FORM OF
INVESTMENT SUBADVISORY AGREEMENT
HIGH YIELD BOND PORTFOLIO
THIS AGREEMENT, made this 1ST day of January 1998, is between CHUBB INVESTMENT
ADVISORY CORPORATION, a Tennessee corporation with offices at Xxx Xxxxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxxxxx, 00000 (the "Investment Manager" or "Manager") and
Massachusetts Financial Services Company, (the "Subadviser") a Delaware
corporation with offices at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, Chubb America Fund, Inc. (the "Fund") is engaged in business as a
diversified open-end management investment company and is registered as such
under the Investment Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund issues separate classes or series of stock, each of which
represents a separate Portfolio of investments;
WHEREAS, the Fund's shareholders are and will be separate accounts
maintained by insurance companies for variable life insurance policies under
which income, gains, losses, whether or not realized, from assets allocated to
such accounts are, in accordance with the Policies, credited to or charged
against such accounts without regard to other income, gains, or losses of such
insurance companies;
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the Portfolios, as set forth in an Investment Management Agreement
between the Fund and the Investment Manager dated August 28, 1997, (the
"Investment Management Agreement") pursuant to which it was agreed that the
Investment Manager may contract with the Subadviser, or other parties for
certain investment management services;
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act");
WHEREAS, the Investment Manager desires to retain the Subadviser to render
investment management services to the Fund's Emerging Growth Portfolio and
Money Market Portfolio (the "Portfolios") in the manner and on the terms
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained the Investment Manager and the Subadviser hereby agree as
follows:
1. Appointment of the Subadviser. The Manager hereby appoints the
Subadviser to act as an investment subadviser for the Portfolios and to manage
the investment and reinvestment of the assets of the Portfolios, subject to the
supervision of the Directors of the Fund and the terms and conditions of this
Agreement. The Subadviser will be an independent contractor and will have no
authority to act for or represent the Fund or Manager in any way or otherwise
be deemed an agent of the Fund or Manager except as expressly
authorized in this Agreement or another writing by the Fund, Manager and the
Subadviser. Notwithstanding the foregoing, the Subadviser may execute account
documentation, agreements, contracts and other documents as the Subadviser may
be requested by brokers, dealers, counterparties and other persons in connection
with the Subadviser's management of the assets of the Portolios, provided that
the Subadviser receives the express agreement and consent of the Manager and/or
the Fund's Board of Directors to execute such documentation, agreements,
contracts and other documents. In such respect, and only for this limited
purpose, the Subadviser shall act as the Manager and/or the Fund's agent and
attorney-in-fact.
2. Duties of the Subadviser. The Subadviser hereby agrees, subject to
the supervision of the Investment Manager and the Board of Directors of the
Fund, (1) to act as the Subadviser of the Portfolios, (2) to manage the
investment and reinvestment of the assets of the Portfolios for the period and
on the terms and conditions set forth in this Agreement, and (3) during the term
hereof, to render the services and to assume the obligations herein set forth in
return for the compensation provided for herein and to bear all expenses of its
performance of such services and obligations.
3. Services to be Rendered by the Subadviser to the Fund
A. The Subadviser will manage the investment and reinvestment of
the assets of the Portfolios and determine the composition of the assets of the
Portfolios, subject always to the direction and control of the Directors of the
Fund and the Manager and in accordance with the provisions of the Fund's
registration statement, as amended from time to time. In fulfilling its
obligations to manage the investment and reinvestment of the assets of the
Portfolios, the Subadviser will:
(i) obtain and evaluate pertinent economic, statistical,
financial, and other information affecting the economy generally and individual
companies or industries, the securities of which are included in the Portfolios
or are under consideration for inclusion in the Portfolios;
(ii) formulate and implement a continuous investment program
for the Portfolios (a) consistent with the investment objectives, policies, and
restrictions of the Portfolios as stated in the Fund's Agreement and Articles of
Incorporation, Bylaws, and such Portfolio's currently effective Prospectus and
Statement of Additional Information ("SAI") as amended from time to time, and
(b) in compliance with the requirements applicable to both regulated investment
companies and segregated asset accounts under Subchapters M and L of the
Internal Revenue Code of 1986, as amended, and requirements applicable to
registered investment companies under applicable laws;
(iii) take whatever steps are necessary to implement the
investment program for the Portfolios by the purchase and sale of securities and
other investments authorized under the Fund's Agreement and Articles of
Incorporation, Bylaws, and such Portfolio's currently effective Prospectus and
SAI, including the placing or orders for such purchases and sales;
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(iv) subject to the consent of the Subadviser, regularly report to
the Directors of the Fund and the Manager with respect to the implementation of
the investment program and, in addition and subject to the consent of the
Subadviser, provide such statistical information and special reports concerning
the Portfolios and/or important developments materially affecting the
investments held, or contemplated to be purchased, by the Portfolios, as may
reasonably be requested by the Manager or the Directors of the Fund, including
attendance at Board of Directors Meetings, as reasonably requested, to present
such information and reports to the Board.
