INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 31st day of May, 1997, by and between Xxxx
Xxxxxx Variable Investment Series, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter called the
"Fund"), and Xxxx Xxxxxx InterCapital Inc., a Delaware corporation
(hereinafter called the "Investment Manager"):
WHEREAS, 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 is registered as an investment adviser
under the Investment Advisers Act of 1940, and engages in the business of
acting as investment adviser; and
WHEREAS, The Fund is authorized to issue shares of beneficial interest in
separate portfolios (the "Portfolios") with each Portfolio representing
interests in a separate portfolio of securities and other assets; and
WHEREAS, The Fund presently offers shares in several Portfolios, such
Portfolios together with all other Portfolios subsequently established by the
Fund with respect to which the Fund desires to retain the Investment Manager
to render management and investment advisory services in the manner and on
the terms and conditions hereinafter set forth being collectively referred to
as the "Portfolios"; and
WHEREAS, The Investment Manager desires to be retained to perform
services on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as investment
manager of the Portfolios and, subject to the supervision of the Trustees, to
supervise the investment activities of the Portfolios as hereinafter set
forth. Without limiting the generality of the foregoing, the Investment
Manager shall obtain and evaluate such information and advice relating to the
economy, securities and commodities markets and securities and commodities as
it deems necessary or useful to discharge its duties hereunder; with respect
to the Portfolios other than the European Growth Portfolio and the Pacific
Growth Portfolio, shall continuously manage the assets of the Portfolios in a
manner consistent with the investment objectives and policies of the
Portfolios and shall determine the securities and commodities to be
purchased, sold or otherwise disposed of by the Portfolios and the timing of
such purchases, sales and dispositions; with respect to the European Growth
Portfolio and the Pacific Growth Portfolio, shall supervise the management of
the assets of the Portfolio in a manner consistent with the investment
objectives and policies of the Portfolio and subject to such other
limitations and directions as the Trustees of the Fund may from time to time
prescribe; and shall take such further action, including the placing of
purchase and sale orders on behalf of the Portfolios other than the European
Growth Portfolio and the Pacific Growth Portfolio, as the Investment Manager
shall deem necessary or appropriate. The Investment Manager shall also
furnish to or place at the disposal of the Fund such of the information,
evaluations, analyses and opinions formulated or obtained by the Investment
Manager in the discharge of its duties as the Fund may, from time to time,
reasonably request.
In the event the Fund establishes another Portfolio other than the
current Portfolios with respect to which it desires to retain the Investment
Manager to render investment advisory services hereunder, it shall notify the
Investment Manager in writing. If the Investment Manager is willing to render
such services, it shall notify the Fund in writing, whereupon such other
Portfolio shall become a Portfolio hereunder.
2. The Investment Manager shall, at its own expense, enter into
Sub-Advisory Agreements in respect of the European Growth Portfolio and the
Pacific Growth Portfolio with a Sub-Adviser or Sub-Advisers to make
determinations as to the securities and commodities to be purchased, sold or
otherwise disposed of by the European Growth Portfolio or the Pacific Growth
Portfolio and the timing of such purchases, sales and dispositions and to
take such further action, including the placing of purchase and sale orders
on behalf of the Portfolio, as the Sub-Adviser, in consultation with the
Investment Manager, shall deem necessary or appropriate; provided that the
Investment Manager shall be responsible for monitoring compliance by such
Sub-Adviser with the investment policies and restrictions of the Portfolio
and with such other limitations or directions as the Trustees of the Fund may
from time to time prescribe.
3. The Investment Manager 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 Investment
Manager shall be deemed to include persons employed or otherwise retained by
the Investment Manager 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 Investment Manager
shall, as agent for the Fund, maintain the Fund's records and books of
account (other than those maintained by the Fund's transfer agent, registrar,
custodian and other agencies). All such books and records so maintained shall
be the property of the Fund and, upon request therefor, the Investment
Manager shall surrender to the Fund such of the books and records so
requested.
4. The Fund will, from time to time, furnish or otherwise make available
to the Investment Manager such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the
Investment Manager may reasonably require in order to discharge its duties
and obligations hereunder.
5. The Investment Manager shall bear the cost of rendering the
investment management and supervisory 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, and provide such office space,
facilities and equipment and such clerical help and bookkeeping services as
the Fund shall reasonably require in the conduct of its business. The
Investment Manager shall also bear the cost of telephone service, heat,
light, power and other utilities provided to the Fund.
6. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including without limitation: the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities or commodities and other
property, and any stock transfer or dividend agent or agents appointed by the
Fund; brokers' commissions chargeable to the Fund in connection with
portfolio transactions to which the Fund is a party; all taxes, including
securities or commodities issuance and transfer taxes, and fees payable by
the Fund to federal, state or other governmental agencies; the cost and
expense of engraving or printing certificates representing shares of the
Fund; all costs and expenses in connection with the registration and
maintenance of registration of the Fund and its shares with the Securities
and Exchange Commission and various states and other jurisdictions (including
filing fees and legal fees and disbursements of counsel); the cost and
expense of printing (including typesetting) and distributing prospectuses and
statements of additional information of the Fund and supplements thereto to
the Fund'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 any
corporate affiliate of the Investment Manager; 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 Fund'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 or the Investment Manager, and of
independent accountants, in connection with any
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matter relating to the Fund; membership dues of industry associations;
interest payable on Fund borrowings; postage; insurance premiums on property
or personnel (including officers and Trustees) of the Fund 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 Fund's operation unless
otherwise explicitly provided herein.
7. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the various Portfolios of the
Fund shall pay to the Investment Manager monthly compensation determined by
applying the following annual rates to the daily net assets of the respective
Portfolios determined as of the close of each business day: (a) each of the
Money Market Portfolio, the High Yield Portfolio and the Strategist Portfolio
-- 0.50% of daily net assets; (b) the Equity Portfolio -- 0.50% of daily net
assets up to $1 billion and 0.475% of daily net assets over $1 billion; (c)
the Quality Income Plus Portfolio -- 0.50% of daily net assets up to $500
million and 0.45% of daily net assets over $500 million; (d) the Utilities
Portfolio -- 0.65% of daily net assets up to $500 and 0.55% of daily net
assets over $500 million; (e) the Dividend Growth Portfolio -- 0.625% of
daily net assets up to $500 million; 0.50% of the next $500 million; and
0.475% of daily net assets over $1 billion; (f) the Capital Growth Portfolio
-- 0.65% of daily net assets; (g) each of the Income Builder Portfolio, the
Global Dividend Growth Portfolio and the Capital Appreciation Portfolio --
0.75% of daily net assets; and (h) each of the European Growth Portfolio and
the Pacific Growth Portfolio -- 1.00% of daily net assets. Except as
hereinafter set forth, compensation under this Agreement shall be calculated
and accrued daily and the amounts of the daily accruals shall be paid
monthly. Such calculations shall be made by applying 1/365ths of the annual
rates to the net assets of the respective Portfolios each day determined as
of the close of business on that day or the last previous business day. 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 that part of
the month this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fees as set forth above.
Subject to the provisions of paragraph 8 hereof, payment of the
Investment Manager's compensation for the preceding month shall be made as
promptly as possible after completion of the computations contemplated by
paragraph 8 hereof.
8. In the event that the operating expenses of any of the Money Market
Portfolio, the High Yield Portfolio, the Equity Portfolio, the Quality Income
Plus Portfolio, the Strategist Portfolio, the Utilities Portfolio or the
Dividend Growth Portfolio, including amounts payable to the Investment
Manager pursuant to paragraph 7 hereof, for any year ending on a date on
which this Agreement is in effect exceed 1.5% of the average daily net assets
of such Portfolio up to $30 million and 1.0% of the average daily net assets
of such Portfolio in excess of $30 million (the "expense limitation" of these
Portfolios), or in the event that the operating expenses of any of the
Capital Growth Portfolio, the Global Dividend Growth Portfolio, the European
Growth Portfolio or the Pacific Growth Portfolio, including amounts payable
to the Investment Manager pursuant to paragraph 7 hereof, for any year ending
on a date on which this Agreement is in effect exceed 2.5% of the average
daily net assets of such Portfolio up to $30 million, 2.0% of the next $70
million and 1.5% of the average daily net assets of such Portfolio in excess
of $100 million (the "expense limitation" of these Portfolios), the
Investment Manager shall reduce its management fee in respect of such
Portfolio to the extent of such excess and will reimburse such Portfolio for
annual operating expenses in excess of the applicable expense limitation, up
to the amount of the management fee for that Portfolio which otherwise would
be payable for that year; 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 such 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 such Portfolio as at the end of the
last business day of the month.
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9. The Investment Manager will use its best efforts in the supervision
and management of the investment activities of the Fund, but in the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations hereunder, the Investment Manager shall not be liable to the
Fund or any of its investors for any error of judgment or mistake of law or
for any act or omission by the Investment Manager or for any losses sustained
by the Fund or its investors.
10. Nothing contained in this Agreement shall prevent the Investment
Manager or any affiliated person of the Investment Manager from acting as
investment adviser or manager for any other person, firm or corporation and
shall not in any way bind or restrict the Investment Manager or any such
affiliated person from buying, selling or trading any securities or
commodities for their own accounts or for the account of others for whom they
may be acting. Nothing in this Agreement shall limit or restrict the right of
any Trustee, officer or employee of the Investment Manager to engage in any
other business or to devote his or her time and attention in part to the
management or other aspects of any other business whether of a similar or
dissimilar nature.
