XXXX XXXXXXX FUNDS II
SUBADVISORY AGREEMENT
AGREEMENT made this 28th day of April 2006, between Xxxx Xxxxxxx Investment
Management Services, LLC, a Delaware limited liability company (the "Adviser"),
and Dimensional Fund Advisors Inc., a Delaware corporation (the "Subadviser").
In consideration of the mutual covenants contained herein, the parties agree as
follows:
1. APPOINTMENT OF SUBADVISER
The Subadviser undertakes to act as investment subadviser to, and, subject
to the supervision of the Trustees of Xxxx Xxxxxxx Funds II (the "Trust") and
the terms of this Agreement, to manage the investment and reinvestment of the
assets of the Portfolios specified in Appendix A to this Agreement as it shall
be amended by the Adviser and the Subadviser from time to time (the
"Portfolios"). The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or Adviser in any way except as
expressly authorized in this Agreement or another writing by the Trust and
Adviser.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
a. Subject always to the direction and control of the Trustees of the Trust,
the Subadviser will manage the investments and determine the composition of
the assets of the Portfolios in accordance with the Portfolios'
registration statement, as amended. In fulfilling its obligations to manage
the investments and reinvestments of the assets of the Portfolios, the
Subadviser will:
i. obtain and evaluate such economic, statistical, financial and other
information that the Subadviser deems relevant to the management of 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; provided however, that the Adviser provides the
Subadviser with changes to the Trust's registration statement with respect
to the Portfolios at least sixty (60) days in advance of the effectiveness
of such change with respect to any material change that affects the
management of the Portfolios' assets, and within a reasonable period of
time in advance of the effectiveness of such change with respect to any
other changes;
iii. 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. upon reasonable request, provide assistance to the Trust to assist the
Trust in fair value pricing securities held by the Portfolios for which
market quotations are not readily available, including communicating with
the Trust's Custodian or pricing agent.
b. The Subadviser, at its expense, will furnish (i) all necessary investment
and management facilities, including payment of salaries of personnel
required for it to execute its duties faithfully, and (ii) administrative
facilities, including recordkeeping, clerical personnel and equipment
necessary for the conduct of investing each Portfolios' assets (excluding
non-investment advisory services such as the determination of net asset
value and custodial, transfer agency, and Portfolio and shareholder
accounting services). The Adviser acknowledges and agrees that the
Subadviser is not responsible to advise or act for the Trust or the
Portfolio in any legal proceedings, including bankruptcies or class
actions, involving securities held or previously held by the Portfolio or
the issuers of such securities. To the extent the Subadviser has received
written documentation related to such proceedings related to securities
held by the Trust which are managed by the Subadviser, the Subadviser shall
promptly forward the documentation to the Adviser.
c. The Subadviser will select brokers and dealers to effect all transactions
subject to the 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 execute brokerage transactions for the Portfolios in
accordance with procedures agreed upon by the parties, as amended from time
to time. 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 and its affiliates'
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 with respect
to the Portfolios as are required to be kept 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.
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f. To the extent proxy voting materials have been forwarded to the Subadviser
in a timely fashion by the Portfolio's custodian, the Subadviser shall vote
proxies relating to the Portfolio's investment securities in accordance
with (i) the Trust's proxy voting policies and procedures; provided
however, the Adviser shall notify the Subaviser of any material change to
the Trust's proxy voting policies and procedures at least sixty (60) days
in advance of the effectiveness of such change); and (ii) the proxy voting
policies and procedures adopted by the Subadviser in conformance with Rule
206(4)-6 under the Investment Advisers Act (a summary of which is described
in the Subadviser's Form ADV Part II, as amended from time to time).
g. The Adviser understands and agrees that the Subadviser, as part of its
duties hereunder, is not responsible for determining whether or not the
Portfolio is a suitable and appropriate investment for the clients who
invest in such Portfolio.
h. The Subadviser may rely on specific information, instructions or requests
given or made to Subadviser by the Adviser with respect to the Trust, the
Portfolio and the management of the Portfolio's assets, which are believed
to be in good faith by the Subadviser to be reliable.
3. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser with respect to each Portfolio the
compensation specified in Appendix A to this Agreement.
4. LIABILITY OF SUBADVISER AND AFFILIATES
The Subadviser, its affiliates and each of their directors, officers and
employees shall not be liable to the Adviser or the Trust for any error of
judgment or mistake of law or for any loss suffered by the Adviser or 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 the Subadviser
or any of its directors.
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,
shareholders or otherwise; that employees, agents and shareholders of the
Subadviser are or may be interested in the Trust as trustees, officers,
shareholders or otherwise; that the Subadviser may be interested in the Trust;
and that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Certificate of
Incorporation of the Subadviser, respectively, or by specific provision of
applicable law.
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6. REGULATION
The Subadviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
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 by the Trustees of the Trust or by a majority
of the outstanding voting securities of each of the Portfolios, provided that in
either event such continuance shall also be approved by the vote of a majority
of the Trustees of the Trust who are not interested persons (as defined in the
Investment Company Act) of any party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval. Any required
shareholder approval of the Agreement or of any continuance of the Agreement
shall be effective with respect to any Portfolio if a majority of the
outstanding voting securities of the series (as defined in Rule 18f-2(h) under
the Investment Company Act) of shares of that Portfolio votes to approve the
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
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 Portfolio by
the vote of a majority of the outstanding voting securities of such Portfolio,
on sixty (60) days' written notice to the Adviser and the Subadviser, or by the
Adviser or Subadviser on sixty (60) days' written notice to the Trust and the
other party. This Agreement will automatically terminate, without the payment of
any penalty, in the event of its assignment (as defined in the Investment
Company Act) or in the event the Advisory Agreement between the Adviser and the
Trust terminates for any reason.
