(Small Cap Value Fund)
SUB-INVESTMENT MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
X. XXXX PRICE ASSOCIATES, INC.
AND
XXXX XXXXXXX LIFE INSURANCE COMPANY
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the first day of May, 2001 by and among Xxxx
Xxxxxxx Variable Series Trust I, a Massachusetts business trust (the "Trust"),
X. Xxxx Price Associates, Inc., ("X. Xxxx Price") a Maryland corporation and
subsidiary of X. Xxxx Price Group, Inc., 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 X. Xxxx Price are each engaged in the business of
rendering investment advice under the Investment Adviser 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 Small Cap Value Fund, (together with all other classes
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
August 31, 1999 (the "Investment Management Agreement"), pursuant to which it
may contract with X. Xxxx Price 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. X. Xxxx Price is hereby appointed and X. Xxxx Price
hereby accepts the appointment to act as investment adviser and manager to the
Small Cap Value Fund (the "Subject Fund") 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 X. Xxxx Price to render investment advisory services hereunder
for any other Fund, they shall so notify X. Xxxx Price in writing. If it is
willing to render such services, X. Xxxx Price shall notify the Trust in
writing, whereupon such Fund shall become a Subject Fund hereunder.
(c) Incumbency Certificates. X. Xxxx Price shall furnish to JHLICO,
immediately upon execution of this Agreement, a certificate of a senior officer
of X. Xxxx Price setting forth (by name and title, and including specimen
signatures) those officers of X. Xxxx Price who are authorized to make
investment decisions for the Subject Fund pursuant to the provisions of this
Agreement. X. Xxxx Price 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 X. Xxxx Price so named.
1
(d) Independent Contractor. X. Xxxx Price 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) X. Xxxx Price's Representations. X. Xxxx Price represents, warrants
and agrees (I) that it is registered as an investment adviser under the
Investment Adviser Act of 1940, 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 X. Xxxx Price, or of any change in the
identity of the personnel who manage the Subject Fund, (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 such code, and (v) that it has
furnished the Trust and JHLICO each with a copy of X. Xxxx Price's Form ADV, as
most recently filed with the SEC, and will promptly furnish copies of each
future amendment thereto.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
X. Xxxx Price will provide for the Subject Fund a continuing and suitable
investment program consistent with the investment policies, objectives and
restrictions of said Fund, as established by the Trust and JHLICO. From time to
time, the Board of Trustees of the Trust may provide X. Xxxx Price with
additional or amended investment policies, guidelines and restrictions. X. Xxxx
Price, as sub-manager, will manage the investment and reinvestment of the assets
in the Subject Fund, and perform the functions set forth below, subject to the
overall supervision, direction, control and review of JHLICO and the Board of
Trustees of the Trust, consistent with the applicable investment policies,
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 X. Xxxx
Price in writing by JHLICO or the Trust from time to time). By its signature
below, X. Xxxx Price 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.
X. Xxxx Price 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' s Board of
Trustees may reasonably request, to assist the custodian in its determination of
the market value of securities held in the Subject Fund to the extent such
securities are not otherwise priceable using an approved pricing service;
2
(c) place orders for purchases and sales of portfolio investments for
the Subject Fund;
(d) give instructions to the Subject Fund's custodian concerning the
delivery of securities and transfer of cash for the Subject Fund in connection
with the settlement of trades;
(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) each business day, provide JHLICO with a written daily statement of
the transactions effected for the Subject Fund on the previous business day;
(g) as soon as practicable following the end of each calendar month,
provide JHLICO with a summary listing of all investments held in such Fund as of
the last day of the month, together with the average purchase price per unit of
each investment and such other information as JHLICO may reasonably request; 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 X. Xxxx
Price's proxy voting policy as most recently provided to JHLICO.
The Trust and JHLICO will provide timely information to X. Xxxx Price
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 X. Xxxx Price with copies of monthly accounting
statements for the Subject Fund, and such other information (including, without
limitation, reports concerning the classification of Portfolio securities for
purposes of Subchapter M of the Internal Revenue Code and Treasury Regulation
Section 1.817) as may be reasonably necessary or appropriate in order for X.
Xxxx Price to perform its responsibilities hereunder. X. Xxxx Price will apprise
JHLICO and the Trust of important political and economic developments materially
affecting the marketplace or the Subject Fund, and will furnish JHLICO and the
Trust's Board of Trustees from time to time such information as is appropriate
for this purpose. X. Xxxx Price will also make such personnel as it deems
appropriate available in Boston or other reasonable locations as often as
quarterly to discuss the Subject Fund and X. Xxxx Price's management thereof, to
educate JHLICO sales personnel with respect thereto, and for such other purposes
as the Trust or JHLICO may reasonably request.
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
3
(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 X. Xxxx Price 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. 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 the 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.
5. FUND TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Subject Fund, X. Xxxx Price is authorized to select the brokers or dealers that
will execute purchase and sale transactions for the Fund and to use reasonable
efforts to obtain the best available price and most favorable execution with
respect to all such purchases and sales of portfolio securities for said Fund.
X. Xxxx Price shall maintain records adequate to demonstrate compliance with
this requirement. X. Xxxx Price shall have the right subject to the control of
the Trust's 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 X. Xxxx Price, 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. X. Xxxx Price shall determine in good faith that such higher cost was
reasonable in relation to the value of the brokerage and research services
provided.
