MANAGEMENT AGREEMENT
Xxxxx Xxxxxx Small Cap Growth Opportunities Portfolio
Sub-Item 77Q1 (Advisory Agreement)
This MANAGEMENT AGREEMENT ("Agreement") is made this 1st day of
December, 2005, by and between Variable Annuity Portfolios, a
Massachusetts Business Trust (the "Trust") and Xxxxx Xxxxxx Fund
Management LLC, a Delaware limited liability company (the "Manager").
WHEREAS, the Trust is registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Manager is engaged primarily in rendering investment
advisory, management and administrative services and is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended;
WHEREAS, the Trust wishes to retain the Manager to provide investment
advisory, management, and administrative services to the Trust with
respect to the series of the Trust designated in Schedule A annexed
hereto (the "Fund"); and
WHEREAS, the Manager is willing to furnish such services on the terms
and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. The Trust hereby appoints the Manager to act as investment
adviser and administrator of the Fund for the period and on the terms
set forth in this Agreement. The Manager accepts such appointment and
agrees to render the services herein set forth, for the compensation
herein provided.
2. The Fund shall at all times keep the Manager fully informed
with regard to the securities owned by it, its funds available, or to
become available, for investment, and generally as to the condition of
its affairs. It shall furnish the Manager with such other documents
and information with regard to its affairs as the Manager may from
time to time reasonably request.
3. (a) Subject to the supervision of the Trust's Board
of Trustees (the "Board"), the Manager shall regularly provide the Fund
with investment research, advice, management and supervision and shall
furnish a continuous investment program for the Fund's portfolio of
securities and other investments consistent with the Fund's investment
objectives, policies and restrictions, as stated in the Fund's current
Prospectus and Statement of Additional Information. The Manager shall
determine from time to time what securities and other investments will
be purchased, retained, sold or exchanged by the Fund and what portion
of the assets of the Fund's portfolio will be held in the various
securities and other investments in which the Fund invests, and shall
implement those decisions, all subject to the provisions of the Trust's
Declaration of Trust and By-Laws (collectively, the "Governing
Documents"), the 1940 Act, and the applicable rules and regulations
promulgated thereunder by the Securities and Exchange Commission (the
"SEC") and interpretive guidance issued thereunder by the SEC staff and
any other applicable federal and state law, as well as the investment
objectives, policies and restrictions of the Fund referred to above, and
any other specific policies adopted by the Board and disclosed to the
Manager. The Manager is authorized as the agent of the Trust to give
instructions to the custodian of the Fund as to deliveries of securities
and other investments and payments of cash for the account of the Fund.
Subject to applicable provisions of the 1940 Act and direction from the
Board, the investment program to be provided hereunder may entail the
investment of all or substantially all of the assets of a Fund in one
or more investment companies. The Manager will place orders pursuant to
its investment determinations for the Fund either directly with the
issuer or with any broker or dealer, foreign currency dealer, futures
commission merchant or others selected by it. In connection with the
selection of such brokers or dealers and the placing of such orders,
subject to applicable law, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Funds
and/or the other accounts over which the Manager or its affiliates
exercise investment discretion. The Manager is authorized to pay a
broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for a Fund which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Manager determines in good
faith that such amount of commission is reasonable in relation to the
value of the brokerage and research services provided by such broker or
dealer. This determination may be viewed in terms of either that
particular transaction or the overall responsibilities which the Manager
and its affiliates have with respect to accounts over which they exercise
investment discretion. The Board may adopt policies and procedures that
modify and restrict the Manager's authority regarding the execution of
the Fund's portfolio transactions provided herein. The Manager shall
also provide advice and recommendations with respect to other aspects
of the business and affairs of the Fund, shall exercise voting rights,
rights to consent to corporate action and any other rights pertaining to
a Fund's portfolio securities subject to such direction as the Board
may provide, and shall perform such other functions of investment
management and supervision as may be directed by the Board.
(b) Subject to the direction and control of the Board,
the Manager shall perform such administrative and management services
as may from time to time be reasonably requested by the Fund as
necessary for the operation of the Fund, such as (i) supervising the
overall administration of the Fund, including negotiation of contracts
and fees with and the monitoring of performance and xxxxxxxx of the
Fund's transfer agent, shareholder servicing agents, custodian and other
independent contractors or agents, (ii) providing certain compliance,
fund accounting, regulatory reporting, and tax reporting services, (iii)
preparing or participating in the preparation of Board materials,
registration statements, proxy statements and reports and other
communications to shareholders, (iv) maintaining the Fund's existence,
and (v) during such times as shares are publicly offered, maintaining
the registration and qualification of the Fund's shares under federal
and state laws. Notwithstanding the foregoing, the Manager shall not
be deemed to have assumed any duties with respect to, and shall not be
responsible for, the distribution of the shares of any Fund, nor shall
the Manager be deemed to have assumed or have any responsibility with
respect to functions specifically assumed by any transfer agent, fund
accounting agent, custodian, shareholder servicing agent or other agent,
in each case employed by the Fund to perform such functions.
