Exhibit 23(d)44
(Active Bond Fund)
SUB-INVESTMENT MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
DECLARATION MANAGEMENT & RESEARCH LLC
AND
XXXX XXXXXXX LIFE INSURANCE COMPANY
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 1st day of October, 2003, by and among Xxxx Xxxxxxx
Variable Series Trust I, a Massachusetts business trust (the "Series"),
Declaration Management & Research LLC, a Delaware limited liability company
("DMR"), and Xxxx Xxxxxxx Life Insurance Company, a Massachusetts corporation
("JHLICO").
WHEREAS, the Series 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 DMR are engaged in the business of rendering investment
advice under the Investment Advisers Act of 1940; and
WHEREAS, the Series is authorized to issue shares of capital stock in
separate classes with each such class representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Series offers shares in several classes, one of which is
designated as the Active Bond Fund, (together with all other classes established
by the Series, the "Funds"), each of which pursues its investment objectives
through separate investment policies; and
WHEREAS, the Series has retained JHLICO to render investment management
services to the Series pursuant to an Investment Management Agreement dated as
of April 12, 1988 (the "Investment Management Agreement"), pursuant to which it
may contract with one or more sub-managers with respect to the Active Bond Fund;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-MANAGER
(a) Subject Fund. DMR is hereby appointed and DMR hereby accepts the
appointment to act as an investment adviser and manager to the Active Bond Fund
(the "Subject Fund"), effective October 1, 2003, for the period and on the terms
herein set forth, for the compensation herein provided.
(b) Independent Contractor. DMR 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.
(c) DMR Representations. DMR represents, warrants and agrees (i) that it is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended, 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
of any change in the identity of the personnel who manage the Subject Assets,
(iii) that it has adopted a code of ethics complying with the requirements of
Section 17(j) and Rule 17j-1 under the 1940 Act and has and will provide true
and complete copies of such code to the Trust and to JHLICO, and has and will
adopt procedures designed to prevent violations of any such code.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES
DMR will provide for the Subject Fund's assets as may be designated to it
by JHLICO from time to time (the "Subject Assets") a continuing and suitable
investment
program consistent with the investment policies, objectives and restrictions of
the Subject Fund, as furnished to DMR by JHLICO in writing from time to time.
DMR will manage the investment and reinvestment of the Subject Assets, and
perform the functions set forth below, subject to the overall supervision,
direction, control and review of the Board of Trustees of the Series, JHLICO
and, as in effect from time to time, the provisions of the Series' Declaration
of Trust, Bylaws, prospectus, statement of additional information (all as
furnished to DMR by JHLICO in writing 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, all as delivered to DMR in writing by JHLICO or the Series from
time to time). In the event that, in addition to DMR, other investment advisers
or sub-managers are appointed by the Trust or JHLICO to render investment
advisory services to the Subject Fund, JHLICO and the Trust each acknowledges
and agrees that DMR will not be held responsible for such other investment
advisers' or sub-managers' actions or omissions including, without limitation,
compliance with policies and limitations applicable to the Subject Fund.
DMR will have investment discretion with respect to the Subject Assets and
will, at its own expense:
(a) upon request, advise the Series in connection with investment
decisions to be made by its Board of Trustees or any committee thereof regarding
the Subject Assets and furnish the Series with research, economic and
statistical data in connection with investments and investment policies for the
Subject Assets;
(b) submit such reports relating to the valuation of the Subject
Assets as the Series' Board of Trustees may reasonably request;
(c) place orders for purchases and sales of portfolio investments for
the Subject Assets;
(d) give instructions to the Subject Fund's custodian concerning the
delivery of securities and transfer of cash for the Subject Assets;
(e) maintain and preserve the records relating to its activities
hereunder, including those records required by the 1940 Act to be maintained by
it and preserved by the Series, to the extent not maintained by the Series'
custodian, transfer agent or JHLICO;
(f) at the close of business each day, provide JHLICO and the
custodian with copies of trade tickets, and a daily summary sufficient to verify
trade data received by the custodian from third parties for each transaction
effected for the Subject Assets;
(g) as soon as practicable following the end of each calendar month,
provide JHLICO with written information on all transactions effected for the
Subject Assets during the month, a summary listing all Subject Assets
investments held in the Subject Fund as of the last day of the month, and such
other information as JHLICO may reasonably request in connection with the
accounting services that JHLICO provides for the Subject Fund; and
(h) subject to its receipt of all necessary voting materials, in its
discretion, as it deems advisable in the best interests of the Subject Fund,
vote any or all proxies with respect to the Subject Assets in accordance with
DMR's proxy voting policy as most recently provided to JHLICO.