X. Xxxx Price will not receive any tender offer solicitation fees or
similar payments in connection with the tender of investments of any Fund.
6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Trust shall own and control all records maintained hereunder by X.
Xxxx Price 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 X. Xxxx Price, provided that (subject to the last paragraph of this
Section 6) X. Xxxx Price may retain copies of such records. X. Xxxx Price 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. X. Xxxx Price 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. X. Xxxx Price also agrees to supply all information in its possession
required by any insurance regulatory authorities to determine whether all
insurance laws and regulations are being complied with. X. Xxxx Price shall
supply the Board of Trustees and officers of the Trust and JHLICO with all
statistical information regarding the investments in the Subject Fund which is
reasonably required by them and reasonably available to X. Xxxx Price, provided
that X. Xxxx Price shall not be required to incur any additional expense in
connection therewith.
4
X. Xxxx Price 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.
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect X. Xxxx Price 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 gross negligence in
the performance his duties or the reckless disregard of his obligations and
duties. X. Xxxx Price 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 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; 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 Portfolio 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 to Section 1.817-5(b). However, X. Xxxx
Price 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.
JHLICO agrees to hold harmless X. Xxxx Price, its directors and officers and
each person if any, who controls X. Xxxx Price within the meaning of Section 15
of the Securities Act of 1933, as amended, from and against any and all losses,
claims, damages liabilities and expenses (including reasonable attorneys' fees
and expenses and costs of investigation) arising out of or based upon (a) the
failure of the Trust's Registration Statement, including the prospectus and
statement of additional information, or any amendment or supplement thereto, any
preliminary prospectus, any other written communication with investors or any
other submission to governmental bodies or self-regulatory bodies filed on or
subsequent to the date of this Agreement (collectively, the "Disclosure
Documents") to comply with the requirements of applicable federal and state
securities, insurance or other laws; (b) any untrue statement or alleged untrue
statement of a material fact contained in any Disclosure Document; or (c) any
omission or alleged omission in any Disclosure Document to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; except insofar as such losses, claims damages, liabilities and
expenses arise out of or are based upon any such statement or omission which is
in turn based upon information furnished in writing to JHLICO or the Trust by X.
Xxxx Price and which X. Xxxx Price was informed or otherwise knew was to be used
in the Disclosure Document.
5
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
Subject Fund on the date hereof and, with respect to any additional Subject
Fund, on the date of receipt by the Trust of notice from X. Xxxx Price 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 (i) by either the Board of Trustees of the Trust
or by vote of a majority of the outstanding voting shares of such Fund, and (ii)
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. The Trust may terminate this Agreement with respect to
any Fund at any time, without payment of any penalty, pursuant to a vote of the
trustees of the Trust or a vote of a majority of the outstanding shares of such
Fund, by giving written notice thereof to X. Xxxx Price and to JHLICO. Any such
termination shall be effective as of the later of the date specified in such
notice or the date such notice is delivered to X. Xxxx Price. X. Xxxx Price may
terminate this Agreement with respect to any Fund on at least sixty days' prior
written notice delivered to the Trust and to JHLICO. JHLICO may terminate this
Agreement with respect to any Fund on at least sixty days' prior written notice
delivered to the Trust and to X. Xxxx Price.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (other than as permitted in
Section 15 below) or if the Investment Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE; USE OF X. XXXX PRICE'S NAME AND LOGO.
The services of X. Xxxx Price 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 X. Xxxx Price 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, and subject to a separate agreement
among JHLICO, the Trust and X. Xxxx Price, JHLICO and the Trust shall have the
non-exclusive, non-transferable right to use X. Xxxx Price's name and logo as
set forth in Exhibit A hereto 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 X. Xxxx Price, JHLICO shall consult with X. Xxxx Price and shall
furnish to X. Xxxx Price a copy of such materials. X. Xxxx Price agrees to
cooperate with JHLICO and to review such materials promptly. JHLICO shall not
distribute such materials if X. Xxxx Price 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.
6
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Subject Fund, X. Xxxx Price and its directors, officers and employees will not
act as principal. Nothing in this Agreement 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 X. Xxxx Price or its
affiliates, if orders are allocated in a manner deemed equitable by X. Xxxx
Price 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. 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:
X. Xxxx Price: X. Xxxx Price Associates, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Fax #: (000) 000-0000
cc: Xxxxx X. Xxxxxxx, Esq.
X. Xxxx Price Associates, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax #: (000) 000-0000
7
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.
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.
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
/s/ XXXXXX X. XXXXXXX
---------------------
Xxxxxx X. Xxxxxxx By:/s/ XXXXXX X. XXX
-----------------------------
Counsel Title: Vice Chairman and President
Xxxxxx X. Xxx
ATTEST: XXXX XXXXXXX LIFE
INSURANCE COMPANY
/s/ XXXXXX X. XXXXXXX
---------------------
Xxxxxx X. Xxxxxxx By: /s/ XXXXXXX X. XXX XXXX
-------------------------
Counsel Title:Senior Vice President
Xxxxxxx X. Xxx Xxxx
ATTEST: X. XXXX PRICE ASSOCIATES, INC.
/s/ XXXXXXX X. XXX XXXX By: /s/ XXXXXXX X. XXXXXX
----------------------- -------------------------
Xxxxxxx X. Xxx Xxxx Title: Vice President
Secretary Xxxxxxx X. Xxxxxx
8
SCHEDULE I
FEES
Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------
On all amounts 60 basis points (0.60%) per annum
