directors (the "Board"), Subadviser shall manage the
investment operations and the composition of that portion of assets of
the Fund which is allocated to Subadviser from time to time by AEFC
(which portion may include any or all of the Fund's assets), including
the purchase, retention, and disposition thereof, in accordance with
the Fund's investment objectives, policies, and restrictions, and
subject to the following understandings:
(i) Investment Decisions. Subadviser shall determine from time to
time what investments and securities will be purchased, retained,
or sold by the Fund, and what portion of such assets will be
invested or held uninvested as cash.
(ii) Investment Limits. In the performance of its duties and
obligations under this Agreement, Subadviser shall act in
conformity with applicable limits and requirements, as amended
from time to time, as set forth in (A) the Fund's Prospectus and
Statement of Additional Information ("SAI"); (B) the instructions
and directions of AEFC and of the Board; (C) the requirements of
the 1940 Act, the Internal Revenue Code of 1986, as amended, as
applicable to the Fund, and all other applicable federal and
state laws and regulations; and (D) the procedures and standards
set forth in, or established in accordance with, the Advisory
Agreement.
(iii) Portfolio Transactions.
(A) Trading. With respect to the securities and other
investments to be purchased or sold for the Fund,
Subadviser shall place orders with or through such
persons, brokers, dealers, or futures commission
merchants (including, but not limited to,
broker-dealers that are affiliated with AEFC or
Subadviser) selected by Subadviser; provided, however,
that such orders shall be consistent with the brokerage
policy set forth in the Fund's Prospectus and SAI, or
approved by the Board; conform with federal securities
laws; and be consistent with securing the most
favorable price and efficient execution. Within the
framework of this policy, Subadviser may consider the
research, investment information, and other services
provided by, and the financial responsibility of,
brokers, dealers, or futures commission merchants who
may effect, or be a party to, any such transaction or
other transactions to which Subadviser's other clients
may be a party.
(B) Aggregation of Trades. On occasions when Subadviser
deems the purchase or sale of a security or futures
contract to be in the best interest of the Fund as well
as other clients of Subadviser, Subadviser, to the
extent permitted by applicable laws and regulations,
may, but shall be under no obligation to, aggregate the
securities or futures contracts to be sold or purchased
in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such
event, allocation of the securities or futures
contracts so purchased or sold, as well as the expenses
incurred in the transaction, will be made by Subadviser
in the manner Subadviser considers to be the most
equitable and consistent with its fiduciary obligations
to the Fund and to such other clients.
(i) Records and Reports. Subadviser shall maintain such books and
records required under the 1940 Act as shall be agreed upon from
time to time by the parties hereto, shall render to the Board
such periodic and special reports as the Board or AEFC may
reasonably request, and shall meet with any persons at the
request of AEFC or the Board for the purpose of reviewing
Subadviser's performance under this Agreement at reasonable times
and upon reasonable advance written notice.
(ii) Transaction Reports. Subadviser shall provide the Fund's
custodian on each business day with information relating to all
transactions concerning the Fund's assets and shall provide AEFC
with such information upon AEFC's request.
(b) Subadviser's Partners, Officers, and Employees. Services to be
furnished by Subadviser under this Agreement may be furnished through
any partners, officers, or employees of the Subadviser.
(c) Maintenance of Records. Subadviser shall timely furnish to AEFC all
information relating to Subadviser's services hereunder which are
needed by AEFC to maintain the books and records of the Fund required
under the 1940 Act. Subadviser shall maintain for the Fund the records
required by paragraphs (b)(5), (b)(6), (b)(7), (b)(9), (b)(10) and (f)
of Rule 31a-1 under the 1940 Act and any additional records as agreed
upon by Subadviser and AEFC. Subadviser agrees that all records which
it maintains for the Fund are the property of the Fund and Subadviser
will surrender promptly to the Fund any of such records upon the
Fund's request; provided, however, that Subadviser may retain a copy
of such records. Subadviser further agrees to preserve for the periods
prescribed under the 1940 Act any such records as are required to be
maintained by it pursuant to paragraph 1(a) hereof.
(d) Fidelity Bond and Code of Ethics. Subadviser will provide the Fund
with reasonable evidence that, with respect to its activities on
behalf of the Fund, Subadviser is maintaining (i) adequate fidelity
bond insurance and (ii) an appropriate Code of Ethics and related
reporting procedures.
2. AEFC's Duties. AEFC shall continue to have responsibility for all other
services to be provided to the Fund pursuant to the Advisory Agreement and
shall oversee and review Subadviser's performance of its duties under this
Agreement. AEFC shall also retain direct portfolio management
responsibility with respect to any assets of the Fund which are not
allocated by it to the portfolio management of Subadviser as provided in
paragraph 1(a) hereof.
