(Small Cap Growth and Fundamental Value B Funds)
SUB-INVESTMENT MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
WELLINGTON MANAGEMENT COMPANY, LLP
AND
XXXX XXXXXXX LIFE INSURANCE COMPANY
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the first day of May 2004 by and among Xxxx Xxxxxxx
Variable Series Trust I, a Massachusetts business trust (the "Trust"),
Wellington Management Company, LLP, a Massachusetts limited liability
partnership ("Wellington Management"), and Xxxx Xxxxxxx Life Insurance Company,
a Massachusetts corporation ("JHLICO").
WHEREAS, the Trust is organized and is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, JHLICO and Wellington Management are each engaged in the business
of rendering investment advice under the Investment Advisers Act of 1940, as
amended; and
WHEREAS, the Trust is authorized to issue its shares in separate classes,
with each such class representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust offers shares in several classes, two of which are
designated as the Small Cap Growth Fund and the Fundamental Value B Fund
(together with all other classes established by the Trust, collectively referred
to as the "Funds"), each of which pursues its investment objectives through
separate investment policies; and
WHEREAS, the Trust has retained JHLICO to render investment management
services to the Trust pursuant to Investment Management Agreements dated as of
March 29, 1996, as amended, and as of July 28, 1999, as amended (the "Investment
Management Agreements"), pursuant to which it may contract with Wellington
Management as a sub-investment manager as provided for herein.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-INVESTMENT MANAGER
(a) Initial Subject Funds. Wellington Management is hereby appointed and
Wellington Management hereby accepts the appointment to act as investment
adviser and manager to the Small Cap Growth Fund and to the Fundamental Value B
Fund (each, a "Subject Fund" hereunder) effective May 1, 2004 for the period and
on the terms herein set forth, and for the compensation herein provided.
(b) Additional Subject Funds. In the event that the Trust and JHLICO
desire to retain Wellington Management to render investment advisory services
hereunder for any other Fund, they shall so notify Wellington Management in
writing. If it is willing to render such services,
Wellington Management shall notify the Trust in writing, whereupon such Fund
shall become a Subject Fund hereunder.
(c) Incumbency Certificates. Wellington Management shall furnish to
JHLICO, immediately upon execution of this Agreement, a certificate of a senior
officer of Wellington Management setting forth (by name and title, and including
specimen signatures) those officers of Wellington Management who are authorized
to give instructions for the Subject Funds pursuant to the provisions of this
Agreement. Wellington Management shall promptly provide supplemental
certificates in connection with each additional Subject Fund (if any) and
further supplemental certificates, as needed, to reflect all changes with
respect to such authorized officers for any Subject Fund. On behalf of the
Trust, JHLICO shall instruct the custodian for the Subject Funds to accept
instructions with respect to each Subject Fund from the officers of Wellington
Management so named.
(d) Independent Contractor. Wellington Management shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or be deemed an
agent of the Trust.
(e) Wellington Management's Representations. Wellington Management
represents, warrants and agrees (i) that it is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended, and that it will
remain so registered and will comply with the requirements of said Act, and the
rules and regulations thereunder, at all times while this Agreement remains in
effect, (ii) that it will promptly notify JHLICO if the foregoing representation
and agreement shall cease to be true in any material respect at any time during
the term of this Agreement, (iii) that it will promptly notify JHLICO of any
material change in the ownership of Wellington Management, or of any change in
the identity of the personnel who manage each Subject Fund, (iv) that it has
adopted a code of ethics complying with the requirements of Section 17(j) and
Rule 17j-1 under the 1940 Act and has provided true and complete copies of such
code to the Trust and to JHLICO, and has adopted procedures designed to prevent
violations of such code, and (v) that it has furnished the Trust and JHLICO each
with a copy of Wellington Management's Form ADV, as most recently filed with the
Securities and Exchange Commission ("SEC"), and will promptly furnish copies of
each future amendment thereto.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
Wellington Management will provide for each Subject Fund a continuing and
suitable investment program consistent with the investment objectives, policies,
guidelines and restrictions of said Fund, as established by the Trust and
JHLICO. From time to time, JHLICO or the Trust may provide Wellington Management
with additional or amended investment policies, guidelines and restrictions.
