(International Equity Index Fund)
-------------------------------
SUB-INVESTMENT MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
SSgA FUNDS MANAGEMENT, INC.
AND
XXXX XXXXXXX LIFE INSURANCE COMPANY
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 29th day of March, 2004 by and among Xxxx Xxxxxxx
Variable Series Trust I, a Massachusetts business trust (the "Trust"), SSgA
Funds Management, Inc., a Massachusetts corporation ("SSgA"), 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 (the "1940 Act"); and
WHEREAS, JHLICO and SSgA 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 shares of capital stock in
separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust offers shares in several series, one of which is
designated as the International Equity Index Fund (together with all other
series 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 an Investment Management Agreement dated as of
April 12, 1988 (the "Investment Management Agreement"), pursuant to which it may
contract with SSgA as a sub-manager as provided for herein;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-MANAGER
(a) Subject Fund. SSgA is hereby appointed and SSgA hereby accepts the
appointment, on the terms herein set forth and for the compensation herein
provided, to act as investment adviser and manager to the International Equity
Index Fund (the "Subject Fund") for the period commencing on March 29, 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 SSgA to render investment advisory services hereunder for any
other Fund, they shall so notify SSgA in writing. If it is willing to render
such services, SSgA shall notify the Trust in writing, whereupon such Fund shall
become a Subject Fund hereunder.
(c) Incumbency Certificates. SSgA shall furnish to JHLICO, immediately
upon execution of this Agreement, a certificate of a senior officer of SSgA
setting forth (by name and title, and including specimen signatures) those
officers of SSgA who are authorized to make investment decisions for the Subject
Fund pursuant to the provisions of this Agreement. SSgA 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 Fund to accept instructions with respect to the Subject Fund from the
officers of SSgA so named.
(d) Independent Contractor. SSgA 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) SSgA's Representations. SSgA 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 senior management or
ownership of SSgA, or of any change in the identity of the personnel who manage
the Subject Fund, and (iv) that it has adopted a code of ethics complying with
the requirements of Rule 17j-1 of the Securities and Exchange Commission (the
"SEC") 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 any such codes, (v) that it has furnished the Trust and JHLICO
each with a copy of SSgA's Form ADV, Part II, as most recently filed with the
SEC, and will promptly furnish copies of each future amendment thereto; and (vi)
that it presently maintains, and shall continue to maintain as long as this
Agreement is in effect, sufficient Directors & Officers, Errors & Omissions and
fidelity bond insurance coverages to provide coverage to JHLICO, the Trust and
the Subject Fund for any claims or losses arising from, or in connection with,
the activities of SSgA and its officers and employees with respect to the
Subject Fund.
(f) JHLICO's Representations. JHLICO represents, warrants and agrees that
it has all requisite power and authority to enter into and perform its
obligations under this Agreement, and has taken all necessary corporate action
to authorize its execution, delivery and performance of this Agreement.
(g) The Trust's' Representations. The Trust represents, warrants and
agrees that it has all requisite power and authority to enter into and perform
its obligations under this Agreement, and has taken all necessary corporate
action to authorize its execution, delivery and performance of this Agreement.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
SSgA will provide for the Subject Fund a continuing and suitable investment
program consistent with the investment policies, objectives, guidelines and
restrictions of said Fund, as established by the Trust and JHLICO, and as
contained in the Prospectus and Statement of Additional Information of the
Subject Fund, as in effect from time to time. From time to time, JHLICO or the
Trust may provide SSgA with additional or amended investment policies,
guidelines and restrictions. SSgA, as sub-manager, will manage the investment
and reinvestment of the assets in the 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,
- 2 -
guidelines and restrictions, the provisions of the Trust's Declaration of Trust,
Bylaws, prospectus, statement of additional information (each as in effect 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 directions or instructions delivered to SSgA in
writing by JHLICO or the Trust from time to time). By its signature below, SSgA
acknowledges receipt of a copy of the Trust's Declaration of Trust, Bylaws,
prospectus, and statement of additional information, each as in effect on the
date of this Agreement.
SSgA 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 the 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 the Subject Fund;
(c) place orders for purchases, exchanges and sales of portfolio
investments for the Subject Fund and, in connection therewith, execute any and
all documents as attorney-in-fact for the Subject Fund as may reasonably be
necessary, desirable, or convenient and consistent with the investment
objectives, policies, guidelines and restrictions of said Fund;
(d) give instructions to the Subject Fund's custodian concerning the
delivery of securities and transfer of cash for the 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 the close of business each day, provide JHLICO and the custodian
and JHLICO's Fund Operations unit with trade information for each transaction
effected for the Subject Fund, and promptly forward 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 written statements showing all transactions effected for the
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 the Subject Fund in accordance with SSgA's proxy
voting policy as most recently provided to JHLICO.
On its own initiative, SSgA will apprise JHLICO and the Trust of important
political and economic developments materially affecting the marketplace or the
Subject Fund, and
- 3 -
will furnish JHLICO and the Trust' Board of Trustees from time to time such
information as is appropriate for this purpose. SSgA will also make its
personnel available in Boston or other reasonable locations as often as
quarterly to discuss the Subject Fund and SSgA'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 SSgA regarding such
matters as purchases and redemptions of shares in the Subject Fund and the cash
requirements of, and cash available for investment in, the Fund. JHLICO will
timely provide SSgA with copies of monthly accounting statements for the Subject
Fund, and such other information (including, without limitation, reports
concerning the classification of Fund 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 SSgA to perform its
responsibilities hereunder.
