XXXX XXXXXXX FUNDS II
AMENDED AND RESTATED SUBADVISORY CONSULTING AGREEMENT
AGREEMENT made this 17th day of October, 2005, among Xxxx Xxxxxxx
Investment Management Services, LLC, a Delaware limited liability company, ("the
Adviser"), MFC Global Investment Management (U.S.A.) Limited, a Canadian
corporation (the "Subadviser"), and Deutsche Asset Management, Inc., a Delaware
corporation ("Deutsche"). In consideration of the mutual covenants contained
herein, the parties agree as follows:
1. APPOINTMENT OF DEUTSCHE
Deutsche undertakes to provide the services described in Section 2 below in
connection with the Subadviser's management of the Lifestyle Funds listed in
Appendix A (collectively, the "Lifestyle Trusts"), subject to the supervision of
the Trustees of Xxxx Xxxxxxx Funds II (the "Trust") and the Adviser. Deutsche
will be an independent contractor and will have no authority to act for or
represent the Trust, Adviser or Subadviser in any way except as expressly
authorized in this Agreement or another writing by the Trust, the Adviser and
Subadviser.
Deutsche represents that it is registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Investment Advisers Act").
2. SERVICES TO BE RENDERED BY DEUTSCHE
a. Deutsche will provide the Subadviser the following information and services
as may be requested by the Subadviser from time to time:
i. o calculate the probability that the subadvisers to the nonLifestyle
Trust portfolios outperform their performance benchmarks;
o perform statistical performance analysis of historical manager
returns for managers that the Subadviser would like to include in its
potential line up on a quarterly basis;
o using a combination of sources, including Deutsche's proprietary
optimization technology, Deutsche will seek to optimize Lifestyle
Trust investments consistent with the performance objective specified
by the Subadviser (i.e. the probability of out-performing a benchmark,
minimum shortfall relative to the benchmark, and specification of the
benchmark for each Lifestyle Trust, and any constraints that the
Subadviser may specify on allocations to nonLifestyle Portfolios) on a
quarterly basis;
o consult with the Subadviser to explain proposed allocations on a
quarterly basis and review past performance of the Lifestyle Trusts
provided that Deutsche is given information on the performance of
these Lifestyle Trusts and the actual allocations implemented.
b. Deutsche, at its expense, will furnish all necessary (i) investment and
management facilities, including salaries of personnel required for it to
execute its duties faithfully under this Agreement, and (ii) administrative
facilities, including bookkeeping, clerical personnel and equipment
necessary to execute its obligations under this Agreement.
c. Deutsche shall be entitled to sub-delegate, where necessary, the
performance of any or all of the services hereunder to any member of a
company controlled by Deutsche Bank AG ("Group Companies"), unless such
delegation would violate the anti-assignment provisions of the Investment
Advisers Act.
3. COMPENSATION OF DEUTSCHE
The Subadviser will pay Deutsche with respect to each Lifestyle Trust the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF DEUTSCHE
a. Neither Deutsche nor any of its directors, officers or employees shall be
liable to the Adviser, the Subadviser or the Trust for any error of
judgment or mistake of law or for any loss suffered by the Adviser, the
Subadviser or the Trust in connection with the matters to which this
Agreement relates except for losses resulting from willful misfeasance, bad
faith or gross negligence in the performance of, or from the reckless
disregard of, the duties of Deutsche or any of its directors.
b. Deutsche and any of its directors, officers or employees shall not in any
event have any liability to the Trust, Adviser or Subadviser to the extent
that performance of its obligations is prevented or impeded as a
consequence of any circumstances beyond its reasonable control, including
(without limitation) nationalization, currency restrictions, acts of war,
acts of God, breakdown or failure of transmission or communications or
computer facilities that is not due to the gross negligence of the Deutsche
or any of its affiliates, postal or other strikes or industrial action,
Government action, or the failure or disruption of any stock exchange,
clearing house, settlements system or market.
5. CONFLICTS OF INTEREST
It is understood that trustees, officers, agents and shareholders of the
Trust are or may be interested in Deutsche as trustees, officers, partners or
otherwise; that employees, agents and partners of Deutsche are or may be
interested in the Trust as trustees, officers, shareholders or otherwise; that
Deutsche 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 or by specific provision of applicable law.
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6. REGULATION
Deutsche shall submit to all regulatory and administrative bodies having
jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
7. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective with respect to each Lifestyle Trust
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 with respect to each Lifestyle Trust only so long as
such continuance is specifically approved at least annually either (i) by the
Trustees of the Trust or (ii) by a majority of the outstanding voting securities
of the Lifestyle Trusts, 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 Lifestyle Trust 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 Lifestyle Trust
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 Lifestyle Trust affected by the
Agreement or (b) all the Lifestyle Trusts.
