EXHIBIT 99.B5-17
EXHIBIT (D)(18)
FORM OF SUB-ADVISORY AGREEMENT ON BEHALF OF
WRL XXXXXXX XXXXX SMALL CAP AND WRL XXXXXXX SACHS GROWTH
SUB-ADVISORY AGREEMENT
BETWEEN
WRL INVESTMENT MANAGEMENT, INC.
AND
XXXXXXX XXXXX ASSET MANAGEMENT, INC.
This Agreement is entered into as of May 1, 1999 between WRL Investment
Management, Inc. a Florida corporation (referred to herein as "WRL Management"),
and Xxxxxxx Sachs Asset Management, a separate operating division of Xxxxxxx
Xxxxx & Co., a limited liability partnership organized and existing under the
laws of the State of New York (referred to herein as "Xxxxxxx Sachs").
WHEREAS, WRL Management entered into a Management and Investment
Advisory Agreement (referred to herein as the "Advisory Agreement"), dated as of
January 1, 1997 with WRL Series Fund, Inc., a Maryland corporation (herein
referred to as the "Fund") on behalf of WRL Xxxxxxx Xxxxx Growth and WRL Xxxxxxx
Sachs Small Cap (each a "Portfolio," collectively, the "Portfolios"), under
which WRL Management has agreed, among other things, to act as investment
adviser to the Portfolios.
WHEREAS, the Advisory Agreement provides that WRL Management may engage
a Sub-Adviser to furnish investment information and advice to assist WRL
Management in carrying out its responsibilities under the Advisory Agreement as
investment adviser to the Portfolios.
WHEREAS, it is the purpose of this Agreement to express the mutual
agreements of the parties hereto with respect to the services to be provided by
Xxxxxxx Xxxxx to WRL Management with respect to the Portfolios and the terms and
conditions under which such services will be rendered.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the parties hereto agree as follows:
1. SERVICES OF XXXXXXX SACHS. Xxxxxxx Xxxxx shall act as investment
sub-adviser to WRL Management with respect to the Portfolios. In this capacity,
Xxxxxxx Sachs shall have the following responsibilities:
(A) (a) provide a continuous investment program for each Portfolio
including advice as to the acquisition, holding or disposition of
any or all of the securities or other assets which the Portfolios
may own or contemplate acquiring from time to time;
(b) to cause its officers to attend meetings of WRL Management or the
Fund and furnish oral or written reports, as WRL Management may
reasonably require, in order to keep WRL Management and its
officers and the Fund's Board and appropriate officers of the Fund
fully informed as to the condition of the investment portfolio of
each Portfolio, the investment recommendations of Xxxxxxx Xxxxx,
and the investment considerations which have given rise to those
recommendations;
(c) to furnish such statistical and analytical information and reports
as may reasonably be required by WRL Management from time to time;
and
(d) to supervise the purchase and sale of securities as directed by
the appropriate officers of the Fund or of WRL Management.
(B) INVESTMENT SUB-ADVISORY SERVICES. Xxxxxxx Sachs shall act as the
investment sub-adviser and shall supervise and direct the investments
of the Portfolios in accordance with each Portfolio's investment
objective, policies, and restrictions as provided in the Prospectus and
Statement of Additional
Information, as currently in effect and as amended or supplemented from
time to time (hereinafter referred to as the "Prospectus"), and such
other limitations as directed by the appropriate officers of WRL
Management or the Fund by notice in writing to Xxxxxxx Xxxxx; provided
that Xxxxxxx Sachs shall be entitled to rely on and comply with the
Prospectus most recently furnished to Xxxxxxx Xxxxx by WRL Management.
Xxxxxxx Sachs shall obtain and evaluate such information relating to
the economy, industries, businesses, securities markets, and securities
as it may deem necessary or useful in the discharge of its obligations
hereunder and shall formulate and implement a continuing program for
the management of the assets and resources of each Portfolio in a
manner consistent with the each Portfolio's investment objective,
policies, and restrictions. In furtherance of this duty, Xxxxxxx Xxxxx,
on behalf of the Portfolios, is authorized, in its discretion and
without prior consultation with the Fund or WRL Management, to:
(1) Buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds and other securities or assets; and
(2) Place orders and negotiate the commissions (if any) for the
execution of transactions in securities or other assets with
or through such brokers, dealers, underwriters or issuers as
Xxxxxxx Sachs may select.
