SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 31st day of May, 1997 by and between Xxxx Xxxxxx
InterCapital Inc., a Delaware corporation (hereinafter called the "Investment
Manager"), and Xxxxxx Xxxxxxxx Investment Services Limited, a British
corporation (hereinafter called the "Sub-Adviser").
WHEREAS, Xxxx Xxxxxx Variable Investment Series (hereinafter called 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 has entered into an Investment Management
Agreement (hereinafter called the "Investment Management Agreement") with the
Fund wherein the Investment Manager has agreed to provide investment
management services to the thirteen current Portfolios of the Fund and may
provide such services to other Portfolios subsequently established by the
Fund; and
WHEREAS, the Sub-Adviser is registered as an investment advisor as under
the Investment Advisers Act of 1940 and is a member of the Investment
Management Regulatory Organization (IMRO), and, as such, is regulated by IMRO
in the conduct of its investment business in the U.K., and engages in the
business of acting as an investment adviser; and
WHEREAS, the Investment Manager desires to retain the services of the
Sub-Adviser to render investment advisory services for each of the European
Growth Portfolio and the Pacific Growth Portfolio in the manner and on the
terms and conditions hereinafter set forth (these Portfolios together with
all other Portfolios subsequently established by the Fund with respect to
which the Fund will have retained the Investment Manager to render management
and investment advisory services under the Investment Management Agreement
and with respect to which the Investment Manager desires to retain the
Sub-Adviser to render investment advisory services in the manner and on the
terms and conditions hereinafter set forth being collectively referred to as
the "Sub-Advisory Portfolios"); and
WHEREAS, the Sub-Adviser desires to be retained by the Investment Manager
to perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to the supervision of the Fund, its officers and Trustees, and
the Investment Manager, and in accordance with the investment objectives,
policies and restrictions set forth in the then current Registration
Statement relating to the Fund, and such investment objectives, policies and
restrictions from time to time prescribed by the Trustees of the Fund and
communicated by the Investment Manager to the Sub-Advisor, the Sub-Adviser
agrees to provide the European Growth Portfolio with investment advisory
services with respect to investments in issuers located in the British Isles,
continental Europe and Scandinavia and, at the discretion of the Investment
Manager, provide investment advisory services to that Portfolio with respect
to investments in issuers located outside of the British Isles, continental
Europe and Scandinavia; to provide the Pacific Growth Portfolio with
investment advisory services with respect to investments in issuers located
in Asia, Australia and New Zealand and, at the direction of the Investment
Manager, provide investment advisory services to that Portfolio with respect
to investments in issuers located outside of Asia, Australia and New Zealand;
to obtain and evaluate such information and advice relating to the economy,
securities markets and securities as it deems necessary or useful to
discharge its duties hereunder; to continuously manage the assets of each
Sub-Advisory Portfolio in a manner consistent with the investment objective
and policies of the Sub-Advisory Portfolio; to make decisions as to foreign
currency matters and make determinations as to forward foreign exchange
contracts and options and futures contracts in foreign currencies; shall
determine the securities to be purchased, sold or otherwise disposed of by
the Sub-Advisory Portfolio and the timing of such purchases, sales and
dispositions; to take such further action, including the placing of purchase
and sale orders on behalf of the Sub-Advisory Portfolio, as it shall deem
necessary or appropriate; to furnish to or place at the disposal of the
Sub-Advisory Portfolio and the Investment Manager such of the information,
evaluations, analyses and opinions formulated or obtained by it in the
discharge of its duties as the Fund and the Investment Manager may, from time
to time, reasonably request. Notwithstanding the foregoing, the Sub-Adviser
must obtain the Investment Manager's prior approval to the initial allocation
by the Sub-Adviser of the assets of the European Growth Portfolio among the
British Isles, continental Europe and Scandinavia and among the particular
countries of those regions; provided, further, that the Sub-Adviser must also
obtain the prior approval of the Investment Manager to: (a) any investment of
the assets of the European Growth Portfolio in the countries in the British
Isles, continental Europe and Scandinavia which countries were not
specifically approved of for investment at the time of the approval of the
initial investment; (b) any investment of the assets of the European Growth
Portfolio in any country outside of the British Isles, continental Europe or
Scandinavia; and (c) any subsequent investment by the Sub-Adviser which would
result in the reallocation of in excess of five (5%) percent of the European
Growth Portfolio's total assets; and the Sub-Adviser must obtain the
Investment Manager's prior approval to the initial allocation by the
Sub-Adviser of the assets of the Pacific Growth Portfolio among the national
markets of Asia, Australia and New Zealand; provided, further, that the
Sub-Adviser must also obtain the prior approval of the Investment Manager to:
(a) any investment of the assets of the Pacific Growth Portfolio in the
countries of Asia, Australia and New Zealand, which countries were not
specifically approved of for investment at the time of the approval of the
initial investment; (b) any investment of the assets of the Pacific Growth
Portfolio in any country outside of Asia, Australia and New Zealand, and (c)
any subsequent investment by the Sub-Adviser which would result in the
reallocation of in excess of five (5%) percent of the Pacific Growth
Portfolio's total assets. The Investment Manager and the Sub-Adviser shall
each make its officers and employees available to the other from time to time
at reasonable times to review investment policies of the Sub-Advisory
Portfolios and to consult with each other.