8. PROVISION OF CERTAIN INFORMATION
a. The Subadviser will promptly notify the Adviser in writing of the
occurrence of any of the following events:
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i. 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;
ii. 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
iii. any change in actual control or management of the Subadviser or the
portfolio manager responsible for coordinating the day-to-day management of
any Portfolio.
b. The Adviser shall furnish to the Subadviser copies of the following
documents:
i. the resolutions of the Trust's Board approving the engagement of the
Subadviser as a subadviser to the Portfolio and approving the form of this
Agreement;
ii. current copies of the registration statement, Prospectus and Statement
of Additional Information of the Trust relating to the Portfolio;
iii. resolutions, policies and procedures adopted by the Trust's Board in
respect of the management or operation of the Portfolio; and
iv. a list of affiliated brokers and underwriters and other affiliates for
compliance with applicable provisions of the Investment Company Act.
The Adviser shall furnish the Subadviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any. Such amendments or supplements to the
items above shall be provided: (1) with respect to any material change that
affects the management of the Portfolios' assets, within sixty (60) days for
items (i) and (ii) above and thirty (30) days for items (iii) and (iv) above in
advance of the effectiveness of such amendment or supplement, and (2) with
respect to any other changes, within a reasonable period of time such materials
become available to the Adviser. Until so provided, the Subadviser may continue
to rely on those documents previously provided.
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.
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10. CONSULTATION WITH OTHERS
The Subadviser may enter into arrangements with other persons affiliated
with the Subadviser or with unaffiliated third parties to better enable the
Subadviser to fulfill its obligations under this Agreement for the provision of
certain personnel and facilities to the Subadviser; provided that the Subadviser
shall be responsible for any acts or omissions of such affiliated or
unaffiliated persons or parties to the extent Subadviser would have been
responsible under this Agreement, and shall notify the Adviser in writing before
entering into such arrangements.
Notwithstanding the foregoing, as required by Rule 17a-10 under the
Investment Company Act of 1940, the Subadviser is prohibited from consulting
with the entities listed below concerning transactions for a Portfolio in
securities or other assets:
a. other subadvisers to a Portfolio;
b. other subadvisers to a Trust portfolio; and
c. other subadvisers to a portfolio under common control with the Portfolio.
11. AMENDMENTS TO THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the Trustees of the Trust and
by the vote of a majority of the Trustees of the Trust who are not interested
persons of any party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval. Any required shareholder approval shall
be effective with respect to any Portfolio if a majority of the outstanding
voting securities of that Portfolio vote to approve the amendment,
notwithstanding that the amendment may not have been approved by a majority of
the outstanding voting securities of (a) any other Portfolio affected by the
amendment or (b) all the portfolios of the Trust.
12. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
13. HEADINGS
The headings in the sections of this Agreement are inserted for convenience
of reference only and shall not constitute a part hereof.
14. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust or
applicable party in person or by registered mail or a private mail or delivery
service providing the sender with notice of receipt. Notice shall be deemed
given on the date actually received.
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15. 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.
16. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of Massachusetts, or any of the applicable provisions
of the Investment Company Act. To the extent that the laws 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
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. The Trust
shall provide the Subadviser with any such amendments. The Subadviser will keep
in place a policy on xxxxxxx xxxxxxx, as amended from time to time, and shall
prohibit its employees from trading in violation of such policy.
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. 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 (other than written inquiries such as
"sweep letters" conducted by the SEC or exams that cannot be disclosed by law or
order of the regulatory agency) of the Subadviser that relates to services
provided by the Subadviser to the Trust and a general summary of any material
deficiencies of the Subadviser cited by the applicable regulatory agency as a
result of such examination to the extent such disclosure is permitted by law,
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 any material deficiency relating to the services provided by the
Subadviser to the Trust under this Agreement discovered as a result of any
formal internal audit conducted by Subadviser. Throughout the term of this
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Agreement, the Subadviser shall provide the Adviser with certifications,
information and access to personnel (including those resources that are
responsible for enforcing the Compliance Policies to permit reasonable testing
of such 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.
20. REFERENCES TO THE ADVISER AND SUBADVISER
During the term of this Agreement, each party agrees to furnish the other
party at its principal office sales literature, prospectuses or shareholder
reports, or other similar material prepared for distribution to the public,
which refers to the other party or its clients, prior to use thereof and not to
use such references if the other party objects in writing within five business
days (or such other time as may be agreed upon) after receipt thereof. Sales
literature may be furnished to the other party by first-class or overnight mail,
facsimile transmission equipment or hand delivery.
(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: /s/ Xxxx x. Xxxxxx
Xxxx X. Xxxxxx
Executive Vice President and Chief Financial Officer
DIMENSIONAL FUND ADVISORS INC.
By: /s/ Xxxxxxxxx X. Xxxxxx
Name: Xxxxxxxxx X. Xxxxxx
Title: Vice President and Secretary
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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"):
First Excess Over
$100 million $100 million
of Aggregate of Aggregate
Portfolio Net Assets* Net Assets*
International Small Company 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)
International Small Company Fund -- International Small Company 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 the (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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