INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 31st day of May, 1997, and amended as of May 1,
1998, by and between Xxxx Xxxxxx Variable Investment Series, an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts
(hereinafter called the "Fund"), and Xxxx Xxxxxx InterCapital Inc., a Delaware
corporation (hereinafter called the "Investment Manager"):
WHEREAS, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and
WHEREAS, The Investment Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser; and
WHEREAS, The Fund is authorized to issue shares of beneficial interest in
separate portfolios (the "Portfolios") with each Portfolio representing
interests in a separate portfolio of securities and other assets; and
WHEREAS, The Fund presently offers shares in several Portfolios, such
Portfolios together with all other Portfolios subsequently established by the
Fund with respect to which the Fund desires to retain the Investment Manager to
render management and investment advisory services in the manner and on the
terms and conditions hereinafter set forth being collectively referred to as the
"Portfolios"; and
WHEREAS, The Investment Manager desires to be retained to perform services
on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as investment
manager of the Portfolios and, subject to the supervision of the Trustees, to
supervise the investment activities of the Portfolios as hereinafter set forth.
Without limiting the generality of the foregoing, the Investment Manager shall
obtain and evaluate such information and advice relating to the economy,
securities and commodities markets and securities and commodities as it deems
necessary or useful to discharge its duties hereunder; with respect to the
Portfolios other than the European Growth Portfolio and the Pacific Growth
Portfolio, shall continuously manage the assets of the Portfolios in a manner
consistent with the investment objectives and policies of the Portfolios and
shall determine the securities and commodities to be purchased, sold or
otherwise disposed of by the Portfolios and the timing of such purchases, sales
and dispositions; with respect to the European Growth Portfolio and the Pacific
Growth Portfolio, shall supervise the management of the assets of the Portfolio
in a manner consistent with the investment objectives and policies of the
Portfolio and subject to such other limitations and directions as the Trustees
of the Fund may from time to time prescribe; and shall take such further action,
including the placing of purchase and sale orders on behalf of the Portfolios
other than the European Growth Portfolio and the Pacific Growth Portfolio, as
the Investment Manager shall deem necessary or appropriate. The Investment
Manager shall also furnish to or place at the disposal of the Fund such of the
information, evaluations, analyses and opinions formulated or obtained by the
Investment Manager in the discharge of its duties as the Fund may, from time to
time, reasonably request.
In the event the Fund establishes another Portfolio other than the current
Portfolios with respect to which it desires to retain the Investment Manager to
render investment advisory services hereunder, it shall notify the Investment
Manager in writing. If the Investment Manager is willing to render such
services, it shall notify the Fund in writing, whereupon such other Portfolio
shall become a Portfolio hereunder.
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2. The Investment Manager shall, at its own expense, enter into
Sub-Advisory Agreements in respect of the European Growth Portfolio and the
Pacific Growth Portfolio with a Sub-Adviser or Sub-Advisers to make
determinations as to the securities and commodities to be purchased, sold or
otherwise disposed of by the European Growth Portfolio or the Pacific Growth
Portfolio and the timing of such purchases, sales and dispositions and to take
such further action, including the placing of purchase and sale orders on behalf
of the Portfolio, as the Sub-Adviser, in consultation with the Investment
Manager, shall deem necessary or appropriate; provided that the Investment
Manager shall be responsible for monitoring compliance by such Sub-Adviser with
the investment policies and restrictions of the Portfolio and with such other
limitations or directions as the Trustees of the Fund may from time to time
prescribe.
3. The Investment Manager shall, at its own expense, maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the performance
of its obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Investment Manager shall be deemed to
include persons employed or otherwise retained by the Investment Manager to
furnish statistical and other factual data, advice regarding economic factors
and trends, information with respect to technical and scientific developments,
and such other information, advice and assistance as the Investment Manager may
desire. The Investment Manager shall, as agent for the Fund, maintain the Fund's
records and books of account (other than those maintained by the Fund's transfer
agent, registrar, custodian and other agencies). All such books and records so
maintained shall be the property of the Fund and, upon request therefor, the
Investment Manager shall surrender to the Fund such of the books and records so
requested.
4. The Fund will, from time to time, furnish or otherwise make available to
the Investment Manager such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the Investment
Manager may reasonably require in order to discharge its duties and obligations
hereunder.
5. The Investment Manager shall bear the cost of rendering the investment
management and supervisory services to be performed by it under this Agreement,
and shall, at its own expense, pay the compensation of the officers and
employees, if any, of the Fund who are also directors, officers or employees
of the Investment Manager, and provide such office space, facilities and
equipment and such clerical help and bookkeeping services as the Fund shall
reasonably require in the conduct of its business. The Investment Manager
shall also bear the cost of telephone service, heat, light, power and other
utilities provided to the Fund.