In the event the Fund establishes another Portfolio other than the
current Sub-Advisory Portfolios with respect to which the Investment Manager
desires to retain the Sub-Adviser to render investment advisory services
hereunder, the Investment Manager shall notify the Sub-Adviser in writing,
whereupon such Portfolio shall become a Sub-Advisory Portfolio hereunder.
2. The Sub-Adviser 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 Sub-Adviser shall
be deemed to include persons employed or otherwise retained by the
Sub-Adviser 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 Sub-Adviser shall maintain whatever
records as may be required to be maintained by it under the Act. All such
records so maintained shall be made available to the Fund, upon the request
of the Investment Manager or the Fund.
3. The Fund will from time to time, furnish or otherwise make available
to the Sub-Adviser such financial reports, proxy statements and other
information relating to the business and affairs of the Sub-Advisory
Portfolios as the Sub-Adviser may reasonably require in order to discharge
its duties and obligations hereunder or to comply with any applicable law and
regulations and the investment objectives, policies and restrictions from
time to time prescribed by the Trustees of the Fund.
4. The Sub-Adviser shall bear the cost of rendering the investment
advisory 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, employed by the Sub-Adviser, and such clerical help and
bookkeeping services as the Sub-Adviser shall reasonably require in
performing its duties hereunder.
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5. The Fund, on behalf of each Sub-Advisory Portfolio, assumes and shall
pay or cause to be paid all other expenses of the Sub-Advisory Portfolio,
including, without limitation: any fees paid to the Investment Manager; the
charges and expenses of any registrar, any custodian, sub-custodian or
depository appointed by the Fund for the safekeeping of the Sub-Advisory
Portfolio's cash, portfolio securities and other property, and any stock
transfer or dividend agent or agents appointed by the Fund; brokers'
commissions chargeable to the Sub-Advisory Portfolio in connection with
portfolio securities transactions to which the Sub-Advisory Portfolio is a
party; all taxes, including securities issuance and transfer taxes, and fees
payable by the Sub-Advisory Portfolio to federal, state or other governmental
agencies or pursuant to any foreign laws; the cost and expense of engraving
or printing certificates representing shares of the Sub-Advisory Portfolio;
all costs and expenses in connection with the registration and maintenance of
registration of the Sub-Advisory Portfolio and its shares with the Securities
and Exchange Commission and various states and other jurisdictions or
pursuant to any foreign laws (including filing fees and legal fees and
disbursements of counsel); the cost and expense of printing (including
typesetting) and distributing prospectuses of the Fund and supplements
thereto to the Sub-Advisory Portfolio'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 Sub-Adviser; 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 Sub-Advisory Portfolio'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 Act) of the Fund, the Investment Manager or the
Sub-Adviser, and of independent accountants, in connection with any matter
relating to the Portfolio; membership dues of industry associations; interest
payable on Sub-Advisory Portfolio borrowings; postage; insurance premiums on
property or personnel (including officers and Trustees) of the Sub-Advisory
Portfolio 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
Sub-Advisory Portfolio's operation unless otherwise explicitly provided
herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Sub-Adviser, the Investment Manager shall pay to the
Sub-Adviser monthly compensation equal to 40% of its monthly compensation
receivable pursuant to the Investment Management Agreement in respect of each
of the European Growth Portfolio and the Pacific Growth Portfolio. Any
subsequent change in the Investment Agreement which has the effect of raising
or lowering the compensation of the Investment Manager will have the
concomitant effect of raising or lowering the fee payable to the Sub-Adviser
under this Agreement. In addition, if the Investment Manager has undertaken
in the Fund's Registration Statement as filed under the Act or elsewhere to
waive all or part of its fee under the Investment Management Agreement, the
Sub-Adviser's fee payable under this Agreement will be proportionately waived
in whole or in part. The calculation of the fee payable to the Sub-Adviser
pursuant to this Agreement will be made, each month, at the time designated
for the monthly calculation of the fee payable to the Investment Manager
pursuant to the Investment Manager Agreement. 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 the part of the month this
Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fee as set forth above. Subject to the provisions of
paragraph 7 hereof, payment of the Sub-Adviser's compensation for the
preceding month shall be made as promptly as possible after completion of the
computations contemplated by paragraph 7 hereof.