If any required shareholder approval of this Agreement or any continuance
of the Agreement is not obtained, Deutsche will continue to provide the services
described herein with respect to the affected Lifestyle Trust pending the
required approval of the Agreement or its continuance or of a new contract with
Deutsche or a different adviser or other definitive action; provided, that the
compensation received by Deutsche in respect of such Lifestyle Trust 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
penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Lifestyle
Trust by the vote of a majority of the outstanding voting securities of such
portfolio, on sixty days' written notice to the Adviser, Subadviser and
Deutsche, or by the Adviser, Subadviser or Deutsche on sixty days' written
notice to the Trust and the other parties. This Agreement will automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in the Investment Company Act), in the event the Subadvisory
Agreement between the Subadviser and the Adviser terminates for any reason with
respect to the Lifestyle Trusts or in the event the Advisory Agreement between
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the Adviser and the Trust terminates for any reason with respect to the
Lifestyle Trusts.
8. PROVISION OF CERTAIN INFORMATION BY DEUTSCHE
Deutsche will promptly notify the Adviser and the Subadviser in writing of
the occurrence of any of the following events:
a. Deutsche fails to be registered as an investment adviser under the
Investment Advisers Act;
b. Deutsche is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, involving the affairs of the Trust; and
c. any change in control of Deutsche within the meaning of the Investment
Company Act.
9. SERVICES TO OTHER CLIENTS
The Adviser and the Subadviser understand, and have advised the Trust's
Board of Trustees, that Deutsche 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 and
Subadviser understand, and have advised the Trust's Board of Trustees that
Deutsche 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 Lifestyle Trusts. Deutsche is not obligated to
initiate transactions for a Lifestyle Trust in any security which Deutsche, its
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 Lifestyle Trust if a majority of the
outstanding voting securities of that Lifestyle Trust 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 Lifestyle Trust
affected by the amendment or (b) all the Lifestyle Trusts 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.
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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, Deutsche or
the Subadviser, as applicable, 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. REPRESENTATIONS OF THE ADVISER AND SUBADVISER
a. The Adviser and Subadviser each separately represent, warrant and agree on
a continuing basis the following:
1. it has the authority to enter into this Agreement, and that it has taken
all steps necessary to appoint Deutsche to perform the services envisaged
in this Agreement;
2. it is duly authorized and empowered to perform its duties and
obligations hereunder and that the terms of this Agreement do not
constitute a breach of any obligations by which it is bound whether arising
by contract, operation of law or otherwise;
3. as a condition of the provision of services by the Deutsche hereunder,
it will produce to Deutsche such documents as it may require as evidence of
its authority to enter into this Agreement, and will forthwith advise
Deutsche of any variation of or supplements to such documents relevant to
its authority to enter into this Agreement; and
4. it will notify Deutsche promptly if there is any change to the
investment policies of the Portfolio and will provide such other relevant
information as Deutsche may from time to time reasonably require in order
to fulfill its legal, regulatory and contractual obligations relating to
fulfilling its obligations under this Agreement, such relevant information
including, but not limited to, providing Deutsche with historical
performance (monthly return) for all of the managers that it wishes to
include in Deutsche's analysis, its performance objective (benchmarks for
each Lifestyle Trust, constraints, performance objective), and any views
that it wishes to place on a benchmark or a manager's future performance.
The Subadviser and the Adviser each separately acknowledge that a failure
to provide such information may adversely affect the quality of the
services that Deutsche may provide.
b. Deutsche represents, warrants and agrees on a continuing basis the
following:
1. it is duly registered as an investment adviser under the Investment
Advisers Act of 1940;
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2. it has the authority to enter into this Agreement;
3. it is duly authorized and empowered to perform its duties and
obligations hereunder and that the terms of this Agreement do not
constitute a breach of any obligations by which the Deutsche is bound
whether arising by contract, operation of law or otherwise.
16. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of The Commonwealth of Massachusetts, or any of the
applicable provisions of the Investment Company Act. To the extent that the laws
of The Commonwealth of Massachusetts, or any of the provisions in this
Agreement, conflict with applicable provisions of the Investment Company Act,
the latter shall control.
17. LIMITATION OF LIABILITY
The Agreement and Declaration of Trust, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the office of the
Secretary of The Commonwealth of Massachusetts, provides that the name " Xxxx
Xxxxxxx Funds II" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of the Trust shall be held to any personal liability,
nor shall resort be had to their private property, for the satisfaction of any
obligation or claim, in connection with the affairs of the Trust or any
portfolio thereof, but only the assets belonging to the Trust, or to the
particular Portfolio with respect to which such obligation or claim arose, shall
be liable.