Wellington Management, as sub-investment manager, will manage the investment and
reinvestment of the assets in each Subject Fund, and perform the functions set
forth below, (i) subject to the overall supervision, direction, control and
review of JHLICO and the Board of Trustees of the Trust, and (ii) consistent
with the applicable investment objectives, policies, guidelines and
restrictions, the provisions of the Trust's Declaration of Trust, By-laws,
prospectus, statement of additional information (each as in effect
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from time to time), the 1940 Act and all other applicable laws and regulations
(including any applicable investment restrictions imposed by state insurance
laws and regulations or any other directions or instructions delivered to
Wellington Management in writing by JHLICO or the Trust from time to time). By
its signature below, Wellington Management acknowledges receipt of a copy of the
Trust's Declaration of Trust, By-laws, prospectus, and statement of additional
information, each as in effect on the date of this Agreement.
Wellington Management will, at its own expense:
(a) advise the Trust in connection with investment policy decisions to be
made by its Board of Trustees or any committee thereof regarding each Subject
Fund and, upon request, furnish the Trust with research, economic and
statistical data in connection with said Fund's investments and investment
policies;
(b) submit such reports and information as JHLICO or the Trust' Board of
Trustees may reasonably request, to assist the custodian in its determination of
the market value of securities held in each Subject Fund;
(c) place orders for purchases and sales of portfolio investments for each
Subject Fund;
(d) give instructions to a Subject Fund's custodian concerning the
delivery of securities and transfer of cash for that Subject Fund;
(e) maintain and preserve the records relating to its activities hereunder
required by the 1940 Act to be maintained and preserved by the Trust, to the
extent not maintained by the custodian, transfer agent or JHLICO;
(f) at or prior to the close of business each day, provide JHLICO and the
custodian with trade information for each transaction effected for each Subject
Fund, and promptly provide to the custodian information on all brokerage or
dealer confirmations;
(g) as soon as practicable following the end of each calendar month,
provide JHLICO with information on all transactions effected for each Subject
Fund during the month, a summary listing all investments held in such Fund as of
the last day of the month, and such other information as JHLICO may reasonably
request in connection with the accounting services that JHLICO provides for the
Subject Fund; and
(h) absent specific instructions to the contrary provided to it by JHLICO
and subject to its receipt of all necessary voting materials, vote all proxies
with respect to investments of each Subject Fund in accordance with Wellington
Management's proxy voting policy as most recently provided to JHLICO.
On its own initiative, Wellington Management will apprise JHLICO and the
Trust of important political and economic developments materially affecting the
marketplace or a Subject Fund, and will furnish JHLICO and the Trust's Board of
Trustees from time to time such information as is appropriate for this purpose.
Wellington Management will also make its
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personnel available in Boston, Massachusetts or other reasonable locations as
often as quarterly to discuss the Subject Fund and Wellington Management's
management thereof, to educate JHLICO sales personnel with respect thereto, and
for such other purposes as the Trust or JHLICO may reasonably request.
The Trust and JHLICO will provide timely information to Wellington
Management regarding such matters as purchases and redemptions of shares in each
Subject Fund and the cash requirements of, and cash available for investment in,
the Subject Fund. JHLICO will timely provide Wellington Management with monthly
accounting statements for each Subject Fund, and such other information
(including, without limitation, reports concerning the classification of the
Subject Fund's securities for purposes of Subchapter M of the Internal Revenue
Code and Treasury Regulations Section 1.817) as may be reasonably necessary or
appropriate in order for Wellington Management to perform its responsibilities
hereunder.
