INVESTMENT SUBADVISORY AGREEMENT
SMALL COMPANY PORTFOLIO
THIS AGREEMENT, made this 1ST day of MAY, 1999, is between JEFFERSON PILOT
INVESTMENT ADVISORY CORPORATION, a Tennessee corporation with offices at Xxx
Xxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxxxxx, 00000 (the "Investment Manager") and Lord
Xxxxxx & Company, (the "Subadviser") a New York corporation with offices at The
General Motors Building, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000.
WITNESSETH:
WHEREAS, Jefferson Pilot Variable 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 Portfolio, 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 Small Company Portfolio (the
"Portfolio") in the manner and on the terms hereinafter set forth;
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NOW, THEREFORE, in consideration of the premises and the convenants
hereinafter contained the Investment Manager and the Subadviser hereby agree as
follows:
1. Appointment of the Subadviser. The Investment Manager hereby
appoints the Subadviser to act as an investment subadviser for the Portfolio and
to manage the investment and reinvestment of the assets of the Portfolio,
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 Investment
Manager in any way or otherwise be deemed an agent of the Fund or Investment
Manager except as expressly authorized in this Agreement or another writing by
the Fund, Investment 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,
counterparts and other persons in connection with the Subadviser's management of
the assets of the Portfolio, 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
Investment Manager's 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 Portfolio, (2) to manage the
investment and reinvestment of the assets of the Portfolio 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 Portfolio and determine the composition of the assets of
the Portfolio, subject always to the general direction and control of the
Directors of the Fund and the Investment 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 Portfolio, the Subadviser will:
(i) obtain and evaluate pertinent, statistical, financial,
and other information relating to individual companies or industries, the
securities
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of which are included in the Portfolio or are under consideration for inclusion
in the Portfolio;
(ii) formulate and implement a continuous investment program
for the Portfolio (a) consistent with the investment objectives, policies, and
restrictions of the Portfolio 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 ("IRC"), and requirements applicable
to registered investment companies under applicable laws;
(iii) take whatever steps are necessary to implement the
investment program for the Portfolio 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 of orders for such purchases and sales;
(iv) regularly report to the Directors of the Fund and the
Investment Manager with respect to the implementation of the investment program
and, in addition, provide such statistical information and special reports
concerning the Portfolio and/or important developments materially affecting the
investments held, or contemplated to be purchased, by the Portfolio, as may
reasonably be requested by the Investment 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, provided that Subadviser
shall not be responsible for fund accounting.
(v) will assist in suggesting methods for determining fair
value of certain portfolio securities when market quotations are not readily
available for the purpose of calculating the Portfolio's net asset value in
accordance with procedures and methods established by the Directors of the Fund;
(vi) establish appropriate interfaces with the Fund's
Investment Manager in order to provide such Investment Manager with all
necessary information requested by the Investment Manager and required to be
provided by Subadviser hereunder.
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B. To facilitate the Subadviser's fulfillment of its obligations
under this Agreement, the Investment Manager will undertake the following:
(i) the Investment Manager agrees to provide the Subadviser
with all amendments or supplements to the Registration Statement, the Fund's
Agreement and Articles of Incorporation, and Bylaws prior to filing with
Securities and Exchange Commission.
(ii) the Investment 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 Portfolio two business days prior to
the effective date of such changes.
(iii) The Investment Manager agrees to provide or cause to be
provided to the Subadviser such assistance as may be reasonably requested by the
Subadviser in connection with its activities pertaining to the Portfolio under
this Agreement, including, without limitation, information concerning the
Portfolio, its available funds, or funds that may reasonably become available
for investment, and information as to the general condition of the Portfolio's
affairs and information to enable Subadviser to monitor the 90% source tax of
Subchapter M of the IRC;
(iv) the Investment 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 Manager
fails to provide or cause to be provided such requested information and the
Subadviser relies on the information most recently furnished to the Subadviser;
and
(v) the Investment Manager will promptly provide the
Subadviser with any guidelines and procedures applicable to the Subadviser or
the Portfolio 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.
C. The Fund and the Investment Manager shall not, without the
prior written consent of Subadviser, make representations in any disclosure
document, advertisement, sales literature or other promotional material
regarding the Subadviser or its affiliates. The Investment Manager shall hold
harmless and indemnify the Subadviser against any loss, liability, cost, damage
or expense (including reasonable attorneys fees and costs) arising out of any
use of any disclosure documents, advertisement, sales literature or other
promotional material without prior written consent by the Subadviser.
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D. The Subadviser, at its expense, will furnish 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. The Fund or Investment Manager assumes
and shall pay all expenses incidental to their respective organization,
operation and business not specifically assumed or agreed to be paid by the
Subadviser pursuant hereto, including, but not limited to, investment adviser
fees; any compensation, fees, or reimbursements which the Fund pays to its
Directors; compensation of the Fund's custodian, transfer agent, registrar and
dividend disbursing agent; legal, accounting, audit and printing expenses;
administrative, clerical, record-keeping and bookkeeping expenses; brokerage
commissions and all other expenses in connection with execution of portfolio
transactions (including any appropriate commissions paid to the Subadviser or
its affiliates for effecting exchange listed, over-the-counter or other
securities transactions); interest, all federal, state and local taxes
(including stamp, excise, income and franchise taxes) costs of stock
certificates and expenses of delivering such certificates to the purchaser
thereof; expenses of shareholders' meetings and of preparing, printing and
distributing proxy statements, notices, and reports to shareholders; regulatory
authorities; all expenses incurred in complying with all federal and state laws
and the laws of any foreign country applicable to the issue, offer, or sale of
shares for the Fund, including, but not limited to all costs involved in the
registration or qualification of shares of the Fund for sale in any
jurisdiction, the costs of portfolio pricing services and systems for compliance
with blue sky laws, and all costs involved in preparing, printing and mailing
prospectuses and statements of additional information of the Fund; and all fees,
dues and other expenses incurred by the Fund in connection with the membership
in any trade association or other investment company organization.
