Exhibit (d)(33)
SECOND AMENDED AND RESTATED
SUB-ADVISORY AGREEMENT
This Amended and Restated Sub-Advisory Agreement (the "Agreement") is
entered into as of November 30, 2017 (the "Amendment Effective Date"), by and
between AllianceBernstein L.P. ("Advisor"), and Morningstar Investment
Management LLC (formerly, Morningstar Associates, LLC) ("Sub-Advisor").
WHEREAS, Advisor is an investment adviser registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and has been retained by
AB Cap Fund, Inc. (the "Company") to provide investment advisory services with
respect to certain assets of the following eleven (11) series of the Company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"):
AB Multi-Manager Select Retirement Allocation Fund
AB Multi-Manager Select 2010 Fund
AB Multi-Manager Select 2015 Fund
AB Multi-Manager Select 2020 Fund
AB Multi-Manager Select 2025 Fund
AB Multi-Manager Select 2030 Fund
AB Multi-Manager Select 2035 Fund
AB Multi-Manager Select 2040 Fund
AB Multi-Manager Select 2045 Fund
AB Multi-Manager Select 2050 Fund
AB Multi-Manager Select 2055 Fund
(individually a "Fund," and collectively the "Funds"); and
WHEREAS, Sub-Advisor also is an investment adviser registered under the
Advisers Act; and
WHEREAS, pursuant to the Sub-Advisory Agreement entered into as of
December 15, 2014 (the "Original Effective Date") and the Amended and Restated
Sub-Advisory Agreement entered into as of August 4, 2016, Advisor retained
Sub-Advisor to furnish it with portfolio management services in connection with
Advisor's investment advisory activities on behalf of the Funds, and Sub-Advisor
is willing to furnish such services to Advisor and the Funds.
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. Employment of Sub-Advisor. In accordance with and subject to the
Investment Advisory Contract between the Company and Advisor, attached hereto as
Exhibit A (the "Advisory Agreement"), Advisor hereby appoints Sub-Advisor to
manage the investment and reinvestment of that portion of the assets of the
Funds allocated to it by Advisor (the "Fund Assets"), in conformity with the
Funds' currently effective Registration Statement, prospectus and Statement of
Additional Information and subject to the control and direction of Advisor and
the Company, for the period and on the terms hereinafter set forth. Sub-Advisor
hereby accepts such employment and agrees during such period to render the
services and to perform the duties called for by this Agreement for the
compensation herein provided. Sub-Advisor shall for all purposes herein be
deemed an independent contractor and shall, except as expressly provided or
authorized (whether herein or otherwise), have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the Company
or the Funds.
2. Duties of Advisor. Advisor will provide the following services and
undertake the following duties:
a. Asset-Allocation Policy. Among other responsibilities to
the Funds, Advisor will determine the asset allocation policy that
is to be used by the Funds and will communicate this asset
allocation policy to Sub-Advisor. Advisor will also be responsible
for negotiating any necessary or advisable participation and other
agreements with the underlying funds that are potential investments
on the Funds or the sponsor of such underlying funds.
b. Trade Execution. Upon receipt of Sub-Advisor's allocations
for the underlying positions for the Funds, Advisor will place
orders for the execution of all portfolio transactions in accordance
with the policies with respect thereto set forth in the Fund's
registration statements under the 1940 Act and the Securities Act of
1933 (the "1933 Act"); as such registration statements may be in
effect from time to time.