18. CONFIDENTIALITY OF TRUST PORTFOLIO HOLDINGS
Deutsche 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. CONSULTATION WITH SUBADVISERS TO OTHER TRUST PORTFOLIOS
As required by Rule 17a-10 under the Investment Company Act of 1940, the
Deutsche 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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20. COMPLIANCE
Upon execution of this Agreement, the Subadviser shall provide the Adviser
with the Subadviser's written policies and procedures ("Compliance Policies") as
required by Rule 206(4)-7 under the Investment Advisers Act. Throughout the term
of this Agreement, the Subadviser shall promptly submit to the Adviser: (i) any
material changes to the Compliance Policies, (ii) notification of the
commencement of a regulatory examination of the Subadviser and documentation
describing the results of any such examination 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. 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-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
Xxxx X. XxxXxxx III
Chairman
MFC GLOBAL INVESTMENT MANAGEMENT
(U.S.A.) LIMITED
By: /s/ Xxxxxx X. Pansegraw
Name: Xxxxxx X. Pansegraw
Title: General Counsel, Secretary and
Chief Compliance Officer
DEUTSCHE ASSET MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Director
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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
$1.5 billion
First and Excess Over
$1.5 billion $7.5 billion $7.5 billion
of Aggregate of Aggregate of Aggregate
Portfolio Net Assets* Net Assets* Net Assets*
Lifestyle Aggressive 1000 Fund
Lifestyle Growth 820 Fund
Lifestyle Balanced 640 Fund
Lifestyle Moderate 460 Fund
Lifestyle Conservative 280 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 portfolio(s). For purposes of determining Aggregate Net Assets and
calculating the Subadviser Fee, the net assets of the Portfolio and each other
portfolio of the Trust are determined as of the close of business on the
previous business day of the Trust, and the net assets of each portfolio of each
other fund are determined as of the close of business on the previous business
day of that fund.
Trust Portfolio(s) Other Portfolio(s)
Lifestyle Aggressive 1000 Fund -- Lifestyle Growth 820 Trust
Lifestyle Balanced 640 Trust
Lifestyle Moderate 460 Trust
Lifestyle Conservative 280 Trust, each a
series of Xxxx Xxxxxxx Funds II and
Lifestyle Aggressive Trust
Lifestyle Growth Trust
Lifestyle Balanced Trust
Lifestyle Moderate Trust
Lifestyle Conservative Trust, each a
series of Xxxx Xxxxxxx Trust
Lifestyle Growth 820 Trust Lifestyle Aggressive 1000 Trust
Lifestyle Balanced 640 Trust
Lifestyle Moderate 460 Trust
Lifestyle Conservative 280 Trust, each a
series of Xxxx Xxxxxxx Funds II and
Lifestyle Aggressive Trust
Lifestyle Growth Trust
Lifestyle Balanced Trust
Lifestyle Moderate Trust
Lifestyle Conservative Trust, each a
series of Xxxx Xxxxxxx Trust
Lifestyle Balanced 640 Trust Lifestyle Aggressive 1000 Trust
Lifestyle Growth 820 Trust
Lifestyle Moderate 460 Trust
Lifestyle Conservative 280 Trust, each a
series of Xxxx Xxxxxxx Funds II and
Lifestyle Aggressive Trust
Lifestyle Growth Trust
Lifestyle Balanced Trust
Lifestyle Moderate Trust
Lifestyle Conservative Trust, each a
series of Xxxx Xxxxxxx Trust
Lifestyle Moderate 460 Trust Lifestyle Aggressive 1000 Trust
Lifestyle Growth 820 Trust
Lifestyle Balanced 640 Trust
Lifestyle Conservative 280 Trust, each a
series of Xxxx Xxxxxxx Funds II and
Lifestyle Aggressive Trust
Lifestyle Growth Trust
Lifestyle Balanced Trust
Lifestyle Moderate Trust
Lifestyle Conservative Trust, each a
series of Xxxx Xxxxxxx Trust
Lifestyle Conservative 280 Trust Lifestyle Aggressive 1000 Trust
Lifestyle Growth 820 Trust
Lifestyle Balanced 640 Trust
Lifestyle Moderate 460 Trust, each a
series of Xxxx Xxxxxxx Funds II and
Lifestyle Aggressive Trust
Lifestyle Growth Trust
Lifestyle Balanced Trust
Lifestyle Moderate Trust
Lifestyle Conservative Trust, each 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.