E. The Subadviser will select brokers and dealers to effect all
portfolio 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
Portfolio 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 Portfolio, in the name of the Portfolio
or its nominees, the Subadviser shall use its best efforts to obtain for the
Portfolio the most favorable price and best execution available, considering all
of the circumstances, and shall maintain records adequate to demonstrate
compliance with this requirement.
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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 Portfolio to pay a broker or
dealer that provides brokerage or research services to the Manager, the
Subadviser, or the Portfolio an amount of commissions for effecting a portfolio
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
Portfolio 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.
F. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio 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 Portfolio and to its other clients.
The Subadviser may perform its Services through any employee, partner,
officer or agent of Subadviser and the Investment Manager and the Fund shall not
be entitled to the advice, recommendation or judgment of any specific person.
Sub-Investment Manager makes no representation or warranty, express or implied,
that any level of performance or investment results will be achieved by the
Small Company Portfolio or that such Portfolio will perform comparably with any
standard or index, including other clients of Subadviser, whether public or
private.
G. The Subadviser will maintain all accounts, books and records with
respect to the Portfolio 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 Portfolio, the compensation specified in
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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 Portfolio'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. The Subadviser shall, for all purposes herein, be deemed to be
an independent contractor and shall, unless otherwise provided or authorized,
have no authority to act for or represent the Fund or the Investment Manager in
any way or otherwise be deemed an agent of the Fund or Investment Manager other
than in furtherance of its duties and responsibilities as set forth in this
Subadvisory Agreement.
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 Portfolio. 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 books 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. Except as may otherwise be provided by the Investment
Company Act, neither the Subadviser nor its officers, directors, employees or
agents shall be subject to any liability to the Investment Manager, the Fund or
any shareholder of the Fund for any error of judgment, mistake of law or any
loss arising out of any investment or other act or omission in the course of,
connected with or arising out of any service to be rendered hereunder, except by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of reckless disregard of its obligations and duties
under this Agreement. The Investment Manager shall hold harmless and indemnify
the Subadviser for any loss, liability, cost, damage or expense (including
reasonable attorneys fees and costs) arising from any claim or demand by the
Fund or any
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past or present shareholder of the fund that is not arising from Subadvisers
willful misfeasance, bad faith or gross negligence.
8. Reliance on Documents. 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 Portfolio, the cash
requirements, and cash available for investment in the Portfolio, and all other
information as may be reasonably necessary or appropriate in order for the
Subadviser to perform its responsibilities hereunder. The Subadviser has
provided the Investment Manager with a copy of its current form ADV.
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 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.
The Investment Manager has herewith furnished the Subadviser copies of the
Fund's Prospectus, Statement of Additional Information, Articles of
Incorporation and By-Laws as currently in effect and agrees during the
continuance of the Agreement to furnish the Subadviser copies of any amendments
or supplements thereto before or at the time the amendments or supplements
become effective. The Subadviser will be entitled to rely on all such documents
furnished to it by the Investment Manager of the Fund.
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 May 1, 2001. 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 Portfolio, 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 Portfolio, 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.
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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 Portfolio (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 Portfolio if a majority of the
outstanding voting securities of the Portfolio vote to approve the amendment,
notwithstanding that amendment may not have been approved by a majority of the
outstanding voting securities of any other portfolio 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 acknowledgment 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:
(a) If to the Subadviser:
Lord Xxxxxx & Company
The General Motors Building
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Legal Department
(b) If to the Investment Manager:
Jefferson Pilot 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 State of New
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Hampshire 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 State of New Hampshire
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 Investment
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, which approval shall not be
unreasonably withheld or delayed. Upon termination of this Agreement, the
Investment 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 Portfolio.
16. Headings. The headings in the sections of this Agreement are
inserted for convenience of reference only and shall not constitute a part
hereof.
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.
JEFFERSON PILOT INVESTMENT ADVISORY
CORPORATION
ATTEST: /s/ Xxxxx Xxxxxxxxx BY: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------- ------------------------------
Xxxxx Xxxxxxxxx Xxxxxx X. Xxxxxxxxx
TITLE: Assistant Secretary TITLE: President
---------------------------- ---------------------------
LORD XXXXXX & COMPANY
ATTEST: /s/ Xxxxx X. Xxxxx BY: /s/ Xxxx X. Xxxxxxx
---------------------------- ------------------------------
Xxxxx X. Xxxxx Xxxx X. Xxxxxxx
TITLE: Assistant General Counsel TITLE: Partner & General Counsel
---------------------------- ------------------------------
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