2. OBLIGATIONS OF WRL MANAGEMENT. WRL Management shall have the
following obligations under this Agreement:
(a) to keep Xxxxxxx Xxxxx continuously and fully informed as to the
composition of each Portfolio's investment portfolio and the
nature of each Portfolio's assets and liabilities from time to
time;
(b) to furnish Xxxxxxx Sachs with copies of each of the following
documents and furnish to Xxxxxxx Xxxxx at its principal office all
future amendments and supplements to such documents, if any, as
soon as practicable after such documents become available;
(1) The Articles of Incorporation of the Fund, as filed with the
State of Maryland, as in effect on the date hereof and as amended
from time to time ("Articles");
(2) The By-Laws of the Fund as in effect on the date hereof and as
amended from time to time ("By-Laws");
(3) Certified resolutions of the Fund's Board authorizing the
appointment of WRL Management and Xxxxxxx Sachs and approving the
form of the Advisory Agreement and this Agreement;
(4) The Fund's Registration Statement under the 1940 Act and the
Securities Act of 1933, as amended, on Form N-1A, as filed with
the Securities and Exchange Commission ("SEC") relating to the
Portfolios and their shares and all amendments thereto
("Registration Statement");
(5) The Notification of Registration of the Fund under the
1940 Act on Form N-8A as filed with the SEC and any amendments
thereto;
(6) The Fund's Prospectus (as defined above); and
(7) A certified copy of any publicly available financial statement
or report prepared for the Fund by certified or independent public
accountants, and copies of any financial statements or reports
made by the Fund to its shareholders or to any government body or
securities exchange.
(c) to furnish Xxxxxxx Xxxxx with any further materials or information
which Xxxxxxx Sachs may reasonably request to enable it to perform
its functions under this Agreement;
(d) to compensate Xxxxxxx Xxxxx for its services under this Agreement
by the payment of a monthly fee equal to the amounts specified in
Schedule A of this Agreement. In the event that this Agreement
shall be effective for only part of a period to which any such fee
received by WRL Management is attributable, then an appropriate
pro-ration of the fee that would have been payable hereunder if
this Agreement had remained in effect until the end of such period
shall be made, based on the number of calendar days in such period
and the number of calendar days during the period in which this
Agreement was in effect. The fees payable to Xxxxxxx Sachs
hereunder shall be payable upon receipt by WRL Management from the
Portfolios of fees payable to WRL Management under Section 6 of
the Advisory Agreement;
3. BROKERAGE.
X. Xxxxxxx Xxxxx agrees that, in placing orders with broker-dealers for the
purchase or sale of portfolio securities, it shall attempt to obtain quality
execution at favorable security prices (best price and execution); provided
that, on behalf of the Portfolios, Xxxxxxx Sachs may, in its discretion, agree
to pay a broker-dealer that furnishes brokerage or research services as such
services are defined under Section 28(e) of the Securities Exchange Act of 1934,
as amended ("1934 Act"), a higher commission than that which might have been
charged by another broker-dealer for effecting the same transactions, if Xxxxxxx
Xxxxx determines in good faith that such commission is reasonable in relation to
the brokerage and research services provided by the broker-dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
Xxxxxxx Sachs with respect to the accounts as to which it exercises investment
discretion (as such term is defined under Section 3(a)(35) of the 1934 Act). In
no instance will portfolio securities be purchased from or sold to Xxxxxxx
Xxxxx, or any affiliated person thereof, except in accordance with the federal
securities laws and the rule and regulations thereunder.
B. On occasions when Xxxxxxx Sachs deems the purchase or sale of a security to
be in the best interest of a Portfolio as well as other clients of Xxxxxxx
Xxxxx, Xxxxxxx Xxxxx, 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 Xxxxxxx Sachs in the manner Xxxxxxx Xxxxx considers
to be most equitable and consistent with its fiduciary obligations to each
Portfolio and to its other clients.
C. In addition to the foregoing, Xxxxxxx Sachs agrees that orders with
broker-dealers for the purchase or sale of portfolio securities by each
Portfolio shall be placed in accordance with the standards set forth in the
Advisory Agreement, subject to compliance with applicable laws and procedures
adopted by the Directors of the Fund.
