INVESTMENT MANAGEMENT AGREEMENT
BY AND BETWEEN
XXXX XXXXXXX VARIABLE SERIES TRUST I
AND
XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY
MANAGEMENT AGREEMENT
AGREEMENT made as of the 14th day of March, 1996 by and between Xxxx Xxxxxxx
Variable Series Trust I, a Massachusetts business trust having a place of
business at Xxxx Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter called
the "Series") and Xxxx Xxxxxxx Mutual Life Insurance Company, a Massachusetts
corporation having its principal place of business at Xxxx Xxxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter called "JHMLICO").
WHEREAS, the Series is organized and 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, JHMLICO is engaged in the business of rendering investment
management services and is registered as an investment adviser under the
Investment Advisers Act of 1940; and
WHEREAS, the Series is authorized to issue shares of beneficial interest in
separate classes with each such class representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Series currently offers shares of beneficial interest in nine
classes designated as the Growth and Income Portfolio (formerly known as the
Stock Portfolio), Sovereign Bond Portfolio (formerly known as the Bond
Portfolio), Money Market Portfolio, Large Cap Growth Portfolio (formerly known
as the Select Stock Portfolio),
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Managed Portfolio (formerly known as Total Return Portfolio), Real Estate Equity
Portfolio, International Equities Portfolio, (formerly known as the
International Portfolio), Short-Term U.S. Government Portfolio, and Special
Opportunities Portfolio, which are subject to separate management agreements
with JHMLICO that do not apply to the Portfolios referred to below; and
WHEREAS, the Series intends to offer shares of beneficial interest in nine
additional classes (the "Initial Portfolios" under this Agreement) designated as
Small Cap Growth Portfolio, Mid Cap Growth Portfolio, Small Cap Value Portfolio,
Mid Cap Value Portfolio, International Balanced Portfolio, International
Opportunities Portfolio, Large Cap Value Portfolio, Strategic Bond Portfolio and
Equity Index Portfolio (together with other classes subsequently established by
the Series, the "Portfolios") and the Series desires to retain JHMLICO to render
investment advisory services under this Agreement, and JHMLICO is willing to do
so.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF JHMLICO AS MANAGER.
(a) Initial Portfolios. The Series hereby appoints JHMLICO and JHMLICO
hereby accepts the appointment, to act as investment adviser and manager to each
of the Initial Portfolios for the period and on the terms herein set forth, for
the compensation herein provided.
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(b) Additional Portfolios. In the event that the Series establishes one or
more classes of shares other than the Initial Portfolios with respect to which
it desires to retain JHMLICO to render investment advisory and management
services hereunder, it shall so notify JHMLICO in writing. If it is willing to
render such services JHMLICO shall notify the Series in writing, whereupon such
class of shares shall become a Portfolio hereunder.
(c) Independent Contractor. JHMLICO 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 Series.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES. JHMLICO will provide to the
Portfolios a continuing and suitable investment program consistent with the
investment policies, objectives and restrictions of the Series. JHMLICO will
manage the investment and reinvestment of the assets in the Portfolios, and
perform the other functions set forth below, subject to the overall supervision,
direction, control and review of the Board of Trustees of the Series and, as in
effect from time to time, the provisions of the Series' Declaration of Trust,
Bylaws, prospectus, statement of additional information, 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 JHMLICO in writing by the Series from time to time.
JHMLICO will, with respect to the Portfolios, and at its own expense:
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(a) advise the Series in connection with policy decisions to be made by its
Board of Trustees or any committee thereof and, upon request, furnish the Series
with research, economic and statistical data in connection with the Series'
investments and investment policies;
(b) provide administration of the day to day operations of the Series;
(c) submit such reports relating to the valuation of the Series' securities
as its Board of Trustees may reasonably request;
(d) assist the Series in any negotiations relating to its investments with
issuers, investment banking firms, securities brokers or dealers and other
institutions or investors and place orders for purchases and sales of portfolio
investments;
(e) provide office space and office equipment and supplies (including
telephone and other utility services), accounting and data processing equipment
and necessary executive, legal, accounting, clerical and secretarial personnel
for the administration of the affairs of the Series;
(f) maintain and preserve the records required by the 1940 Act to be
maintained and preserved by the Series, to the extent not maintained by the
Series' custodian, transfer agent or any Sub-Investment Manager;
(g) oversee, and use its best efforts to assure the performance of all the
activities and services of any custodian, transfer agent other similar agent
retained by the Series;
(h) value the assets and liabilities of the Series, compute the daily
income, net asset value and yield of each Portfolio;
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(i) pay the charges and expenses of independent counsel and any other
independent agents routinely retained by the Series; and
(j) supervise the activities of each Sub-Investment Manager. The Series
will provide timely information to JHMLICO regarding such matters as purchases
and redemptions of shares in each Portfolio and the cash requirements of, and
cash available for investment in, each Portfolio, and all other information as
may be reasonably necessary or appropriate in order for JHMLICO to perform its
responsibilities hereunder.
