SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 1st day of November, 1998 by and between Xxxxxx
Xxxxxxx Xxxx Xxxxxx Advisors Inc., a Delaware corporation (hereinafter called
the "Investment Manager"), and Xxxxxx Xxxxxxx Asset Management Inc., a Delaware
corporation (hereinafter called the "Sub-Advisor").
WHEREAS, Xxxxxx Xxxxxxx Xxxx Xxxxxx Variable Investment Series (hereinafter
called the "Fund") is engaged in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (the "Act"); and
WHEREAS, the Investment Manager has entered into an Investment Management
Agreement (hereinafter called the "Investment Management Agreement") with the
Fund wherein the Investment Manager has agreed to provide investment management
services to the fifteen current Portfolios of the Fund and may provide such
services to other Portfolios subsequently established by the Fund; and
WHEREAS, the Sub-Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940 and engages in the business of acting as an
investment adviser; and
WHEREAS, the Investment Manager desires to retain the services of the
Sub-Advisor to render investment advisory services for each of the Pacific
Growth Portfolio (effective November 1, 1998) and the European Growth Portfolio
(effective January 1, 1999) in the manner and on the terms and conditions
hereinafter set forth (these Portfolios together with all other Portfolios
subsequently established by the Fund with respect to which the Fund will have
retained the Investment Manager to render management and investment advisory
services under the Investment Management Agreement and with respect to which the
Investment Manager desires to retain the Sub-Advisor to render investment
advisory services in the manner and on the terms and conditions hereinafter set
forth being collectively referred to as the "Sub-Advisory Portfolios"); and
WHEREAS, the Sub-Advisor desires to be retained by the Investment Manager to
perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to the supervision of the Fund, its officers and Trustees, and
the Investment Manager, and in accordance with the investment objectives,
policies and restrictions set forth in the then current Registration
Statement relating to the Fund, and such investment objectives, policies and
restrictions from time to time prescribed by the Trustees of the Fund and
communicated by the Investment Manager to the Sub-Advisor, the Sub-Advisor
agrees to provide each Sub-Advisory Portfolio with investment advisory
services; to obtain and evaluate such information and advice relating to the
economy, securities markets and securities as it deems necessary or useful to
discharge its duties hereunder; to continuously manage the assets of each
Sub-Advisory Portfolio in a manner consistent with the investment objective
and policies of the Sub-Advisory Portfolio; to make decisions as to foreign
currency matters and make determinations as to forward foreign exchange
contracts and options and futures contracts in foreign currencies; shall
determine the securities to be purchased, sold or otherwise disposed of by
the Sub-Advisory Portfolio and the timing of such purchases, sales and
dispositions; to take such further action, including the placing of purchase
and sale orders on behalf of the Sub-Advisory Portfolio, as it shall deem
necessary or appropriate; to furnish to or place at the disposal of the
Sub-Advisory Portfolio and the Investment Manager such of the information,
evaluations, analyses and opinions formulated or obtained by it in the
discharge of its duties as the Fund and the Investment Manager may, from time
to time, reasonably request. The Investment Manager and the Sub-Advisor shall
each make its officers and employees available to the other from time to time
at reasonable times to review investment policies of the Sub-Advisory
Portfolios and to consult with each other.
In the event the Fund establishes another Portfolio other than the current
Sub-Advisory Portfolios with respect to which the Investment Manager desires to
retain the Sub-Advisor to render investment advisory services hereunder, the
Investment Manager shall notify the Sub-Advisor in writing, whereupon such
Portfolio shall become a Sub-Advisory Portfolio hereunder.
2. The Sub-Advisor shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Sub-Advisor shall
be deemed to include persons employed or otherwise retained by the
Sub-Advisor to furnish statistical and other factual data, advice regarding
economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Investment Manager may desire. The Sub-Advisor shall maintain whatever
records as may be required to be maintained by it under the Act. All such
records so maintained shall be made available to the Fund, upon the request
of the Investment Manager or the Fund.
3. The Fund will from time to time, furnish or otherwise make available
to the Sub-Advisor such financial reports, proxy statements and other
information relating to the business and affairs of the Sub-Advisory
Portfolios as the Sub-Advisor may reasonably require in order to discharge
its duties and obligations hereunder or to comply with any applicable law and
regulations and the investment objectives, policies and restrictions from
time to time prescribed by the Trustees of the Fund.
