INVESTMENT SUBADVISORY AGREEMENT
INVESTMENT SUBADVISORY AGREEMENT, effective _____________, 2001, by and
between Xxxxxxx Asset Management Company, Inc., a Delaware corporation
registered as an investment Advisor under the Investment Advisors Act of 1940
(the "Advisor"), and Atlanta Capital Management Company, L.L.C., a Georgia
corporation (the "Subadvisor").
WHEREAS, the Advisor is the investment advisor to Xxxxxxx Variables Series,
Inc. (the "Fund"), an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Advisor desires to retain the Subadvisor to furnish it with
certain investment advisory services in connection with the Advisor's investment
advisory activities on behalf of the Fund and any series of the Fund, for which
Schedules are attached hereto (each such series referred to individually as the
"Portfolio").
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is hereby agreed as follows:
1. Services to be Rendered by the Subadvisor to the Fund.
(a) Investment Program. Subject to the control of the Fund's Board of
Directors and the Advisor, the Subadvisor at its expense continuously will
furnish to the Fund an investment program for such portion, if any, of Fund
assets designated by the Advisor from time to time. With respect to such
assets, the Subadvisor will make investment decisions, subject to Section 1(g)
of this Agreement, and will place all orders for the purchase and sale of
portfolio securities. The Subadvisor is deemed to be an independent contractor
and, except as expressly provided or authorized by this Agreement, has no
authority to act for or represent the Fund or the Advisor in any way or
otherwise be deemed an agent of the Fund or the Advisor. In the performance of
its duties, the Subadvisor will act in the best interests of the Fund and will
comply with (i) applicable laws and regulations, including, but not limited to,
the 1940 Act and Subchapter M of the Internal Revenue Code of 1986, as amended,
(ii) the terms of this Agreement, (iii) the Fund 's Articles of Incorporation,
Bylaws and Registration Statement as from time to time amended, (iv) relevant
undertakings provided to State securities regulators, (v) the stated investment
objective, policies and restrictions of the Fund, and (vi) such other guidelines
as the Board of Directors or Advisor may establish. The Advisor is responsible
for providing the Subadvisor with current copies of the materials specified in
Subsections (a)(iii), (iv), (v) and (vi) of this Section 1.
(b) Availability of Personnel. The Subadvisor at its expense
will make available to the Directors and Advisor at reasonable times its
portfolio managers and other appropriate personnel, either in person or, at the
mutual convenience of the Advisor and the Subadvisor, by telephone, in order to
review the Fund's investment policies and to consult with the Directors and
Advisor regarding the Fund's investment affairs, including economic, statistical
and investment matters relevant to the Subadvisor's duties hereunder, and will
provide periodic reports to the Advisor relating to the investment strategies it
employs.
(c) Expenses, Salaries and Facilities. The Subadvisor will pay
all expenses incurred by it in connection with its activities under this
Agreement (other than the cost of securities and other investments, including
any brokerage commissions and all taxes, including any interest and penalties
with respect thereto) including, but not limited to, all salaries of personnel
and facilities required for it to execute its duties under this Agreement.
(d) Compliance Reports. The Subadvisor at its expense will
provide the Advisor with such compliance reports relating to its duties under
this Agreement as may be agreed on by such parties from time to time.
(e) Valuation. The Subadvisor will assist the Fund and its agents
in determining whether prices obtained for valuation purposes accurately reflect
market price information relating to the assets of the Fund for which the
Subadvisor has responsibility on a daily basis (unless otherwise agreed on by
the parties hereto) and at such other times as the Advisor shall reasonably
request.
(f) Executing Portfolio Transactions.
(i) Brokerage. In selecting brokers and dealers to execute purchases
and sales of investments for the Fund, the Subadvisor will use its best efforts
to obtain the most favorable price and execution available in accordance with
this paragraph. The Subadvisor agrees to provide the Advisor and the Fund with
copies of its policy with respect to allocation of brokerage on trades for the
Fund. Subject to review by the Directors of appropriate policies and
procedures, the Subadvisor may cause the Fund to pay a broker a commission for
effecting a portfolio transaction, in excess of the commission another broker
would have charged for effecting the same transaction. If the first broker
provided brokerage and/or research services, including statistical data, to the
Subadvisor, the Subadvisor shall not be deemed to have acted unlawfully, or to
have breached any duty created by this Agreement, or otherwise, solely by reason
of acting according to such authorization.