The Series and JHLICO will provide timely information to DMR regarding such
matters as purchases and redemptions of shares in the Subject Assets and the
cash requirements of, and cash available for investment in, the Subject Assets,
and all information (including, without limitation, reports concerning the
classification of Portfolio securities for purposes of Subchapter M of the
Internal Revenue Code and Treasury Regulations Section 1.817) as may be
reasonably necessary or appropriate in order for DMR to perform its
responsibilities hereunder. On its own initiative, DMR will apprise JHLICO and
the Series of important developments materially affecting the Subject Assets and
will furnish JHLICO and the Series' Board of Trustees from time to time such
information as is appropriate for this purpose.
DMR will not consult with any unaffiliated sub-manager to the Subject
Assets or to any other Fund of the Trust concerning transactions of the Subject
Assets in securities or other assets, except as such consultations may be
reasonably necessary in order to ensure compliance with paragraphs (a) and (b)
of Rule 12d3-1 under the 1940 Act.
3. ALLOCATION OF EXPENSES
Each party to this Agreement shall bear the costs and expenses of
performing its obligations hereunder. In this regard, the Series specifically
agrees, without limitation, to assume the expense of:
(a) brokerage commissions for transactions in the portfolio investments of
the Subject Assets and similar fees, charges and expenses incurred in connection
with the acquisition, disposition, lending or borrowing of such portfolio
investments;
(b) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Series to federal, state or other governmental agencies;
and
(c) interest payable on the Series' borrowings. Nothing in this Agreement
shall alter the allocation of expenses and costs agreed upon between the Series
and JHLICO in the Investment Management Agreement or any other agreement to
which they are parties.
4. SUB-ADVISORY FEES
For all of the services rendered as herein provided, JHLICO shall pay to
DMR a fee (for payment of which the Series shall have no obligation or
liability) based on the Current Net Assets of the Subject Assets, as set forth
in Schedule I attached hereto and made a part hereof. The 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 Assets during any calendar month, the fee with respect to such Portfolio
accrued to termination shall be paid promptly following such termination.
"Current Net Assets" of the Subject Fund for purposes of computing the
amount of advisory fee accrued for any day shall mean the net assets of the
Subject Assets as of the most recent preceding day for which the Subject Fund's
net assets were computed.
5. PORTFOLIO TRANSACTIONS
In connection with the investment and reinvestment of the assets of the
Subject Fund, DMR is authorized to select the brokers or dealers that will
execute purchase and sale transactions for the Subject Assets and to use its
best efforts to obtain best execution with respect to all such purchases and
sales of portfolio securities for said Subject Assets. DMR shall maintain
records reasonably 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, DMR 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 DMR, 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. DMR shall 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 DMR by JHLICO hereunder shall be reduced by any tender
offer solicitation fees or similar payments received by DMR, in connection with
the tender of investments of any Subject Assets (less direct expenses incurred
by DMR in connection with obtaining such fees or payments), to the extent not
otherwise paid or credited to the Subject Assets.
6. INFORMATION, RECORDS, AND CONFIDENTIALITY
The Series shall own and control all records maintained hereunder by DMR on
the Series' behalf and, in the event of termination of this Agreement with
respect to the Subject Fund for any reason, all records (or true and complete
copies thereof) relating to that Portfolio shall be promptly returned to the
Series, free from any claim or retention of rights by DMR. DMR also agrees, upon
request of the Series, promptly to surrender such books and records or, at its
expense, copies thereof, to the Series or make such books and records available
for inspection by representatives of regulatory authorities or other persons
reasonably designated by the Series. DMR 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 in its possession or reasonably available to it, requested by
any insurance regulatory authorities to determine whether all insurance laws and
regulations are being complied with.
DMR 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 (i) to Xxxx Xxxxxxx Life Insurance Company, or to any other
person or entity that directly or indirectly owns all or substantially all of
the Sub-Manager's capital stock; (ii) if the Series or JHLICO has authorized
such disclosure, or (iii) if such disclosure is expressly required by applicable
federal or state regulatory authorities or court proceedings.
DMR shall supply the Board of Trustees and officers of the Series and
JHLICO with all statistical information regarding investments which is
reasonably required by them and reasonably available to it.