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.
4. SUB-ADVISORY FEES.
For all of the services rendered with respect to the Subject Fund as herein
provided, JHLICO shall pay to SSgA 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,
and as may be amended from time to time with respect to additional Subject Fund.
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 a 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.
- 4 -
5. PORTFOLIO TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Subject Fund, SSgA is authorized to select the brokers or dealers that will
execute purchase and sale transactions for the Fund and to use its best efforts
to obtain the best available price and most favorable execution in relation to
the services received on behalf of the Subject Fund with respect to all such
purchases and sales of portfolio securities for said Fund. SSgA 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, SSgA 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 SSgA, 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. SSgA shall determine in good faith that such higher cost was
reasonable in relation to the value of the brokerage and research services
provided.
SSgA will not receive any tender offer solicitation fees or similar
payments in connection with the tender of investments of any Fund.
JHLICO shall provide the SSgA a list of other sub-managers to the Subject
Fund and to every other Fund of the Trust (each, a "Sub-Manager"). SSgA will not
consult with any Sub-Manager 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.
6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Trust shall own and control all records maintained hereunder by SSgA 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
SSgA, provided that (subject to the last paragraph of this Section 6) SSgA may
retain copies of such records. SSgA also agrees, upon request of the Trust,
promptly to surrender such books and records or, at its expense, copies thereof,
to the Trust or make such books and records available for audit or inspection by
representatives of regulatory authorities or other persons reasonably designated
by the Trust. SSgA further agrees to maintain, prepare and preserve such
applicable 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,
and to supply all information requested by any insurance regulatory authorities
to determine whether all insurance laws and regulations are being complied with.
SSgA 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 SSgA.
SSgA 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.
- 5 -
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect SSgA 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 might otherwise be
subject by reason of any willful misfeasance, bad faith or negligence in the
performance his duties or the reckless disregard of his obligations and duties.
SSgA shall employ only qualified personnel to manage the 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, Bylaws, prospectus
and statement of additional information or any supplements thereto; shall manage
the 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, SSgA
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
Subject Fund as provided in Section 1(a) hereof and, with respect to any
additional Subject Fund, on the date of receipt by the Trust of notice from SSgA
in accordance with Paragraph 1(b) hereof that it is willing to serve with
respect to such Fund. Unless terminated as herein provided, this Agreement shall
remain in full force and effect for two years from the date hereof with respect
to the initial Subject Fund 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 so long as such continuance with respect to any such Fund
is 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 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,"
- 6 -
"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 notice thereof to SSgA and JHLICO. This Agreement
may be terminated by SSgA 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 SSgA.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (other than as permitted
pursuant to Section 15 below) or if the Investment Management Agreement is
terminated.
9. SERVICES NOT EXCLUSIVE; USE OF SSgA'S NAME AND LOGO.
The services of SSgA 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
directors, officers and employees of SSgA 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, JHLICO and the Trust shall have the
non-exclusive and non-transferable right to use SSgA's name and logo in all
materials relating to the Subject Fund, including all prospectuses, proxy
statements, reports to shareholders, sales literature and other written
materials prepared for distribution to shareholders of the Trust or the public.
However, prior to distribution of any materials which refer to SSgA, JHLICO
shall consult with SSgA and shall furnish to SSgA a copy of such materials. SSgA
agrees to cooperate with JHLICO and to review such materials promptly.
JHLICO shall not distribute such materials if SSgA 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 used.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Subject Fund, SSgA and its directors, officers and employees will not act as
principal or agent or receive any commission; except that, in compliance with
procedures adopted by the Trust pursuant to Rule 17e-1 under the 1940 Act, an
affiliate of SSgA, State Street Brokerage Services, Inc., may be so employed and
may receive a 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 registered investment companies managed by
SSgA or its affiliates, if orders are allocated in a manner deemed equitable by
SSgA among the accounts and at a price approximately averaged.
- 7 -
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 Trust personally, but only bind the trust property of the Trust, as
provided in the Trust's Declaration of Trust.
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:
SSgA: SSgA Funds Management, Inc.
Xxx Xxxxxxx Xx.
00xx Xxxxx
Xxxxxx, XX 00000
Attn: Compliance Officer
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.
- 8 -
15. ASSIGNMENT.
This Agreement may not be assigned by any party, either in whole or in
part, without the prior written consent of each other party; provided, however,
that any assignment that results in a change of actual control or management of
SSgA (within the meaning of Rule 2a-6 under the 0000 Xxx) shall terminate this
Agreement.
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/Xxxxxxx Xxx Xxxx
------------------------------------
Name: Xxxxxxx Xxx Xxxx
Title: Chairman
ATTEST: XXXX XXXXXXX LIFE
INSURANCE COMPANY
By: /s/Xxxxxxx Xxx Xxxx
------------------------------------
Name: Xxxxxxx Xxx Xxxx
Title: Senior Vice President
ATTEST: SSgA FUNDS MANAGEMENT, INC.
By: /s/Xxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Principal
- 9 -
SCHEDULE I
FEES
----
(International Equity Index Fund)
Current Net Assets Under Management Sub-Investment Management Fee
----------------------------------- ------------------------------
On the first $100,000,000 Ten (10) basis points (0.10%)
On amounts over $100,000,000 Eight (8) basis points (0.08%)
- 10 -
