INVESTMENT SUBADVISORY AGREEMENT
THIS INVESTMENT SUBADVISORY AGREEMENT ("Agreement") is made as of the
1st day of January, 2000, by and among AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
("ACCP"), a Maryland corporation acting on behalf of American Century Real
Estate Fund (the "ACRE Fund"), a series of shares of ACCP, AMERICAN CENTURY
INVESTMENT MANAGEMENT, INC. ("ACIM"), a Delaware corporation, and X.X. XXXXXX
INVESTMENT MANAGEMENT INC. (the "Subadvisor"), a Delaware corporation.
WITNESSETH:
WHEREAS, ACCP is an open-end management investment company registered
with the Securities and Exchange Commission under the Investment Company Act of
1940, as amended; and
WHEREAS, ACIM and the Subadvisor are both investment advisors
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended; and
WHEREAS, ACCP has engaged ACIM to serve as the investment manager for
the ACRE Fund pursuant to a Management Agreement dated May 8, 1997; and
WHEREAS, ACCP and ACIM desire to engage the Subadvisor as a subadvisor
for the ACRE Fund, and the Subadvisor desires to accept such engagement; and
WHEREAS, the Boards of Directors of ACCP, ACIM and the Subadvisor have
determined that it is advisable to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, and intending to be legally bound hereby,
the parties hereto covenant and agree as follows:
1. INVESTMENT DESCRIPTION - APPOINTMENT. ACCP hereby appoints the
Subadvisor to provide certain advisory services to the ACRE
Fund in accordance with the ACRE Fund's Prospectus and
Statement of Additional Information as in effect and as
amended from time to time, in such manner and to such extent
as may be approved by the Board of Directors of ACCP. ACCP
agrees to provide the Subadvisor copies of all amendments to
the ACRE Fund's Prospectus and Statement of Additional
Information on an ongoing basis. In consideration for the
compensation set forth below, the Subadvisor accepts the
appointment and agrees to furnish the services described
herein.
2. SERVICES AS INVESTMENT SUBADVISOR.
(a) Subject to the general supervision of the Board of Directors of
ACCP, and of ACIM, the Subadvisor will (i) act in conformity with the ACRE
Fund's Prospectus and Statement of Additional Information, the Investment
Company Act of 1940, the Investment Advisers Act of 1940, the Internal Revenue
Code and all other applicable federal and state laws and regulations, as the
same may from time to time be amended; (ii) make investment decisions for the
ACRE Fund in accordance with the ACRE Fund's investment objective and policies
as stated in the ACRE Fund's Prospectus and Statement of Additional Information
and with such written guidelines as ACIM may from time to time provide to the
Subadvisor; (iii) place purchase and sale orders on behalf of the ACRE Fund; and
(iv) maintain books and records with respect to the securities transactions of
the ACRE Fund and furnish ACCP's Board of Directors such periodic, regular and
special reports as the Board may request.
(b) In providing those services, the Subadvisor will supervise the ACRE
Fund's investments and conduct a continual program of investment, evaluation
and, if appropriate, sale and reinvestment of the ACRE Fund's assets. In
addition, the Subadvisor will furnish ACCP or ACIM whatever information,
including statistical data, ACCP or ACIM may reasonably request with respect to
the instruments that the ACRE Fund may hold or contemplate purchasing.
(c) The Subadvisor will at all times comply with the policies adopted
by ACCP's Board of Directors of which it has received written notice. If the
Subadvisor believes that a change in any of such policies shall be advisable, it
shall recommend such change to ACIM and the Board of Directors of ACCP. Any
change to any such policies whether suggested by the Subadvisor or not shall be
approved by ACCP's Board of Directors prior to the implementation of such
change, and Subadvisor will be given reasonable notice of the anticipated
change.
