JOHN HANCOCK FUNDS II SUBADVISORY AGREEMENT
XXXX XXXXXXX FUNDS II
AGREEMENT made this 28th day of April, 2008, between Xxxx Xxxxxxx Investment
Management Services, LLC, a Delaware limited liability company (the “Adviser”), and Franklin
Xxxxxxxxx Investment Corp., an Ontario, Canada 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 die 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 audiority 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 die investments and determine the composition of the assets of the Portfolios in accordance with the Portfolios’ registration statement, as amended, that Adviser provides to the Subadviser. 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 die 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. purchase, sell, exchange or convert foreign currency in the spot or forward
markets
as necessary to facilitate transactions in international securities for the
Portfolios.
| 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 die investment affairs of the Portfolios (excluding determination of net asset value and shareholder accounting services). Subadviser will not pay the costs of investments (including brokerage fees) of a Portfolio and will not pay expenses related to the operation of a Portfolio, including but not limited to, investment advisory fees, administration fees, pricing service fees, taxes, interest, brokerage fees and commissions, proxy voting expenses and extraordinary Portfolio expenses. | |
| c. | The Subadviser will select brokers and dealers to effect all transactions subject to die 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 |
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| execute brokerage transactions for the Portfolios in accordance with applicable laws and regulations. The Subadviser may pay a broker-dealer which provides research and brokerage services a higher spread or commission for a particular transaction than otherwise might have been charged by another broker-dealer, if the Subadviser determines that the higher spread or commission is reasonable in relation to the value of the brokerage and research services that such broker-dealer provides, viewed in terms of either the particular transaction or the Subadviser’s overall responsibilities with respect to accounts managed by the Subadviser. The Subadviser may use for the benefit of the Subadviser’s other clients, or make available to companies affiliated with the Subadviser or to its directors for the benefit of its clients, any such brokerage and research services that the Subadviser obtains from brokers or dealers. | ||
| d. | On occasions when the Subadviser deems the purchase or sale of a security to be in the best interest of the Portfolio as well as other clients of the Subadviser, the Subadviser to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities to be purchased or sold to attempt to obtain a more favorable price or lower brokerage commissions and efficient execution. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Subadviser in the manner the Subadviser considers to be the most equitable and consistent with its fiduciary obligations to the Portfolio and to its other clients. | |
| e. | The Subadviser will maintain all accounts, books and records witii 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. Such accounts, books and records shall be the property of the Subadviser, which shall provide copies of them to the Adviser upon reasonable request, | |
| f. | Subadviser will make decisions on proxy voting unless such decisions are expressly reserved by Adviser. Subadviser’s obligation to vote proxies shall be contingent upon receipt of proxies from a Portfolio custodian in a timely manner. Subadviser shall not be expected or required to take any action other than the rendering of investment-related advice with respect to lawsuits involving securities presently or formerly held in a Portfolio, or the issuers thereof. Adviser will file all proofs of claim on behalf of Portfolios in class-action suits and SEC settlements which have a proof of claim process for investors. 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.
4. INDEMNIFICATION
Adviser and the Subadviser each agree to indemnify the other party (and each such party’s
affiliates, employees, directors and officers) against any claim, damages, loss or liability
(including reasonable attorneys’ fees) arising out of any third party claims brought against an
indemnified party that are found to constitute willful misfeasance, bad faith or gross negligence
on the part of the indemnifying party.
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, directors or otherwise; that employees, agents
and officers and directors of the Subadviser are or may be interested in flie 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
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of Trust of the Trust and the organizational documents 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 mis Agreement any information, reports or other material
which any such body by reason of this Agreement may require pursuant to applicable laws and
regulations. Nothing herein shall be deemed a waiver of Subadviser’s right to assert claims of
privilege, or other legal rights, in connection with any such request or demand by such regulatory
or administrative body.