B. To facilitate the Subadviser's fulfillment of its obligations under
this Agreement, the Manager will undertake the following:
(i) the Manager agrees promptly to provide the Subadviser with all
amendments or supplements to the Registration Statement, the Fund's Agreement
and Articles of Incorporation, and Bylaws;
(ii) the Manager agrees, on an ongoing basis, to notify the
Subadviser expressly in writing of each change in the fundamental and
nonfundamental investment policies of the Portfolios;
(iii) the Manager agrees to provide or cause to be provided to the
Subadviser with such assistance as may be reasonably requested by the Subadviser
in connection with its activities pertaining to the Portfolios under this
Agreement, including, without limitation, information concerning the Portfolios
under this Agreement, including, without limitation, information concerning the
Portfolios, its available funds, or funds that may reasonably become available
for investment, and information as to the general condition of the Portfolios's
affairs;
(iv) the Manager agrees to provide or cause to be provided to the
Subadviser on an ongoing basis, such information as is reasonably requested by
the Subadviser for performance by the Subadviser of its obligations under this
Agreement, and the Subadviser shall not be in breach of any term of this
Agreement or be deemed to have acted negligently if the Manger fails to provide
or cause to be provided such requested information and the Subadviser relies on
the information most recently furnished to the Subadviser;
(v) the Manager will promptly provide the Subadviser with any
guidelines and procedures applicable to the Subadviser or the portfolios
adopted from time to time by the Board of Directors of the Fund and agrees to
promptly provide the Subadviser copies of all amendments thereto; and
(vi) the Board of Directors of the Fund or its officers or agent will
provide timely information to the Subadviser regarding such matters as purchases
and redemptions of shares in the Portfolios, the cash requirements, and cash
available for investment in the Portfolios and all other information as may be
reasonably necessary or appropriate in order for the Subadviser to perform its
responsibilities hereunder.
C. The Subadviser, at its expense, will furnish: (i) all necessary
investment and management facilities and investment personnel, including
salaries, expenses and fees of any personnel required for it to faithfully
perform its duties under this Agreement; and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment required for it to
faithfully perform its duties under this agreement. The Subadviser shall not be
obligated to pay any expenses of or for the Portfolios not expressly assumed by
the Subadviser pursuant to this Section 3.
D. The Subadviser will select brokers and dealers to effect all Portfolios
transactions subject to the conditions set forth herein. The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will negotiate
brokerage commissions if applicable. The Subadviser is directed at all times to
seek to execute brokerage transactions for the Portfolios in accordance with
such policies or practices as may be established by the Board of Directors and
described in the Fund's currently effective Prospectus and SAI, as amended from
time to time. In placing orders for the purchase or sale of investments for the
Portfolios, in the name of the Portfolios or its nominees, the Subadviser shall
use its best efforts to obtain for the Portfolios the most favorable price and
best execution available, considering all of the circumstances, and shall
maintain records adequate to demonstrate compliance with this requirement.
Subject to the appropriate policies and procedures approved by the Board of
Directors, the Subadviser may, to the extent authorized by Section 28(e) of the
Securities and Exchange Act of 1934, cause the Portfolios to pay a broker or
dealer that provides brokerage or research services to the Manager, the
Subadviser, or the Portfolios an amount of commissions for effecting a
Portfolios transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Subadviser
determines, in good faith, that such amount of commission is reasonable in
relationship to the value of such brokerage or research services provided viewed
in terms of that particular transaction or the Subadviser's overall
responsibilities to the Portfolios or its other advisory clients. To the extent
authorized by said Section 28(e) and the Fund's Board of Directors, the
Subadviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of such action. In
addition, subject to seeking the most favorable price and best execution
available, the Subadviser may also consider sales of shares of the Fund as a
factor in the selection of brokers and dealers.
E. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolios as well as other clients
of the Subadviser, the Subadviser to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be purchased or sold to attempt to obtain a more favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Subadviser in the manner the Subadviser
considers to be the most equitable and consistent with its fiduciary obligations
to the Portfolios and to its other clients.
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F. The Subadviser will maintain all accounts, books and records with
respect to the Portfolios as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act and
Advisers Act and the rules thereunder.
4. Compensation of the Subadviser. The Investment Manager will pay the
Subadviser, with respect to the Portfolios, the compensation specified in
Appendix A to this Agreement. Payments shall be made to the Subadviser on the
first day of each month; however, this advisory fee will be calculated on the
daily average value of the Portfolios's assets and accrued on a daily basis.
5. Non-Exclusivity. The Investment Manager agrees that the services of
the Subadviser are not to be deemed exclusive and the Subadviser is free to act
as investment manager to various investment companies and as fiduciary for other
managed accounts.
6. Books and Records. The Subadviser agrees that all books and records
which it maintains for the Fund are the Fund's property, and, in the event of
termination of this Agreement for any reason, the Subadviser agrees promptly to
return to the Fund, free from any claim or retention of rights by the
Subadviser, all records relating to the Portfolios. The Subadviser also agrees
upon request of the Investment Manager or the Fund, promptly to surrender the
books and records to either party or make the book and records available for
inspection by representatives of regulatory authorities. In connection with its
duties hereunder, the Subadviser further agrees to maintain, prepare and
preserve books and records in accordance with the Investment Company Act and
rules thereunder, including but not limited to, Rule 31a-1 and 31a-2.
The Subadviser will use records or information obtained under this
Agreement only for the purposes contemplated hereby, and will not disclose such
records or information in any manner other than expressly authorized by the
Fund, or if disclosure is expressly required by applicable federal or state
regulatory authorities or by this Agreement. The Subadviser will furnish any
informational reports requested by any state insurance commissioner.
7. Liability. The Subadviser will not be liable for any loss suffered by
the Fund in connection with any investment policy established by the Fund for
the purchase, sale or redemption of any securities at the direction of the Board
of Directors of the Fund or the Investment Manager. Nothing herein contained
shall be construed to protect the Subadviser against any liability resulting
from the willful misfeasance, bad faith or gross negligence of the Subadviser in
the performance of its duties or from reckless disregard of its obligations and
duties under this Subadviser Agreement.
8. Documents. Neither the Fund or the Investment Manager, nor their
respective designees or agents, shall use any material describing or
identifying the Subadviser or its affiliates without the prior consent of the
Subadviser. Any material utilized by the Fund, the Investment Manager or their
respective designees or agents which contain information as to the
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Subadviser and/or its affiliates shall be submitted to the Subadviser for
approval prior to use, not less than five (5) business days before such approval
is requested.
9. Duration and Termination of the Agreement. This Subadvisory
Agreement shall become effective as of the date first written above and remain
in force until August 28, 1999. Thereafter, it shall continue in effect from
year to year, but only so long as such continuance is specifically approved at
least annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Portfolios, and (b) a
majority of those directors who are not parties to this Subadvisory Agreement,
not interested persons of any party to this Subadvisory Agreement, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may be terminated, without the payment of any penalty, by the Board of
Directors of the Fund, by a vote of a majority of the outstanding shares of the
Portfolios, or by the Investment Manager on sixty days' written notice to the
Subadviser, or by the Subadviser on sixty days' written notice to the Fund or
the Investment Manager. Termination by the Board of Directors or by the
Investment Manager shall be subject to shareholder approval to the extent
legally required. This Agreement shall automatically terminate in the event of
its assignment or in the event of termination of the Investment Management
Agreement.
10. Amendments of the Agreement. Except to the extent permitted by the
Investment Company Act or the rules or regulations thereunder or pursuant to any
exemptive relief granted by the Securities and Exchange Commission ("SEC"), this
Agreement may be amended by the parties only if such amendment, if material, is
specifically approved by the vote of a majority of the outstanding voting
securities of the Portfolios (unless such approval is not required by Section
15 of the Investment Company Act as interpreted by the SEC or its staff) and by
the vote of a majority of the Independent Directors cast in person at a meeting
called for the purpose of voting on such approval. The required shareholder
approval shall be effective with respect to the Portfolios if a majority of the
outstanding voting securities of the Portfolios vote to approve the amendment,
notwithstanding that amendment may not have been approved by a majority of the
outstanding voting securities of any other Portfolios affected by the amendment
or all the Portfolios of the Fund.
