(Growth & Income)
SUB-INVESTMENT MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
XXXX XXXXXXX LIFE INSURANCE COMPANY
AND
XXXXXX INVESTMENT MANAGEMENT, INC.
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the first day of November, 2000 by and among Xxxx
Xxxxxxx Variable Series Trust I, a Massachusetts business trust (the "Trust"),
Xxxx Xxxxxxx Life Insurance Company, a Massachusetts corporation ("JHLICO"), and
Xxxxxx Investment Management, Inc.("Advisers");
WHEREAS, the Trust 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 Advisers are each engaged in the business of rendering
investment advice under the Investment Advisers Act of 1940; and
WHEREAS, the Trust 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 Trust offers shares in several classes, one of which is
designated as the Growth & Income Fund, (together with all other classes
established by the Trust, collectively referred to as the "Funds"), each of
which pursues its investment objectives through separate investment policies;
and
WHEREAS, the Trust has retained JHLICO to render investment management
services to the Trust 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 Growth & Income Fund.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-MANAGER
(a) Subject Fund. Advisers is hereby appointed and Advisers hereby accepts
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the appointment to act as an investment adviser and manager to the
Growth & Income Fund (the "Subject Fund") for the period and on the
terms herein set forth, for the compensation herein provided.
(b) Incumbency Certificates. Advisers shall furnish to JHLICO, immediately
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upon execution of this Agreement, a certificate of a senior officer of
Advisers setting forth (by name and title, and including specimen
signatures) those employees of Advisers who are authorized to issue
instructions for trades for the Subject Fund pursuant to the
provisions of this Agreement. Advisers shall promptly provide
supplemental certificates, as needed, to reflect all changes with
respect to such employees for any Subject Fund. On behalf of the
Trust, JHLICO shall instruct the custodian for the Subject Fund to
accept instructions with respect to the Subject Fund from the
employees of Advisers so named.
(c) Independent Contractor. Advisers shall for all purposes herein be
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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 Trust.
(d) Advisers' Representations. Advisers represents, warrants and agrees
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(i) that it is registered as an investment adviser under the
Investment Advisers Act of 1940, and that it will remain so registered
and will comply with the requirements of said Act, and the rules and
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regulations thereunder, at all times while this Agreement remains in
effect, (ii) that it will promptly notify JHLICO if the foregoing
representation and agreement shall cease to be true (in any material
respect) at any time during the term of this Agreement, (iii) that it
will promptly notify JHLICO of any material change in the senior
management or ownership of Advisers, or of any change in the identity
of the personnel who manage the Subject Fund(s), (iv) that it has
adopted a code of ethics complying with the requirements of Rule 17j-1
of the Securities and Exchange Commission (the "SEC") under the 1940
Act and has provided true and complete copies of such code to the
Trust and to JHLICO, and has adopted procedures designed to prevent
violations of such code, and (v) that it has furnished the Trust and
JHLICO each with a copy of Advisers' Form ADV, as most recently filed
with the SEC, and will promptly furnish copies of each future
amendment thereto.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
Advisers 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 said Fund, as set forth in the Subject Fund's current Prospectus
and Statement of Additional Information. From time to time, JHLICO or the Trust
may provide Advisers in writing (including, without limit, electronic
communication) with additional or amended investment policies, guidelines and
restrictions. Advisers, as a sub-manager, 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 JHLICO and
the Board of Trustees of the Trust, consistent with the applicable investment
policies, guidelines and restrictions, the provisions of the Trust's Declaration
of Trust, Bylaws, prospectus, statement of additional information (each as in
effect 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, each as
delivered to Advisers in writing by JHLICO or the Trust from time to time). In
the event that, in addition to Advisers, 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 Advisers will not be held responsible for such other investment advisers'
or sub-managers' compliance with policies and limitations applicable to the
Subject Fund. By its signature below, Advisers acknowledges receipt of a copy of
the Trust's Declaration of Trust, Bylaws, prospectus, and statement of
additional information, each as in effect on the date of this Agreement.
Advisers will, at its own expense:
(a) advise the Subject Fund in connection with investment policy decisions
regarding the Subject Assets and, upon request, furnish the Trust with research,
economic and statistical data in connection with investments and investment
policies for the Subject Assets;
(b) submit such reports and information as JHLICO or the Trust's Board of
Trustees may reasonably request, to assist the custodian in its determination of
the market value of securities held in the Subject Assets (it being understood
that Advisers is not responsible for the pricing of the Subject Assets);
(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
required by the 1940 Act to be maintained and preserved by the Trust, to the
extent not maintained by the custodian, transfer agent or JHLICO;
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(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 statements showing all transactions effected for the
Subject Assets during the month, a summary listing all investments held in the
Subject Assets 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 (it being understood that Advisers is not
responsible for such accounting services); and
(h) absent specific instructions to the contrary provided to it by JHLICO
and subject to its receipt of all necessary voting materials, vote all proxies
with respect to investments of the Subject Assets in accordance with Advisers'
proxy voting policy as most recently provided to JHLICO.
