Exhibit 23(d)37(a)
(Bond Index Fund)
SUB-MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
XXXXXXXX MELLON ASSET MANAGEMENT COMPANY LLC
AND
XXXX XXXXXXX LIFE INSURANCE COMPANY
SUB-MANAGEMENT AGREEMENT
AGREEMENT made as of the first day of August, 2003 by and among Xxxx
Xxxxxxx Variable Series Trust I, a Massachusetts business trust (the "Trust"),
Xxxxxxxx Mellon Asset Management Company LLC, a Delaware limited liability
company ("Advisers"), 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 Advisers are each 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 Bond Index 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
April 14, 1998, and as amended (the "Investment Management Agreement"), pursuant
to which it may contract with Advisers 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. Advisers is hereby appointed and Advisers hereby accepts
the appointment to act as investment adviser and manager to the Bond Index 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 Advisers to render investment advisory services hereunder for
any other Fund, they shall so notify Advisers in writing. If it is willing to
render such services, Advisers shall notify the Trust in writing, whereupon such
Fund shall become a Subject Fund hereunder.
(c) Incumbency Certificates. Advisers shall furnish to JHLICO, immediately
upon execution of this Agreement, a certificate of a senior officer of Advisers
setting forth (by name and title, and including specimen signatures) those
officers of Advisers who are authorized to make investment decisions for the
Subject Fund pursuant to the provisions of this Agreement. Advisers 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 Advisers so named.
(d) Independent Contractor. Advisers 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) Advisers' Representations. Advisers represents, warrants and agrees
(i) that it is registered as an investment adviser under the Investment Advisers
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 Advisers, 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 Section 17(j)
and Rule 17j-1 under the 1940 Act, and has and will provide true and complete
copies of each such code to the Trust and to JHLICO, and has and will adopt
procedures designed to prevent violations of any such codes, (v) that it has
furnished the Trust and JHLICO each with a copy of Advisers' Form ADV, as most
recently filed with the SEC, and will promptly furnish copies of each future
amendment thereto, and (vii) that it presently maintains, and shall continue to
maintain as long as this Agreement is in effect, Directors & Officers, Errors &
Omissions and fidelity bond insurance coverages to provide coverage to JHLICO,
the Trust and the Subject Fund for any claims or losses arising from, or in
connection with, the activities of Advisers and its officers and employees with
respect to the Subject Fund.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
Advisers 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 and
communicated to Advisers in writing. From time to time, JHLICO or the Trust
shall promptly provide Advisers with any additional or amended investment
policies, guidelines and restrictions in writing. Advisers, 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 and as communicated in
writing to Advisers 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 as may
be delivered to Advisers in writing by JHLICO or the Trust from time to time).
By its signature below, Advisers 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.
Advisers 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 Subject 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;
(c) place orders for purchases and sales of Fund 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;
(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) at the close of business each day, provide JHLICO and the custodian
with copies of trade tickets, electronic access to trade records, or other means
to verify trade data received by the custodian from third parties for each
transaction effected for the Subject Fund, and promptly forward to the custodian
copies of all brokerage or dealer confirmations;
(g) as soon as practicable following the end of each calendar month,
provide JHLICO with written statements showing all transactions effected for the
Subject Fund during the month, a summary listing all investments held in such
Subject Fund as of the last day of the month, and such other information as
JHLICO may reasonably request in connection with the accounting services that
JHLICO provides for the Subject Fund; and
(h) although it is not expected that the management of the Subject Fund
will require the review and voting of proxies, in the event that a proxy vote is
required with respect to an investment of the Subject Fund and JHLICO has
provided in a timely manner all necessary voting materials, Advisers will vote
all proxies with respect to investments of the Subject Fund in accordance with
Advisers' proxy voting policy as most recently provided to JHLICO, unless JHLICO
has provided specific written instructions, upon reasonable notice to Advisers,
that it or the Trust is reserving voting discretion.
On its own initiative, Advisers 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. Advisers will also make its personnel available in Boston or other
reasonable locations as often as quarterly to discuss the Subject Fund and
Advisers' management thereof, to educate JHLICO sales personnel with respect
thereto, and for such other purposes as the Trust or JHLICO may reasonably
request.
The Trust and JHLICO will provide timely information to Advisers 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 Advisers with copies of monthly accounting statements for
the Subject Fund, and such other 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 Advisers to
perform its responsibilities hereunder.
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 Fund investments of the
Trust and similar fees and charges for the acquisition, disposition, lending or
borrowing of such Fund 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
(d) interest payable on the Trust' 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-MANAGEMENT FEES.
For all of the services rendered with respect to the Subject Fund as herein
provided, JHLICO shall pay to Advisers 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 sub-management 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. PORTFOLIO TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Subject Fund, Advisers is authorized to select the brokers or dealers that will
execute purchase and sale transactions for the Fund and to use its best 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. Advisers
shall maintain records adequate to demonstrate compliance with this requirement.