3. ALLOCATION OF EXPENSES.
Except as set forth below, each party to this Agreement shall bear the
costs and expenses of performing its obligations hereunder.
(a) The Series agrees to assume the Portfolios' share of the expense of:
(i) brokerage commissions for transactions in the portfolio
investments of the Series and similar fees and charges for the acquisition,
disposition, lending or borrowing of such portfolio investments;
(ii) the advisory fees called for in this Agreement;
(iii) all taxes, including issuance and transfer taxes, and reserves
for taxes payable by the Series to federal, state or other governmental
agencies;
(iv) interest payable on the Series' borrowings; and
(v) extraordinary or non-recurring expenses, such as legal claims and
liabilities and litigation costs and indemnification payments by the Series in
connection therewith;
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(vi) the charges and expenses of any custodian or depository appointed
by the Series for the safekeeping of its cash, portfolio securities and other
property;
(vii) the charges and expenses of its independent auditors;
(viii) the cost of the fidelity bond required by 1940 Act Rule 17g-1;
(ix) the compensation and travel expenses of trustees who are not
"interested persons" within the meaning of the 1940 Act; and
(x) the expenses in printing and distributing to persons entitled to
give voting instructions, but not of preparing, the forms of voting instruction
information statements and annual and semi-annual reports and the cost of
tabulating votes.
(b) To the extent not assumed by the Series pursuant to (a) above, JHMLICO
agrees to assume the Portfolios' share of the expense of:
(i) the charges and expenses of any registrar stock transfer or
dividend disbursing agent;
(ii) the cost of any stock certificates representing shares of the
Series:
(iii) the fees and expenses involved in registering and maintaining
registrations of the Series and of its shares with the Securities and
Exchange Commission and various states and other jurisdictions;
(iv) all expenses of shareholders' and trustees' meetings, including
voting instructions solicitation fees and expenses, and of preparing,
printing and distributing communications (including Prospectuses,
statements of additional information, and any advertising or sales
literature) to prospective and existing
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policyowners and contractowners, and costs of any other activity
primarily intended to result in the sale of the Series' shares;
(v) compensation and travel expense of directors, officers and
employees of the Series in their capacities as such, excluding trustees who
are "interested persons" within the meaning of the 1940 Act;
(vi) the expense of furnishing each shareholder statements of account;
(vii) membership or association dues for the Investment Company
Institute or similar organizations;
(viii) postage;
(ix) the cost of and any errors and omissions insurance or other
liability insurance covering the Series and/or its officers, directors and
employees;
(x) organizational expenses of the Series; and
(xi) the expenses and costs associated with the preparation and filing
of all tax returns.