On its own initiative, Advisers will apprise JHLICO and the Trust of
important political and economic developments materially affecting the
marketplace or the Subject Assets, and will furnish JHLICO and the Trust's Board
of Trustees from time to time such information as is appropriate for this
purpose. Advisers will also make its personnel available in Boston or other
reasonable locations as often as quarterly to discuss the Subject Assets and
Advisers' management thereof, to educate JHLICO sales personnel with respect
thereto, and for such other purposes as the Trust or JHLICO may reasonably
request.
The Trust and JHLICO will provide timely information to Advisers regarding
such matters as purchases and redemptions of shares in the Subject Fund and the
cash requirements of, and cash available for investment in, the Subject Fund.
JHLICO will timely provide Advisers with copies of monthly accounting statements
for the Subject Fund, and such other information (including, without limitation,
reports concerning the classification of portfolio securities for purposes of
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") and
Treasury Regulations Section 1.817) as may be reasonably necessary or
appropriate in order for Advisers to perform its responsibilities hereunder.
3. ALLOCATION OF EXPENSES.
Each party to this Agreement shall bear the costs and expenses of
performing its obligations hereunder. In this regard, the Trust specifically
agrees to assume the expense of:
(a) brokerage commissions for transactions in the portfolio investments of
the Trust and similar fees and charges for the acquisition,
disposition, lending or borrowing of such portfolio investments;
(b) custodian fees and expenses;
(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Trust to federal, state or other governmental
agencies; and
(d) interest payable on the Trust's borrowings.
Nothing in this Agreement shall alter the allocation of expenses and costs
agreed upon between the Trust and JHLICO in the Investment Management Agreement
or any other agreement to which they are parties.
4. SUB-ADVISORY FEES.
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For all of the services rendered with respect to the Subject Assets as
herein provided, JHLICO shall pay to Advisers a fee (for the payment of which
the Trust shall have no obligation or liability), based on the Current Net
Assets (as defined below) of the Subject Assets, as set forth in Schedule I
attached hereto and made a part hereof. Such 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 the Subject Assets
accrued to but excluding the date of termination shall be paid promptly
following such termination. For purposes of computing the amount of advisory fee
accrued for any day, "Current Net Assets" shall mean the net 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 Subject Assets,
Advisers 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 the best available price and most favorable execution with
respect to all such purchases and sales of portfolio securities for said Subject
Assets. Advisers 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 Subject Fund and its shareholders,
Advisers 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 the Advisers, 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. Advisers shall determine in good
faith that such higher cost was reasonable in relation to the value of the
brokerage and research services provided.
Advisers will not receive any tender offer solicitation fees or similar
payments in connection with the tender of investments of any Fund.
6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.
Except for such records Advisers is required to maintain under the
Investment Advisers Act of 1940, as amended, the Trust shall own and control all
records maintained hereunder by Advisers on the Trust's behalf and, in the event
of termination of this Agreement with respect to the Subject Assets for any
reason, all records relating to the Subject Fund owned by the Trust shall be
promptly returned to the Trust, free from any claim or retention of rights by
Advisers, provided that (subject to the last paragraph of this Section 6)
Advisers may retain copies of such records. Advisers also agrees, upon request
of the Trust, promptly to surrender such books and records or, at its expense,
copies thereof, to the Trust or make such books and records available for audit
or inspection by representatives of regulatory authorities or other persons
reasonably designated by the Trust. Advisers further agrees to maintain, prepare
and preserve such books and records as it is required to as an investment
sub-adviser to the Trust in accordance with the 1940 Act and rules thereunder,
including but not limited to Rules 31a-1 and 31a-2, and to supply all such
information related to the Subject Fund as may be requested by any insurance
regulatory authorities in connection with such insurance authorities'
administration of insurance laws and regulations. Advisers shall supply the
Board of Trustees and officers of the Trust and JHLICO with all statistical
information regarding investments made on behalf of the Subject Assets which is
reasonably required by them and reasonably available to Advisers.
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Advisers 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 Trust has authorized such disclosure, or
if such disclosure is expressly requested by applicable federal or state
regulatory authorities. Advisers shall provide reasonable notice to the Trust of
any such disclosure to applicable federal or state regulatory officials in
connection with any audit of the Subject Fund or the Trust, and in any event,
Advisers shall provide reasonable notice to the Trust of any threatened, pending
or final regulatory enforcement or other disciplinary action involving Advisers.
