XXXX XXXXXXX FUNDS II
SUBADVISORY AGREEMENT
AGREEMENT made this 17th day of October, 2005, between Xxxx Xxxxxxx
Investment Management Services, LLC, a Delaware limited liability company (the
"Adviser"), and Xxxxxx Xxxxxxx Investment Management Inc., a Delaware
corporation (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 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 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;
iv. regularly report to the Trustees of the Trust with respect to the
implementation of these investment programs; and
v. provide assistance upon request, in accordance with procedures and
methods established by the Trustees of the Trust, of the fair value of
securities held by the Portfolios for which market quotations are not
readily available for purposes of enabling the Trust's Custodian to
calculate net asset value.
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 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. 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. In accordance with Section 11(a) of the Securities Exchange Act of
1934, as amended and Rule 11a2-2(T) thereunder, and subject to any other
applicable laws and regulations including Section 17(e) of the Investment
Company Act of 1940 (the "1940 Act") and Rule 17e-1 thereunder, the
Subadviser may engage its affiliates as broker-dealers to effect portfolio
transactions in securities for the Portfolios.
d. The Subadviser will maintain all accounts, books and records with respect
to the Portfolios as are required of an investment adviser of a registered
investment company pursuant to the Investment Company Act of 1940 (the
"Investment Company Act") and Investment Advisers Act of 1940 (the
"Investment Advisers Act") and the rules thereunder.
e. Pursuant to the proxy voting policies and procedures of the Trust, the
Subadviser shall vote proxies relating to the Portfolio's investment
securities in accordance with the 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 at their request.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER
Neither the Subadviser nor any of its affiliates, officers, partners or
employees nor anyone who controls the Subadviser (or any of its affiliates,
officers, partners or employees) within the meaning of Section 15 of the
Securities Act of 1933 (the "1933 Act") shall be liable to the Adviser or Trust
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for any loss suffered by the Adviser or Trust resulting from any error of
judgment made in the good faith exercise of the Subadviser's investment
discretion in connection with selecting Portfolio investments except for losses
resulting from willful misfeasance, bad faith or gross negligence of, or from
reckless disregard of, the duties of the Subadviser or any of its affiliates,
partners or employees; and neither the Subadviser nor any of its affiliates,
officers, partners or employees, nor anyone who controls the Subadviser (or any
of its affiliates, officers, partners or employees) within the meaning of
Section 15 of the 1933 Act shall be liable to the Adviser or Trust for any loss
suffered by the Adviser or Trust resulting from any other matters to which this
Agreement relates, except for losses resulting from willful misfeasance, bad
faith, or gross negligence in the performance of, or from disregard of, the
duties of the Subadviser or any of its affiliates partners or employees.
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 directors, officers, 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 Articles of Incorporation 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 each 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 each of the Portfolios, provided that in
either event such continuance shall also be approved by the vote of a majority
of the Trustees of the 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 the
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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 with respect to any Portfolio
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 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. 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. there is a change of control of the Subadviser which constitutes an
assignment of this Agreement under the 1940 Act;
d. the portfolio manager of any Portfolio changes.
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.
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11. HEADINGS
The headings in the sections of this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
12. 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.
13. 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.
14. 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.
15. 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 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.
16. 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
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17. 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.
18. COMPLIANCE
Upon execution of this Agreement, the Subadviser shall provide the Adviser
with the Subadviser's written policies and procedures relating to the management
of the Portfolio ("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 as it relates to the Portfolio, (ii) notification of the commencement
of a regulatory examination that materially impacts the Subadviser as it relates
to the Portfolio and the results of any such examination and the annual review
or any other periodic review, if any, of the Compliance Policies as it relates
to the Portfolio, 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 as it relates to the
Portfolio by the Adviser) that the Adviser may reasonably request to enable the
Trust to comply with Rule 38a-1 under the Investment Company Act.
(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: /s/Xxxx X. XxxXxxx III
Name: Xxxx X. XxxXxxx III
Title: Chairman
XXXXXX XXXXXXX INVESTMENT
MANAGEMENT INC.
By: /s/Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
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APPENDIX A
The Subadviser shall serve as investment subadviser for the 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 the
Portfolio, the fee computed at an annual rate as follows (the "Subadviser Fee"):
Between
$200 million
First and Excess Over
$200 million $500 million $500 million
of Aggregate of Aggregate of Aggregate
Portfolio Net Assets* Net Assets* Net Assets*
Value Fund 0.300% 0.275% 0.200%
*The term Aggregate Net Assets includes the net assets of the Portfolio of the
Trust. It also includes 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 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.
Trust Portfolio(s) Other Portfolio(s)
Value Fund -- Value Trust, a series of Xxxx Xxxxxxx Trust
The Subadviser Fee for the Portfolio shall be based on the applicable
annual fee rate for the Portfolio which for each day shall be equal to (i) the
sum of the amounts determined by applying the annual percentage rates in the
table to the applicable portions of Aggregate Net Assets divided by (ii)
Aggregate Net Assets (the "Applicable Annual Fee Rate"). The Subadviser Fee for
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 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 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 of 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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