3. Advisor Representations
Advisor represents and warrants that:
a. it is registered, and agrees to maintain its registration
for the term of this Agreement, as an investment advisor with the
Securities and Exchange Commission ("SEC") or applicable state(s)
securities authority and is not prohibited by the Advisers Act, the
rules thereunder, or otherwise from acting as contemplated by this
Agreement;
b. it understands that the performance of its obligations
under this Agreement is subject to the securities and other
applicable laws of the various jurisdictions in which Advisor has an
office or conducts its business. Advisor will comply with all
applicable laws and regulations, including SEC and state
registration or notice filing obligations, SEC and state-imposed
anti-fraud provisions, and all applicable registration requirements
for investment adviser representatives;
c. there is no action, suit, proceeding, or matter before or
by any court or governmental agency or body, domestic or foreign,
now pending, or, to Advisor's knowledge, threatened against Advisor
(including any investigation, request for a "Xxxxx" submission, or
settlement of an administrative action before the SEC) that might
result in any material adverse change in Advisor's financial
condition, business, or prospects or might materially and adversely
affect Advisor's properties or assets;
d. it will perform its services under this Agreement in
accordance with this Agreement, the Advisers Act, and other
applicable laws and rules;
e. it will notify Sub-Advisor within five (5) business days of
any material change in investment personnel, litigation status of
firm/key personnel, enforcement or formal inquiry, or a financial
situation which will adversely impact its ability to perform its
obligations under this Agreement;
f. it will be responsible for notifying Sub-Advisor promptly
upon any additions and/or deletions in the Advisor's platform's
investment universe.
g. it, and its officers, directors, employees, associated
persons and agents, possess all necessary licenses and registrations
to enter into and perform this Agreement;
h. with respect to its performance of the obligations arising
under this Agreement, it complies in all material respects with all
applicable laws, rules and regulations, including but not limited to
the 1940 Act, the Advisers Act, applicable state laws, and the
Internal Revenue Code of 1986, as amended (the "Code");
i. except as provided herein, Sub-Advisor has no
responsibility for the organization and operation of each Fund or
for ensuring compliance with all applicable laws and/or regulations
relating to Advisor and the Funds;
j. it is solely responsible for the monitoring and ongoing due
diligence of the parties that Advisor or the Funds contract with,
including, but not limited to the custodian, it being understood,
however, that Sub-Advisor is responsible for selecting the
investments from the universe of available investments provided to
Sub-Advisor by Advisor;
k. it has met and will seek to continue to meet in all
material respects for so long as this Agreement remains in effect,
any federal or state requirements, as necessary to be met in order
to maintain the organization and operation of each Fund;
l. it will promptly notify Sub-Advisor of the occurrence of
any event that would materially adversely impact the operation of
any Fund; and
m. it has received a copy of Sub-Advisor's Form ADV Part 2.
n. it agrees to indemnify Sub-Advisor, its officers,
directors, employees, associated persons, agents and control
persons, against any damages, losses, penalties, fines, fees or
expenses (including reasonable attorneys' fees) resulting from any
material breach by Advisor of such representations and warranties.
4. Duties of Sub-Advisor. Sub-Advisor will provide the following services
and undertake the following duties:
a. Underlying Fund Selection. Sub-Advisor will select the
underlying investment options for the Funds; provided, however, that
investments managed by the Advisor shall normally constitute
approximately 30% of the aggregate net asset value of the Funds and
between 10% and 50% of the net asset value of each Fund, and
provided that Advisor will have the right to reject any investment
option selected by Sub-Advisor if, in the Advisor's discretion,
appropriate agreements cannot be entered into or appropriate
arrangements cannot be entered into with such investment option or
its sponsor. Sub-Advisor will work with Advisor to understand
constraints that may influence the portfolio construction of the
Funds. Sub-Advisor employs both quantitative and qualitative
analysis to select investment options. Sub-Advisor will make all
determinations with respect to the selection of the investments,
subject to the Adviser's right of rejection above.
b. Portfolio Construction. Subject to Advisor's asset
allocation determinations, Sub-Advisor will have responsibility over
the portfolio construction of the Funds. As part of the portfolio
construction process, Sub-Advisor will analyze the underlying
holdings of the selected investments to ensure adherence to the
selected asset allocation (provided by Advisor) while minimizing
unnecessary overlap. The Sub-Advisor's selections will be
communicated to Advisor for execution and trading. To the extent
that a selection of an investment by Sub-Advisor may render it
necessary or advisable to enter into or amend a participation or
similar agreement with such investment or its sponsor, Sub-Advisor
shall provide notice of such potential investment to Advisor
sufficiently in advance of the anticipated investment date so as to
permit any such agreement to be entered into prior to the
anticipated investment date. Sub-Advisor will manage the investment
of the Fund Assets as outlined herein, subject to and in accordance
with the investment objectives, policies and restrictions of the
Funds and in conformity with the Funds' currently effective
Registration Statement, prospectus and Statement of Additional
Information and any directions which Advisor or the Company may give
from time to time with respect to the Funds. Upon receipt of the
asset allocation policy from Advisor, Sub-Advisor will determine the
allocation in the investments of the Fund Assets.