11. This Agreement shall remain in effect until April 30, 1999 and from
year to year thereafter with respect to each Portfolio provided such
continuance with respect to a 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 such 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 days' written notice to the Investment Manager, either by majority
vote of the Trustees of the Fund or, with respect to a Portfolio, by the vote
of a majority of the outstanding voting securities of such Portfolio; (b)
this Agreement shall immediately terminate in the event of its assignment (to
the extent required by the Act and the rules thereunder) unless such
automatic terminations shall be prevented by an exemptive order of the
Securities and Exchange Commission; and (c) the Investment Manager may
terminate this Agreement without payment of penalty on thirty days' written
notice to the Fund. 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.
Any approval of this Agreement by the holders of a majority of the
outstanding voting securities of any Portfolio shall be effective to continue
this Agreement with respect to such Portfolio notwithstanding (a) that this
Agreement has not been approved by the holders of a majority of the
outstanding voting securities of any other Portfolio or (b) that this
Agreement has not been approved by the vote of a majority of the outstanding
voting securities of the Fund, unless such approval shall be required by any
other applicable law or otherwise.
12. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund 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
nor the Investment Manager shall be liable for failing to do so.
13. This Agreement shall be construed in accordance with the laws 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,
conflicts with the applicable provisions of the Act, the latter shall control.
14. The Investment Manager and the Fund each agree that the name "Xxxx
Xxxxxx," which comprises a component of the Fund's name, is a property right
of Xxxx Xxxxxx Xxxxxxxx Inc. The Fund agrees and consents that (i) it will
only use the name "Xxxx Xxxxxx" as a component of its name and for no other
purpose, (ii) it will not purport to grant to any third party the right to
use the name "Xxxx Xxxxxx" for any purpose, (iii) the Investment Manager or
its parent, Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Discover & Co.,
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or any corporate affiliate of the Investment Manager's parent, may use or
grant to others the right to use the name "Xxxx Xxxxxx," or any combination
or abbreviation thereof, as all or a portion of a corporate or business name
or for any commercial purpose, including a grant of such right to any other
investment company, (iv) at the request of the Investment Manager or its
parent, the Fund will take such action as may be required to provide its
consent to the use of the name "Xxxx Xxxxxx," or any combination or
abbreviation thereof, by the Investment Manager or its parent or any
corporate affiliate of the Investment Manager's parent, or by any person to
whom the Investment Manager or its parent or any corporate affiliate of the
Investment Manager's parent shall have granted the right to such use, and (v)
upon the termination of any investment advisory agreement into which the
Investment Manager and the Fund may enter, or upon termination of affiliation
of the Investment Manager with its parent, the Fund shall, upon request by
the Investment Manager or its parent, cease to use the name "Xxxx Xxxxxx" as
a component of its name, and shall not use the name, or any combination or
abbreviation thereof, as a part of its name or for any other commercial
purpose, and shall cause its officers, Trustees and shareholders to take any
and all actions which the Investment Manager or its parent may request to
effect the foregoing and to reconvey to the Investment Manager or its parent
any and all rights to such name.
The Declaration of Trust establishing Xxxx Xxxxxx Variable Investment
Series, dated February 24, 1983, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name Xxxx
Xxxxxx Variable Investment Series refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally;
and no Trustee, shareholder, officer, employee or agent of Xxxx Xxxxxx
Variable Investment Series shall be held to any personal liability, nor shall
resort be had to their private property for the satisfaction of any
obligation or claim or otherwise, in connection with the affairs of said Xxxx
Xxxxxx Variable Investment Series, but the Trust Estate only shall be liable.
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.
XXXX XXXXXX VARIABLE INVESTMENT SERIES
By:
......................................
Attest:
.....................................
XXXX XXXXXX INTERCAPITAL INC.
By:
......................................
Attest:
.....................................
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XXXX XXXXXX VARIABLE INVESTMENT SERIES
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
February 5, 1998
To Xxxx Xxxxxx InterCapital Inc.:
The Investment Management Agreement between you and this Fund (the
"Agreement") provides that in the event the Fund establishes additional
Portfolios with respect to which it desires to retain you to render investment
advisory services under the Agreement, it shall notify you in writing, and
further provides that if you are willing to render such services, you shall
notify the Fund in writing, whereupon such Portfolios shall become Portfolios
under the Agreement.
The Fund hereby informs you that it has established two additional
Portfolios, designated as the S&P 500 Index Portfolio and the Competitive Edge
"Best Ideas" Portfolio, and that it desires to retain you to render investment
advisory services to those Portfolios under the Agreement, for which the Fund
shall pay you monthly compensation determined by applying the annual rate of
0.40% to the net assets of the S&P 500 Index Portfolio and 0.65% to the net
assets of the Competitive Edge "Best Ideas" Portfolio, in each case determined
as of the close of each business day.
Very truly yours,
XXXX XXXXXX VARIABLE
INVESTMENT SERIES
by
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Xxxx Xxxxxx InterCapital Inc. hereby notifies Xxxx Xxxxxx Variable Investment
Series of its willingness to render investment advisory services to the S&P 500
Index Portfolio and the Competitive Edge "Best Ideas" Portfolio under the
Agreement, with the fees as specified above.
XXXX XXXXXX INTERCAPITAL INC.
by
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