INVESTMENT SUBADVISORY AGREEMENT
CAPITAL GROWTH PORTFOLIO
THIS AGREEMENT, made this 3rd day of April, 2002 is between JEFFERSON PILOT
INVESTMENT ADVISORY CORPORATION, a Tennessee corporation with offices at Xxx
Xxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxxxxx, 00000 (the "Investment Manager" or
"Manager") and Janus Capital Management LLC, (the "Subadviser") a Delaware
Limited Liability Company with offices at 000 Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000.
WITNESSETH:
WHEREAS, Jefferson Pilot Variable Fund, Inc. (the "Fund") is engaged
in business as a diversified open-end management investment company and is
registered as such under the Investment Company Act of 1940 (the "Investment
Company Act");
WHEREAS, the Fund issues separate classes or series of stock, each of
which represents a separate portfolio of investments;
WHEREAS, the Fund's shareholders are and will be separate accounts
maintained by insurance companies for variable life insurance policies under
which income, gains, losses, whether or not realized, from assets allocated to
such accounts are, in accordance with the Policies, credited to or charged
against such accounts without regard to other income, gains, or losses of such
insurance companies;
WHEREAS, the Fund has employed the Investment Manager to act as
investment manager of the Portfolio, as set forth in an Investment Management
Agreement between the Fund and the Investment Manager dated August 28, 1997,
(the "Investment Management Agreement") pursuant to which it was agreed that the
Investment Manager may contract with the Subadviser, or other parties for
certain investment management services;
WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Advisers Act");
WHEREAS, the Investment Manager desires to retain the Subadviser to
render investment management services to the Fund's Capital Growth Portfolio
(the "Portfolio") in the manner and on the terms hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained the Investment Manager and the Subadviser hereby agree as
follows:
1. APPOINTMENT OF THE SUBADVISER. The Manager hereby appoints the
Subadviser to act as an investment subadviser for the Portfolio and to manage
the investment and reinvestment of the assets of the Portfolio, subject to the
supervision of the Directors of the
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Fund and the terms and conditions of this Agreement. The Subadviser will be an
independent contractor and will have no authority to act for or represent the
Fund or Manager in any way or otherwise be deemed an agent of the Fund or
Manager except as expressly authorized in this Agreement or another writing by
the Fund, Manager and the Subadviser. Notwithstanding the foregoing, the
Subadviser may execute account documentation, agreements, contracts and other
documents as the Subadviser may be requested by brokers, dealers, counterparts
and other persons in connection with the Subadviser's management of the assets
of the Portfolio, provided that the Subadviser receives the express agreement
and consent of the Manager and/or the Fund's Board of Directors to execute such
documentation, agreements, contracts and other documents. In such respect, and
only for this limited purpose, the Subadviser shall act as the Manager and/or
the Fund's agent and attorney-in-fact.
2. DUTIES OF THE SUBADVISER. The Subadviser hereby agrees, subject to
the supervision of the Investment Manager and the Board of Directors of the
Fund, (1) to act as the Subadviser of the Portfolio, (2) to manage the
investment and reinvestment of the assets of the Portfolio for the period and on
the terms and conditions set forth in this Agreement, and (3) during the term
hereof, to render the services and to assume the obligations herein set forth in
return for the compensation provided for herein and to bear all expenses of its
performance of such services and obligations.
3. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE FUND
A. The Subadviser will manage the investment and reinvestment
of the assets of the Portfolio and determine the composition of the assets of
the Portfolio, subject always to the direction and control of the Directors of
the Fund and the Manager and in accordance with the provisions of the Fund's
registration statement, as amended from time to time. In fulfilling its
obligations to manage the investment and reinvestment of the assets of the
Portfolio, the Subadviser will:
(i) obtain and evaluate pertinent statistical,
financial, and other information relating to individual companies or industries,
the securities of which are included in the Portfolio or are under consideration
for inclusion in the Portfolio;
(ii) formulate and implement a continuous investment
program for the Portfolio (a) consistent with the investment objectives,
policies, and restrictions of the Portfolio as stated in the Fund's Agreement
and Articles of Incorporation, Bylaws, and such Portfolio's currently effective
Prospectus and Statement of Additional Information ("SAI") as amended from time
to time, and (b) in compliance with the requirements applicable to both
regulated investment companies and segregated asset accounts under Subchapters M
and L of the Internal Revenue Code of 1986, as amended ("IRC"), and requirements
applicable to registered investment companies under applicable laws;
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(iii) take whatever steps are necessary to implement
the investment program for the Portfolio by the purchase and sale of securities
and other investments authorized under the Fund's Agreement and Articles of
Incorporation, Bylaws, and such Portfolio's currently effective Prospectus and
SAI, including the placing of orders for such purchases and sales;
(iv) regularly report to the Directors of the Fund
and the Manager with respect to the implementation of the investment program
and, in addition, provide such statistical information and special reports
concerning the Portfolio and/or important developments materially affecting the
investments held, or contemplated to be purchased, by the Portfolio, as may
reasonably be requested by the Manager or the Directors of the Fund, including
attendance at Board of Directors Meetings, as reasonably requested, to present
such information and reports to the Board, provided that Subadviser shall not be
responsible for fund accounting;
(v) will assist in suggesting methods for determining
fair value of certain portfolio securities when market quotations are not
readily available for the purpose of calculating the Portfolio's net asset value
in accordance with procedures and methods established by the Directors of the
Fund;
(vi) establish appropriate interfaces with the Fund's
Manager in order to provide such Manager with all necessary information
requested by the Manager and required to be provided by Subadviser hereunder.