7. LIABILITY; STANDARD OF CARE.
Advisers shall be liable to JHLICO, the Trust or the Trust's shareholders
for losses resulting from any willful misfeasance, bad faith or negligence in
the performance of Advisers' duties or the reckless disregard of its obligations
and duties under this Agreement or the Investment Management Agreement. No
provision hereof shall be deemed to protect any trustee or officer of the Trust
against any such liability to which he might otherwise be subject by reason of
any willful misfeasance, bad faith or negligence in the performance his duties
or the reckless disregard of his obligations and duties. Adviser shall employ
only qualified personnel to manage the Subject Assets; shall comply with all
applicable laws and regulations in the discharge of its duties under this
Agreement; 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 Trust's Declaration of Trust, Bylaws, prospectus and statement
of additional information; 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 Fund 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 at all times in the best interests of
the Trust; 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, Advisers 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 with respect to the
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Subject Fund on the date hereof and, 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
(a) by either the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting shares of such Fund, and (b) 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.
(b) 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 with respect to any such Fund notwithstanding (A) that
this Agreement has not been approved by the holders of a majority of
the outstanding shares of any other Fund affected hereby, and (B) 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.
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(c) Termination. This Agreement may be terminated at any time, without
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payment of any penalty, by the Trust pursuant to a vote of the
trustees of the Trust 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 Advisers and JHLICO.
This Agreement may be terminated by Advisers on at least ninety days'
prior written notice to the Trust and JHLICO, and may be terminated by
JHLICO on at least ninety days' prior written notice to the Trust and
Advisers.
(d) Automatic Termination. This Agreement shall automatically and
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immediately terminate in the event of its assignment or if the
Investment Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE; USE OF ADVISERS' NAME AND LOGO.
(a) The services of Advisers to the Trust 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 Advisers and of
its subsidiaries and affiliates may continue to engage in providing
Fund management services and advice to other investment companies,
whether or not registered, and other investment advisory clients.
(b) During the term of this Agreement, JHLICO and the Trust shall have the
non-exclusive and non-transferable right to use Advisers' name and
logo in all materials relating to the Subject Fund, including all
prospectuses, proxy statements, reports to shareholders, sales
literature and other written materials prepared for distribution to
shareholders of the Trust or the public. However, prior to
distribution of any materials which refer to Advisers or use its logo,
JHLICO shall consult with Advisers and shall furnish to Advisers a
copy of such materials. Advisers agrees to cooperate with JHLICO and
to review such materials promptly. JHLICO shall not distribute such
materials if Advisers reasonably objects in writing, within ten (10)
days of its receipt of such copy (or such other time as may be
mutually agreed), to the manner in which its name and logo are used.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Subject Assets, Advisers 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 Subject Assets with those for other registered
investment companies managed by Advisers or its affiliates, if orders are
allocated in a manner deemed equitable by Advisers among the accounts and at a
price approximately averaged.
11. 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 until approved specifically by (a) the Board of
Trustees of the Trust, 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 Trust 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.
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It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the trustees, shareholders, officers, agents or
employees of the Trust personally, but only bind the trust property of the
Trust, as provided in the Trust's Declaration of Trust.
13. 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, by hand or by commercial overnight delivery
service, addressed as follows:
ADVISERS Xxxxxx Investment Management, Inc.
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
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
TRUST: Xxxx Xxxxxxx Variable Series Trust I
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
14. 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.
15. ASSIGNMENT.
This Agreement may not be assigned by any party, either in whole or in
part, without the prior written consent of each other party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.
ATTEST: XXXX XXXXXXX VARIABLE SERIES
TRUST I
/s/Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxx Xxxx
Counsel Title: Chairman
ATTEST: XXXX XXXXXXX LIFE INSURANCE COMPANY
/s/Xxxxxxxxxx Xxxxx By: /s/Xxxxxx X. Xxxxxxx
Assistant Secretary Title: Senior Vice President and
Chief Investment Strategist
ATTEST: XXXXXX INVESTMENT MANAGEMENT, INC.
/s/Xxxxxx Xxxxxxxx By: /s/Xxxx X. Xxxxxx
Assistant Vice President Title: Senior Vice President
SCHEDULE I
FEES
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Current Net Assets Under Management Sub-Advisory Fee
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On the first $150,000,000 of Subject Assets 50 basis points (0.50%) per annum
On the next $150,000,000 of Subject Assets 45 basis points (0.45%) per annum
On Subject Assets over $300,000 35 basis points (0.35%) per annum