D. Subject to procedures adopted by the Board of the Fund, Xxxxxxx Xxxxx is
authorized to place orders on behalf of each Portfolio through the Xxxxxxx Sachs
or any affiliate thereof if Xxxxxxx Xxxxx or its affiliate is registered as a
broker or dealer with the SEC or as a FCM with the Commodities Futures Trading
Commission ("CFTC"), or to any of its affiliates that are brokers or dealers or
FCBs or such other entities which provide similar services in foreign countries.
Such allocation shall be in such amounts and proportions as Xxxxxxx Sachs shall
determine consistent with the above standards, and, upon, request, Xxxxxxx Xxxxx
will report on said allocation to WRL Management and the Fund's Board,
indicating the brokers, dealers or FCBs to which such allocations have been made
and the basis therefor.
4. TREATMENT OF INVESTMENT ADVICE. WRL Management may direct Xxxxxxx
Sachs to furnish its investment information, advice and recommendations directly
to officers of the Fund.
5. PURCHASES BY AFFILIATES. Neither Xxxxxxx Xxxxx nor any of its
officers or Directors shall take a long or short position in the securities
issued by the Portfolios. This prohibition, however, shall not prevent
the purchase from the Portfolios of shares issued by the Portfolios on behalf of
the Portfolios by the officers and Directors of Xxxxxxx Sachs (or deferred
benefit plans established for their benefit) at the current price available to
the public, or at such price with reductions in sales charge as may be permitted
in the Fund's current prospectus in accordance with Section 22(d) of the
Investment Company Act of 1940, as amended (the "1940 Act").
6. SERVICES TO OTHER CLIENTS. Nothing contained in this Agreement shall limit or
restrict (i) the freedom of Xxxxxxx Xxxxx, or any affiliated person thereof, to
render investment management and corporate administrative services to other
investment companies, to act as investment manager or investment counselor to
other persons, firms, or corporations, or to engage in any other business
activities, or (ii) the right of any director, officer, or employee of Xxxxxxx
Sachs, who may also be a trustee, officer, or employee of the Fund, to engage in
any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar nature
or a dissimilar nature.
7. SUB-ADVISER'S USE OF THE SERVICES OF OTHERS. Xxxxxxx Xxxxx may (at its cost
except as contemplated by paragraph __ of this Agreement) employ, retain, or
otherwise avail itself of the services or facilities of other persons or
organizations for the purpose of obtaining such statistical and other factual
information, such advice regarding economic factors and trends, such advice as
to occasional transactions in specific securities, or such other information,
advice, or assistance as Xxxxxxx Sachs may deem necessary, appropriate, or
convenient for discharge of its obligations hereunder or otherwise helpful to
the Portfolios, as appropriate, or in the discharge of Xxxxxxx Xxxxx overall
responsibilities with respect to the other accounts that it serves as investment
manager or counselor, provided that Xxxxxxx Sachs shall at all times retain
responsibility for making investment recommendations with respect to the
Portfolios.
8. LIMITATION OF LIABILITY OF THE SUB-ADVISER. Neither Xxxxxxx Xxxxx nor any of
its officers, directors, or employees, nor any person performing executive,
administrative, trading, or other functions for Xxxxxxx Sachs, the Portfolios
(at the direction or request of Xxxxxxx Xxxxx) or the Sub-Adviser in connection
with Xxxxxxx Sachs' discharge of its obligations undertaken or reasonably
assumed with respect to this Agreement, shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Company or Portfolios
or any error of facts or mistake of law contained in any report or date provided
by Xxxxxxx Xxxxx, except for any error, mistake or loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties on
behalf of the Portfolios or from reckless disregard by Xxxxxxx Xxxxx or any such
person of the duties of Xxxxxxx Sachs pursuant to this Agreement.
9. REPRESENTATIONS.
Each party hereto represents, warrants, and agrees as follows:
A. WRL Management and Xxxxxxx Xxxxx each: (i) is registered as an investment
adviser under the Advisers Act and any applicable state laws and will continue
to be so registered for so long as this Agreement remains in effect; (ii) is not
prohibited by the 1940 Act or the Advisers Act from performing the services
contemplated by this Agreement; (iii) has met, and will continue to meet for so
long as this Agreement remains in effect, any applicable federal or state
requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency, necessary to be met in order to perform the services
contemplated by this Agreement; (iv) has the authority to enter into and perform
the services contemplated by this Agreement; and (v) will immediately notify the
other party of the occurrence of any event that would disqualify such other
party from serving as an investment adviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise.
