Exhibit (d)49
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the first day of November, 2000 by and among Xxxx
Xxxxxxx Variable Series Trust I, a Massachusetts business trust (the "Trust"),
Independence Investment Associates, Inc., a Delaware corporation ("IIA"), 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 IIA are engaged in the business of rendering
investment advice under the Investment Advisers Act of 1940; and
WHEREAS, the Trust is authorized to issue shares of capital stock in
separate classes with each such class representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust offers shares in several classes, one of which is
designated as the Growth & Income Fund, (together with all other classes
established by the Trust, 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 one or more investment advisers 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. IIA is hereby appointed and IIA hereby accepts the
appointment to act as an investment adviser and manager to the Growth & Income
Fund (the "Subject Fund"), effective November 1, 2000, for the period and on the
terms herein set forth, for the compensation herein provided.
(b) Additional Subject Funds. In the event that the Trust and JHLICO
desire to retain IIA to render investment advisory services hereunder for any
other Fund, they shall so notify IIA in writing. If it is willing to render such
services, IIA shall notify the Trust in writing, whereupon such Fund shall
become a Subject Fund hereunder.
(c) Independent Contractor. IIA 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.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
IIA will provide for such portion of the Subject Fund's assets as may be
designated to it by JHLICO from time to time (the "Subject Assets") a continuing
and suitable investment program consistent with the investment policies,
objectives and restrictions of said Fund, as furnished to IIA by JHLICO in
writing from time to time. IIA will manage the investment and reinvestment of
the the Subject Assets, and perform the functions set forth below, subject to
the overall supervision, direction, control and review of the Board of Trustees
of the Trust, JHLICO and, as in effect from time to time, the provisions of the
Trust's Declaration of Trust, Bylaws, prospectus, statement of additional
information (all as furnished to IIA by JHLICO in writing 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, all as delivered to IIA in
writing by JHLICO or the Trust from time to time).
IIA will have investment discretion with respect to the Subject Assets and
will, at its own expense:
(a) upon request, advise the Trust in connection with investment
decisions to be made by its Board of Trustees or any committee thereof regarding
the Subject Assets and furnish the Trust with research, economic and statistical
data in connection with investments and investment policies for the Subject
Assets;
(b) submit such reports relating to the valuation of the Subject
Assets as the Trust's Board of Trustees may reasonably request;
(c) place orders for purchases and sales of portfolio investments for
the Subject Assets;
(d) maintain and preserve the records relating to its activities
hereunder, including those records required by the 1940 Act to be maintained by
it and preserved by the Trust, to the extent not maintained by the Trust's
custodian, transfer agent or JHLICO; and
(e) subject to its receipt of all necessary voting materials, in its
discretion, as it deems advisable in the best interests of the Subject Fund,
vote, or cause to be voted, any or all proxies with respect to the Subject
Assets in accordance with IIA's proxy voting policy as most recently provided to
JHLICO.
The Trust and JHLICO will provide timely information to IIA regarding such
matters as purchases and redemptions of shares with respect to the Subject
Assets and the cash requirements of, and cash available for investment in, the
Subject Assets, and all 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 IIA to perform its
responsibilities hereunder. On its own initiative, IIA will apprise JHLICO and
the Trust of important developments materially affecting the Subject Assets and
will furnish JHLICO and the Trust's Board of Trustees from time to time such
information as is appropriate for this purpose.
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, without limitation, to assume the expense of:
(i) brokerage commissions for transactions in the portfolio investments of
the Subject Assets and similar fees, charges and expenses incurred in connection
with the acquisition, disposition, lending or borrowing of such portfolio
investments;
(ii) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Trust to federal, state or other governmental agencies; and
(iii) 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 as herein provided, JHLICO shall pay to
IIA a fee (for payment of which the Trust shall have no obligation or liability)
based on the Current Net Assets of the Subject Assets, as set forth in Schedule
I attached hereto and made a part hereof. The 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 the Subject
Assets during any calendar month, the fee with respect to such Subject Assets
accrued to termination shall be paid promptly following such termination.
"Current Net Assets" of the Subject Assets for purposes of computing the
amount of advisory fee accrued for any day shall mean the net assets of the
Subject Assets as of the most recent preceding day for which the Subject Assets'
net assets were computed.
5. FUND TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Subject Fund, IIA is authorized to select the brokers or dealers that will
execute purchase and sale transactions for the Subject Assets and to use its
best efforts to obtain best execution with respect to all such purchases and
sales of Fund securities for said Subject Assets. IIA shall maintain records
reasonably 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, IIA 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 IIA, 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. IIA shall determine in good faith that such higher cost was
reasonable in relation to the value of the brokerage and research services
provided.
The fees payable to IIA by JHLICO hereunder shall be reduced by any tender
offer solicitation fees or similar payments received by IIA, in connection with
the tender of investments of any Subject Assets (less direct expenses incurred
by IIA in connection with obtaining such fees or payments), to the extent not
otherwise paid or credited to the Subject Fund.
6. INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Trust shall own and control all records maintained hereunder by IIA on
the Trust's behalf and, in the event of termination of this Agreement with
respect to the Subject Fund for any reason, all records (or true and complete
copies thereof) relating to that Fund shall be promptly returned to the Trust,
free from any claim or retention of rights by IIA. IIA 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
inspection by representatives of regulatory authorities or other persons
reasonably designated by the Trust. IIA further agrees to
maintain, prepare and preserve such books and records in accordance with the
1940 Act and rules thereunder, including but not limited to, Rules 31a-1 and
31a-2 and to supply all information in its possession or reasonably available to
it, requested by any insurance regulatory authorities to determine whether all
insurance laws and regulations are being complied with.
IIA 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 (i) to Xxxx Xxxxxxx Life Insurance Company, or to any other
person or entity that directly or indirectly owns all or substantially all of
the IIA's capital stock; (ii) if the Trust or JHLICO has authorized such
disclosure, or (iii) if such disclosure is expressly required by applicable
federal or state regulatory authorities or court proceedings.
IIA 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 it.
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect IIA 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, as applicable. 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 of his duties or the reckless disregard of his
obligations and duties. IIA shall employ only qualified personnel to manage the
Subject Assets; shall comply with all applicable laws and regulations in the
discharge of its duties under this Agreement (provided that copies of any
applicable investment restrictions imposed by state insurance laws and
regulations shall be furnished to IIA by JHLICO); shall (as provided in Section
2 above) comply with the investment 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, all as furnished to
IIA by JHLICO in writing from time to time; shall manage the Subject Assets
(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 in its management of the Subject
Assets in the best interests of the Trust, subject however to its duties to
other clients as described in Section 9 below; 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, IIA
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
Growth & Income Fund on the date set forth in Section 1(a) hereof and, with
respect to any additional Subject Fund, on the date of receipt by the Trust of
notice from IIA 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," "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 IIA and JHLICO. This Agreement
may be terminated by IIA on at least sixty days' prior written notice to the
Trust and JHLICO, or by JHLICO on at least sixty days' prior written notice to
the Trust and IIA. Transactions already entered into by IIA but not yet settled
at the time of any such termination shall settle for the account of the Trust.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment or if the Investment
Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE.
The services of IIA 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 IIA 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.
Nothing in this Agreement shall limit or restrict IIA or any of its
officers, affiliates or employees from buying, selling or trading in any
securities for its or their own accounts; provided, however, that no such person
shall purchase securities from or sell securities to the Subject Fund except as
permitted under applicable laws and regulations, including without limitation
the 1940 Act and the Investment Advisers Act of 1940, and the rules and
regulations thereunder. The Trust acknowledges that IIA and its officers,
affiliates and employees, and its and their other clients, may at any time have,
acquire, increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of under this Agreement. IIA shall have
no obligation to acquire for the Subject Fund a position in any investment which
IIA, its officers, affiliates or employees may acquire for their own accounts or
for the account of another client, if in the sole discretion of IIA it is not
feasible or desirable to do so.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Subject Assets, IIA and its directors, officers and employees will not act as
principal or agent or receive any commission, except as may be permitted
under applicable laws and regulations and the policies and procedures of the
Trust in effect from time to time. Nothing in this Agreement, however, shall
preclude the combination of orders for the sale or purchase of portfolio
securities of the Subject Assets with those for other accounts managed by IIA or
its affiliates, if orders are allocated in a manner deemed equitable by IIA
among the accounts and at a price approximately averaged.
11. AMENDMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by a duly
authorized officer of the party or parties intending to be bound thereby. No
amendment of this Agreement shall be effective until approved specifically by
(a) the Board of Trustees of the Trust, or by vote of a majority of the
outstanding shares of the Subject 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 the Trust personally, but only bind the trust property of the
Trust, as provided in the Trust's Declaration of Trust.
13. 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.
14. 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 (provided that any notice delivered by
facsimile shall be followed promptly by a duplicate notice delivered by another
permitted method of delivery), by hand or by commercial overnight delivery
service, addressed as follows:
IIA: Independence Investment Associates, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President
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 Trust Trust I
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
5. ASSIGNMENT.
This Agreement may not be assigned by any party, either in whole or in
part.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.
XXXX XXXXXXX VARIABLE SERIES TRUST I
/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxx Xxxx
--------------------- -----------------------
Xxxxxx X. Xxxxxxx Xxxxxxx X. Xxx Xxxx
Counsel Title: Chairman and CEO
XXXX XXXXXXX LIFE INSURANCE
COMPANY
/s/ Xxxxxxxxxx Xxxxx By: Xxxxxx X. Xxxxxxx
-------------------- ---------------------
Xxxxxxxxxx Xxxxx Xxxxxx X. Xxxxxxx
Assistant Secretary Title: Senior Vice President & Chief
Investment Strategist
INDEPENDENCE INVESTMENT
ASSOCIATES, INC.
/s/ Xxxxxxx Xxxxxxxx By: /s/ Illegible
Xxxxxxx Xxxxxxxx -------------
Senior Associate Title: CEO
SCHEDULE I
FEES
Current Subject Assets Under Management Sub-Advisory Fee
--------------------------------------- ----------------
All amounts 18.75 basis points (0.1875%)
per annum