3. BROKERAGE.
(a) In executing transactions for the ACRE Fund and selecting brokers
or dealers, the Subadvisor will seek to obtain the best net price and execution
available and shall execute or direct the execution of all such transactions as
permitted by law and in a manner that is consistent with its fiduciary
obligations to the ACRE Fund and its other clients. In assessing the best net
price and execution available for any ACRE Fund transaction, the Subadvisor will
consider all factors it deems relevant including, but not limited to, breadth of
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and on a continuing basis. Consistent
with this obligation, when the execution and net price offered by two or more
brokers or dealers are comparable, the Subadvisor may, at its discretion,
execute transactions with brokers and dealers who provide the ACRE Fund and/or
other accounts over which the Subadvisor exercises investment discretion with
research advice and other services, but in all instances best net price and
execution shall control. The Subadvisor is authorized to place purchase and sale
orders for the ACRE Fund with brokers and/or dealers subject to the supervision
of ACIM and the Board of Directors of ACCP and in accordance with the
limitations set forth in the registration statement for the ACRE Fund shares
then in effect.
(b) On occasions when the Subadvisor deems the purchase or sale of a
security to be in the best interest of the ACRE Fund as well as one or more of
its other clients, the Subadvisor may to the extent permitted by applicable law,
but shall not be obligated to, aggregate the securities to be sold or purchased
with those of its other clients. In such event, allocation of the securities so
purchased or sold will be made by the Subadvisor in a manner it considers to be
equitable and consistent with its fiduciary obligations to ACCP and to such
other clients. ACCP recognizes that, in some cases, this procedure may limit the
size of the position that may be acquired or sold for the ACRE Fund.
4. INFORMATION PROVIDED TO ACCP.
(a) The Subadvisor will keep ACCP and ACIM informed of developments
materially affecting the ACRE Fund and will take initiative to furnish ACCP and
ACIM on at least quarterly basis with whatever information the Subadvisor and
ACIM believe is appropriate for this purpose. Such regular quarterly reports
shall include information reasonably requested by ACCP's Board of Directors from
time to time.
(b) The Subadvisor will provide ACCP and ACIM with such investment
records, ledgers, accounting and statistical data, and other information as ACCP
and ACIM require for the preparation of registration statements, periodic and
other reports and other documents required by federal and state laws and
regulations, and particularly as may be required for the periodic review,
renewal, amendment or termination of this Agreement, and such additional
documents and information as ACCP and ACIM may reasonably request for the
management of their affairs. The Subadvisor understands that the ACRE Fund and
ACIM will rely on such information in the preparation of ACCP's registration
statement, the ACRE Fund's financial statements, and any such reports, and
hereby covenants that any such information derived from the investment records,
ledgers and accounting records maintained by the Subadvisor shall be true and
complete in all material respects.
(c) At the request of the Board of Directors, a representative of the
Subadvisor shall attend meetings of the Board of Directors to make a
presentation on the ACRE Fund's performance and such other matters as the Board
of Directors, the Subadvisor and ACIM believe is appropriate.
(d) The Subadvisor shall furnish to regulatory authorities any
information or reports in connection with such services as may be lawfully
requested. The Subadvisor shall also, at ACCP's request, certify to ACCP's
independent auditors that sales or purchases aggregated with those of other
clients of the Subadvisor, as described in Section 3 above, were allocated in a
manner it considers to be equitable.
(e) In compliance with the requirements of the Investment Company Act,
the Subadvisor hereby agrees that all records that it maintains for the ACRE
Fund are the property of ACCP and further agrees to surrender to ACCP promptly
upon ACCP's request any of such records. In addition, the Subadvisor agrees to
cooperate with ACCP and ACIM when either of them is being examined by any
regulatory authorities, and specifically agrees to promptly comply with any
request by such authorities to provide information or records. The Subadvisor
further agrees to preserve for the periods of time prescribed by the Investment
Company Act of 1940 and the Investment Advisers Act of 1940 the records required
to be maintained thereunder.
(f) The Subadvisor will vote the ACRE Fund's investment securities in
the manner in which the Subadvisor believes to be in the best interests of the
ACRE Fund, and shall review its proxy voting activities on a periodic basis with
the Board of Directors.