B. To facilitate the Subadviser' s fulfillment of its
obligations under this Agreement, the Manager will undertake the following:
(i) the Manager agrees to provide the Subadviser with
all amendments or supplements to the Registration Statement, the Fund's
Agreement and Articles of Incorporation, and Bylaws prior to filing with SEC;
(ii) the Manager agrees, on an ongoing basis, to
notify the Subadviser expressly in writing of each change in the fundamental and
nonfundamental investment policies of the Portfolio prior to the effective date
of such changes;
(iii) the Manager agrees to provide or cause to be
provided to the Subadviser such assistance as may be reasonably requested by the
Subadviser in connection with its activities pertaining to the Portfolio under
this Agreement, including, without limitation, information concerning the
Portfolio, its available funds, or funds that may reasonably become available
for investment, and information as to the general condition of the Portfolio's
affairs and information to enable Subadviser to monitor the "short-short" test
and 90% source tax of Subchapter M of the IRC;
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(iv) the Manager agrees to provide or cause to be
provided to the Subadviser on an ongoing basis, such information as is
reasonably requested by the Subadviser for performance by the Subadviser of its
obligations under this Agreement, and the Subadviser shall not be in breach of
any term of this Agreement or be deemed to have acted negligently if the Manager
fails to provide or cause to be provided such requested information and the
Subadviser relies on the information most recently furnished to the Subadviser;
and
(v) the Manager will promptly provide the Subadviser
with any guidelines and procedures applicable to the Subadviser or the Portfolio
adopted from time to time by the Board of Directors of the Fund and agrees to
promptly provide the Subadviser copies of all amendments thereto.
C. The Fund and the Investment Manager shall not, without the prior
written consent of the Subadviser, make representations in any disclosure
document, advertisement, sales literature or other promotional material
regarding the Subadviser or its affiliates. The Investment Manager shall hold
harmless and indemnify the Subadviser against any loss, liability, cost, damage
or expense (including reasonable attorneys fees and costs) arising out of any
use of any disclosure documents, advertisement, sales literature or other
promotional material without prior written consent by the Subadviser.
D. The Subadviser, at its expense, will furnish all necessary
investment and management facilities and investment personnel, including
salaries, expenses and fees of any personnel required for it to faithfully
perform its duties under this Agreement. The Fund or Investment Manager assumes
and shall pay all expenses incidental to their respective organization,
operation and business not specifically assumed or agreed to be paid by the
Subadviser pursuant hereto, including, but not limited to, investment adviser
fees; any compensation, fees, or reimbursements which the Fund pays to its
Directors; compensation of the Fund's custodian, transfer agent, registrar and
dividend disbursing agent; legal, accounting, audit and printing expenses;
administrative, clerical, record-keeping and bookkeeping expenses; brokerage
commissions and all other expenses in connection with execution of portfolio
transactions (including any appropriate commissions paid to the Subadviser or
its affiliates for effecting exchange listed, over-the-counter or other
securities transactions); interest, all federal, state and local taxes
(including stamp, excise, income and franchise taxes) costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof, expenses of shareholders' meetings and of preparing, printing and
distributing proxy statements, notices, and reports to shareholders; regulatory
authorities; all expenses incurred in complying with all federal and state laws
and the laws of any foreign country applicable to the issue, offer, or sale of
shares for the Fund, including, but not limited to all costs involved in the
registration or qualification of shares of the Fund for sale in any
jurisdiction, the costs of portfolio pricing services and systems for compliance
with blue sky laws, and all costs involved in preparing, printing and mailing
prospectuses and statements of additional information of the Fund; and all fees,
dues and other expenses incurred by the Fund in connection with the membership
in any trade association or other investment company organization.