4. SUB-INVESTMENT MANAGERS.
Notwithstanding any other provision hereof, JHMLICO, with the approval of
the Series, may contract with one or more Sub-Investment Managers to perform any
of the investment management services required of JHMLICO under this Agreement;
provided, however, that the compensation of any such Sub-Investment Manager will
be the sole responsibility of JHMLICO and the duties and responsibilities of any
such Sub-Investment Manager shall be as set forth in an agreement between the
Series, JHMLICO and such Sub-Investment Manager. It is anticipated that JHMLICO
and the Series will
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agree to contract initially with X. Xxxx Price Associates, Inc. to be
Sub-Investment Manager for the Large Cap Growth Portfolio, with Xxxx
Xxxxx-Xxxxxxx International, Inc. to be Sub-Investment Manager for the
International Opportunities Portfolio, with Invesco Management and Research,
Inc. to be Sub-Investment Manager for the Small Cap Value Portfolio, with
Xxxxxxxxx & Xxxxxx X.X. to be Sub-Investment Manager for the Mid Cap Value
Portfolio, with Janus Capital Corporation to be Sub-Investment Manager for the
Mid Cap Growth Portfolio, with X.X. Xxxxxx Investment Management Inc. to be
Sub-Investment Manager for the Strategic Bond Portfolio, with Xxxxxxx Partners,
Inc. to be Sub-Investment Manager for the International Balanced Portfolio, with
Xxxx Xxxxxxx Advisers, Inc. to be Sub-Investment Manager for the Small Cap
Growth Portfolio, and with Independence Investment Associates, Inc to be
Sub-Investment Manager for the Equity Index Portfolio.
JHMLICO shall exercise reasonable care in selecting, for approval by the
Series, any Sub-Investment Manager and in monitoring and supervising the
performance of any Sub-Investment Manager, but except as provided in Section 14
hereof, shall not otherwise be legally responsible or liable for any action of
any Sub-Investment Manager. It shall be a particular responsibility of JHMLICO
to evaluate the investment performance of Sub-Investment Managers and that of
potential Sub-Investment Managers and to supervise and monitor the practices of
Sub-Investment Managers in selecting brokers and dealers to effect portfolio
transactions, including the negotiation of commissions and the evaluation of
services provided by such brokers and dealers.
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5. INVESTMENT ADVISORY FEE AND EXPENSE LIMITATION.
For all of the services rendered, facilities furnished and expenses paid or
assumed as herein provided, the Series shall pay to JHMLICO a fee, which fee
shall, with respect to each Portfolio, be at an effective rate of:
(a) For the Small Cap Growth Portfolio:
(i) 0.75% of the Current Net Assets of such Portfolio on an annual
basis;
(b) For the Mid Cap Growth Portfolio:
(i) 0.85% on an annual basis of the first $100,000,000 of the
Current Net Assets of such Portfolio; and
(ii) 0.80% on an annual basis of that portion of the Current Net
Assets in excess of $100,000,000 of such Portfolio.
(c) For the Small Cap Value Portfolio:
(i) 0.80% on an annual basis of the first $100,000,000 of the
Current Net Assets of such Portfolio; and
(ii) 0.75% on an annual basis of that portion of the Current Net
Assets in excess of $100,000,000 and not over $200,000,000 of such
Portfolio; and
(iii) 0.65% on an annual basis for that portion of the Current Net
Assets in excess of $200,000,000 of such Portfolio.
(d) For the Mid Cap Value Portfolio:
(i) 0.80% on an annual basis of the first $250,000,000 of the
Current Net Assets of such Portfolio; and
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(ii) 0.775% on an annual basis of that portion of the Current Net
Assets in excess of $250,000,000 and not over $500,000,000 of such
Portfolio; and
(iii) 0.750% on an annual basis of that portion of the Current Net
Assets in excess of $500,000,000 and not over $750,000,000 of such
Portfolio; and
(iv) 0.725% on an annual basis for that portion of the Current Net
Assets in excess of $750,000,000 of such Portfolio.
(e) For the International Balanced Portfolio:
(i) 0.85% on an annual basis of the first $100,000,000 of the
Current Net Assets of such Portfolio; and
(ii) 0.70% on an annual basis of that portion of the Current Net
Assets in excess of $100,000,000 of such Portfolio.
(f) For the International Opportunities Portfolio:
(i) 1.00% on an annual basis for the first $20,000,000 of the
Current Net Assets of such Portfolio; and
(ii) 0.85% on an annual basis of that portion of the Current Net
Assets in excess of $20,000,000 and not over $50,000,000 of such Portfolio;
and
(iii) 0.75% on an annual basis for that portion of the Current Net
Assets in excess of $50,000,000 of such Portfolio.
(g) For the Large Cap Value Portfolio:
(i) 0.75% of the Current Net Assets of such Portfolio on an annual
basis.