7. In the event the operating expenses of the European Growth Portfolio
or the Pacific Growth Portfolio, including amounts payable to the Investment
Manager pursuant to the Investment Management Agreement in respect of either
of these Sub-Advisory Portfolios, for any fiscal year ending on a date on
which this Agreement is in effect, exceed, with respect to each of these
Sub-Advisory Portfolios, 2.5% of the average daily net assets of the
Sub-Advisory Portfolio up to $30 million, 2.0% of the next $70 million and
1.5% of the average daily net assets of
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the Sub-Advisory Portfolio in excess of $100 million (the "expense
limitation"), the Sub-Adviser shall reduce its advisory fee in respect of the
applicable Sub-Advisory Portfolio to the extent of 40% of such excess and
will reimburse the Investment Manager for annual operating expenses in the
amount of 40% of such excess of the expense limitation, up to the amount of
the Sub-Adviser's fee which would otherwise be payable in respect of the
applicable Sub-Advisory Portfolio under this Agreement for that year, it
being understood that the Investment Manager has agreed to effect a reduction
and reimbursement of 100% of such excess, up to the amount of its management
fee in respect of the Sub-Advisory Portfolio which otherwise would be payable
for that year, in accordance with the terms of the Investment Management
Agreement; 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
the Sub-Advisory Portfolio. Such reduction, if any, shall be computed and
accrued daily, shall be settled on a monthly basis, and shall be based upon
the expense limitation applicable to the Sub-Advisory Portfolio as at the end
of the last business day of the month.
8. The Sub-Adviser will use its best efforts in the performance of
investment activities on behalf of each Sub-Advisory Portfolio, but in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations hereunder, the Sub-Adviser shall not be liable
to the Investment Manager or the Fund or any of its investors for any error
of judgment or mistake of law or for any act or omission by the Sub-Adviser
or for any losses sustained by the Sub-Advisory Portfolio or its investors.
9. It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee of,
or be otherwise interested in, the Sub-Adviser, and in any person controlled
by or under common control with the Sub-Adviser, and that the Sub-Adviser and
any person controlled by or under common control with the Sub-Adviser may
have an interest in the Fund. It is also understood that the Sub-Adviser and
any affiliated persons thereof or any persons controlled by or under common
control with the Sub-Adviser have and may have advisory, management service
or other contracts with other organizations and persons, and may have other
interests and businesses, and further may purchase, sell or trade any
securities or commodities for their own accounts or for the account of others
for whom they may be acting; provided, however, that neither the Sub-Adviser
nor any of its affiliates organized with a corporate name or other name under
which it is performing its business activities which contains the name
"Xxxxxx Xxxxxxxx," with the exception of X.X. Xxxxxxxx, Xxxxxx Xxxxxxxx,
Inc., shall undertake to act as investment adviser or sub-adviser for any
other U.S. registered investment company, sold primarily as the underlying
investment for variable annuity or variable life contracts, whose investment
policy is to invest primarily in equity securities of issuers located in
Europe or in Asia, Australia and New Zealand and which is sponsored,
distributed or managed by a U.S. registered broker-dealer or one of its
affiliates; and further provided, however, that if the net assets of a
Sub-Advisory Portfolio are less than $50 million on the first anniversary of
the commencement of the Sub-Advisory Portfolio's operations, then thereafter
the Sub-Adviser and its affiliates shall not be bound by the foregoing
provision.
10. This Agreement shall remain in effect until April 30, 1999 and from
year to year thereafter with respect to each Sub-Advisory Portfolio, provided
such continuance with respect to a Sub-Advisory 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 the Sub-Advisory 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 and the
Sub-Adviser, either by majority vote of the Trustees of the Fund or, with
respect to a Sub-Advisory Portfolio, by the vote of a majority of the
outstanding voting securities of such Sub-Advisory Portfolio;
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(b) this Agreement shall immediately terminate in the event of its assignment
(within the meaning of the Act) unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission;
(c) this Agreement shall immediately terminate in the event of the
termination of the Investment Management Agreement; (d) the Investment
Manager may terminate this Agreement without payment of penalty on thirty
days' written notice to the Fund and the Sub-Adviser and; (e) the Sub-Adviser
may terminate this Agreement without the payment of penalty on thirty days'
written notice to the Fund and the Investment Manager. 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.
11. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Sub-Advisory Portfolio 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, the Investment Manager nor the Sub-Adviser shall be liable
for failing to do so.
12. This Agreement shall be construed in accordance with the law 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,
conflict with the applicable provisions of the Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
XXXX XXXXXX INTERCAPITAL INC.
By: ..................................
Attest: ..............................
XXXXXX XXXXXXXX INVESTMENT
SERVICES LIMITED
By: ..................................
Attest: ..............................
Accepted and agreed to as of
the day and year first above written:
XXXX XXXXXX VARIABLE INVESTMENT SERIES
By: ..................................
Attest: ..............................
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