c. Reporting. Sub-Advisor will render regular reports to the
Company and to Advisor (or such other advisor or advisors as Advisor
shall engage to assist it in the evaluation of the performance and
activities of Sub-Advisor). Such reports shall be made in such form
and manner and with respect to such matters regarding the Funds and
Sub-Advisor as the Company or Advisor shall from time to time
request; provided, however, that unless otherwise requested by the
Board of Directors of the Company, the individual primarily
responsible for management of the Funds' Assets for Sub-Advisor will
not be required to attend in person more than four quarterly
meetings per year with the Company's board of directors or Advisor.
d. Sub-Advisor shall provide support to Advisor with respect
to the marketing of the Funds, including but not limited to: (i)
permission to use Sub-Advisor's name as provided in Section 8, (ii)
access to the individual(s) responsible for day-to-day management of
the Funds for marketing conferences, teleconferences and other
activities involving the promotion of the Funds, subject to the
reasonable request of Advisor, and (iii) permission to use
biographical and historical data of Sub-Advisor and individual
manager(s).
e. Sub-Advisor will work with Advisor, in the name of the
Funds, to place orders for the execution of all portfolio
transactions in accordance with the policies with respect thereto
set forth in the Fund's registration statements under the 1940 Act
and the 1933 Act, as such registration statements may be in effect
from time to time.
f. In the event of any reorganization or other change in
Sub-Advisor, its investment principals, supervisors or members of
its investment (or comparable) committee, Sub-Advisor shall give
Advisor and the Company written notice of such reorganization or
change within a reasonable time (but not later than 30 days) after
such reorganization or change.
g. Sub-Advisor will bear its expenses of providing services to
the Funds pursuant to this Agreement except such expenses as are
expressly undertaken by Advisor or the Company.
h. Sub-Advisor will comply with the timing and procedural
standards set forth in the service level agreement attached hereto
as Exhibit D.
5. Sub-Advisor Representations
Sub-Advisor represents, warrants, and covenants that:
a. it is registered, and agrees to maintain its registration
for the term of this Agreement, as an investment advisor with the
Securities and Exchange Commission ("SEC") or applicable state(s)
securities authority and is not prohibited by the Advisers Act, the
rules thereunder, or otherwise from acting as contemplated by this
Agreement;
b. there is no action, suit, proceeding, or matter before or
by any court or governmental agency or body, domestic or foreign,
now pending, or, to Sub-Advisor's knowledge, threatened against
Sub-Advisor (including any investigation, request for a "Xxxxx"
submission, or settlement of an administrative action before the
SEC) that might result in any material adverse change in
Sub-Advisor's financial condition, business, or prospects or might
materially and adversely affect Sub-Advisor's properties or assets;
c. it will perform its services under this Agreement in
accordance with this Agreement, the Advisers Act, and other
applicable laws and rules; and
d. it will notify Advisor within five (5) business days of any
material change in investment personnel, litigation status of
firm/key personnel, enforcement or formal inquiry, or a financial
situation which will adversely impact its ability to perform its
obligations under this Agreement.
e. Sub-Advisor agrees to comply with the requirements of the
1940 Act, the Advisers Act, the 1933 Act, the Securities Exchange
Act of 1934, as amended (the "1934 Act"), the Internal Revenue Code
of 1986, and the respective rules and regulations thereunder, as
applicable, as well as with all other applicable federal and state
laws, rules, regulations and case law that relate to the services
and relationships described hereunder and to the conduct of its
business as a registered investment adviser. In addition, in
selecting the Funds' portfolio securities and performing
Sub-Advisor's obligations hereunder, Sub-Advisor shall cause the
Funds to comply with the requirements communicated by Advisor.