Wellington Management will not consult with any other sub-investment
manager to a Subject Fund or to any other Fund of the Trust concerning
transactions of the Subject Fund in securities or other assets, except as such
consultations may be reasonably necessary in order to ensure compliance with
paragraphs (a) and (b) of Rule 12d3-1 under the 1940 Act.
3. ALLOCATION OF EXPENSES.
Each party to this Agreement shall bear the costs and expenses of
performing its obligations hereunder. In this regard, the Trust specifically
agrees to assume the expense of:
(a) brokerage commissions for transactions in the portfolio investments of
the Trust and similar fees and charges for the acquisition, disposition, lending
or borrowing of such portfolio investments;
(b) custodian fees and expenses;
(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Trust to federal, state or other governmental agencies; and
(d) interest payable on the Trust's borrowings.
Nothing in this Agreement shall alter the allocation of expenses and costs
agreed upon between the Trust and JHLICO in the Investment Management Agreement
or any other agreement to which they are parties.
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4. SUB-ADVISORY FEES.
For all of the services rendered with respect to each Subject Fund as
herein provided, JHLICO shall pay to Wellington Management a fee (for the
payment of which the Trust shall have no obligation or liability), based on the
Current Net Assets of the Subject Fund, as set forth in Schedule I attached
hereto and made a part hereof. Such fee shall be accrued daily and payable
monthly, as soon as practicable after the last day of each calendar month. In
the case of termination of this Agreement with respect to the Subject Fund
during any calendar month, the fee with respect to such Fund accrued to but
excluding the date of termination shall be paid promptly following such
termination. For purposes of computing the amount of advisory fee accrued for
any day, "Current Net Assets" shall mean the Subject Fund's net assets as of the
most recent preceding day for which the Subject Fund's net assets were computed.
5. PORTFOLIO TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Subject Fund, Wellington Management is authorized to select the brokers or
dealers that will execute purchase and sale transactions for that Fund and to
use its best efforts to obtain the best available price and most favorable
execution with respect to all such purchases and sales of portfolio securities
for said Fund. Wellington Management shall maintain records adequate to
demonstrate compliance with this requirement. Subject to this primary
requirement, and maintaining as its first consideration the benefits to the
Subject Fund and its shareholders, Wellington Management shall have the right
subject to the control of the Board of Trustees, and to the extent authorized by
the Securities Exchange Act of 1934, to follow a policy of selecting brokers who
furnish brokerage and research services to the Subject Fund or to Wellington
Management, and who charge a higher commission rate to the Subject Fund than may
result when allocating brokerage solely on the basis of seeking the most
favorable price and execution. Wellington Management shall determine in good
faith that such higher cost was reasonable in relation to the value of the
brokerage and research services provided.
Wellington Management will not receive any tender offer solicitation fees
or similar payments in connection with the tender of investments of any Fund.
6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Trust shall own and control all records maintained hereunder by
Wellington Management on the Trust's behalf and, in the event of termination of
this Agreement with respect to any Fund for any reason, all records relating to
that Fund shall be promptly returned to the Trust, free from any claim or
retention of rights by Wellington Management, provided that (subject to the last
paragraph of this Section 6) Wellington Management may retain copies of such
records. Wellington Management also agrees, upon request of the Trust, promptly
to surrender such books and records or, at its expense, copies thereof, to the
Trust or to make such books and records available for audit or inspection by
representatives of regulatory authorities, or other persons reasonably
designated by the Trust. Wellington Management further agrees to maintain,
prepare and preserve such books and records in accordance with the 1940 Act and
rules thereunder, including but not limited to Section 31 and Rules 31a-1 and
31a-2, to the extent
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such records are not maintained by the custodian, transfer agent or JHLICO, and
to supply all information requested by any securities and insurance regulatory
authorities to determine whether all securities and insurance laws and
regulations are being complied with. Wellington Management shall supply the
Board of Trustees and officers of the Trust and JHLICO with all statistical
information regarding investments which is reasonably required by them and
reasonably available to Wellington Management.