4. The Sub-Advisor shall bear the cost of rendering the investment
advisory services to be performed by it under this Agreement, and shall, at
its own expense, pay the compensation of the officers and employees, if any,
of the Fund, employed by the Sub-Advisor, and such clerical help and
bookkeeping services as the Sub-Advisor shall reasonably require in
performing its duties hereunder.
5. The Fund, on behalf of each Sub-Advisory Portfolio, assumes and shall
pay or cause to be paid all other expenses of the Sub-Advisory Portfolio,
including, without limitation: any fees paid to the Investment Manager; the
charges and expenses of any registrar, any custodian, sub-custodian or
depository appointed by the Fund for the safekeeping of the Sub-Advisory
Portfolio's cash, portfolio securities and other property, and any stock
transfer or dividend agent or agents appointed by the Fund; brokers'
commissions chargeable to the Sub-Advisory Portfolio in connection with
portfolio securities transactions to which the Sub-Advisory Portfolio is a
party; all taxes, including securities issuance and transfer taxes, and fees
payable by the Sub-Advisory Portfolio to federal, state or other governmental
agencies or pursuant to any foreign laws; the cost and expense of engraving
or printing certificates representing shares of the Sub-Advisory Portfolio;
all costs and expenses in connection with the registration and maintenance of
registration of the Sub-Advisory Portfolio and its shares with the Securities
and Exchange Commission and various states and other jurisdictions or pursuant
to any foreign laws (including filing fees and legal fees and disbursements of
(counsel); the cost and expense of printing (including typesetting) and
distributing prospectuses of the Fund and supplements thereto to the
Sub-Advisory Portfolio's shareholders; all expenses of shareholders' and
Trustees' meetings and of preparing, printing and mailing proxy statements and
reports to shareholders; fees and travel expenses of Trustees or members of any
advisory board or committee who are not employees of the Investment Manager or
Sub-Advisor; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption whether in shares or in cash; charges and
expenses of any outside service used for pricing of the Sub-Advisory Portfolio's
shares; charges and expenses of legal counsel, including counsel to the Trustees
of the Fund who are not interested persons (as defined in the Act) of the Fund,
the Investment Manager or the Sub-Advisor, and of independent accountants, in
connection with any matter relating to the Portfolio; membership dues of
industry associations; interest payable on Sub-Advisory Portfolio borrowings;
postage; insurance premiums on property or personnel (including officers and
Trustees) of the Sub-Advisory Portfolio which inure to its benefit;
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related thereto); and
all other charges and costs of the Sub-Advisory Portfolio's operation unless
otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Sub-Advisor, the Investment Manager shall pay to the
Sub-Advisor monthly compensation equal to 40% of its monthly compensation
receivable pursuant to the Investment Management Agreement in respect of each
of the European Growth Portfolio and the Pacific Growth Portfolio. Any
subsequent change in the Investment Agreement which has the effect of raising
or lowering the compensation of the Investment Manager will have the
concomitant effect of raising or lowering the fee payable to the Sub-Advisor
under this Agreement. In addition, if the Investment Manager has undertaken
in the Fund's Registration Statement as filed under
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the Act or elsewhere to waive all or part of its fee under the Investment
Management Agreement, the Sub-Advisor's fee payable under this Agreement will be
proportionately waived in whole or in part. The calculation of the fee payable
to the Sub-Advisor pursuant to this Agreement will be made, each month, at the
time designated for the monthly calculation of the fee payable to the Investment
Manager pursuant to the Investment Manager Agreement. If this Agreement becomes
effective subsequent to the first day of a month or shall terminate before the
last day of a month, compensation for the part of the month this Agreement is in
effect shall be prorated in a manner consistent with the calculation of the fee
as set forth above. Subject to the provisions of paragraph 7 hereof, payment of
the Sub-Advisor's compensation for the preceding month shall be made as promptly
as possible after completion of the computations contemplated by paragraph 7
hereof.