Sub-Advisor shall maintain compliance procedures that it reasonably
believes are adequate to ensure compliance with the foregoing. No
supervisory activity undertaken by Advisor shall limit Sub-Advisor's
full responsibility for any of the foregoing.
f. Sub-Advisor has adopted a written code of ethics (the "Code
of Ethics") that it reasonably believes complies with the
requirements under the Advisers Act. Sub-Advisor has policies and
procedures in place to monitor compliance by its Access Persons (as
defined in Sub-Advisor's Code of Ethics) with Sub-Advisor's Code of
Ethics, as in effect from time to time. Upon request, Sub-Advisor
shall provide Advisor with (i) a copy of Sub-Advisor's current Code
of Ethics, as in effect from time to time, and (ii) a certification
that it has adopted procedures reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by
Sub-Advisor's Code of Ethics. No less frequently than annually,
Sub-Advisor shall furnish a written report, which complies with the
requirements of Rule 17j-1, concerning Sub-Advisor's Code of Ethics
to the Funds and Advisor. Sub-Advisor shall respond to requests for
information from Advisor as to violations of the Code of Ethics by
Access Persons (as defined in Rule 17j-1) and the sanctions imposed
by Sub-Advisor. Sub-Advisor shall immediately notify Advisor of any
material violation of the Code of Ethics, whether or not such
violation relates to a security held by any Fund.
g. Sub-Advisor shall notify the Advisor's Chief Compliance
Officer and Advisor immediately upon detection of (i) any material
failure to manage any Fund in accordance with its investment
objectives and policies or any applicable law; or (ii) any material
breach of any of the Funds' or Advisor's policies, guidelines or
procedures. In addition, as requested Sub-Advisor shall provide
information regarding each Fund's compliance with its investment
objectives and policies and applicable law, including, but not
limited to the 1940 Act, the Code, and the Funds' and Advisor's
policies, guidelines or procedures as applicable to Sub-Advisor's
obligations under this Agreement. Sub-Advisor acknowledges and
agrees that Advisor may, in its discretion, provide such quarterly
compliance certifications to the Company. Sub-Advisor agrees to
correct any such failure promptly and to take any action that the
Company and/or Advisor may reasonably request in connection with any
such breach. Upon request, Sub-Advisor shall also provide Advisor
with supporting certifications in connection with such
certifications of Fund financial statements and disclosure controls
pursuant to the Xxxxxxxx-Xxxxx Act. Sub-Advisor will promptly notify
Advisor in the event (i) Sub-Advisor 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 Company or the compliance by
Sub-Advisor with the federal or state securities laws or (ii) the
controlling stockholder of Sub-Advisor changes or an actual change
in control resulting in an "assignment" (as defined in the Advisers
Act) has occurred or is otherwise proposed to occur.
h. Sub-Advisor shall maintain books and records as required by
applicable regulations.
6. Compensation of Sub-Advisor. As compensation for the services to be
rendered and duties undertaken hereunder by the Sub-Advisor, the Advisor will
pay to the Sub-Advisor a monthly fee as set forth in Exhibit B (the "Fee
Schedule") without regard to any total expense limitation of the Company or the
Advisor.
7. Activities of Sub-Advisor. Sub-Advisor will report to the Company (at
regular quarterly meetings of the Company's directors and at such other times as
the Company shall reasonably request, subject to the limitation on personal
attendance at such meetings in Section 4(c) above) such information as the
Company shall reasonably request regarding the Funds, the Funds' performance,
the services provided by Sub-Advisor and affiliates of Sub-Advisor to the Funds
as compared to its other accounts and the plans of, and the capability of,
Sub-Advisor with respect to providing future services to the Funds and its other
accounts.
Sub-Advisor has supplied to Advisor and the Company copies of its Form ADV
Part 2 and will hereafter supply to Advisor, promptly upon the preparation
thereof, copies of all amendments or restatements of such document.
