(Active Bond II Fund)
SUB-INVESTMENT MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
XXXX XXXXXXX LIFE INSURANCE COMPANY
AND
XXXX XXXXXXX ADVISERS, INC.
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of May 1, 2001 by and among Xxxx Xxxxxxx Variable Series
Trust I, a Massachusetts business trust (the "Trust"), Xxxx Xxxxxxx Life
Insurance Company, a Massachusetts corporation ("JHLICO"), and Xxxx Xxxxxxx
Advisers, Inc., a Delaware corporation ("JH Advisers");
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 JH 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 series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust offers shares in several series, one of which is
designated as the Active Bond II Fund, (together with all other series
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
June 1, 2000 (the "Investment Management Agreement"), pursuant to which it may
contract with JH 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. JH Advisers is hereby appointed and JH Advisers hereby
accepts the appointment to act as investment adviser and manager to the Active
Bond II (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 JH Advisers to render investment advisory services hereunder
for any other Fund, they shall so notify JH Advisers in writing. If it is
willing to render such services, JH Advisers shall notify the Trust in writing,
whereupon such Fund shall become a Subject Fund hereunder.
(c) Incumbency Certificates. JH Advisers shall furnish to JHLICO,
immediately upon execution of this Agreement, a certificate of a senior officer
of JH Advisers setting forth (by name and title, and including specimen
signatures) those officers of JH Advisers who are authorized to make investment
decisions for the Subject Fund pursuant to the provisions of this Agreement. JH
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 JH Advisers so named.
(d) Independent Contractor. JH 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.
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(e) JH Advisers' Representations. JH 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 JH Advisers, or of any change in the identity of the personnel
who manage the Subject Fund(s), (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 JH Advisers' 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.
JH Advisers will provide for each 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, JHLICO or the Trust may provide JH Advisers with additional or amended
investment policies, guidelines and restrictions. JH 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 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 JH Advisers in writing by JHLICO or the
Trust from time to time). By its signature below, JH 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.
JH 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 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 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;
(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;
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(f) at the close of business each day, provide JHLICO and the custodian
with copies of trade tickets 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
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) 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 JH Advisers'
proxy voting policy as most recently supplied to JHLICO.
On its own initiative, JH 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. JH Advisers will also make its personnel available in Boston or other
reasonable locations as often as quarterly to discuss the Subject Fund and JH
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 JH 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 JH Advisers with copies of monthly accounting
statements for the Subject Fund, and such other information (including, without
limitation, reports concerning the classification of portfolio securities of the
Subject Fund 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 JH 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 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
(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.
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4. SUB-ADVISORY FEES.
For all of the services rendered with respect to the Subject Fund as
herein provided, JHLICO shall pay to JH 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 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 that Subject Fund's net assets were computed.
5. FUND TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Subject Fund, JH 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.
JH Advisers shall maintain records 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, JH Advisers
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 JH Advisers, 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. JH Advisers shall determine in good
faith that such higher cost was reasonable in relation to the value of the
brokerage and research services provided.
JH Advisers 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 JH
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 Fund shall be promptly returned to the Trust, free from any claim or
retention of rights by JH Advisers, provided that (subject to the last paragraph
of this Section 6) JH Advisers may retain copies of such records. JH 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. JH Advisers
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 requested by any insurance
regulatory authorities to determine whether all insurance laws and regulations
are being complied with. JH 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 JH
Advisers.
JH 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
(after reasonable notice to the Trust) if such disclosure is expressly requested
by applicable federal or state regulatory authorities.
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7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect JH 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 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 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, JH 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.
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 JH 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 (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. This Agreement may be terminated with respect to any
Subject Fund at any time, without payment of any penalty, by vote of the
trustees of the Trust or by vote of a majority of the outstanding shares of such
Fund, by JH Advisers on at least sixty days' written notice to the Trust and
JHLICO, or by JHLICO on at least sixty days' written notice to the Trust and JH
Advisers.
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(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (other than as permitted
pursuant to Section 15 below) or if the Investment Management Agreement is
terminated.
9. SERVICES NOT EXCLUSIVE; USE OF JH ADVISERS' NAME AND LOGO.
(a) The services of JH 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 JH 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 JH 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 JH Advisers,
JHLICO shall consult with JH Advisers and shall furnish to JH Advisers a copy of
such materials. JH Advisers agrees to cooperate with JHLICO and to review such
materials promptly. JHLICO shall not distribute such materials if JH 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.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Subject Fund, JH 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
portfolio securities of the Subject Fund with those for other registered
investment companies or other accounts managed by JH Advisers or its affiliates,
if orders are allocated in a manner deemed equitable by JH 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 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.
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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:
JH ADVISERS: Xxxx Xxxxxxx Advisers, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
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 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.
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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 /s/ XXXXXX X. XXX
-------------------- -----------------
Xxxxxx X. Xxxxxxx By: Xxxxxx X. Xxx
--------------------- --------------------------------
Counsel Title: Vice Chairman and President
--------------------- ---------------------------
ATTEST: XXXX XXXXXXX LIFE INSURANCE
COMPANY
/s/XXXXXX X. XXXXXXX /s/ XXXXXXX X. XXX XXXX
-------------------- -----------------------
Xxxxxx X. Xxxxxxx By: Xxxxxxx X. Xxx Xxxx
--------------------- ------------------------------
Counsel Title: Senior Vice President
--------------------- ---------------------
ATTEST: XXXX XXXXXXX ADVISERS, INC.
/s/ XXXXXXX XXXXXXXXX
---------------------
Xxxxxxx Xxxxxxxxx By: /s/ XXXXX X. XXXXXXX
--------------------- ------------------------
Assistant Secretary Xxxxx X. Xxxxxxx
--------------------- ------------------------
Executive Vice President
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SCHEDULE I
FEES
----
Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------
On the first $100 million 25.0 basis points (0.25%) per annum
On the next $150 million 20.0 basis points (0.20%) per annum
On the next $250 million 16.0 basis points (0.16%) per annum
On the next $500 million 12.5 basis points (0.125%) per annum
On amounts over $1 billion 10.0 basis points (0.10%) per annum