(ii) Aggregate Transactions. In executing portfolio transactions for the
Fund, the Subadvisor may, but will not be obligated to, aggregate the securities
to be sold or purchased with those of its other clients where such aggregation
is not inconsistent with the policies of the Fund, to the extent permitted by
applicable laws and regulations. If the Subadvisor chooses to aggregate sales
or purchases, it will allocate the securities as well as the expenses incurred
in the transaction in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and its other clients
involved in the transaction.
(iii) Directed Brokerage. The Advisor may direct the Subadvisor to use a
particular broker or dealer for one or more trades if, in the sole opinion of
the Advisor, it is in the best interest of the Fund to do so.
(iv) Brokerage Accounts. The Advisor authorizes and empowers the Subadvisor
to direct the Fund's custodian to open and maintain brokerage accounts for
securities and other property, including financial and commodity futures and
commodities and options thereon (all such accounts hereinafter called "brokerage
accounts") for and in the name of the Fund and to execute for the Fund as its
agent and attorney-in-fact standard customer agreements with such broker or
brokers as the Subadvisor shall select as provided above. The Subadvisor may,
using such of the securities and other property in the Fund as the Subadvisor
deems necessary or desirable, direct the Fund's custodian to deposit for the
Fund original and maintenance brokerage and margin deposits and otherwise direct
payments of cash, cash equivalents and securities and other property into such
brokerage accounts and to such brokers as the Subadvisor deems desirable or
appropriate.
(g) Social Screening. The Advisor is responsible for screening
those investments of the Fund subject to social screening ("Securities") to
determine that the Securities investments meet the Fund's social investment
criteria, as may be amended from time to time by the Directors and for notifying
the Subadvisor of its determination. The Subadvisor will buy only those
Securities permitted by the Fund's investment program which the Advisor
determines pass the Fund's social screens and of which the Advisor has notified
the Subadvisor. In the event that the Advisor notifies the Subadvisor that a
security already in the Fund's portfolio no longer passes the Fund's social
screen, the Advisor shall instruct the Subadvisor whether the Subadvisor should
dispose of the security immediately or at such time as the Subadvisor believes
would be least detrimental to the Fund. To the extent instructed by the
Advisor, the Subadvisor shall have no liability for the disposition of any
securities under this paragraph. With respect to this paragraph, the form of
notification shall be mutually agreed upon by the parties.
(h) Voting Proxies. The Subadvisor agrees to take appropriate
action (which includes voting) on all proxies for the Fund's portfolio
investments in a timely manner in accordance with the Advisor's Proxy Voting
Guidelines, a copy of which has been provided to the Subadvisor.
(i) Furnishing Information for the Fund's Proxies and Other
Required Mailings. The Subadvisor agrees to provide the Advisor in a timely
manner with all information necessary, including information concerning the
Subadvisor's controlling persons, for preparation of the Fund's proxy statements
or other required mailings, as may be needed from time to time.
2. Books, Records and Procedures.
(a) In connection with the purchase and sale of the Fund's portfolio
securities, the Subadvisor shall arrange for the transmission to the Fund's
custodian, and/or the Advisor on a daily basis, of such confirmations, trade
tickets or other documentation as may be necessary to enable the Advisor to
perform its accounting and administrative responsibilities with respect to the
management of the Fund.
(b) Pursuant to Rule 31a-3 under the 1940 Act, Rule 204-2 under the
Investment Advisors Act of 1940, and any other applicable laws, rules or
regulations regarding recordkeeping, the Subadvisor agrees that: (i) all
records it maintains for the Fund are the property of the Fund; (ii) it will
surrender promptly to the Fund or Advisor any such records upon the Fund's or
Advisor's request; (iii) it will maintain for the Fund the records that the Fund
is required to maintain under Rule 31a-1(b) or any other applicable rule insofar
as such records relate to the investment affairs of the Fund for which the
Subadvisor has responsibility under this Agreement; and (iv) it will preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act the records it
maintains for the Fund.
(c) The Subadvisor represents that it has adopted and will maintain at
all times a suitable Code of Ethics that covers its activities with respect to
its services to the Fund.
(d) The Subadvisor periodically shall supply to the Fund's Board of
Directors its policies on "soft dollars," trade allocations and brokerage
allocation. The Subadvisor shall maintain appropriate fidelity bond and errors
and omission insurance policies.
3. Exclusivity. Each party and its affiliates may have advisory, management
service or other agreements with other organizations and persons, and may
have other interests and businesses; provided, however, that during the term of
the Agreement, the Subadvisor will not provide investment advisory services
("Services") to any other investment company offered to the public and
registered under the 1940 Act which is "socially screened", as that term is
commonly understood.