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect DMR or JHLICO
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 or the Investment Management
Agreement, as applicable. 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 misfeasance, bad faith or
negligence in the performance of his duties or the reckless disregard of his
obligations and duties. DMR 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 (provided that copies of any
applicable investment restrictions imposed by state insurance laws and
regulations shall be furnished to DMR by JHLICO); 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 Series' Declaration of Trust,
Bylaws, prospectus and statement of additional information, all as furnished to
DMR by JHLICO in writing from time to time; shall manage the Subject Assets
(subject to the receipt of, and based upon the information contained in,
periodic reports from JHLICO or the custodian concerning the classification of
Portfolio 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 in its
management of the Subject Assets in the best interests of the Series, subject
however to its duties to other clients as described in Section 9 below; 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, DMR 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 on the date set forth
in Section 1(a) hereof. Unless terminated as herein provided, this Agreement
shall remain in full force and effect for two years from the date hereof and
shall continue in full force and effect thereafter so long as such continuance
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 the Subject 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 the Subject Fund shall be effective to continue this Agreement
notwithstanding 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 at any time, without
payment of any penalty, by the Series pursuant to a vote of the trustees of the
Series or a vote of a majority of the outstanding shares of the Subject Fund,
which termination shall be effective immediately upon delivery of notice thereof
to DMR and JHLICO. This Agreement may be terminated by DMR on at least sixty
days' prior written notice to the Series and JHLICO, or by JHLICO on at least
sixty days' prior written notice to the Series and DMR. Transactions already
entered into by DMR but not yet settled at the time of any such termination
shall settle for the account of the Series.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment or if the Investment
Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE
The services of DMR to the Series 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 DMR 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.
Nothing in this Agreement shall limit or restrict DMR or any of its
officers, affiliates or employees from buying, selling or trading in any
securities for its or their own accounts; provided, however, that no such person
shall purchase securities from or sell securities to the Subject Fund except as
permitted under applicable laws and regulations, including without limitation
the 1940 Act and the Investment Advisers Act of 1940, and the rules and
regulations thereunder. The Series acknowledges that DMR and its officers,
affiliates and employees, and its and their other clients, may at any time have,
acquire, increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of under this Agreement. DMR shall have
no obligation to acquire for the Subject Fund a position in any investment which
the DMR, its officers, affiliates or employees may acquire for their own
accounts or for the accounts of another client, if in the sole discretion of DMR
it is not feasible or desirable to do so.
10. AVOIDANCE OF INCONSISTENT POSITION
In connection with the purchase and sale of portfolio securities of the
Subject Assets, DMR and its directors, officers and employees will not act as
principal or agent or receive any commission, except as may be permitted under
applicable laws and regulations and the policies and procedures of the Series in
effect from time to time. Nothing in this Agreement, however, shall preclude the
combination of orders for the sale or purchase of portfolio securities of the
Subject Assets with those for other accounts
managed by DMR or its affiliates, if orders are allocated in a manner deemed
equitable by DMR among the accounts and at a price approximately averaged.
11. ENTIRE AGREEMENT, AMENDMENT
This Agreement constitutes the entire agreement between the parties and
supersedes in their entirety all prior agreements between the parties with
respect to the subject matter hereof. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by a duly authorized officer of the party or parties intending to
be bound thereby. No amendment of this Agreement shall be effective until
approved specifically by (a) the Board of Trustees of the Series, or by vote of
a majority of the outstanding shares of the Subject Fund, 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.
12. 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 the Series personally, but only bind the trust property of the
Series, as provided in the Series' Declaration of Trust.
13. 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.
14. 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 (provided that any notice delivered by facsimile shall be
followed promptly by a duplicate notice delivered by another permitted method of
delivery), by hand or by commercial overnight delivery service, addressed as
follows:
SUB-MANAGER: Declaration Management & Research LLC
0000 Xxxxxx Xxxxxxxxx, Xxxxx 0000,
XxXxxx, XX 00000
Attention: President
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
SERIES: Xxxx Xxxxxxx Variable Series Trust I
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
5. ASSIGNMENT.
This Agreement may not be assigned by any party, either in whole or in
part.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.
XXXX XXXXXXX VARIABLE SERIES TRUST I
By: /s/ Xxxxxxx X. Xxx Xxxx
Chairman and CEO
XXXX XXXXXXX LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxx Xxxx
Senior Vice President
DECLARATION MANAGEMENT & RESEARCH LLC
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
President
SCHEDULE I
FEES
----
Active Bond Fund
Current Net Assets Under Management Sub-Advisory Fee
------------------------------------------- -------------------------------
On the first $100 million of Subject Assets 15 basis points (0.15%) per
annum
On the next $150 million of Subject Assets 12.5 basis points (0.125%) per
annum
On Subject Assets over $250 million 10 basis points (0.10%) per
annum