7. In the event the operating expenses of the European Growth Portfolio
or the Pacific Growth Portfolio, including amounts payable to the Investment
Manager pursuant to the Investment Management Agreement in respect of either
of these Sub-Advisory Portfolios, for any fiscal year ending on a date on
which this Agreement is in effect, exceed, with respect to each of these
Sub-Advisory Portfolios, 2.5% of the average daily net assets of the
Sub-Advisory Portfolio up to $30 million, 2.0% of the next $70 million and
1.5% of the average daily net assets of the Sub-Advisory Portfolio in excess
of $100 million (the "expense limitation"), the Sub-Advisor shall reduce its
advisory fee in respect of the applicable Sub-Advisory Portfolio to the
extent of 40% of such excess and will reimburse the Investment Manager for
annual operating expenses in the amount of 40% of such excess of the expense
limitation, up to the amount of the Sub-Advisor's fee which would otherwise
be payable in respect of the applicable Sub-Advisory Portfolio under this
Agreement for that year, it being understood that the Investment Manager has
agreed to effect a reduction and reimbursement of 100% of such excess, up to
the amount of its management fee in respect of the Sub-Advisory Portfolio
which otherwise would be payable for that year, in accordance with the terms
of the Investment Management Agreement; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
commissions, and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Sub-Advisory Portfolio. Such reduction, if
any, shall be computed and accrued daily, shall be settled on a monthly
basis, and shall be based upon the expense limitation applicable to the
Sub-Advisory Portfolio as at the end of the last business day of the month.
8. The Sub-Advisor will use its best efforts in the performance of
investment activities on behalf of each Sub-Advisory Portfolio, but in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations hereunder, the Sub-Advisor shall not be liable
to the Investment Manager or the Fund or any of its investors for any error
of judgment or mistake of law or for any act or omission by the Sub-Advisor
or for any losses sustained by the Sub-Advisory Portfolio or its investors.
9. It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee of,
or be otherwise interested in, the Sub-Advisor, and in any person controlled
by or under common control with the Sub-Advisor, and that the Sub-Advisor and
any person controlled by or under common control with the Sub-Advisor may
have an interest in the Fund. It is also understood that the Sub-Advisor and
any affiliated persons thereof or any persons controlled by or under common
control with the Sub-Advisor have and may have advisory, management service
or other contracts with other organizations and persons, and may have other
interests and businesses, and further may purchase, sell or trade any
securities or commodities for their own accounts or for the account of others
for whom they may be acting.
10. This Agreement shall remain in effect until April 30, 1999 and from
year to year thereafter with respect to each Sub-Advisory Portfolio, provided
such continuance with respect to a Sub-Advisory Portfolio is approved at
least annually by the vote of holders of a majority, as defined in the Act,
of the outstanding voting securities of the Sub-Advisory Portfolio or by the
Trustees of the Fund; provided that in either event such continuance is also
approved annually by the vote of a majority of the Trustees of the Fund who
are not parties to this Agreement or "interested persons" (as defined in the
Act) of any such party, which vote must be cast in person at a meeting called
for the purpose of voting on such approval; provided, however, that (a) the
Fund may, at any time and without the payment of any penalty, terminate this
Agreement upon thirty
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days' written notice to the Investment Manager and the Sub-Advisor, either by
majority vote of the Trustees of the Fund or, with respect to a Sub-Advisory
Portfolio, by the vote of a majority of the outstanding voting securities of
such Sub-Advisory Portfolio; (b) this Agreement shall immediately terminate in
the event of its assignment (within the meaning of the Act) unless such
automatic termination shall be prevented by an exemptive order of the Securities
and Exchange Commission; (c) this Agreement shall immediately terminate in the
event of the termination of the Investment Management Agreement; (d) the
Investment Manager may terminate this Agreement without payment of penalty on
thirty days' written notice to the Fund and the Sub-Advisor and; (e) the
Sub-Advisor may terminate this Agreement without the payment of penalty on
thirty days' written notice to the Fund and the Investment Manager. Any notice
under this Agreement shall be given in writing, addressed and delivered, or
mailed post-paid, to the other party at the principal office of such party.
11. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Sub-Advisory Portfolio to supply any
omission, to cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, or if they deem it necessary to conform this
Agreement to the requirements of applicable federal laws or regulations, but
neither the Fund, the Investment Manager nor the Sub-Advisor shall be liable
for failing to do so.
12. This Agreement shall be construed in accordance with the law of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
XXXXXX XXXXXXX XXXX XXXXXX
ADVISORS INC.
By: ..................................
Attest: ..............................
XXXXXX XXXXXXX
ASSET MANAGEMENT INC.
By: ..................................
Attest: ..............................
Accepted and agreed to as of
the day and year first above written:
XXXXXX XXXXXXX XXXX XXXXXX
VARIABLE INVESTMENT SERIES
By: ..................................
Attest: ..............................
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