8. Use of Names. Neither Advisor nor the Company shall use the name of
Sub-Advisor in any prospectus, sales literature or other material relating to
Advisor or the Company in any manner not approved in advance by Sub-Advisor;
provided, however, that Sub-Advisor hereby approves all uses of its name which
merely refer in accurate terms to its appointment hereunder or which are
required by the SEC or a state securities commission or otherwise required by
applicable law. Sub-Advisor shall not use the name of Advisor or the Company in
any material relating to Sub-Advisor in any manner not approved in advance by
Advisor or the Company, as the case may be; provided, however, that Advisor and
the Company shall each approve all uses of their respective names which merely
refer in accurate terms to the appointment of Sub-Advisor hereunder or which are
required by the SEC or a state securities commission or otherwise by applicable
law; and, provided further, that in no event shall such approval be unreasonably
withheld.
9. Liability of Sub-Advisor and Indemnification.
a. The Sub-Advisor will not be liable for any loss sustained
by reason of the adoption of any investment policy or the purchase,
sale, or retention of any security on the recommendation of the
Sub-Advisor, if such recommendation shall have been made and such
other individual, firm, or corporation shall have been selected,
with due care and in good faith.
b. Sub-Advisor shall indemnify and hold harmless the Company
and all affiliated persons thereof (within the meaning of Section
2(a)(3) of the 0000 Xxx) and all controlling persons (as described
in Section 15 of the 1933 Act) (collectively, the "Sub-Advisor
Indemnitees") against any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other
expenses) by reason of or arising out of: (a) Sub-Advisor being in
material violation of any applicable federal or state law, rule or
regulation or any investment policy or restriction set forth in the
Funds' Registration Statement or any written guidelines or
instruction provided in writing by the Company, (b) Sub-Advisor's
willful misfeasance, bad faith or gross negligence generally in the
performance of its duties hereunder or its reckless disregard of its
obligations and duties under this Agreement, or (c) any breach of
any duty or warranty hereunder of the Sub-Advisor or any inaccuracy
of any representation of the Sub-Advisor made hereunder.
c. Advisor shall indemnify and hold harmless Sub-Advisor and
its affiliates against any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other
expenses) by reason of or arising out of (a) Advisor's willful
misfeasance, bad faith or gross negligence in the performance of its
duties hereunder or its reckless disregard of its obligations and
duties under this Agreement and (b) any breach of any duty or
warranty hereunder of the Advisor or any inaccuracy of any
representation of the Advisor made hereunder, provided, however,
that nothing herein contained will provide indemnity to the
Sub-Advisor for liability resulting from its own willful
misfeasance, bad faith, or gross negligence in the performance of
its duties or reckless disregard of such duties.
10. Force Majeure. Sub-Advisor shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of circumstances beyond
its control, Sub-Advisor shall take all reasonable steps to minimize service
interruptions.
11. Approval, Renewal, Termination and Amendment.
a. Approval. This Agreement has been approved by the Company's
board of directors, including a majority of the members who are not
"interested parties" (as that term is defined in the 0000 Xxx) of
the Funds or any investment advisor to a Fund ("Independent Board
Member"), by a vote cast in person at a meeting called for the
purposes of voting on such approval, and shall become effective as
of the Amendment Effective Date.
b. Renewal and Termination. Unless terminated sooner as
provided herein, this Agreement shall continue in respect of each
Fund for an initial term of two (2) years from the Original
Effective Date. Thereafter, if not terminated, this Agreement shall
continue in respect of each Fund for successive 12-month periods,
provided, that such continuance is specifically approved at least
annually by (i) the vote of the holders of a majority of the
Independent Board Members, cast in person at a person at a meeting
called for the purpose of voting on such continuance, and (ii) by
the Company or by vote of a majority of the "outstanding voting
securities" (as that term is defined in the 1940 Act ) of the Fund;
provided, however, that notwithstanding the foregoing, this
Agreement may be terminated with respect to the Fund at any time
without payment of any penalty, on sixty (60) days written notice to
Advisor and/or Sub-Advisor, as appropriate.
c. Survival. In the event of termination of this Agreement,
Sections 8, 9, 11, 16, 17 and 18 shall survive such termination of
this Agreement.
d. Amendment. This Agreement may be amended at any time by the
parties hereto, subject to approval by the Company and, if required
by applicable SEC rules and regulations, a vote of the majority of
the outstanding voting securities of the Funds affected by such
change.