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E. The Subadviser will select brokers and dealers to effect all
portfolio transactions subject to the conditions set forth herein. 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
Portfolio in accordance with such policies or practices as may be established by
the Board of Directors and described in the Fund's currently effective
Prospectus and SAI, as amended from time to time. In placing orders for the
purchase or sale of investments for the Portfolio, in the name of the Portfolio
or its nominees, the Subadviser shall use its best efforts to obtain for the
Portfolio the most favorable price and best execution available, considering all
of the circumstances, and shall maintain records adequate to demonstrate
compliance with this requirement.
Subject to the appropriate policies and procedures approved by the
Board of Directors, the Subadviser may, to the extent authorized by Section
28(e) of the Securities and Exchange Act of 1934, cause the Portfolio to pay a
broker or dealer that provides brokerage or research services to the Manager,
the Subadviser, or the Portfolio an amount of commissions for effecting a
portfolio transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Subadviser
determines, in good faith, that such amount of commission is reasonable in
relationship to the value of such brokerage or research services provided viewed
in terms of that particular transaction or the Subadviser's overall
responsibilities to the Portfolio or its other advisory clients. To the extent
authorized by said Section 28(e) and the Fund's Board of Directors, the
Subadviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of such action. In
addition, subject to seeking the most favorable price and best execution
available, the Subadviser may also consider sales of shares of the Fund as a
factor in the selection of brokers and dealers.
F. 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.
The Subadviser may perform its Services through any employee,
officer or agent of the Subadviser and the Investment Manager and the Fund shall
not be entitled to the advice, recommendation or judgment of any specific
person. The Subadviser makes no representation or warranty, express or implied,
that any level of performance or investment results will be achieved by the
Capital Growth Portfolio or that such Portfolio will perform comparably with any
standard or index, including other clients of the Subadviser, whether public or
private.
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G. The Subadviser will maintain all accounts, books and records with
respect to the Portfolio as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act and
Advisers Act and the rules thereunder.
4. COMPENSATION OF THE SUBADVISER. The Investment Manager will pay the
Subadviser, with respect to the Portfolio, the compensation specified in
Appendix A to this Agreement. Payments shall be made to the Subadviser on the
first day of each month; however, this advisory fee will be calculated on the
daily average value of the Portfolio's assets and accrued on a daily basis.
5. NON-EXCLUSIVITY. The Investment Manager agrees that the services of
the Subadviser are not to be deemed exclusive and the Subadviser is free to act
as investment manager to various investment companies and as fiduciary for other
managed accounts. The Subadviser shall, for all purposes herein, be deemed to be
an independent contractor and shall, unless otherwise provided or authorized,
have no authority to act for or represent the Fund or the Investment Manager in
any way or otherwise be deemed an agent of the Fund or Investment Manager other
than in furtherance of its duties and responsibilities as set forth in this
Subadvisory Agreement.
6. BOOKS AND RECORDS. The Subadviser agrees that all books and records
which it maintains for the Fund are the Fund's property, and, in the event of
termination of this Agreement for any reason, the Subadviser agrees promptly to
return to the Fund, free from any claim or retention of rights by the
Subadviser, all records relating to the Portfolio. The Subadviser also agrees
upon request of the Investment Manager or the Fund, promptly to surrender the
books and records to either party or make the book and records available for
inspection by representatives of regulatory authorities. In connection with its
duties hereunder, the Subadviser further agrees to maintain, prepare and
preserve books and records in accordance with the Investment Company Act and
rules thereunder, including but not limited to, Rule 3 1a-1 and 31a-2.
The Subadviser will use records or information obtained under this
Agreement only for the purposes contemplated hereby, and will not disclose such
records or information in any manner other than expressly authorized by the
Fund, or if disclosure is expressly required by applicable federal or state
regulatory authorities or by this Agreement. The Subadviser will furnish any
informational reports requested by any state insurance commissioner.
7. LIABILITY. Except as may otherwise be provided by the Investment
Company Act, neither the Subadviser nor its officers, directors, employees or
agents shall be subject to any liability to Investment Manager, the Fund or any
shareholder of the Fund for any error of judgment, mistake of law or any loss
arising out of any investment or other act or omission in the course of,
connected with or arising out of any service to be rendered hereunder, except by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of reckless disregard of its obligations and duties
under this Agreement. The Investment Manager shall hold harmless and indemnify
the Subadviser for any loss, liability, cost, damage or expense (including
reasonable attorneys fees and costs) arising from
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any claim or demand by the Fund or any past or present shareholder of the fund
that is not arising from Subadviser's willful misfeasance, bad faith or gross
negligence.
8. RELIANCE ON DOCUMENTS. THE BOARD OF DIRECTORS OF THE FUND or its
officers or agent will provide timely information to the Subadviser regarding
such matters as purchases and redemptions of shares in the Portfolio, the cash
requirements, and cash available for investment in the Portfolio, and all other
information as may be reasonably necessary or appropriate in order for the
Subadviser to perform its responsibilities hereunder. The Subadviser has
provided the Investment Manager with a copy of its current Form ADV.