X. Xxxxxxx Sachs has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and, if it has not already done
so, will provide the Investment Adviser and the Fund's Board with a copy of such
code of ethics, together with evidence of its adoption.
X. Xxxxxxx Xxxxx has provided WRL Management and the Fund's Board with a copy of
its Form ADV as most recently filed with the SEC and will, promptly after filing
any amendment to its Form ADV with the SEC, furnish a copy of such amendment to
WRL Management.
10. TERM OF AGREEMENT.
This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those Directors 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, and (ii) by vote of a
majority of the a Portfolio's outstanding voting securities. Unless sooner
terminated as provided herein, this Agreement shall continue in effect for an
initial term ending April 30, 2001. Thereafter, this Agreement shall continue in
effect from year to year, with respect to each Portfolio, subject to the
termination provisions and all other terms and conditions hereof, so long as
such continuation shall be specifically approved at least annually (a) by either
the Board, or by vote of a majority of the outstanding voting securities of each
Portfolio; and (b) in either event, by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the Fund's
Directors who are not parties to this Agreement or interested persons of any
such party. Xxxxxxx Sachs shall furnish to the Fund's Board, promptly upon its
request such information as may reasonably be necessary to evaluate the terms of
this Agreement or any extension, renewal, or amendment hereof.
11. TERMINATION OF AGREEMENT.
Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of each Portfolio on at least 60
days' prior written notice to Xxxxxxx Xxxxx. This Agreement may also be
terminated by WRL Management: (i) on at least 60 days' prior written notice to
Xxxxxxx Sachs, without the payment of any penalty; (ii) if Xxxxxxx Xxxxx becomes
unable to discharge its duties and obligations under this Agreement or (iii) per
the terms of an exemptive order - Xxxxxxx Xx. 00000 dated August 5, 1998 -
granted under section 6(c ) of the 1940 Act granting an exemption from Section
15(a) of the 1940 Act and Rule 18f-2 under the Act. Xxxxxxx Sachs may terminate
this Agreement at any time, or preclude its renewal without the payment of any
penalty, on at least 60 days' prior notice to WRL Management. Subject to the
terms of any exemptive order obtained by the Fund, this Agreement shall
terminate automatically in the event of its assignment or upon termination of
the Advisory Agreement.
12. AMENDMENT OF AGREEMENT.
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 amendment of this Agreement shall be effective until approved by
vote or a majority of each Portfolio's outstanding voting securities and a vote
of a majority of those Directors of the Fund who are no 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 amendment, unless otherwise permitted
in accordance with the 1940 Act, or as modified per exemptive relief granted
from Section 15(a) of the Act and Rule 18f-2 under the Act to the Fund and WRL
Management - Release No. 23379.
13. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of New York without giving effect to the conflicts of
laws principles thereof, and the 1940 Act. To the extent that the applicable
laws of the State of New York conflict with the applicable provisions of the
1940 Act, the latter shall control.
B. CAPTIONS. The captions contained in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
C. ENTIRE AGREEMENT. This Agreement represents the entire
agreement and understanding of the parties hereto and shall supersede any prior
agreements between the parties relating to the subject matter hereof, and all
such prior agreements shall be deemed terminated upon the effectiveness of this
Agreement.
D. INTERPRETATION. Nothing herein contained shall be deemed to
require the Fund to take any action contrary to its Articles or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of its responsibility for
and control of the conduct of the affairs of the Fund.
E. DEFINITIONS. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretation thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations, or orders of the SEC validly issued pursuant to the 1940
Act. As used in this Agreement, the terms "majority of the outstanding voting
securities," "affiliated person," "interested person," "assignment," "broker,"
"investment adviser," "net assets," "sale," "sell," and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the SEC by any rule, regulation, or order. Where the effect
of a requirement of the federal securities laws reflected in any provision of
this Agreement is made less restrictive by a rule, regulation, or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation, or order, unless WRL
Management and Xxxxxxx Xxxxx agree to the contrary.