(c) The Fund hereby authorizes any entity or person
associated with the Manager which is a member of a national securities
exchange to effect any transaction on the exchange for the account of
the Fund which is permitted by Section 11(a) of the Securities Exchange
Act of 1934, as amended, and Rule 11a2-2(T) thereunder, and the Fund
hereby consents to the retention of compensation for such transactions
in accordance with Rule 11a2-2(T)(a)(2)(iv). Notwithstanding the
foregoing, the Manager agrees that it will not deal with itself, or
with members of the Board or any principal underwriter of the Fund, as
principals or agents in making purchases or sales of securities or other
property for the account of the Fund, nor will it purchase any securities
from an underwriting or selling group in which the Manager or its
affiliates is participating, or arrange for purchases and sales of
securities between a Fund and another account advised by the Manager or
its affiliates, except in each case as permitted by the 1940 Act and in
accordance with such policies and procedures as may be adopted by a Fund
from time to time, and will comply with all other provisions of the
Governing Documents and the Fund's then-current Prospectus and Statement
of Additional Information relative to the Manager and its directors and
officers.
4. Subject to the Board's approval, the Manager or the Fund may enter
into contracts with one or more investment subadvisers or subadministrators,
including without limitation, affiliates of the Manager, in which the
Manager delegates to such investment subadvisers or subadministrators any
or all its duties specified hereunder, on such terms as the Manager will
determine to be necessary, desirable or appropriate, provided that in
each case the Manager shall supervise the activities of each such
subadviser or subadministrator and further provided that such contracts
impose on any investment subadviser or subadministrator bound thereby
all the conditions to which the Manager is subject hereunder and that
such contracts are entered into in accordance with and meet all
applicable requirements of the 1940 Act.
5. (a) The Manager, at its expense, shall supply the Board and
officers of the Trust with all information and reports reasonably
required by them and reasonably available to the Manager and shall
furnish the Fund with office facilities, including space, furniture and
equipment and all personnel reasonably necessary for the operation of
the Fund. The Manager shall oversee the maintenance of all books and
records with respect to the Fund's securities transactions and the
keeping of the Fund's books of account in accordance with all applicable
federal and state laws and regulations. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Manager hereby agrees
that any records that it maintains for the Fund are the property of the
Fund, and further agrees to surrender promptly to the Fund any of such
records upon the Fund's request. The Manager further agrees to arrange
for the preservation of the records required to be maintained by Rule
31a-1 under the 1940 Act for the periods prescribed by Rule 31a-2 under
the 1940 Act. The Manager shall authorize and permit any of its
directors, officers and employees, who may be elected as Board members
or officers of the Fund, to serve in the capacities in which they are
elected.
(b) The Manager shall bear all expenses, and shall furnish
all necessary services, facilities and personnel, in connection with its
responsibilities under this Agreement. Other than as herein specifically
indicated, the Manager shall not be responsible for the Fund's expenses,
including, without limitation, advisory fees; distribution fees;
interest; taxes; governmental fees; voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; organization costs of the Fund; the cost (including
brokerage commissions, transaction fees or charges, if any) in connection
with the purchase or sale of the Fund's securities and other investments
and any losses in connection therewith; fees and expenses of custodians,
transfer agents, registrars, independent pricing vendors or other agents;
legal expenses; loan commitment fees; expenses relating to share
certificates; expenses relating to the issuing and redemption or
repurchase of the Fund's shares and servicing shareholder accounts;
expenses of registering and qualifying the Fund's shares for sale under
applicable federal and state law; expenses of preparing, setting in
print, printing and distributing prospectuses and statements of
additional information and any supplements thereto, reports, proxy
statements, notices and dividends to the Fund's shareholders; costs
of stationery; website costs; costs of meetings of the Board or any
committee thereof, meetings of shareholders and other meetings of the
Fund; Board fees; audit fees; travel expenses of officers, members of
the Board and employees of the Fund, if any; and the Fund's pro rata
portion of premiums on any fidelity bond and other insurance covering
the Fund and its officers, Board members and employees; litigation
expenses and any non-recurring or extraordinary expenses as may arise,
including, without limitation, those relating to actions, suits or
proceedings to which the Fund is a party and the legal obligation which
the Fund may have to indemnify the Fund's Board members and officers
with respect thereto.
6. No member of the Board, officer or employee of the Trust or
Fund shall receive from the Trust or Fund any salary or other
compensation as such member of the Board, officer or employee while
he is at the same time a director, officer, or employee of the Manager
or any affiliated company of the Manager, except as the Board may decide.
This paragraph shall not apply to Board members, executive committee
members, consultants and other persons who are not regular members of
the Manager's or any affiliated company's staff.
7. As compensation for the services performed and the facilities
furnished and expenses assumed by the Manager, including the services
of any consultants retained by the Manager, the Fund shall pay the
Manager, as promptly as possible after the last day of each month, a
fee, computed daily at an annual rate set forth opposite the Fund's
name on Schedule A annexed hereto, provided however, that if the Fund
invests all or substantially all of its assets in another registered
investment company for which the Manager or an affiliate of the Manager
serves as investment adviser or investment manager, the annual fee
computed as set forth on such Schedule A shall be reduced by the
aggregate management fees allocated to that Fund for the Fund's
then-current fiscal year from such other registered investment company.