4. Compensation. The Advisor will pay to the Subadvisor as
compensation for the Subadvisor's services rendered pursuant to this Agreement
an annual Subadvisory fee as specified in one or more Schedules attached hereto
and made part of this Agreement. Such fees shall be paid by the Advisor (and
not by the Fund). Such fees shall be payable for each month within 15 business
days after the end of such month. If the Subadvisor shall serve for less than
the whole of a month, the compensation as specified shall be prorated based on
the portion of the month for which services were provided. The Schedules may be
amended from time to time, in writing agreed to by the Advisor and the
Subadvisor, provided that amendments are made in conformity with applicable laws
and regulations and the Articles of Incorporation and Bylaws of the Fund. Any
change in the Schedule pertaining to any new or existing series of the Fund
shall not be deemed to affect the interest of any other series of the Fund and
shall not require the approval of shareholders of any other series of the Fund.
5. Assignment and Amendment of Agreement. This Agreement automatically
shall terminate without the payment of any penalty in the event of its
assignment (as defined under the 0000 Xxx) or if the Investment Advisory
Agreement between the Advisor and the Fund relating to the Fund shall terminate
for any reason. This Agreement constitutes the entire agreement between the
parties, and may not be amended except in a writing signed by both parties.
This Agreement shall not be materially amended unless, if required by Securities
and Exchange Commission rules and regulations, such amendment is approved by the
affirmative vote of a majority of the outstanding shares of the Fund, and by the
vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Directors of the Fund who are not interested
persons of the Fund, the Advisor or the Subadvisor.
6. Duration and Termination of the Agreement. This Agreement shall
become effective upon its execution; provided, however, that this Agreement
shall not become effective with respect to any Fund now existing or hereafter
created unless it has first been approved (a) by a vote of the majority of those
Directors of the Fund who are not parties to this Agreement or interested
persons of such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by a vote of a majority of that Fund's
outstanding voting securities or as otherwise provided by law, or pursuant to an
exemptive order governing such vote. This Agreement shall remain in full force
and effect with respect to a Fund continuously thereafter (unless terminated
automatically as set forth in Section 5.) except as follows:
(a) The Fund may at any time terminate this Agreement without
penalty with respect to any or all Funds by providing not less than 60 days
written notice delivered or mailed by registered mail, postage prepaid, to the
Advisor and the Subadvisor. Such termination can be authorized by the
affirmative vote of a majority of the (i) Directors of the Fund or (ii)
outstanding voting securities of the applicable Fund.
(b) This Agreement will terminate automatically with respect to a
Fund unless, within two years of the effective date of that Fund, and at least
annually thereafter, the continuance of the Agreement is specifically approved
by (i) the Directors of the Fund or the shareholders of such Fund by the
affirmative vote of a majority of the outstanding shares of such Fund, and (ii)
a majority of the Directors of the Fund who are not interested persons of the
Fund, Advisor or Subadvisor, by vote cast in person at a meeting called for the
purpose of voting on such approval. If the continuance of this Agreement is
submitted to the shareholders of any Fund for their approval and such
shareholders fail to approve such continuance as provided herein, the Subadvisor
may continue to serve hereunder in a manner consistent with the 1940 Act and the
rules and regulations thereunder.
(c) The Advisor may at any time terminate this Agreement with
respect to any or all Funds by not less than 60 days written notice delivered or
mailed by registered mail, postage prepaid, to the Subadvisor, and the
Subadvisor may at any time terminate this Agreement with respect to any or all
Funds by not less than 90 days written notice delivered or mailed by registered
mail, postage prepaid, to the Advisor, unless otherwise mutually agreed in
writing.
(d) The Advisor may terminate this Agreement with respect to any or all
Funds immediately by written notice if the Confidentiality and Non-Use Agreement
referred to in Section 11 of this Agreement is, in the sole opinion of the
Advisor, violated.
Upon termination of this Agreement with respect to any Fund:
(a) the duties of the Advisor delegated to the Subadvisor under this
Agreement with respect to such Fund automatically shall revert to the Advisor,
and
(b) both parties agree to use reasonable efforts to jointly issue public
statements, other than those public statements required by law, regarding the
termination.