Neither the Fund or the Investment Manager, nor their respective
designees or agents, shall use any material describing or identifying the
Subadviser or its affiliates without the prior consent of the Subadviser. Any
material utilized by the Fund, the Investment Manager or their respective
designees or agents which contain information as to the Subadviser and/or its
affiliates shall be submitted to the Subadviser for approval .prior to use, not
less than five (5) business days before such approval is requested.
The Investment Manager has herewith furnished the Subadviser copies of
the Fund's Prospectus, Statement of Additional Information, Articles of
Incorporation and By-Laws as currently in effect and agrees during the
continuance of the Agreement to furnish the Subadviser copies of any amendments
or supplements thereto before or at the time the amendments or supplements
become effective. The Subadviser will be entitled to rely on all such documents
furnished to it by the Investment Manager or the Fund.
9. DURATION AND TERMINATION OF THE AGREEMENT. This Subadvisory
Agreement shall become effective as of the date first written above and remain
in force until April 2, 2004. Thereafter, it shall continue in effect from year
to year, but only so long as such continuance is specifically approved at least
annually by (a) the Board of Directors of the Fund, or by the vote of a majority
of the outstanding voting securities of the Portfolio, and (b) a majority of
those directors who are not parties to this Subadvisory Agreement, not
interested persons of any party to this Subadvisory Agreement, cast in person at
a meeting called for the purpose of voting on such approval. This Agreement may
be terminated, without the payment of any penalty, by the Board of Directors of
the Fund, by a vote of a majority of the outstanding shares of the Portfolio, or
by the Investment Manager on sixty days' written notice to the Subadviser, or by
the Subadviser on sixty days' written notice to the Fund or the Investment
Manager. Termination by the Board of Directors or by the Investment Manager
shall be subject to shareholder approval to the extent legally required. This
Agreement shall automatically terminate in the event of its assignment or in the
event of termination of the Investment Management Agreement.
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10. AMENDMENTS OF THE AGREEMENT. EXCEPT TO THE EXTENT PERMITTED BY THE
Investment Company Act or the rules or regulations thereunder or pursuant to any
exemptive relief granted by the Securities and Exchange Commission ("SEC"), this
Agreement may be amended by the parties only if such amendment, if material, is
specifically approved by the vote of a majority of the outstanding voting
securities of the Portfolio (unless such approval is not required by Section 15
of the Investment Company Act as interpreted by the SEC or its staff) and by the
vote of a majority of the Independent Directors cast in person at a meeting
called for the purpose of voting on such approval. The required shareholder
approval shall be effective with respect to the Portfolio if a majority of the
outstanding voting securities of the Portfolio vote to approve the amendment,
notwithstanding that amendment may not have been approved by a majority of the
outstanding voting securities of any other portfolio affected by the amendment
or all the portfolios of the Fund.
11. DEFINITIONS. The terms "assignment", "interested person", and
"majority of the outstanding voting securities", when used in this Agreement,
shall have the respective meaning specified under the Investment Company Act and
the rules thereunder.
12. NOTICES. Any notice that is required to be given by the parties to
each other under the terms of this Agreement shall be given in writing,
delivered, or mailed postpaid to the other party, or transmitted by facsimile
with acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Janus Capital Management LLC
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
(b) If to the Investment Manager:
Jefferson Pilot Investment Advisory Corporation
Xxx Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Facsimile (000) 000-0000
13. GOVERNING LAW. The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the State of New Hampshire as at
the time in effect and the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable. To the extent
that the applicable law of the State of New Hampshire or any of the provisions
herein, conflict with the applicable provisions of the Investment Company Act or
other federal laws and regulations which may be applicable, the latter shall
control.
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14. USE OF SUBADVISER'S NAME. Neither the Fund nor the Manager or any
affiliate or agent thereof shall make reference to or use the name, and any
derivative thereof or logo associated with that name, of the Subadviser or any
of its affiliates in any advertising or promotional materials without the prior
approval of the Subadviser, which approval shall not be unreasonably withheld or
delayed. Upon termination of this Agreement, the Manager and the Fund shall
forthwith cease to use such name (or derivative or logo) as soon as reasonably
practicable.
15. ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement of the parties with respect to the Portfolio.
16. HEADINGS. The headings in the sections of this Agreement are
inserted for convenience of reference only and shall not constitute a part
hereof.
17. 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.
JEFFERSON PILOT INVESTMENT
ADVISORY CORPORATION
ATTEST:______________________ BY______________________
TITLE:_______________________ TITLE:__________________
JANUS CAPITAL MANAGEMENT LLC
ATTEST:______________________ BY______________________
TITLE:_______________________ TITLE:__________________
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