Wellington Management shall not disclose or use any records or information
obtained pursuant hereto in any manner whatsoever except as expressly authorized
herein, and will keep confidential any information obtained pursuant hereto, and
disclose such information only if the Trust has authorized such disclosure, or
if such disclosure is expressly required by applicable federal or state
regulatory authorities.
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect Wellington
Management or JHLICO against any liability to the Trust or its shareholders to
which it might otherwise be subject by reason of any willful misfeasance, bad
faith or negligence in the performance of its duties or the reckless disregard
of its obligations and duties under this Agreement or the Investment Management
Agreement. Nor shall any provision hereof be deemed to protect any trustee or
officer of the Trust against any such liability to which he or she might
otherwise be subject by reason of any willful misfeasance, bad faith or
negligence in the performance of his or her duties or the reckless disregard of
his or her obligations and duties. Adviser shall employ only qualified personnel
to manage each Subject Fund; shall comply with all applicable laws and
regulations in the discharge of its duties under this Agreement; shall (as
provided in Section 2 above) comply with the investment objectives, policies,
guidelines and restrictions of the Subject Fund and with the provisions of the
Trust's Declaration of Trust, By-laws, prospectus and statement of additional
information or any supplements thereto; shall manage each Subject Fund (subject
to the receipt of, and based upon the information contained in, periodic reports
from JHLICO or the custodian concerning the classification of Fund securities
for such purposes) as a regulated investment company in accordance with
subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
Treasury Regulations Section 1.817-5(b); shall act at all times in the best
interests of the Trust; and shall discharge its duties with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the
conduct of a similar enterprise. However, Wellington Management shall not be
obligated to perform any service not described in this Agreement, and shall not
be deemed by virtue of this Agreement to have made any representation or
warranty that any level of investment performance or level of investment results
will be achieved.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
initial Subject Funds on May 1, 2004 and, with respect to any additional Subject
Fund, on the date of receipt by the Trust of notice from Wellington Management
in accordance with Paragraph 1(b) hereof that it is willing to serve with
respect to such Fund. Unless terminated as herein provided, this
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Agreement shall remain in full force and effect for two years from the date
hereof with respect to the initial Subject Funds and, with respect to each
additional Subject Fund, until two years following the date on which such Fund
becomes a Subject Fund hereunder, and shall continue in full force and effect
thereafter with respect to each Subject Fund only so long as such continuance
with respect to any such Fund is specifically approved at least annually (a) by
either the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting shares of such Fund, and (b) in either event by the vote of a
majority of the Board of Trustees of the Trust who are not parties to this
Agreement or "interested persons" of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
Any approval of this Agreement by the holders of a majority of the
outstanding shares of any Subject Fund shall be effective to continue this
Agreement with respect to any such Fund notwithstanding (A) that this Agreement
has not been approved by the holders of a majority of the outstanding shares of
any other Fund affected hereby, and (B) that this Agreement has not been
approved by the vote of a majority of the outstanding shares of the Trust,
unless such approval shall be required by any other applicable law or otherwise.
The terms "assignment," "vote of a majority of the outstanding shares" and
"interested person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and rules thereunder.
(b) Termination. This Agreement may be terminated with respect to any
Subject Fund at any time, without payment of any penalty, by the Trust pursuant
to a vote of the Trustees of the Trust or a vote of a majority of the
outstanding shares of such Fund, which termination shall be effective
immediately upon delivery of written notice thereof to Wellington Management and
JHLICO. This Agreement may be terminated by Wellington Management on at least
ninety days' prior written notice to the Trust and JHLICO, and may be terminated
by JHLICO on at least ninety days' prior written notice to the Trust and
Wellington Management.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment or if the Investment
Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE; USE OF WELLINGTON MANAGEMENT'S NAME AND LOGO.