Consistent with obtaining best execution, transactions for the Subject Fund may
be directed to brokers in return for brokerage and research services furnished
by them to Advisers; provided that in so doing Advisers complies with JHLICO's
most recently provided "Soft Dollar Policy." Such research generally will be
used to service all of Advisers' clients, but brokerage commissions paid by the
Subject Fund may be used to pay for research that is not used in managing the
Subject Fund. Advisers may, in its discretion, cause the Subject Fund to pay
brokers a commission greater than another qualified broker might charge to
effect the same transaction where Advisers determines in good faith that the
commission is reasonable in relation to the value of the brokerage and research
services received. With respect to new issues of securities underwritten by
dealers selling as principal, Advisers may receive research through the use of
"new issue" research credits. On occasions when Advisers deems the purchase or
sale of a security to be in the best interest of the Subject Fund as well as
other clients, Advisers, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be sold or purchased for the
Subject Fund and such other clients in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the prices and
amounts of the securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by Advisers in the manner it considers to be
the most equitable and consistent with its fiduciary obligations to the Subject
Fund and to such clients.
Advisers will not receive any tender offer solicitation fees or similar
payments in connection with the tender of investments of any Subject Fund.
6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Trust shall own and control all records maintained hereunder by
Advisers on the Trust's behalf and, in the event of termination of this
Agreement with respect to any Subject Fund for any reason, all records relating
to that Subject Fund shall be promptly returned to the Trust, free from any
claim or retention of rights by Advisers, provided that (subject to the last
paragraph of this Section 6) Advisers may retain copies of such records.
Advisers 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.
Advisers further agrees to maintain, prepare and preserve such books and records
with respect to the Subject Fund's transactions 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 requested by any insurance regulatory authorities to
determine whether all insurance laws and regulations are being complied with.
Advisers 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 Advisers.
Advisers 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 Advisers 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 their respective duties or the reckless
disregard of their respective obligations and duties under either this Agreement
or under the Investment Management Agreement, as the case may be. 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 his duties
or the reckless disregard of his obligations and duties. Adviser 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 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 at all
times in the best interests of the Trust; 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, Advisers 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.
All directions or instructions by or on behalf of the Trust to Advisers
shall be in writing signed by a duly authorized agent of the Trust. Advisers
shall be duly protected in acting upon any instrument, certificate or paper
believed by it to be genuine and to be signed or presented by the proper person
or persons, and Advisers shall be under no duty to make any investigation or
inquiry as to any statement contained in any such writing but may accept the
same as conclusive evidence of the truth and accuracy of the statements therein
contained.
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 Advisers 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 Subject 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 by a vote of a majority of the
outstanding shares of such Subject Fund, which termination shall be effective
immediately upon delivery of notice thereof to Advisers and JHMLICO. This
Agreement
may be terminated by Advisers on at least ninety days' prior written notice to
the Trust and JHLICO, and may be terminated by JHLICO on at least ninety days'
prior written notice to the Trust and Advisers.
(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; USE OF ADVISERS' NAME AND LOGO.
(a) The services of Advisers 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 Advisers and of its subsidiaries and
affiliates may continue to engage in providing fund management services and
advice to other investment companies, whether or not registered, and other
investment advisory clients.
(b) During the term of this Agreement, JHLICO and the Trust shall have the
non-exclusive and non-transferable right to use Advisers' name and logo 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 Advisers, JHLICO
shall consult with Advisers and shall furnish to Advisers a copy of such
materials. Advisers agrees to cooperate with JHLICO and to review such materials
promptly. JHLICO shall not distribute such materials if Advisers 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.
(c) Advisers will not consult with any other sub-manager to the Subject
Fund or to any other Fund of the Trust concerning transactions of the Subject
Fund in securities or other assets, except as such consultations may be
reasonably necessary in order to ensure compliance with paragraphs (a) and (b)
of Rule 12d3-1 under the 1940 Act.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of Fund securities of the Subject
Fund, Advisers and its directors, officers and employees will not act as
principal or agent or receive any commission. Nothing in this Agreement,
however, shall preclude the combination of orders for the sale or purchase of
Fund securities of the Subject Fund with those for other registered investment
companies managed by Advisers or its affiliates, if orders are allocated in a
manner deemed equitable by Advisers 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 Subject 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 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. 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:
ADVISERS: Xxxxxxxx Xxxxxx Asset Management Company LLC
Xxx Xxxxxx Xxxxx
Xxxxx 000-0000
Xxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxxx #: 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 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/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxx Xxxx
---------------------------------- -------------------------------------
Title: President and CEO
ATTEST: XXXX XXXXXXX LIFE INSURANCE COMPANY
/s/Xxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------- -------------------------------------
Title: Senior Vice President &
Chief Investment Strategist
ATTEST: XXXXXXXX MELLON ASSET MANAGEMNT
COMPANY LLC
/s/Xxxxxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Title: Chief Operating Officer
SCHEDULE I
FEES
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Current Net Assets Under Management Sub-Management Fee
----------------------------------- ----------------------------------------
On the first $100,000,000 7 basis points (0.07%) per annum
On the next $150,000,000 6 basis points (0.06%) per annum
On the next $250,000,000 3 basis points (0.03%) per annum
On amounts over $500,000,000 1 basis point (0.01%) per annum