6. The Fund assumes and shall pay or cause to be paid all other expenses of
the Fund, including without limitation: the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the safekeeping
of its cash, portfolio securities or commodities and other property, and any
stock transfer or dividend agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio transactions to
which the Fund is a party; all taxes, including securities or commodities
issuance and transfer taxes, and fees payable by the Fund to federal, state or
other governmental agencies; the cost and expense of engraving or printing
certificates representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the Fund and
its shares with the Securities and Exchange Commission and various states and
other jurisdictions (including filing fees and legal fees and disbursements of
counsel); the cost and expense of printing (including typesetting) and
distributing prospectuses and statements of additional information of the Fund
and supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
proxy statements and reports to shareholders; fees and travel expenses of
Trustees or members of any advisory board or committee who are not employees of
the Investment Manager or any corporate affiliate of the Investment Manager; all
expenses incident to the payment of any dividend, distribution, withdrawal or
redemption, whether in shares or in cash; charges and expenses of any outside
service used for pricing of the Fund's shares; charges and expenses of legal
counsel, including counsel to the Trustees of the Fund who are not interested
persons (as defined in the
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Act) of the Fund or the Investment Manager, and of independent accountants, in
connection with any matter relating to the Fund; membership dues of industry
associations; interest payable on Fund borrowings; postage; insurance premiums
on property or personnel (including officers and Trustees) of the Fund which
inure to its benefit; extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any indemnification
related thereto); and all other charges and costs of the Fund's operation
unless otherwise explicitly provided herein.
7. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the various Portfolios of the Fund
shall pay to the Investment Manager monthly compensation determined by applying
the following annual rates to the daily net assets of the respective Portfolios
determined as of the close of each business day: (a) the S&P 500 Index Portfolio
-- 0.40%; (b) the High Yield Portfolio -- 0.50% of daily net assets up to $500
million and 0.425% of daily net assets over $500 million; (c) the Quality Income
Plus Portfolio -- 0.50% of daily net assets up to $500 million and 0.45% of
daily net assets over $500 million; (d) the Equity Portfolio -- 0.50% of daily
net assets up to $1 billion and 0.475% of daily net assets over $1 billion; (e)
each of the Money Market Portfolio and the Strategist Portfolio -- 0.50% of
daily net assets; (f) the Dividend Growth Portfolio -- 0.625% of daily net
assets up to $500 million, 0.50% of the next $500 million, 0.475% of the next $1
billion, and 0.45% of daily net assets over $2 billion; (g) each of the Capital
Growth Portfolio and the Competitive Edge "Best Ideas" Portfolio -- 0.65% of
daily net assets; (h) the Utilities Portfolio -- 0.65% of daily net assets up to
$500 and 0.55% of daily net assets over $500 million; (i) each of the Income
Builder Portfolio, the Global Dividend Growth Portfolio and the Capital
Appreciation Portfolio -- 0.75% of daily net assets; (j) the European Growth
Portfolio -- 1.0% of daily net assets up to $500 million and 0.95% of daily net
assets over $500 million; and (k) the Pacific Growth Portfolio -- 1.0% of daily
net assets. Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily and the amounts of the daily accruals
shall be paid monthly. Such calculations shall be made by applying 1/365ths of
the annual rates to the net assets of the respective Portfolios each day
determined as of the close of business on that day or the last previous business
day. If this Agreement becomes effective subsequent to the first day of a month
or shall terminate before the last day of a month, compensation for that part of
the month this Agreement is in effect shall be prorated in a manner consistent
with the calculation of the fees as set forth above.
Subject to the provisions of paragraph 8 hereof, payment of the Investment
Manager's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by paragraph 8
hereof.
8. In the event that the operating expenses of any of the Money Market
Portfolio, the High Yield Portfolio, the Equity Portfolio, the Quality Income
Plus Portfolio, the Strategist Portfolio, the Utilities Portfolio or the
Dividend Growth Portfolio, including amounts payable to the Investment Manager
pursuant to paragraph 7 hereof, for any year ending on a date on which this
Agreement is in effect exceed 1.5% of the average daily net assets of such
Portfolio up to $30 million and 1.0% of the average daily net assets of such
Portfolio in excess of $30 million (the "expense limitation" of these
Portfolios), or in the event that the operating expenses of any of the Capital
Growth Portfolio, the Global Dividend Growth Portfolio, the European Growth
Portfolio or the Pacific Growth Portfolio, including amounts payable to the
Investment Manager pursuant to paragraph 7 hereof, for any year ending on a date
on which this Agreement is in effect exceed 2.5% of the average daily net assets
of such Portfolio up to $30 million, 2.0% of the next $70 million and 1.5% of
the average daily net assets of such Portfolio in excess of $100 million (the
"expense limitation" of these Portfolios), the Investment Manager shall reduce
its management fee in respect of such Portfolio to the extent of such excess and
will reimburse such Portfolio for annual operating expenses in excess of the
applicable expense limitation, up to the amount of the management fee for that
Portfolio which otherwise would be payable for that year; provided, however,
there shall be excluded from such expenses the amount of any interest, taxes,
brokerage commissions and extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any indemnification
related thereto) paid or payable by such Portfolio. Such reduction, if any,
shall be computed and accrued daily,
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shall be settled on a monthly basis, and shall be based upon the expense
limitation applicable to such Portfolio as at the end of the last business day
of the month.