3. Documents Provided to Subadviser. AEFC has delivered or will deliver to
Subadviser current copies and supplements thereto of each of the Prospectus
and SAI pertaining to the Fund, and will deliver to it all future
amendments and supplements, if any.
4. Compensation of Subadviser. For the services provided and the expenses
assumed pursuant to this Agreement, AEFC will pay to Subadviser, effective
from the date of this Agreement, a fee which shall be accrued daily and
paid monthly, on or before the last business day of the next succeeding
calendar month, from the Fund's assets at the annual rates as a percentage
of the Fund's average daily net assets set forth in the attached Schedule
A, which Schedule can be modified from time to time to reflect changes in
annual rates, subject to appropriate approvals required by the 1940 Act, if
any. If this Agreement becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion that such
month bears to the full month in which such effectiveness or termination
occurs.
5. Liability of Subadviser. Subadviser agrees to perform faithfully the
services required to be rendered to the Fund under this Agreement, but
nothing herein contained shall make Subadviser or any of its officers,
partners, or employees liable for any loss sustained by the Fund or its
officers, directors, or shareholders, or any other person on account of the
services which Subadviser may render or fail to render under this
Agreement; provided, however, that nothing herein shall protect Subadviser
against liability to the Fund or to
any of its shareholders, to which Subadviser would otherwise be subject, by
reason of its willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement. Nothing in this Agreement
shall protect Subadviser from any liabilities which it may have under the
1933 Act or the 1940 Act.
6. Representations of Subadviser. Subadviser represents and warrants as
follows:
(a) Subadviser (i) is registered as an investment advisor under the
Advisers Act of 1940 (the "Advisers Act") and will continue to be so
registered for so long as this Agreement remains in effect; (ii) is
not prohibited by the 1940 Act or the Advisers Act from performing the
services contemplated by this Agreement, (iii) has met and will seek
to continue to meet for so long as this Agreement remains in effect,
any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency
necessary to be met in order to perform the services contemplated by
this Agreement; (iv) has the authority to enter into and perform the
services contemplated by this Agreement; and (v) will promptly notify
AEFC of the occurrence of any event that would disqualify Subadviser
from serving as an investment advisor of an investment company
pursuant to Section 9(a) of the 1940 Act or otherwise.
(b) Subadviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide AEFC
with a copy of the code of ethics, together with evidence of its
adoption. Within 45 days of the end of the last calendar quarter of
each year that this Agreement is in effect, a duly authorized officer
of Subadviser shall certify to AEFC that Subadviser has complied with
the requirements of Rule 17j-1 during the previous year and that there
has been no material violation of Subadviser's code of ethics or, if
such a violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of AEFC,
Subadviser shall permit AEFC, its employees, or its agents to examine
any report required to be made pursuant to Rule 17j-1(c)(2).
(c) Subadviser has provided AEFC with a copy of its Form ADV, which as of
the date of this Agreement is its Form ADV as most recently filed with
the Securities and Exchange Commission ("SEC") and promptly will
furnish a copy of all amendments to AEFC at least annually.
(d) Subadviser will promptly notify AEFC of any changes in the membership
of the Executive Committee or in the key personnel who are either the
portfolio manager(s) responsible for the Fund or senior management of
Subadviser, or if there is otherwise an actual or expected change in
control or management of Subadviser.
(e) Subadviser agrees that neither it nor any of its affiliates will in
any way refer directly or indirectly to its relationship with the Fund
or AEFC, or any of their respective affiliates in offering, marketing,
or other promotional materials without the prior written consent of
AEFC.
7. Representations of AEFC. AEFC represents and warrants as follows:
(a) AEFC (i) is registered as an investment advisor under the Advisers Act
of 1940 (the "Advisers Act") and will continue to be so registered for
so long as this Agreement remains in effect; (ii) is not prohibited by
the 1940 Act or the Advisers Act from performing the services
contemplated by this Agreement, (iii) has met and will seek to
continue to meet for so long as this Agreement remains in effect, any
other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency
necessary to be met in order to perform the services contemplated by
this Agreement; (iv) has the authority to enter into and perform the
services contemplated by this Agreement; and (v) will promptly notify
Subadviser of the occurrence of any event that would disqualify AEFC
from serving as an investment advisor of an investment company
pursuant to Section 9(a) of the 1940 Act or otherwise.
(b) AEFC agrees that neither it nor any of its affiliates will in any way
refer directly or indirectly to its relationship with Subadviser, or
any of its affiliates in offering, marketing, or other promotional
materials without the prior written consent of Subadviser.