5. FUTURES AND OPTIONS. The Subadvisor's investment authority shall
include the authority to purchase, sell, cover open positions, and generally to
deal in financial futures contracts and options thereon. The Subadvisor will (a)
open and maintain brokerage accounts for financial futures and options (such
accounts hereinafter referred to as "Brokerage Accounts") on behalf of and in
the name of the ACRE Fund, and (b) execute, for and on behalf of the Brokerage
Accounts, standard customer agreements with a broker or brokers. The Subadvisor
may, using such of the securities and other property in the Brokerage Accounts
as the Subadvisor deems necessary or desirable, direct the custodian to deposit
on behalf of the ACRE Fund, original and maintenance brokerage deposits and
other direct payments of cash, cash equivalents, and securities and other
property into such Brokerage Accounts and to such brokers as the Subadvisor
deems appropriate. The ACRE Fund represents and warrants that it is a "qualified
eligible client" within the meaning of the CFTC Regulations Section 4.7 and, as
such, consents to treat the ACRE Fund in accordance with the exemption contained
in CFTC Regulations Section 4.7(b).
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION
("CFTC") IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE CLIENTS, THIS
DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE CFTC. THE CFTC
DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE
ADEQUACY OR ACCURACY OF THE COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY,
THE CFTC HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS DOCUMENT.
6. CONFIDENTIALITY. The parties to this Agreement agree that each
shall treat as confidential all information provided by a
party to the others regarding such party's business and
operations, including without limitation the investment
activities, holdings, or identities of shareholders of the
ACRE Fund. All confidential information provided by a party
hereto shall be used by any other parties hereto solely for
the purposes of rendering services pursuant to this Agreement
and, except as may be required in carrying out the terms of
this Agreement, shall not be disclosed to any third party
without the prior consent of such providing party. The
foregoing shall not be applicable to any information that is
publicly available when provided or which thereafter becomes
publicly available other than in contravention of this
paragraph. The foregoing also shall not apply to any
information which is required to be disclosed by any
regulatory authority in the lawful and appropriate exercise of
its jurisdiction over a party, by any auditor of the parties
hereto, by judicial or administrative process or otherwise by
applicable law or regulation; provided, however, that the
disclosing party shall provide reasonable notice to the other
parties hereto prior to any such disclosure.
7. LIABILITY AND INDEMNIFICATION.
(a) The Subadvisor shall be responsible for the exercise of reasonable
care in carrying out its responsibilities hereunder; provided, however, that no
provision of this Agreement be construed to protect any trustee, director,
officer, agent or employee of the Subadvisor or an affiliate from liability by
reason of gross negligence, willful malfeasance, bad faith in the performance of
such person's duties hereunder or by reason of reckless disregard of obligations
and duties hereunder. Notwithstanding any other provision of this Agreement, no
party shall be liable for any actions or omissions taken or made pursuant to
this Agreement unless such actions or omissions result from gross negligence,
willful malfeasance, or bad faith in the performance of such party's duties or
by reason of reckless disregard of obligations and duties hereunder.
(b) ACIM agrees to indemnify and hold harmless the Subadvisor and its
officers, directors, employees, agents, affiliates and each person, if any, who
controls the Subadvisor within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this Section 7(b))
against any losses, claims, expenses, damages or liabilities (including amounts
paid in settlement thereof) or litigation expenses (including legal and other
expenses) (collectively, "Losses"), to which the Indemnified Parties may become
subject, insofar as such Losses result from gross negligence, willful
malfeasance or bad faith in the performance by ACCP or ACIM of its respective
duties hereunder or reckless disregard by ACCP or ACIM of its respective duties
hereunder. ACIM will reimburse any legal or other expenses reasonably incurred
by the Indemnified Parties in connection with investigating or defending any
such Losses. ACIM shall not be liable for indemnification hereunder if such
Losses are attributable to the gross negligence, willful malfeasance or bad
faith of the Subadvisor in performing its obligations under this Agreement. ACIM
shall not be liable for special, consequential or incidental damages.