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(h) For the Strategic Bond Portfolio:
(i) 0.75% on an annual basis of the first $25,000,000 of the Current
Net Assets of such Portfolio; and
(ii) 0.65% on an annual basis of that portion of the Current Net
Assets in excess of $25,000,000 and not over $75,000,000 of such Portfolio;
and
(iii) 0.55% on an annual basis for that portion of the Current Net
Assets in excess of $75,000,000 and not over $150,000,000; and
(iv) 0.50% on an annual basis for that portion of the Current Net
Assets in excess of $150,000,000 of such Portfolio.
(i) For the Equity Index Portfolio:
(i) 0.25% of the Current Net Assets of such Portfolio on an annual
basis.
The fee shall be accrued daily and payable monthly as soon as possible
after the last day of each calendar month.
In the case of termination of this Agreement with respect to any Portfolio
during any calendar month, the amount of the fee accrued to the date of
termination shall be paid.
"Current Net Assets" of any Portfolio for purposes of computing the amount
of advisory fee accrued for any day shall mean that Portfolio's net assets for
the most recent preceding day for which that Portfolio's net assets were
computed.
For any fiscal year in which the normal operating costs and expenses of any
Portfolio of the Series, exclusive of the investment advisory fee, interest,
brokerage
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commissions, taxes and extraordinary expenses outside the control of JHMLICO
exceed 0.25% of that Portfolio's average daily net assets, JHMLICO will
reimburse that Portfolio promptly after the end of the fiscal year in an amount
equal to such excess. In the event of termination of this Agreement as of a date
other than the last day of Series' fiscal year, JHMLICO shall pay any Portfolio
of Series the amount by which such expenses incurred by that Portfolio prior to
the date of termination exceeds a pro rata portion of the expense limitation.
6. PORTFOLIO TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Portfolios, JHMLICO is authorized to select the brokers or dealers that will
execute purchase and sale transactions for the Series 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 the Series.
JHMLICO 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 Series and its shareholders, JHMLICO shall
have the right, subject to the control of the Board of Trustees, and to the
extent authorized by the Securities and Exchange Act of 1934, to follow a policy
of selecting brokers who furnish brokerage and research services to the Series
or to JHMLICO, who charge a higher commission rate to the Series than may result
when allocating brokerage solely on the basis of seeking the most favorable
price and execution. JHMLICO shall
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determine in good faith that such higher cost was reasonable in relation to the
value of the brokerage and research services provided.
The fees payable to JHMLICO by the Series hereunder shall be reduced by any
tender solicitation fees or similar payments received by JHMLICO, or any
affiliated person of JHMICO, in connection with the tender of investments of any
Portfolio (less any direct expenses incurred by JHMLICO, or any affiliated
person of JHMLICO, in connection with obtaining such fees or payments). JHMLICO
shall use its best efforts to recapture all available tender offer solicitation
fees and similar payments in connection with tenders of the securities of any
Portfolio, provided, however, that neither JHMLICO nor any affiliated person
shall be required to register as a broker-dealer for this purpose. JHMLICO shall
advise the Board of Trustees of any fees or payments of whatever type which it
may be possible for JHMLICO or an affiliate of JHMLICO to receive in connection
with the purchase or sale of investment securities for any Portfolio.
7. INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Series shall own and control all records maintained hereunder by
JHMLICO on the Series' behalf and, in the event of termination of this Agreement
with respect to any Portfolio for any reason, all records relating to that
Portfolio shall promptly be returned to the Series, free from any claim or
retention of rights by JHMLICO. JHMLICO also agrees, upon request of the Series,
promptly to surrender such books and records or, at JHMLICO's expense, copies
thereof to the Series or make such books and records available for inspection by
representatives of regulatory authorities or other persons
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reasonably designated by the Series. JHMLICO 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. JHMLICO shall
supply all information requested by any insurance regulatory authorities to
determine whether all insurance laws and regulations are being complied with.
JHMLICO 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 Series has authorized such disclosure, or
if such disclosure is expressly required by applicable Federal or state
regulatory authorities.
JHMLICO shall supply the Board of Trustees and officers of the Series with
all statistical information regarding investments of the Portfolios which is
reasonably required by them and reasonably available to JHMLICO.