8. Liability and Indemnification.
(a) Except as may otherwise be provided by the 1940 Act or any other
federal securities law, Subadviser, any of its affiliates and any of
the partners, officers, employees, consultants, or agents thereof
shall not be liable for any losses, claims, damages, liabilities, or
litigation (including legal and other expenses) incurred or suffered
by AEFC or the Fund as a result of any error of judgment or mistake of
law by Subadviser with respect to the Fund, except that nothing in
this Agreement shall operate or purport to operate in any way to
exculpate, waive, or limit the liability of Subadviser for, and
Subadviser shall indemnify and hold harmless the Fund, AEFC, all
affiliated persons thereof (within the meaning of Section 2(a)(3) of
the 0000 Xxx) and all controlling persons (as described in Section 15
of the Securities Act of 1933, as amended ("1933 Act")) (collectively,
"AEFC Indemnitees") against any and all losses, claims, damages,
liabilities, or litigation (including reasonable legal and other
expenses) to which any of the AEFC Indemnitees may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, or under any other
statute, at common law, or otherwise arising out of or based on (i)
any willful misconduct, bad faith, reckless disregard, or gross
negligence of Subadviser in the performance of any of its duties or
obligations hereunder; (ii) any untrue statement of a material fact
regarding the Subadviser contained in the Prospectus and SAI, proxy
materials, reports, advertisements, sales literature, or other
materials pertaining to the Fund or the omission to state therein a
material fact regarding the Subadviser known to Subadviser which was
required to be stated therein or necessary to make the statements
therein not misleading, if such statement or omission was made in
reliance upon written information furnished to AEFC or the Fund by the
Subadviser Indemnitees (as defined below) for use therein; or (iii)
any violation of federal or state statutes or regulations by
Subadviser. It is further understood and agreed that Subadviser
may rely upon information furnished to it by AEFC that it reasonably
believes to be accurate and reliable. The federal securities laws
impose liabilities in certain circumstances on persons who act in good
faith, and therefore nothing herein shall in any way constitute a
waiver of limitation of any rights which AEFC may have under any
securities laws.
(b) Except as may otherwise be provided by the 1940 Act or any other
federal securities law, AEFC and the Fund shall not be liable for any
losses, claims, damages, liabilities, or litigation (including legal
and other expenses) incurred or suffered by Subadviser as a result of
any error of judgment or mistake of law by AEFC with respect to the
Fund, except that nothing in this Agreement shall operate or purport
to operate in any way to exculpate, waive, or limit the liability of
AEFC or the Fund for, and AEFC shall indemnify and hold harmless
Subadviser, all affiliated persons thereof (within the meaning of
Section 2(a)(3) of the 0000 Xxx) and all controlling persons (as
described in Section 15 of the 1933 Act) (collectively, "Subadviser
Indemnitees") against any and all losses, claims, damages,
liabilities, or litigation (including reasonable legal and other
expenses) to which any of the Subadviser Indemnitees may become
subject under the 1933 Act, the 1940 Act, the Advisers Act, or under
any other statute, at common law, or otherwise arising out of or based
on (i) any willful misconduct, bad faith, reckless disregard, or gross
negligence of AEFC in the performance of any of its duties or
obligations hereunder; (ii) any untrue statement of a material fact
contained in the Prospectus and SAI, proxy materials, reports,
advertisements, sales literature, or other materials pertaining to the
Fund or the omission to state therein a material fact known to AEFC
which was required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission
concerned the Subadviser and was made in reliance upon written
information furnished to AEFC or the Fund by a Subadviser Indemnitee
for use therein, or (iii) any violation of federal or state statutes
or regulations by AEFC or the Fund.
(c) After receipt by AEFC or Subadviser, their respective affiliates, or
any partner, officer, director, employee, or agent of any of the
foregoing, entitled to indemnification as stated in (a) or (b) above
("Indemnified Party") of notice of the commencement of any action, if
a claim in respect thereof is to be made against any person obligated
to provide indemnification under this section ("Indemnifying Party"),
such Indemnified Party shall notify the Indemnifying Party in writing
of the commencement thereof as soon as practicable after the summons
or other first written notification giving information of the nature
of the claim that has been served upon the Indemnified Party; provided
that the failure to so notify the Indemnifying Party will not relieve
the Indemnifying Party from any liability under this section, except
to the extent that the omission results in a failure of actual notice
to the Indemnifying Party and such Indemnifying Party is damaged
solely as a result of the failure to give such notice. The
Indemnifying Party, upon the request of the Indemnified Party, shall
retain counsel satisfactory to the Indemnified Party to represent the
Indemnified Party in the proceeding, and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the
expense of such
Indemnified Party unless (1) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such
counsel, or (2) the named parties to any such proceeding (including
any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation by both parties by the same
counsel would be inappropriate due to actual or potential differing
interests between them. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent,
which consent shall not be unreasonably withheld, but if settled with
such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and
against any loss or liability by reason of such settlement or
judgment.