9. The Investment Manager will use its best efforts in the supervision
and management of the investment activities of the Fund, but in the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations hereunder, the Investment Manager shall not be liable to the
Fund or any of its investors for any error of judgment or mistake of law or
for any act or omission by the Investment Manager or for any losses sustained
by the Fund or its investors.
10. Nothing contained in this Agreement shall prevent the Investment Manager
or any affiliated person of the Investment Manager from acting as investment
adviser or manager for any other person, firm or corporation and shall not in
any way bind or restrict the Investment Manager or any such affiliated person
from buying, selling or trading any securities or commodities for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any Trustee, officer or
employee of the Investment Manager to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business whether of a similar or dissimilar nature.
11. This Agreement shall remain in effect until April 30, 1999 and from year
to year thereafter with respect to each Portfolio provided such continuance with
respect to a Portfolio is approved at least annually by the vote of holders of a
majority (as defined in the Act) of the outstanding voting securities of such
Portfolio or by the Trustees of the Fund; provided that in either event such
continuance is also approved annually by the vote of a majority of the Trustees
of the Fund who are not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party, which vote must be cast in person at a
meeting called for the purpose of voting on such approval; provided, however,
that (a) the Fund may, at any time and without the payment of any penalty,
terminate this Agreement upon thirty days' written notice to the Investment
Manager, either by majority vote of the Trustees of the Fund or, with respect to
a Portfolio, by the vote of a majority of the outstanding voting securities of
such Portfolio; (b) this Agreement shall immediately terminate in the event of
its assignment (to the extent required by the Act and the rules thereunder)
unless such automatic terminations shall be prevented by an exemptive order of
the Securities and Exchange Commission; and (c) the Investment Manager may
terminate this Agreement without payment of penalty on thirty days' written
notice to the Fund. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed post-paid, to the other party at the
principal office of such party.
Any approval of this Agreement by the holders of a majority of the
outstanding voting securities of any Portfolio shall be effective to continue
this Agreement with respect to such Portfolio notwithstanding (a) that this
Agreement has not been approved by the holders of a majority of the outstanding
voting securities of any other Portfolio or (b) that this Agreement has not been
approved by the vote of a majority of the outstanding voting securities of the
Fund, unless such approval shall be required by any other applicable law or
otherwise.
12. This Agreement may be amended by the parties without the vote or consent
of the shareholders of the Fund to supply any omission, to cure, correct or
supplement any ambiguous, defective or inconsistent provision hereof, or if they
deem it necessary to conform this Agreement to the requirements of applicable
federal laws or regulations, but neither the Fund nor the Investment Manager
shall be liable for failing to do so.
13. This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflicts with the applicable provisions of the Act, the latter shall control.
14. The Investment Manager and the Fund each agree that the name "Xxxx
Xxxxxx," which comprises a component of the Fund's name, is a property right of
Xxxx Xxxxxx Xxxxxxxx Inc. The Fund
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agrees and consents that (i) it will only use the name "Xxxx Xxxxxx" as a
component of its name and for no other purpose, (ii) it will not purport to
grant to any third party the right to use the name "Xxxx Xxxxxx" for any
purpose, (iii) the Investment Manager or its parent, Xxxxxx Xxxxxxx Xxxx Xxxxxx
& Co., or any corporate affiliate of the Investment Manager's parent, may use or
grant to others the right to use the name "Xxxx Xxxxxx," or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or for
any commercial purpose, including a grant of such right to any other investment
company, (iv) at the request of the Investment Manager or its parent, the Fund
will take such action as may be required to provide its consent to the use of
the name "Xxxx Xxxxxx," or any combination or abbreviation thereof, by the
Investment Manager or its parent or any corporate affiliate of the Investment
Manager's parent, or by any person to whom the Investment Manager or its parent
or any corporate affiliate of the Investment Manager's parent shall have granted
the right to such use, and (v) upon the termination of any investment advisory
agreement into which the Investment Manager and the Fund may enter, or upon
termination of affiliation of the Investment Manager with its parent, the Fund
shall, upon request by the Investment Manager or its parent, cease to use the
name "Xxxx Xxxxxx" as a component of its name, and shall not use the name, or
any combination or abbreviation thereof, as a part of its name or for any other
commercial purpose, and shall cause its officers, Trustees and shareholders to
take any and all actions which the Investment Manager or its parent may request
to effect the foregoing and to reconvey to the Investment Manager or its parent
any and all rights to such name.
15. The Declaration of Trust establishing Xxxx Xxxxxx Variable Investment
Series, dated February 24, 1983, 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 Xxxxxx Variable
Investment Series 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 Xxxx Xxxxxx Variable Investment Series shall be
held to any personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or otherwise, in
connection with the affairs of said Xxxx Xxxxxx Variable Investment Series, but
the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, as amended, on May 1, 1998 in New York, New York.
XXXX XXXXXX VARIABLE INVESTMENT SERIES
By:
......................................
Attest:
.....................................
XXXX XXXXXX INTERCAPITAL INC.
By:
......................................
Attest:
.....................................
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