12. Marketing Materials, Trademarks and Related Matters.
a. Marketing Materials. Sub-Advisor will assist Advisor in
Advisor's development and construction of marketing materials for
the Funds ("Marketing Materials"). Advisor will be responsible for
any and all content, production, shipping and other like charges
relating to such Marketing Materials. All Marketing Materials that
refer to the Sub-Advisor will appropriately reflect the nature and
role of Sub-Advisor's performance of Sub-Advisor's obligations under
this Agreement. Advisor agrees to provide Sub-Advisor with any new
Marketing Materials that either contain Sub-Advisor's logo or
reference Sub-Advisor. Advisor will allow Sub-Advisor to review and
approve such Marketing Materials. Sub-Advisor agrees to complete its
review of such Marketing Materials within five (5) business days.
Marketing Materials that have previously been reviewed and approved
by Sub-Advisor are not required to be submitted unless content
impacting or relating to Sub-Advisor has changed.
b. Trademarks. Subject to (i) and (ii) below. Advisor may
utilize the following trademarks of Sub-Advisor in association with
the Funds:
Morningstar(R)
i. Use of Trademarks. To the extent not permitted by Section 8
hereof, each party must obtain the other party's permission prior
any use of its name, logo, trademarks, or data. Sub-Advisor and
Advisor will submit such materials to the other for their review
prior to any printing or dissemination.
ii. Notices and Disclaimers. The following or a substantially
similar statement shall be included with Marketing Materials that
reference Sub-Advisor or the Funds:
Morningstar Investment Management LLC is a registered
investment adviser and wholly owned subsidiary of
Morningstar, Inc. Morningstar Investment Management is
acting as a sub-advisor to AllianceBernstein L.P. with
regard to the AB Multi-Manager Select Retirement
Funds. Morningstar Investment Management is not
affiliated with AB or its affiliates. The Morningstar
name and logo are the property of Morningstar, Inc.
Sub-Advisor reserves the right to modify the above disclaimer text
or add additional text to the required disclaimer text as it deems
appropriate based on its review of Marketing Materials.
13. Limited Exclusivity. Commencing with the Original Effective Date and
for a period of three (3) years; Sub-Advisor will not engage with the asset
managers listed in Exhibit C (the "Exclusivity List") as a sub-advisor for a
series of actively managed, multi-manager target date mutual funds. This does
not prohibit the asset managers from being included as underlying funds in third
party U.S. registered multi-manager offerings where Sub-Advisor acts as a
sub-advisor or consultant or for Sub-Advisor to act as consultant or advisor to
multi-manager custom target date solutions.
14. Disclosure Materials of Underlying Holdings. Advisor shall be solely
and exclusively responsible, where applicable, for the delivery in a timely
fashion to any shareholder, prospective shareholder or other person any
prospectus, semi-annual report, and any other shareholder communication or
materials.
15. Proxies and Legal Proceedings. Sub-Advisor will not be responsible for
voting of proxies solicited by, or with respect to, the issuers of any
securities held in any Fund. Advisor understands and acknowledges that
Sub-Advisor will not render any advice or take any action on behalf of any Fund
with respect to securities presently or formerly held in any Fund, or the
issuers thereof, which become the subject of any legal proceedings including
bankruptcies and class actions suits.
16. Severability. If any provision of this Agreement shall become or shall
be found to be invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
17. Notice. Any notices under this Agreement shall be in writing addressed
and delivered personally (or by telecopy) or mailed postage-paid, to the other
party at such address as such other party may designate in accordance with this
paragraph for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Company and that of Advisor for this
purpose shall be 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 and that the
address of Sub-Advisor shall be 00 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000.
18. Miscellaneous. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Illinois and Sub-Advisor consents to the
jurisdiction of courts, both state or federal, in Illinois, with respect to any
dispute under this Agreement. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. The parties acknowledge that the
Company and the Funds are third party beneficiaries of this Agreement. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
ALLIANCEBERNSTEIN L.P.
