XXXX XXXXXXX FUNDS II
SUBADVISORY AGREEMENT
AGREEMENT made this ___ day of _________, 2005, between Xxxx Xxxxxxx
Investment Management Services, LLC, a Delaware limited liability company (the
"Adviser"), and Xxxxxxxx Associates 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 II (the "Trust") 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 Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust, the
Adviser and the Subadviser. The Trust, the Adviser and the Subadviser shall not
be considered as partners or participants in a joint venture.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the Trust,
the Subadviser will manage the investments and determine the composition
of the assets of the Portfolios in 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
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 and communicating
such information to the Trust's Custodian, as designated by Adviser,
with respect thereto;
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 Portfolios for which market quotations are
not readily available or securities for which such market quotations
are not reliable in the opinion of the Subadviser.
b. The Subadviser, at its expense, will furnish (i) all necessary investment
and management facilities, including salaries of personnel required for it
to execute its duties faithfully, and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the investment affairs of the Portfolios (excluding
determination of net asset value and shareholder accounting services).
c. The Subadviser will select brokers and dealers to effect all transactions
subject to the following conditions: The Subadviser will place all
necessary orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all
times to seek to execute brokerage transactions for the Portfolios in
accordance with such policies or practices as may be established by the
Trustees and described in the Trust's registration statement as amended.
Subject to Section 28(e) of the Securities Exchange Act of 1934, as
amended, the Subadviser may pay or direct to be paid commissions generated
by portfolio transactions on behalf of the Portfolio to 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. Adviser hereby agrees and consents that the Subadviser and its affiliates
are authorized to execute agency cross transactions for the Portfolio
provided such transactions comply with applicable laws or regulations.
f. 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, as
amended (the "Investment Company Act") and Investment Advisers Act of
1940, as amended (the "Investment Advisers Act") and the rules thereunder.
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g. 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 for services rendered by
the Subadviser until the date of termination of 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 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. 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 partnership agreement of the
Subadviser, respectively, 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
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, (ii) [ ] 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 Capital Appreciation Fund,
a series of the Trust, 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
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any party to this Agreement cast in person at a meeting called for the purpose
of voting on such approval. Any required shareholder approval of the Agreement
or of any continuance of the Agreement shall be effective with respect to any
Portfolio if a majority of the outstanding voting securities of the series (as
defined in Rule 18f-2(h) under the Investment Company Act) of shares of that
Portfolio votes to approve the Agreement or its continuance, notwithstanding
that the Agreement or its continuance may not have been approved by a majority
of the outstanding voting securities of (a) any other Portfolio affected by the
Agreement or (b) all the portfolios of the Trust.
If any required shareholder approval of 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 or Rule
18f-2(c)(2), as applicable, 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' prior written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty days' prior 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.
In the event this Agreement is terminated or is not approved in the manner
described above, the Sections numbered 2(f) for a period of six years, 3, 4, 13,
15, 16, 17, 19, 20, 21, 22, 23 and Appendix A of this Agreement as well as any
applicable provision of this Section 7 shall remain in effect.
8. 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 the partners or in actual control or management of the
Subadviser or the portfolio manager of any Portfolio.
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9. 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 security which the Subadviser, its partners, affiliates or
employees may purchase or sell for their own accounts or other clients.
10. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the Trustees of the Trust 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.
11. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
12. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
13. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the business address listed below of the 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.
A. if to the Subadviser, to:
Xxxxxxxx Associates LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile transmission number: (000) 000-0000
Attention: Xxxxx Xxxxxxx, Executive Vice President
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With a copy to:
Xxxxxxxx Associates LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile transmission number: (000) 000-0000
Attention: Xxxxx Xxxxx, Vice President and Chief Legal Officer
B. if to the Adviser, to:
[]
Facsimile transmission number:
Attention:
C. if to the Trust, to:
[]
Facsimile transmission number:
Attention:
14. DISCLOSURE STATEMENT
Adviser acknowledges receipt of Subadviser's Disclosure Statement, as
required by Rule 204-3 under the Investment Advisers Act of 1940, more than 48
hours prior to the date of execution of this Agreement.
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,
nor shall resort be had to their private property, for the satisfaction of any
obligation or claim, in connection
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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 CONSULTATION WITH SUBADVISERS TO OTHER TRUST PORTFOLIOS
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
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,
provided that such restriction shall not apply to any disclosure by the
Subadviser to its affiliates or to any disclosure required by regulatory
authorities, applicable law or the rules of any securities exchange which may be
applicable or by legal process (including a subpoena) or if such disclosure is
to the Subadviser's counsel, auditors, agents or consultants who agree to keep
such information confidential.