(c) The Subadvisor agrees to indemnify and hold harmless ACIM and ACCP,
and their respective officers, directors, employees, agents, affiliates and each
person, if any, who controls ACIM or ACCP within the meaning of the Securities
Act of 1933 (collectively, the "Indemnified Parties" for purposes of this
Section 7(c)) against any Losses to which the Indemnified Parties may become
subject, insofar as such Losses result from gross negligence, willful
malfeasance, or bad faith in performance by the Subadvisor or its affiliates of
their duties hereunder or reckless disregard by the Subadvisor or its affiliates
of their duties hereunder. The Subadvisor will reimburse any legal or other
expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such Losses. The Subadvisor shall not be liable
for indemnification hereunder if such Losses are attributable to the gross
negligence, willful malfeasance or bad faith of ACIM or ACCP in performing their
obligations under this Agreement. The Subadvisor shall not be liable for
special, consequential or incidental damages.
(d) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section 7, except to
the extent the indemnifying party shall have been prejudiced thereby. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(e) If the indemnifying party assumes the defense of any such action,
the indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgment in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
8. COMPENSATION.
(a) In consideration of the services rendered pursuant to this
Agreement, ACIM will pay the Subadvisor a per annum management fee (the
"Applicable Fee") as follows:
Name of Series Applicable Fee
American Century Real Estate Fund 0.425%
(b) On the first business day of each month, ACIM shall pay the
Subadvisor the Applicable Fee for the previous month. The fee for the previous
month shall be calculated by multiplying the Applicable Fee for the ACRE Fund by
the aggregate average daily closing value of the net assets of all classes of
the ACRE Fund during the previous month, and further multiplying that product by
a fraction, the numerator of which shall be the number of days in the previous
month, and the denominator of which shall be 365 (366 in leap years).
(c) In the event that the Board of Directors of ACCP shall determine to
issue any additional series of shares for which it is proposed that the
Subadvisor serve as investment manager, and for which the Subadvisor desires to
so serve, ACCP, ACIM and the Subadvisor shall enter into an Addendum to this
Agreement setting forth the name of the series, the Applicable Fee and such
other terms and conditions as are applicable to the management of such series of
shares.
(d) The Subadvisor shall have no right to obtain compensation directly
from the ACRE Fund or ACCP for services provided hereunder and agrees to look
solely to ACIM for payment of fees due. Upon termination of this Agreement
before the end of a month, or in the event the Agreement begins after the
beginning of the month, the fee for that month shall be prorated according to
the proportion that such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
9. EXPENSES. The Subadvisor will bear all of its expenses in
connection with the performance of its services under this
Agreement, which expenses shall not include brokerage fees or
commissions in connection with the execution of securities
transactions.
10. SERVICES TO OTHER COMPANIES OR ACCOUNTS. ACCP understands that
the Subadvisor or its affiliates now acts and will continue to
act as investment advisor to other clients and ACCP has no
objection to the Subadvisor so acting. In addition, ACCP
understands that the persons employed by the Subadvisor to
assist in the performance of the Subadvisor's duties hereunder
will not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the
right of the Subadvisor or any affiliate of the Subadvisor to
engage in and devote time and attention to other business or
to render services of whatever kind or nature. Further, from
time to time, the Subadvisor may refer or introduce certain
institutional investors and existing clients of the Subadvisor
and its affiliates to ACCP. ACCP understands that nothing
herein shall be deemed to limit or restrict the right of the
Subadvisor, in the event the Subadvisor's clients purchase
shares of ACCP, to subsequently suggest or induce such clients
to redeem such shares and open a separate advisory account
with the Subadvisor.
11. TERM OF AGREEMENT. This Agreement shall become effective as of
the date first written above and shall continue until January
1, 2002 and thereafter so long as such continuance is
specifically approved at least annually by (i) the Board of
Directors of ACCP or (ii) a vote of a majority of the Fund's
outstanding voting securities, provided that in either event
the continuance is also approved by a majority of the Board of
Directors who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement, by a
vote cast at a meeting called for the purpose of voting on
such approval. This Agreement is terminable without penalty on
60 days' written notice by (i) the Board of Directors of ACCP,
(ii) by vote of holders of a majority of the ACRE Fund's
shares, (iii) by ACIM, or (iv) by the Subadvisor, and will
terminate automatically upon any termination of the investment
management agreement between ACCP and ACIM. This Agreement
will terminate automatically in the event of its assignment.
