EXHIBIT 99
INVESTMENT SUB-ADVISORY AGREEMENT
X.X. Xxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Western Reserve Life Assurance Co. of Ohio (the "Adviser")
hereby agrees with X.X. Xxxxxx Investment Management Inc., a Delaware
corporation (the "Sub-Adviser") as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT. The Adviser entered
into an Investment Advisory Agreement (referred to herein as the
"Advisory Agreement"), dated February 26, 1991, with WRL Series Fund,
Inc., a Maryland corporation (the "Fund"), under which the Adviser
agreed, among other things, to act as investment adviser to the Fund.
The Adviser desires to employ the capital of the Money Market Portfolio
("Portfolio") by investing and reinvesting in investments of the kind
and in accordance with the limitations specified in the Fund's Articles
of Incorporation, as amended to date (the "Charter Document"), and in
the prospectus (the "Prospectus") and the statement of additional
information (the "Statement") for the Portfolio filed with the
Securities and Exchange Commission as part of the Fund's Registration
Statement on Form N-1A, as amended or supplemented from time to time,
and in such manner and to such extent as from time to time may be
approved by the Fund's Board of Directors. Copies of the Prospectus,
the Statement and the Charter Document, each as currently in effect,
have been delivered to the Sub-Adviser. The Adviser agrees, on an
ongoing basis, to provide to the Sub-Adviser as promptly as practicable
copies of all amendments and supplements to the Prospectus and the
Statement and amendments to the Charter Document. The Advisory
Agreement provides that the Adviser may engage a Sub-Adviser to perform
the services contemplated hereunder. The Adviser desires to engage and
hereby appoints the Sub-Adviser to act as investment sub-adviser to the
Portfolio. The Sub-Adviser accepts the appointment and agrees to
furnish the services described herein for the compensation set forth
below.
2. SERVICES AS INVESTMENT SUB-ADVISER, GUIDELINES AND ADVICE.
Subject to the supervision of the Adviser and the Board of Directors of
the Fund, the Sub-
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Adviser will (a) manage the Portfolio's assets in accordance with the
Portfolio's investment objective(s) and policies stated in the
Prospectus, the Statement and the Charter Document, but subject to the
Guidelines (as such term is defined below); (b) make investment
decisions for the Portfolio; (c) place purchase and sale orders for
portfolio transactions for the Portfolio; and (d) employ professional
portfolio managers and securities analysts to provide research services
to the Portfolio; (e) furnish statistical and analytical information
and reports as may reasonably be required by the Adviser from time to
time, and, in providing these services, conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of
the Portfolio's assets; (f) cause its officers to attend meetings of
the Fund's Board of Directors and furnish oral or written reports, as
the Adviser may reasonably require, in order to keep the Adviser and
its officers and the Directors of the Fund and appropriate officers of
the Fund fully informed as to the condition of the investment
securities of the Portfolio, the investment recommendations of the
Sub-Adviser, and the investment considerations which have given rise to
those recommendations.
The Adviser agrees on an on-going basis to provide or cause to
be provided to the Sub-Adviser guidelines, to be revised as provided
below (the "Guidelines"), setting forth limitations, by dollar amount
or percentage of net assets, on the types of securities in which the
Portfolio is permitted to invest or investment activities in which the
Portfolio is permitted to engage. Among other matters, the Guidelines
shall set forth clearly the limitations imposed upon the Portfolio as a
result of relevant diversification requirements under state and federal
law pertaining to insurance products, including, without limitation,
the provisions of Section 817(h) of the Internal Revenue Code of 1986,
as amended (the "Code"). The Guidelines shall remain in effect until
12:00 p.m. on the third business day following actual receipt by the
Sub-Adviser of a written notice, denominated clearly as such, setting
forth revised Guidelines. The Adviser agrees to cause to be delivered
to a person designated in writing for such purpose by the Sub-Adviser
each day, by _________p.m., New York time, a written report dated the
date of its delivery (the "Report") with respect to the Porftolio's
compliance for its current fiscal year with the short-three test set
forth in Section 851(b) (3) of the Code (the "short-three test"). The
Report shall include in chart form the Portfolio's gross income (within
the meaning of Section 851 of the Code) from the beginning of the
current fiscal year to the date of the Report and its cumulative income
and gains described in Section 851(b) (3) of the Code for such period.
If the Report is not timely delivered, the Sub-Adviser shall be
permitted to rely on the most recent Report delivered to it. The
Adviser agrees that the Sub-Adviser may rely on the Guidelines and the
Report without independent verification of their accuracy.