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Title: Assistant Secretary & SVP
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Date: 11/30/2017
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MORNINGSTAR INVESTMENT MANAGEMENT LLC
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
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Title: Chief Operating Officer
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Date: 11/6/17
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EXHIBIT A
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ADVISORY AGREEMENT
EXHIBIT B
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FEE SCHEDULE
Basis Point Fee
As compensation for the services to be rendered and duties undertaken hereunder
by Sub-Advisor, Advisor will pay to Sub-Advisor a monthly fee (the "Basis Point
Fee") for the assets under management ("AUM") based upon the following fee
schedule.
AUM Annual Fee Rate
$0-$1 billion in AUM: 5 basis points
Over $1 billion in AUM: 4 basis points
Each month, Sub-Advisor's Basis Point Fee calculation will be based on 1/12 of
the annual Basis Point Fee multiplied by the total AUM. The Basis Point Fee
shall be assessed and payable monthly.
If Sub-Advisor serves in such capacity for less than the whole of any period,
the Fee shall be prorated.
Annual Minimum Fee
Advisor shall pay to Sub-Advisor an annual minimum fee (the "Annual Minimum
Fee") of $150,000, commencing on the Original Effective Date.
If, at the end of each one (1) year anniversary of the Original Effective Date,
the Asset Based Fees for the previous 12 month period are less than the Annual
Minimum Fee, the difference between the amount of Asset Based Fees paid and the
Annual Minimum Fee shall be due and payable by Advisor no later than forty-five
(45) days after that anniversary date.
If Sub-Advisor serves in such capacity for less than the whole of any period,
the Annual Minimum Fee shall be prorated.
EXHIBIT C
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EXCLUSIVITY LIST
Sub-Advisor will not engage with the following asset managers as a sub-advisor
for a series of actively managed, multi-manager target date mutual funds.
o MFS
o Xxxxxxxx Xxxxxxxxx
x Xxxxxxx Sachs
o Columbia
o PIMCO
o X.X. Xxxxxx
o Invesco
x Xxxxxxxxxxx
o AQR
EXHIBIT D
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Morningstar Investment Management ("Morningstar")/AB standard operating
procedures for implementing changes to the model portfolio
Defining "change months". To allow for the most efficient change management
process, the month ends of February, May, August and November will be considered
the regular time frames for implementing a new model portfolio.
Provision of asset class glide path from AB to Morningstar. The AB portfolio
management team will provide any changes to the asset class glide path via
e-mail to Morningstar portfolio management by the 15th of the month prior to a
change month. Tactical changes provided will not include the normal "roll down"
of the glide path as this information will be provided in an excel file from AB
to Morningstar prior to the launch of the funds.
Provision of changes to the model portfolio from Morningstar to AB. To ensure
implementation can be completed by month end, AB would request that Morningstar
provides AB with a listing of any new funds to be added or any funds to be
completely removed no later than the 1st of the change month (Example in
Appendix A). The finalized model portfolio in the Excel evergreen format
(Example in Appendix A) can be provided as late as the 15th of the change month.
Exceptions. AB also understand that there may be events that would warrant a
more immediate change to a portfolio holding, and AB plans to work as necessary
to implement them should they occur. AB has the ability to sell almost
completely out of a fund on a tactical basis while XX xxxxx to fully liquidate
the position. AB can also purchase an ETF immediately to gain exposure to a new
holding while XX xxxxx to set up the new mutual fund.
Typical Quarterly Cycle. Using November month end as a change month . . .
o October 15 - AB to provide Morningstar with a new asset class glide
path if necessary
o November 1 - Morningstar to provide new fund information to AB
o November 15 - Morningstar to provide final model portfolio to AB
o November 30 -AB to implement new model portfolio (potentially
earlier using tactical methods)
Implementation of new model portfolio. Once the model portfolio has been
received by AB's portfolio management team and approved, the AB implementation
team will determine the type of change and proceed with AB's process to load the
target weights.
Scenario A - only weightings of existing funds change (2 days to 1 week)
o Need to load new model portfolio into AB's product management tool
which must be done at least 2 days prior to implementation
o Additionally, AB's implementation team needs to analyze the new
target percentages to see if any will result in large flows to the
underlying funds. If there are large flows, AB will need to contact
the fund managers, who may require up to 3 days' notice for
pretrading. If AB does not do this, AB runs the risk of the trades
being rejected.