The services of Wellington Management to the Trust are not to be deemed
exclusive and it shall be free to render similar services to others so long as
its services hereunder are not impaired thereby. It is specifically understood
that partners, officers and employees of Wellington Management and of its
subsidiaries and affiliates may continue to engage in providing portfolio
management services and advice to other investment companies, whether or not
registered, and other investment advisory clients.
During the term of this Agreement, subject to Wellington Management's
consent (which consent shall not be unreasonably withheld and which may be
presumed unless an objection is made to a proposed use as hereinafter provided),
JHLICO and the Trust shall have the non-exclusive and non-transferable right to
use Wellington Management's name and logo in all materials relating to a Subject
Fund, including all prospectuses, proxy statements, reports to
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shareholders, sales literature and other written materials prepared for
distribution to shareholders of the Trust or the public. However, prior to
printing or distributing of any materials which refer to Wellington Management,
JHLICO shall consult with Wellington Management and shall furnish to Wellington
Management a copy of such materials. Wellington Management agrees to cooperate
with JHLICO and to review such materials promptly. JHLICO shall not print or
distribute such materials if Wellington Management reasonably objects in
writing, within five (5) business days of its receipt of such copy (or such
other time as may be mutually agreed), to the manner in which its name and logo
are to be used.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of a
Subject Fund, Wellington Management and its partners, officers and employees
will not act as principal or agent or receive any commission. Nothing in this
Agreement, however, shall preclude the combination of orders for the sale or
purchase of portfolio securities of the Subject Fund with those for other
accounts managed by Wellington Management or its affiliates, if orders are
allocated in a manner deemed equitable by Wellington Management among the
accounts and at a price approximately averaged.
11. AMENDMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing. No amendment of this
Agreement shall be effective with respect to any Fund until approved
specifically by (a) the Board of Trustees of the Trust, or by vote of a majority
of the outstanding shares of that Fund, and (b) by vote of a majority of those
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.
12. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the trustees, shareholders, officers, agents or
employees of the Trust personally, but only bind the trust property of the
Trust, as provided in the Trust's Declaration of Trust, and that the obligations
of a Subject Fund hereunder shall only be binding upon the assets of that Fund.
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13. NOTICES
Notices and other communications required or permitted under this Agreement
shall be in writing, shall be deemed to be effectively delivered when actually
received, and may be delivered by US mail (first class, postage prepaid), by
facsimile transmission, by hand or by commercial overnight delivery service,
addressed as follows:
SUB-INVESTMENT MANAGER: Wellington Management Company, LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Legal Services
Fax #: 000-000-0000
JHLICO: Xxxx Xxxxxxx Life Insurance Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
TRUST: Xxxx Xxxxxxx Variable Series Trust I
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
14. GOVERNING LAW.
This agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act and
rules thereunder.
15. ASSIGNMENT.
This Agreement may not be assigned by any party, either in whole or in
part.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.
ATTEST: XXXX XXXXXXX VARIABLE SERIES
TRUST I
By: /s/ Xxxxxxxx X. XxxXxxx
----------------------------------
Name: Xxxxxxxx X. XxxXxxx
----------------------------------
Title: Chairman and CEO
---------------------------------
ATTEST: XXXX XXXXXXX LIFE INSURANCE COMPANY
By: /s/ Xxxxxxxx X. XxxXxxx
----------------------------------
Name: Xxxxxxxx X. XxxXxxx
----------------------------------
Title: Senior Vice President
---------------------------------
ATTEST: WELLINGTON MANAGEMENT COMPANY, LLP
By: /s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Vice President
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SCHEDULE I
Fees
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For the Small Cap Growth Fund:
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Current Net Assets Under Management Sub-Advisory Fee
On the first $100 million 65 basis points per annum
On net assets over $100 million 60 basis points per annum
For the Fundamental Value B Fund:
---------------------------------
Current Net Assets Under Management Sub-Advisory Fee
On the first $100 million 40 basis points per annum
On net assets over $100 million 30 basis points per annum
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