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3. BROKERAGE. In selecting brokers or dealers to execute
transactions on behalf of the Fund, the Sub-Adviser will seek the best
overall terms available. In assessing the best overall terms available
for any transaction, the Sub-Adviser will consider factors it deems
relevant, including, without limitation, the breadth of the market in
the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of
the commission, if any, for the specific transaction and on a
continuing basis. In selecting brokers or dealers to execute a
particular transaction, and in evaluating the best overall terms
available, the Sub-Adviser is authorized to consider the brokerage and
research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided to the Portfolio
and/or other accounts over which the Sub-Adviser or its affiliates
exercise investment discretion.
4. STANDARD OF CARE. The Sub-Adviser shall exercise its best
judgment in rendering the services described in paragraphs 2 and 3
above. The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Portfolio in connection
with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard by
it of its obligations and duties under this Agreement (each such act or
omission shall be referred to as "Disqualifying Conduct"). The
Sub-Adviser shall not be deemed to have engaged in Disqualifying
Conduct if it complies with the Guidelines and acts in reliance on the
Report, and the Sub-Adviser's failure to act in accordance therewith
shall not constitute evidence that it engaged in Disqualifying Conduct.
5. COMPENSATION. In consideration of the services rendered
pursuant to this Agreement, the Adviser will pay the Sub-Adviser on the
first business day of each month a fee for the previous month at the
annual rate of .15% of the Portfolio's average daily net assets. The
fee for the period from the [date the initial public sale of the Fund's
shares commences] to the end of the month during which such sale shall
have been commenced shall be prorated according to the proportion that
such period bears to the full monthly period. Upon any termination of
this Agreement before the end of a month, the fee for such part of that
month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees
payable to the Sub-Adviser, the value of the Portfolio's net assets
shall be computed at the times and in the manner specified in the
Prospectus and/or the Statement.
6. EXPENSES. The Sub-Adviser will bear all of its expenses in
connection with the performance of its services under this Agreement.
All other expenses to
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be incurred in the operation of the Portfolio will be borne by the Fund
or the Adviser, as appropriate, except to the extent specifically
assumed by the Sub-Adviser. The expenses to be borne by the Fund or the
Adviser, as appropriate, include, without limitation, the following:
organizational costs, taxes, interest, brokerage fees and commissions,
Director's fees, Securities and Exchange Commission fees and state Blue
Sky qualification fees, if any, advisory fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance
premiums, industry association fees, outside auditing and legal
expenses, costs of independent pricing services, costs of maintaining
existence, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of preparing and
printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing stockholders,
costs of stockholders' reports and meetings, and any extraordinary
expenses.
7. SERVICES TO OTHER COMPANIES OR ACCOUNTS. The Adviser
understands that the Sub-Adviser now acts, will continue to act and may
act in the future as investment adviser to fiduciary and other managed
accounts and as investment adviser to other investment companies, and
the Adviser has no objection to the Sub-Adviser so acting, provided
that whenever the Portfolio and one or more other accounts or
investment companies advised by the Sub-Adviser have available funds
for investment, investments suitable and appropriate for each will be
allocated in accordance with a methodology believed to be equitable to
each entity. The Sub-Adviser agrees to allocate similarly opportunities
to sell securities. The Adviser recognizes that, in some cases, this
procedure may limit the size of the position that may be acquired or
sold for the Portfolio. In addition, the Adviser understands that the
persons employed by the Sub-Adviser to assist in the performance of the
Sub-Adviser's duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or
restrict the right of the Sub-Adviser of any affiliate of the
Sub-Adviser to engage in and devote time and attention to other
business or to render services of whatever kind or nature.
8. BOOKS AND RECORDS. In compliance with the requirements of
Rule 31a-3 under the Investment Company Act of 1940, as amended (the
"Act"), the Sub-Adviser hereby agrees that all records which it
maintains for the Portfolio are the property of the Fund and further
agrees to surrender promptly to the Fund copies of any of such records
upon the Fund's or the Adviser's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the
Act the records relating to its activities hereunder required to be
maintained by Rule 31a-1 under the Act and to preserve the records
relating to its activities hereunder required by Rule 204-2 under the
Investment Advisers Act of 1940, as amended, for the period specified
in said Rule.