The Subadvisor agrees to notify ACCP of any circumstances that
might result in this Agreement being deemed to be assigned.
12. REPRESENTATIONS OF ACIM, THE SUBADVISOR AND ACCP.
(a) ACIM and the Subadvisor each hereby represents that it is
registered as an investment advisor under the Investment Advisers Act of 1940,
that it will use its reasonable best efforts to maintain such registration, and
that it will promptly notify the other if it ceases to be so registered, if its
registration is suspended for any reason, or if it is notified by any regulatory
organization or court of competent jurisdiction that it should show cause why
its registration should not be suspended or terminated. ACIM and the Subadvisor
each further represents that it is registered under the laws of all
jurisdictions in which the conduct of its business hereunder requires such
registration.
(b) ACCP and ACIM represent and warrant that (i) the appointment of the
Subadvisor has been duly authorized; and (ii) each of them has full power and
authority to execute and deliver this Agreement and to perform the services
contemplated hereunder, and such execution, delivery and performance will not
cause either to be in violation of its Articles of Incorporation, Bylaws, or any
material laws.
(c) The Subadvisor represents and warrants that (i) its service as
subadvisor hereunder has been duly authorized; (ii) it has full power and
authority to execute and deliver this Agreement and to perform the services
contemplated hereunder, and such execution, delivery and performance will not
cause it to be in violation of its organizational documents, its Bylaws or
material laws; (iii) it will at all times in the performance of its duties
hereunder act in conformity with the provisions of the Investment Company Act of
1940, the Investment Advisers Act of 1940, the Internal Revenue Code and all
other applicable federal and state laws and regulations, as the same may be
amended from time to time; and (iv) it has all controls necessary to perform its
obligations under and comply with the representations and warranties it made in
this Agreement.
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or
termination is sought.
14. LIMITATION OF LIABILITY. This Agreement has been executed on
behalf of ACCP by the undersigned officer of ACCP solely in
his capacity as an officer of ACCP.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto on the subject matter
described herein.
16. INDEPENDENT CONTRACTOR. In the performance of its duties
hereunder, the Subadvisor is and shall be an independent
contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent
ACCP or ACIM in any way, or otherwise be deemed to be an agent
of ACCP or ACIM.
17. SEVERABILITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statue, rule or similar
authority, the remainder of this Agreement shall not be
affected thereby.
18. NOTICES. All notices and other communications hereunder shall
be given or made in writing and shall be delivered personally,
or sent by telex, telecopy, express delivery or registered or
certified mail, postage prepaid, return receipt requested, to
the party or parties to whom they are directed at the
following addresses, or at such other addresses as may be
designated by notice from such party to all other parties.
To the Subadvisor:
X.X. Xxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
To ACCP or ACIM:
American Century Investments
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: General Counsel
Any notice, demand or other communication given in a manner prescribed in this
Section shall be deemed to have been delivered on receipt.
19. DISCLOSURE. Neither ACCP nor ACIM shall, without the prior
written consent of the Subadvisor, make representations
regarding or reference the Subadvisor or any affiliates in any
disclosure document, advertisement, sales literature or other
promotional materials; provided, however, the Subadvisor need
not review or consent to any reference to its name only or any
language that it has previously approved for use in another
document.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below on the day and year first written
above.
X.X. XXXXXX INVESTMENT AMERICAN CENTURY CAPITAL
MANAGEMENT INC. PORTFOLIOS, INC.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxxx
Name: Xxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Vice President Title: Assistant Vice President
AMERICAN CENTURY INVESTMENT
MANAGEMENT, INC.
By: /s/ Xxxxxx X. Puff Jr.
Name: Xxxxxx X. Puff Jr.
Title: President