Scenario B - funds from existing families are added/removed (1 to 4 weeks)
o Requires all bullets from Scenario A plus
o New funds must be setup in AB's trade operations, portfolio
management and custodial systems
o Implementation team needs to confirm whether AB has an existing
ability to trade the funds, and if not, needs to add them to
accounts if they weren't set up previously.
o Implementation team needs to vet the funds for any operational
complexities
o AB assumes the fund can trade on an "as of" basis, settles
both purchases and redemptions on T+1 basis, does not have
short term redemption fees or revenue share, and does not have
a minimum investment amount that would be needed to get
waived. If any of these scenarios do occur, they could add to
the implementation time.
o Complete liquidations of all shares for a fund require minor
development work and cannot be implemented immediately.
o NOTE: These implementations will be closer to the 1-2 week range if
AB is able to set the funds up ahead of time, either through a
backup fund list, or notification of the new fund additions on the
1st of a change month as mentioned earlier.
Scenario C - new fund families are added (4 to 6 weeks)
o Requires all of the bullets from Scenario A and Scenario B plus
o AB has to negotiate a participation agreement with fund family
o If fund family is not on the Fidelity brokerage platform, AB needs
them to paper a contract with the fund family to have it added (can
take several weeks) or AB can trade directly with the fund company
(several weeks for AB's IT team to build a trade feed assuming no
other priorities).
Additional Communications/Deliverables:
AB and Morningstar portfolio management teams will discuss the management of the
portfolios on a standing monthly call.
AB and Morningstar portfolio management teams will meet in person at a minimum
semi-annually to discuss the management of the portfolios.
On a quarterly basis, Morningstar will provide a brief write-up on the rationale
for including a fund in the lineup. Morningstar and AB will mutually agree on
the time frame within which these quarterly write-ups will be delivered to AB.
Morningstar will provide analytics on the underlying funds on a quarterly basis.
Morningstar and AB will mutually agree on the time frame within which these
quarterly analytics will be delivered to AB.
Morningstar will also provide analytics on the underlying funds whenever
off-cycle changes are implemented within 10 calendar days following an off-cycle
change.
Morningstar will provide a brief write-up on the rationale for adding and/or
removing a fund in to/from lineup or for making a change to a weight in excess
of 50 bps in any vintage.
Commentary for external use: TBD
Morningstar will present to the AB mutual fund board on an annual basis.
Morningstar may also be asked to participate via phone in other board meetings
no more frequently than quarterly.
15C: TBD
Appendix A
Fund Information Required for New Setup
Official Fund Name
CUSIP
Ticker
SEDOL
Share Class
Fund Family
Benchmark Name {as specific as possible}
Benchmark Identifier
Total Expense Ratio {in basis points or percentage}
Dividend Schedule {annual, semi-annual, quarterly, monthly, daily}
Model Portfolio Template
Contacts
AB Portfolio Management Team
Xxxxxx Xxxxx
Co-Head & Chief Investment Officer
Multi-Asset Solutions
xxxxxx.xxxxx@xxxxxxxx.xxx
-------------------------
Xxxxxxxxxxx Xxxxxxxx
Head, Research and Investment Design
AllianceBernstein Defined Contribution Investments
xxxxx.xxxxxxxx@xxxxxxxx.xxx
AB Implementation Team
Xxxxxx Xxxxxxxxx
xxxxxx.xxxxxxxxx@xxxxxxxx.xxx
-----------------------------
XXXXXxxxxxxxx@xxxxxxxx.xxx
Morningstar Investment Management Portfolio Management Team
Xxxxx Xxxxxxxx
Senior Portfolio Manager/Co-Head of Target Risk Strategies
xxxxx.xxxxxxxx@xxxxxxxxxxx.xxx
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Xxxx XxXxxxxxxx
Associate Portfolio Manager
xxxx.xxxxxxxxxx@xxxxxxxxxxx.xxx
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