7. 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 (i) by the Trustees of the Trustor (ii) a vote of 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 Agreement or its continuance, notwithstanding that the Agreement or its
continuance may not have been approved by a majority of the outstanding voting securities of (a)
any other Portfolio affected by the Agreement or (b) all the portfolios of the Trust.
If any required shareholder approval of this Agreement or any continuance of the Agreement is
not obtained, the Subadviser will continue to act as investment subadviser with respect to such
Portfolio pending the required approval of the Agreement or its continuance or of a new contract
with the Subadviser or a different adviser or subadviser or other definitive action; provided,
that the compensation received by the Subadviser in respect of such Portfolio during such period
is in compliance with Rule 15a-4 under the Investment Company Act.
This Agreement may be terminated at any time, without the payment of any penally, 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 at least sixty days’ prior written notice to the Adviser and the
Subadviser, or by the Adviser or Subadviser on at least 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.
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 |
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| C- | any change in control of me Subadviser or the portfolio manager of any Portfolio, provided however, that this shall not apply to a change of control of Subadviser which results in control of Subadviser by one of its affiliates that is under common control with the Subadviser. |
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 diatthe 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 last known business address of the Trust or applicable parry 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.
14 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.
15. GOVERNING LAW
The provisions of mis 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.
16. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust dated August 12, 2005, a copy of which, together with
all amendments thereto (me “Declaration”), is on file in the office of the Secretary of The
Commonwealth of
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Massachusetts, provides that the name “Xxxx Xxxxxxx Funds U” 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.
17. CONSULTATION WITH SUBADVISERS TO OTHER TRUST PORTFOLIOS
As required by Rule 17a-10 under the Investment Company Act, 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, and
3. other subadvisers to a portfolio under common control with the Portfolio;
provided, however, that: (i) such consultations are permitted between the current and successor
subadvisers of a Portfolio in order to effect an orderly transition of sub-advisory duties so long
as such consultations are not concerning transactions prohibited by Section 17(a) of the
Investment Company Act; (ii) Subadviser may consult with any of its affiliated persons concerning
transactions in securities or other assets; and (Hi) Subadviser may consult with any of the other
subadvisers to the Trust concerning compliance with paragraphs a and b of Rule 12d3-l of the
Investment Company Act.
18. 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.
19. 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 that relate to the services provided by the Subadviser to the
Trust. Throughout the term of this Agreement, the Subadviser shall make reasonable efforts to
submit to the Adviser: (i) any material changes to the Compliance Policies, (ii) notification of
regulatory examinations of the Subadviser and general descriptions of the results of such
examinations and of any periodic testing of the Compliance Policies, and (iii) notification of any
material compliance matter that relates to the services provided by the Subadviser to the Trust
including but not limited to any material violation of the Compliance Policies or of the
Subadviser’s code of ethics and/or related code that relate to the services provided by the
Subadviser to the Trust. Throughout the term of this Agreement, the Subadviser shall provide the
Adviser with any certifications, information and access to personnel and resources (including those
resources that will permit testing of the Compliance Policies by the Adviser) that the Adviser may
reasonably request to enable the Trust to comply with Rule 38a-l under the Investment Company Act
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal by
their duly authorized officers as of the date first mentioned above.
| Xxxx Xxxxxxx Investment Management Services, LLC |
||||
| By: | /s/ Xxxxx X. Xxxxx | |||
| Xxxxx X. Xxxxx | ||||
| Executive Vice President | ||||
| Franklin Xxxxxxxxx Investment Corp. |
||||
| By: | /s/ Xxxxxx X. Xxxx | |||
| Xxxxxx X. Xxxx | ||||
| President and Chief Executive Officer | ||||
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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”):
| 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* | |||||||||
International Small Cap Fund |
[ %] | [ %] | [ %] | |||||||||
* 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 portfoMo(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.
| Trust Portfolio(s) | Other Portfolio(s) | |||
International Small Cap Fund
|
— | International Small Cap 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 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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