Each party further agrees to treat as confidential any records or
information (together "Information") obtained from the other pursuant to this
Agreement and not to disclose any part of the Information to a third party or
use the Information other than for purposes of carrying out the terms of this
Agreement; provided, however, that such restrictions shall not apply to any
disclosure of Information by either party to its affiliates or to any disclosure
required by regulatory authorities, applicable law or the rules of any
securities exchange which may be applicable or by legal process (including a
subpoena) or if such disclosure is to either party's counsel, auditors, agents
or consultants who agree to keep such information confidential. Each party shall
inform all of its agents of the confidentiality provisions of this Agreement.
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 upon request of a
regulatory examination of the Subadviser relating to its investment management
services and a summary of material findings with respect to the Portfolio of any
such examination and of the formal review 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
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(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.
21. Use of Names
(a) It is understood that the name "Xxxxxxxx Associates LLC" and "Xxxxxxxx
Associates" and "Xxxxxxxx" or any logo associated with those names is the
valuable property of the Subadviser and that the Trust and the Adviser have the
right to use such name (or derivative or logo), in the Trust's prospectus, SAI
and Registration Statement or other filings, forms or reports required under
applicable state or federal securities, insurance, or other law, for so long as
the Subadviser is a Subadviser to the Trust and/or one of the Portfolios,
provided, however, that the Fund may continue to use the name of the Subadviser
in its Registrations Statement and other documents to the extent deemed
necessary by the Trust to comply with disclosure obligations under applicable
law and regulation. Neither the Trust nor the Adviser shall use the Subadviser's
name or logo in promotional or sales related materials prepared by or on behalf
of the Adviser or the Trust, without prior review and approval by the
Subadviser, which may not be unreasonably withheld. Upon termination of this
Agreement, the Trust and the Adviser shall forthwith cease to use such names
(and logo), except as provided for herein.
(b) It is understood that the name "Xxxx Xxxxxxx" and "Xxxx Xxxxxxx
Investment Management Services, LLC" and "Xxxx Xxxxxxx Funds II" and any
derivative thereof or logo associated with those names are the valuable property
of the Adviser and its affiliates, and that the Subadviser shall not use such
names (or derivatives or logos) without the prior written approval of the
Adviser and only so long as the Adviser is an investment adviser to the Trust
and/or the Portfolios. Upon termination of this Agreement, the Subadviser shall
forthwith cease to use such name (or derivative or logo). The Subadviser may not
use any of those names on a representative client list of the Subadviser without
prior written approval of the Adviser.
22. COOPERATION
Each party to this Agreement agrees to cooperate with each other party and
with all appropriate governmental authorities having the requisite jurisdiction
(including, but not limited to the SEC and state insurance authorities) in
connection with any investigation or inquiry relating to this Agreement or the
Trust.
(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: Xxxx Xxxxxxx Life Insurance Company (U.S.A.),
Managing Member
By:______________________________________________
Xxxx X. XxxXxxx III
Chairman
XXXXXXXX ASSOCIATES LLC
By:______________________________________________
Name:
Title:
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APPENDIX A
The Subadviser shall serve as investment subadviser for each Portfolio of
the Trust listed below. The Adviser will pay the Subadviser, as full
compensation for all services provided under this Agreement with respect to each
Portfolio, the fee computed separately for such Portfolio at an annual rate as
follows (the "Subadviser Fee"):
FIRST EXCESS OVER
$300 MILLION OF $300 MILLION OF
PORTFOLIO AGGREGATE NET ASSETS AGGREGATE NET ASSETS
-------------------------- -------------------- --------------------
Capital Appreciation Fund* 0.400% 0.350%
*The term Aggregate Net Assets includes the net assets of a Portfolio of the
Trust. It also includes with respect to each Portfolio the net assets of one or
more other portfolios as indicated below, but in each case only for the period
during which the Subadviser for the Portfolio also serves as the subadviser for
the other portfolio(s). For purposes of determining Aggregate Net Assets and
calculating the Subadviser Fee, the net assets of the Portfolio and each other
portfolio of the Trust are determined as of the close of business on the
previous business day of the Trust, and the net assets of each portfolio of each
other fund are determined as of the close of business on the previous business
day of that fund, in each case based on market values as reported by the Trust's
custodian.
TRUST PORTFOLIO(s) OTHER PORTFOLIO(s)
------------------------- ------------------
Capital Appreciation Fund -- Capital Appreciation 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 (as determined by percentage rate breakpoints) 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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