7. Notification to the Advisor. The Subadvisor promptly shall notify
the Advisor in writing of the occurrence of any of the following events:
(a) the Subadvisor shall fail to register as an investment advisor
under the Investment Advisors Act of 1940, as amended;
(b) the Subadvisor shall have been served or otherwise have notice of
any action, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, public board or body, directly involving the affairs of
the Fund;
(c) a material violation of the Subadvisor's Code of Ethics is
discovered and, again, when action has been taken to rectify such violations; or
(d) any other event, including but not limited to, a change in
executive personnel or the addition or loss of major clients of the Subadvisor
that might affect the ability of the Subadvisor to provide the Services provided
for under this Agreement.
8. Definitions. For the purposes of this Agreement, the terms "vote of
a majority of the outstanding Shares," "affiliated person," "control,"
"interested person" and "assignment" shall have their respective meanings as
defined in the 1940 Act and the rules and regulations thereunder subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission under said Act; and the term "specifically approve at least annually"
shall be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
9. Indemnification. The Subadvisor shall indemnify and hold harmless
the Advisor, the Fund and their respective directors, officers and shareholders
from any and all claims, losses, expenses, obligation and liabilities (including
reasonable attorneys fees) arising or resulting from the Subadvisor's willful
misfeasance, bad faith, gross negligence or reckless disregard of its duties
hereunder.
The Subadvisor shall indemnify and hold harmless the Advisor, the Fund and
their respective directors, officers and shareholders from all claims, losses,
expenses, obligations and liabilities (including reasonable attorneys' fees)
which arise solely on account of any Subadvisors action(s) in respect to the
Transaction and are not otherwise typically borne by the Fund. These expenses
shall include but are not exclusive of, the cost of notice to shareholders of
any meeting or vote necessary to approve the Subadvisory Agreement and the cost
of reprinting shareholder communications describing the new Subadvisory
Agreement.
The Advisor shall indemnify and hold harmless the Subadvisor, the Fund,
their respective directors, officers and shareholders from any and all claims,
losses, expenses, obligation and liabilities (including reasonable attorneys
fees) arising or resulting from the Advisor's willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties hereunder.
This Section 9 shall survive the termination of the Agreement.
10. Applicable Law and Jurisdiction. This Agreement shall be governed
by Maryland law, and any dispute arising from this Agreement or the services
rendered hereunder shall be resolved through legal proceedings, whether state,
federal, or otherwise, conducted in the state of Maryland or in such other
manner or jurisdiction as shall be mutually agreed upon by the parties hereto.
11. Confidentiality. This Agreement is not binding on the Advisor
unless the Subadvisor has signed and is subject to a confidentiality and non-use
agreement ("Non-Use Agreement") not materially different than the one attached
hereto as Exhibit 1. For a period of two (2) years from the date of termination
of this Agreement, the Subadvisor shall not attempt to develop, market or sell
any product which uses or employs any Confidential Information, as that term is
defined in the Non-Use Agreement.
12. Miscellaneous. Notices of any kind to be given to a party
hereunder shall be in writing and shall be duly given if mailed, delivered or
communicated by answer back facsimile transmission to such party at the address
set forth below, or at such other address or to such person as a party may from
time to time specify.
Subadvisor agrees that for a period of two (2) years from the date of
termination of this Agreement, it shall not directly or indirectly, hire, employ
or engage, or attempt to hire, employ or engage any employee of the Advisor or
any affiliate thereof without the prior written permission of the Advisor.
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof. The captions in
this Agreement are included for convenience only and in no way define or delimit
any of the provisions hereof or otherwise affect their construction or effect.
Each party represents and warrants that it has all requisite authority to
enter into and carry out its responsibilities under this Agreement.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
signed in duplicate on its behalf by its duly authorized representative, all as
of the day and year first written above.
Witness: Xxxxxxx Asset Management Company, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000X
Xxxxxxxx, Xxxxxxxx 00000
By:_______________________ By:______________________________
Witness: Atlanta Capital Management Company, L.L.C.
Two Midtown Plaza, Suite 1600
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
By:________________________ By:_______________________________
Fee Schedule to the Investment Subadvisory Agreement
between Xxxxxxx Asset Management Company, Inc.
and Atlanta Capital Management Company, L.L.C.
As compensation pursuant to Section 4 of the Investment Subadvisory
Agreement between Xxxxxxx Asset Management Company, Inc. (the "Advisor") and
Atlanta Capital Management Company, L.L.C. (the "Subadvisor") for the providing
of investment subadvisory services to the CVS Social Equity Portfolio, the
Advisor shall pay the Subadvisor an annual Subadvisory fee computed daily and
payable monthly, at an annual rate equal to _____ basis points of average daily
net assets of the CVS Social Equity Portfolio.