11. Definitions. The terms "assignment", "interested person", and
"majority of the outstanding voting securities", when used in this Agreement,
shall have the respective meaning specified under the Investment Company Act and
the rules thereunder.
12. Notices. Any notice that is required to be given by the parties to
each other under the terms of this Agreement shall be given in writing,
delivered, or mailed postpaid to the other party, or transmitted by facsimile
with acknowledgement of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
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(a) If to the Subadviser:
Massachusetts Financial Services Company,
000 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000
(b) If to the Investment Manager:
Shubb Investment Advisory Corporation
Xxx Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Facsimile (000) 000-0000
13. Governing Law. The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the Commonwealth of Massachusetts
as at the time in effect and the applicable provisions of the Investment Company
Act or other federal laws and regulations which may be applicable. To the
extent that the applicable law of the Commonwealth of Massachusetts or any of
the provisions herein, conflict with the applicable provisions of the Investment
Company Act or other federal laws and regulations which may be applicable, the
latter shall control.
14. Use of Subadviser's Name. Neither the Fund nor the Manager or any
affiliate or agent thereof shall make reference to or use the name, and any
derivative thereof or logo associated with that name, of the Subadviser or any
of its affiliates in any advertising or promotional materials, without the prior
approval of the Subadviser. Upon termination of this Agreement, the Manager and
the Fund shall forthwith cease to use such name (or derivative or logo) as soon
as reasonably practicable.
15. Entire Agreement. This Agreement contains the entire understanding
and agreement of the parties with respect to the Portfolios.
16. Headings. The headings in the sections of this Agreement are
inserted for convenience of reference only and shall not constitute a part
hereof.
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17. Severability. Should any portion of this Agreement for any reason
be held to be void in law or in equity, the Agreement shall be construed,
insofar as is possible, as if such portion had never been contained herein.
CHUBB INVESTMENT
ADVISORY CORPORATION
ATTEST: BY:
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TITLE: TITLE:
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MASSACHUSETTS FINANCIAL
SERVICES COMPANY
ATTEST: BY:
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TITLE: TITLE:
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SCHEDULE A
INVESTMENT SUBADVISORY FEES
--------------------------------------------------------------------------------
NAME OF PORTFOLIO ANNUAL FEE AS A PERCENTAGE OF
AVERAGE DAILY NET ASSETS
--------------------------------------------------------------------------------
Money Market Portfolio .30% of first $200 Million
Massachusetts Financial Services .25% over $200 Million
--------------------------------------------------------------------------------
Emerging Growth Portfolio .40%
Massachusetts Financial Services
--------------------------------------------------------------------------------
High Yield Bond .40%
Massachusetts Financial Services
--------------------------------------------------------------------------------
Growth Portfolio .60% of first $25 Million
Strong .50% of the next $75 Million
.40% of the next $50 Million
.30% over $100 Million
--------------------------------------------------------------------------------
Growth Income Portfolio .50%
Warburg Pincus
--------------------------------------------------------------------------------
World Growth Stock Portfolio .50% of first $200 Million
Xxxxxxxxx Global Advisors Limited .45% of next $1.1 Billion
.40% over $1.3 Billion
--------------------------------------------------------------------------------
International Equity Portfolio .50%
Lombard Odier
--------------------------------------------------------------------------------
Balanced Portfolio .45% of first $100 Million
X.X. Xxxxxx Investment Management .40% of next $100 Million
.35% over $200 Million
.30% over $400 Million
--------------------------------------------------------------------------------
Emerging Growth Portfolio .40%
Massachusetts Financial Services
--------------------------------------------------------------------------------
Bond Portfolio .35% of first $200 Million
Chubb Asset Managers, Inc. .30% of next $1.1 Billion
.25% over $1.3 Billion
--------------------------------------------------------------------------------
Gold Stock Portfolio .50% of first $200 Million
Xxx Xxx Associates Corporation .45% of next $1.1 Billion
.40% over $1.3 Billion
--------------------------------------------------------------------------------
Domestic Growth Portfolio .50% of first $200 Million
Pioneering Management Corporation .45% of next $1.1 Billion
.40% over $1.3 Billion
--------------------------------------------------------------------------------
Capital Growth Portfolio .75% of first $200 Million
Janus Capital Corporation .70% of next $1.1 Billion
.65% over $1.3 Billion
--------------------------------------------------------------------------------
EFFECTIVE: January 1, 1998