X. XXXXXXX SACHS NAME: WRL Series Fund may use any name including
or derived from the name "Xxxxxxx Xxxxx" in connection with a fund only for so
long as this Agreement, or any extension, renewal or amendment hereof remains in
effect, including any similar agreement with any organization which shall be
succeeded to your business as investment adviser or distributor. Upon
termination of this Agreement, WRL Series Fund (to the extent that it lawfully
can) will cause the portfolio to cease to use such a name or any other name
indicating that it is advised by or otherwise connected with you or any
organization which shall have so succeeded to your business.
14. COMPLIANCE WITH LAWS.
(a) In all matters relating to the performance of this Agreement, Xxxxxxx Sachs
will act in conformity with the Fund's Articles, Bylaws, and current Prospectus
and with the instructions and direction of WRL Management and the Fund's Board.
(b) Xxxxxxx Xxxxx shall conform with (1) the 1940 Act and all rules and
regulations thereunder, and releases and interpretations thereto (including any
no-action letters and exemptive orders which have been granted by the SEC to the
Portfolios, WRL Management and/or Xxxxxxx Sachs and (2) with all other
applicable federal and state laws and regulations pertaining to management of
investment companies.
(c) WRL Management shall perform quarterly and annual tax compliance tests to
ensure that each Portfolio is in compliance with Subchapter M of the Internal
Revenue Code ("IRC") and Section B17(h) of the Internal Revenue Code and
regulations thereunder. In connection with such compliance tests, WRL Management
shall prepare and provide reports to Xxxxxxx Xxxxx within 10 business days of a
calendar quarter end relating to the diversification of each Portfolio, Xxxxxxx
Sachs shall review such reports for purposes of determining compliance with such
diversification requirements. If it is determined that a Portfolio is not in
compliance with the requirements noted above, Xxxxxxx Xxxxx, in consultation
with WRL Management, will take prompt action to bring the Portfolio back into
compliance within the time permitted under the IRC.
15. ASSIGNMENT. This Agreement shall terminate automatically in the
event of any assignment (as that term is defined in Section 2(a)(4) of the 0000
Xxx) of this Agreement.
16. REFERENCE TO SUB-ADVISER. Neither WRL Management nor the Fund will
publish or distribute any information, including but not limited to registration
statements, advertising or promotional material, regarding the provision of
investment advisory services by Xxxxxxx Sachs pursuant to this Agreement, or use
in advertising, publicity or otherwise the name of Xxxxxxx Xxxxx or any of its
affiliates, or any trade name, trademark, trade device, service xxxx, symbol or
any abbreviation, contraction or simulation thereof of Xxxxxxx Xxxxx or its
affiliates, without the prior written consent of Xxxxxxx Sachs. Notwithstanding
the foregoing, WRL Management may distribute information regarding the provision
of investment advisory services by Xxxxxxx Xxxxx to the Fund's Board of
Directors ("Board Materials") without the prior written consent of Xxxxxxx
Sachs. WRL Management will provide copies of the Board Materials to Xxxxxxx
Xxxxx within a reasonable time following distribution to the Fund's Board.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATTEST: XXXXXXX SACHS ASSET MANAGEMENT,
A separate Operating Division of
Xxxxxxx, Xxxxx & Co.
By:______________________________
Secretary Title:
ATTEST: WRL INVESTMENT MANAGEMENT, INC.
By:______________________________
Assistant Secretary Xxxx X. Xxxxxx
Chairman, Director & President
Sub-Advisory Agreement
SCHEDULE A
SUB-ADVISORY FEE
------------------------------------------ --------------------------------------- --------------------------
FUND ANNUAL PERCENTAGE OF MONTHLY AVERAGE TERMINATION DATE
DAILY NET ASSETS
------------------------------------------ --------------------------------------- --------------------------
WRL XXXXXXX XXXXX GROWTH 0.50% of the first $50 million of the April 30, 2001
Portfolio's average daily net assets;
0.45% of $50-$100 million in assets;
and 0.40% in excess of $100 million
(from first dollar)*
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WRL XXXXXXX SACHS SMALL CAP 0.50% of the Fund's average daily net April 30, 2001
assets
------------------------------------------ --------------------------------------- --------------------------
* The fees payable for this portfolio will be based upon the average daily net
assets, on a combined basis, for both the WRL Xxxxxxx Xxxxx Growth portfolio and
the IDEX Xxxxxxx Sachs Growth fund.