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9. TERM OF AGREEMENT. This Agreement shall become effective as
of April 30, 1996 and shall continue until April 22, 1998 and
thereafter shall continue annually, provided such continuance is
specifically approved at least annually by (i) the Fund's Board or (ii)
a vote of "majority" (as defined in the Act) of the Portfolio's
outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Fund's Board who are
not "interested persons" (as defined in the Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose
of voting on such approval. This Agreement is terminable, without
penalty, on 60 days' written notice, by the Adviser, by the Fund's
Board, by vote of holders of a majority of the Portfolio's shares or by
the Sub-Adviser, and will terminate five business days after the
Sub-Adviser receives written notice of the termination of the advisory
agreement between the Fund and the Adviser. This Agreement also will
terminate automatically in the event of its assignment (as defined in
the Act).
10. INDEMNIFICATION. The Adviser agrees to indemnify and hold
harmless the Sub-Adviser and each person who controls or is associated
with the Sub-Adviser within the meaning of such terms under the federal
securities laws and any officer, trustee, director, employee or agent
of the foregoing, against any and all losses, claims, damages or
liabilities, joint or several (including any investigative, legal and
other expenses reasonably incurred in connection therewith) under any
statute or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities:
(1) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the variable annuity
contracts and variable life insurance policies (both contracts and
policies, collectively referred to as "Contracts") for which the
Portfolio serves as an underlying investment option, (ii) any untrue
statement or alleged untrue statement of any material fact contained in
the Prospectuses or Statements for the Contracts, (iii) any sales
literature for the Contracts, (or any amendment or supplement to any of
the foregoing), or (iv) the statement or omission to state or the
alleged statement or alleged omission to state in the Prospectuses or
Statements for the Contracts a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances in which they were made; provided, that this
provision shall not apply if such statement or omission or such alleged
statement or alleged omission was made in reliance upon and in
conformity with information furnished to the Adviser by the Sub-Adviser
for use in the Contracts, or the Prospectuses or the Statements for the
Contracts, or sales literature (or any amendment or supplement), or
otherwise for use in connection with the sales of the Contracts or
Portfolio shares; or
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(2) arise out of or as a result of statements or representations by or
on behalf of the Sub-Adviser (other than statements or representations
contained in the Contracts, the Prospectuses or Statements, or sales
literature for the Contracts not supplied by the Sub-Adviser or persons
under its control) or wrongful conduct of the Adviser or persons under
its control with respect to the sales or distribution of the Contracts
or Portfolio shares; or
(3) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Prospectus or
Statement for the Portfolio (or any amendment thereof or supplement
thereto), (ii) any sales literature for the Portfolio or (iii) the
omission or alleged omission to state in the Prospectus or Statement
for the Portfolio a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made; provided, that this provision
shall not apply if such statement or omission or such alleged statement
or alleged omission was made in reliance upon and in conformity with
information furnished to the Adviser by the Sub-Adviser for use with
the Prospectus, Statement or sales literature for the Portfolio and the
Contracts; or
(4) arise out of any third-party claims or proceedings relating to the
performance by or obligations of the Sub-Adviser in the performance of
its duties hereunder, except to the extent any such claims arise out of
any material breach by the Sub-Adviser of this Agreement.
This indemnification will be in addition to any liability which the
Adviser may otherwise have, but does not supersede the standard of care
owed by the Sub-Adviser to the Adviser as described in Section 4 above.
11. DISCLOSURE. The Adviser represents and warrants that
neither the Fund nor the Adviser shall, without the prior written
consent of the Sub-Adviser, make representations regarding or reference
to the Sub-Adviser or any affiliates in any disclosure document,
advertisement, sales literature or other promotional materials.
12. MISCELLANEOUS. All notices provided for by this Agreement
shall be in writing and shall be deemed given when received, against
appropriate receipt, by Xxxxx Xxxxxxx at 000 Xxxxx Xxxxxx, Xxx Xxxx XX
00000 in the case of the Sub-Adviser, General Counsel at P. O. Xxx 0000
Xxxxxxxxxx, Xx 00000 in the case of the Adviser, or such other person
as a party shall designate by notice to the other parties. No provision
of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument of writing signed by the party
against which enforcement of the change, waiver, discharge or
termination is sought. This Agreement constitutes the entire agreement
among the parties hereto and
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supersedes any prior agreement among the parties relating to the
subject matter hereof. The paragraph headings of this Agreement are for
convenience of reference and do not constitute a part hereof. This
Agreement shall be governed in accordance with the internal laws of the
State of New York, without giving effect to principles of conflict of
laws.
If the foregoing accurately sets forth our agreement, kindly
indicate your acceptance hereof by signing and returning the enclosed
copy hereof.
Very truly yours,
By: _______________________________
Name:_____________________________
Title:______________________________
WESTERN RESERVE LIFE ASSURANCE
CO. OF OHIO
Accepted:
By:_______________________________________
Name:_____________________________________
Title:______________________________________
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
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