8. LIABILITY.
No provision of this Agreement shall be deemed to protect JHMLICO against
any liability to the Series 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. Nor shall any provision hereof be deemed to protect
any Trustee or officer of the Series against any such liability to which he
might otherwise be subject by reason of any willful
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misfeasance, bad faith or negligence in the performance of his duties or the
reckless disregard of his obligations and duties.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to each
Initial Portfolio on the date hereof and, with respect to any additional
Portfolio, on the date of receipt by the Series of notice from JHMLICO in
accordance with Paragraph 1(b) hereof that JHMLICO is willing to serve with
respect to such Portfolio. 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 Portfolios and, with respect to each additional Portfolio
until two years following the date on which such Portfolio becomes a Portfolio
hereunder, and shall continue in full force and effect thereafter with respect
to each Portfolio so long as such continuance with respect to any such Portfolio
is approved at least annually (a) by either the Board of Trustees of the Series
or by vote of a majority of the outstanding voting shares of such Portfolio, and
(b) in either event by the vote of a majority of the Board of Trustees of the
Series 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 Portfolio shall be effective to continue this
Agreement with respect to any such Portfolio notwithstanding (A) that this
Agreement has not been approved by the
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holders of a majority of the outstanding shares of any other Portfolio affected
hereby, and (B) that this Agreement has not been approved by the vote of a
majority of the outstanding shares of the Series, 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
Portfolio at any time, without payment of any penalty, by vote of the Board of
Trustees of the Series, by vote of a majority of the outstanding shares of such
Portfolio, or by JHMLICO on at least sixty (60) days written notice to the
Series.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment.
10. NAME OF XXXX XXXXXXX.
It is understood that the name "Xxxx Xxxxxxx", or any name derived from or
similar to that name, and any logo associated with that name, is the valuable
property of JHMLICO, and that the Series has the right to include "Xxxx Xxxxxxx"
as a part of its name only so long as this Agreement shall continue. Upon
termination of this Agreement the Series shall forthwith cease to use the Xxxx
Xxxxxxx name and logos and shall submit to its shareholders, if necessary, an
amendment to its Declaration of Trust to change the Series' name.
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11. SERVICES NOT EXCLUSIVE.
The services of JHMLICO to the Series with respect to the Portfolios are
not to be deemed exclusive and JHMLICO 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 JHMLICO 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.
12. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Portfolios, JHMLICO 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 Series with those for other registered investment
companies managed by JHMLICO or its affiliates, if orders are allocated in a
manner deemed equitable by JHMLICO among the accounts and at a price
approximately averaged.
13. 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 Portfolio until approved
specifically by (a) the Board of Trustees of the Series, or by vote of a
majority of the outstanding shares of that
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Portfolio, and (b) by vote of a majority of those Trustees of the Series 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.
14. INDEMNIFICATION.
Except to the extent that a member of the Board of Trustees would thereby
be protected against any liability to the Series or its shareholders to which he
or she would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of the member's duties, or by reason of
the member's reckless disregard either of the member's obligations and duties
under this Agreement or of the duties involved in the conduct of the member's
office, JHMLICO hereby indemnifies each person who is or has been a member of
the Board of Trustees and will hold each harmless against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses)
to which the member may become subject under the 1940 Act or any other statute
or at common law or otherwise, by reason of his or her failure or alleged
failure to take any action relating to the investment or reinvestment of assets
in the Portfolios, regardless of whether a Sub-Investment Manager has been
retained in connection with the Portfolio concerned, including any failure or
alleged failure to seek or retain investment advice or management in addition to
or in place of that provided by JHMLICO and its Sub-Investment Managers, if any.
With respect to any losses, claims, damages, liabilities or litigation arising
out of events occurring prior to the termination of this Agreement, this
indemnity shall survive said termination.
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15. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Series hereunder shall
not be binding upon any of the Trustees, shareholders, officers, agents or
employees of Series personally, but bind only the trust property of the Series,
as provided in the Series' Declaration of Trust.
16. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first set forth above.
XXXX XXXXXXX VARIABLE SERIES TRUST I
ATTEST:
/s/ Xxxxxx X. XxXxxx By: /s/ Xxxxx X. Xxxx
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Associate Counsel Title: Chairman 3-13-96
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XXXX XXXXXXX MUTUAL LIFE INSURANCE COMPANY
ATTEST:
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
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Vice President Title: Vice President 3-14-96
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