9. Duration and Termination.
(a) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for a period of two years from the date written
above only so long as such the Agreement is specifically approved in
conformity with the requirements of the 1940 Act. Thereafter, if not
terminated, this Agreement shall continue automatically for successive
periods of 12 months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of
the Board members who are not parties to this Agreement or interested
persons (as defined in the 0000 Xxx) of any such party, and (ii) by
the Board or by a vote of the holders of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund.
(b) Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by the Board or by vote of a
majority of the outstanding voting securities (as defined in the 0000
Xxx) of the Fund on 60 days' written notice to Subadviser. This
Agreement may also be terminated, without the payment of any penalty,
by AEFC (i) upon 60 days' written notice to Subadviser; (ii) upon
material breach by Subadviser of any representations and warranties
set forth in this Agreement, if such breach has not been cured within
20 days after written notice of such breach; or (iii) immediately if,
in the reasonable judgment of AEFC, Subadviser becomes unable to
discharge its duties and obligations under this Agreement, including
circumstances such as the insolvency of Subadviser or other
circumstances that could adversely affect the Fund. Subadviser may
terminate this Agreement at any time, without payment of any penalty,
on: (i) 60 days' written notice to AEFC; or (ii) upon material breach
by AEFC of any representations and warranties set forth in this
Agreement, if such breach has not been cured within 20 days after
written notice of such breach. This Agreement shall terminate
automatically in the event of its assignment (as defined in the 0000
Xxx) or upon the termination of the Advisory Agreement.
10. Subadviser's Services Are Not Exclusive. Nothing in this Agreement shall
limit or restrict the right of any of Subadviser's partners, officers, or
employees to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any business,
whether of a similar or a dissimilar nature, or limit or restrict
Subadviser's right to engage in any other business or to render services of
any kind to any other corporation, firm, individual, or association.
11. References to Subadviser. During the term of this Agreement, AEFC agrees to
furnish to Subadviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to sales personnel, shareholders of the Fund or
the public, which refer to Subadviser or its clients in any way, prior to
use thereof and not to use such material if Subadviser reasonably objects
in writing five business days (or such other time as may be mutually agreed
upon) after receipt thereof. Sales literature may be furnished to
Subadviser hereunder by first-class or overnight mail, electronic or
facsimile transmission, or hand delivery.
12. Notices. Any notice under this Agreement must be given in writing as
provided below or to another address as either party may designate in
writing to the other.
Subadviser:
Wellington Management Company, LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Fax: 000-000-0000
with a copy to:
Wellington Management Company, LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxx
Fax: 000-000-0000
AEFC:
Vice President, Investment Administration American
Express Financial Corporation 53600 AXP Financial
Center Xxxxxxxxxxx, XX 00000 Fax: 000-000-0000
with a copy to:
H. Xxxxx xxx Xxxxx
Group Counsel
American Express Financial Advisors Inc.
50606 AXP Financial Center
Xxxxxxxxxxx, XX 00000
Fax: 000-000-0000
13. Amendments. This Agreement may be amended by mutual consent, subject to
approval by the Board and the Fund's shareholders to the extent required by
the 1940 Act.
14. Assignment. No assignment (as defined in the 0000 Xxx) shall be made by
AEFC or the Subadviser without the prior written consent of the other
party. Notwithstanding the foregoing, no assignment shall be deemed to
result from any changes in the directors, partners, officers, or employees
of AEFC or the Subadviser, respectively, except as may be provided to the
contrary in the 1940 Act or the rules and regulations thereunder.
15. Governing Law. This Agreement shall be governed by the laws of the State of
Minnesota, without giving effect to the conflicts of laws principles
thereof, or any applicable provisions of the 1940 Act. To the extent that
the laws of the State of Minnesota, or any of the provision of this
Agreement, conflict with applicable provisions of the 1940 Act, the latter
shall control.
16. Entire Agreement. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof.
17. Severability. Should any part of this Agreement be held invalid by a court
decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors.
18. Interpretation. Any questions of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision in the 1940 Act and to interpretation thereof, if any, by the
federal courts or, in the absence of any controlling decision of any such
court, by rules, regulations, or orders of the SEC validly issued pursuant
to the 1940 Act. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by a rule,
regulation, or order of the SEC, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation, or order.
19. Headings. The headings in this Agreement are intended solely as a
convenience and are not intended to modify any other provision herein.
20. Authorization. Each of the parties represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action by such party and when so executed and
delivered, this Agreement will be the valid and binding obligation of such
party in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
American Express Financial Corporation Wellington Management Company, LLP
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
----------------------- ------------------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxxxx
Title: Vice President, Mutual Funds Title: President
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