The first payment of the fee shall be made as promptly as possible at
the end of the month succeeding the effective date of this Agreement,
and shall constitute a full payment of the fee due the Manager for all
services prior to that date. If this Agreement is terminated as of
any date not the last day of a month, such fee shall be paid as
promptly as possible after such date of termination, shall be based
on the average daily net assets of the Fund in that period from the
beginning of such month to such date of termination, and shall be
that proportion of such average daily net assets as the number of
business days in such period bears to the number of business days
in such month. The average daily net assets of the Fund shall in
all cases be based only on business days and be computed as of the
time of the regular close of business of the New York Stock Exchange,
or such other time as may be determined by the Board.
8. The Manager assumes no responsibility under this Agreement
other than to render the services called for hereunder, in good
faith, and shall not be liable for any error of judgment or mistake
of law, or for any loss arising out of any investment or for any act
or omission in the execution of securities transactions for a Fund,
provided that nothing in this Agreement shall protect the Manager
against any liability to the Fund to which the Manager would
otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its duties or by reason
of its reckless disregard of its obligations and duties hereunder.
As used in this Section 8, the term "Manager" shall include any
affiliates of the Manager performing services for the Trust or the
Fund contemplated hereby and the partners, shareholders, directors,
officers and employees of the Manager and such affiliates.
9. Nothing in this Agreement shall limit or restrict the right
of any director, officer, or employee of the Manager who may also be
a Board member, officer, or employee of the Trust or the Fund, to
engage in any other business or to devote his time and attention in
part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature, nor to limit
or restrict the right of the Manager to engage in any other business
or to render services of any kind, including investment advisory a
nd management services, to any other fund, firm, individual or
association. If the purchase or sale of securities consistent
with the investment policies of a Fund or one or more other accounts
of the Manager is considered at or about the same time, transactions
in such securities will be allocated among the accounts in a manner
deemed equitable by the Manager. Such transactions may be combined,
in accordance with applicable laws and regulations, and consistent
with the Manager's policies and procedures as presented to the
Board from time to time.
10. For the purposes of this Agreement, the Fund's "net assets"
shall be determined as provided in the Fund's then-current Prospectus
and Statement of Additional Information and the terms "assignment,
" "interested person," and "majority of the outstanding voting
securities" shall have the meanings given to them by Section 2(a)
of the 1940 Act, subject to such exemptions as may be granted by
the SEC by any rule, regulation or order.
11. This Agreement will become effective with respect to the
Fund on the date set forth opposite the Fund's name on Schedule A
annexed hereto, provided that it shall have been approved by the
Trust's Board and by the shareholders of the Fund in accordance
with the requirements of the 1940 Act and, unless sooner terminated
as provided herein, will continue in effect for two years from the
above written date. Thereafter, if not terminated, this Agreement
shall continue in effect with respect to the Fund, so long as such
continuance is specifically approved at least annually (i) by the
Board or (ii) by a vote of a majority of the outstanding voting
securities of the Fund, provided that in either event the continuance
is also approved by a majority of the Board members who are not
interested persons of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval.
12. This Agreement is terminable with respect to the Fund without
penalty by the Board or by vote of a majority of the outstanding
voting securities of the Fund, in each case on not more than 60 days'
nor less than 30 days' written notice to the Manager, or by the Manager
upon not less than 90 days' written notice to the Fund, and will be
terminated upon the mutual written consent of the Manager and the
Trust. This Agreement shall terminate automatically in the event of
its assignment by the Manager and shall not be assignable by the Trust
without the consent of the Manager.
13. The Manager agrees that for services rendered to the Fund,
or for any claim by it in connection with services rendered to the
Fund, it shall look only to assets of the Fund for satisfaction and
that it shall have no claim against the assets of any other portfolios
of the Trust. The undersigned officer of the Trust has executed this
Agreement not individually, but as an officer under the Trust's
Declaration of Trust and the obligations of this Agreement are not
binding upon any of the Trustees, officers or shareholders of the
Trust individually
14. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no material amendment of the
Agreement shall be effective until approved, if so required by the
1940 Act, by vote of the holders of a majority of the Fund's
outstanding voting securities.
15. This Agreement embodies the entire agreement and understanding
between the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof. Should any part
of this Agreement be held or made invalid by a court decision, statute,
rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding on and shall
inure to the benefit of the parties hereto and their respective
successors.
16. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of
New York.
[signature page to follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers thereunto duly authorized.
VARIABLE ANNUITY PORTFOLIOS
By:_______________________________
Name: R. Xxx Xxxxxx
Title: Chairman
XXXXX XXXXXX FUND MANAGEMENT LLC
By:_______________________________
Name: Xxxxxx Xxxxxxx
Title: Director
Schedule A
Xxxxx Xxxxxx Small Cap Growth Opportunities Portfolio
Fee:
The following percentage of the Fund's average daily net assets:
0.75
