INVESTMENT SUBADVISORY AGREEMENT
SMALL-CAP VALUE PORTFOLIO
THIS AGREEMENT, made this day of 2001, is between JEFFERSON PILOT
INVESTMENT ADVISORY CORPORATION, a Tennessee corporation with offices at Xxx
Xxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxxxxx, 00000 (the "Investment Manager") and
Dalton, Greiner, Xxxxxxx, Xxxxx & Co. (the "Subadviser") a New York corporation
with offices at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000.
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-Cap Value Portfolio (the
"Portfolio") in the manner and on the terms hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained the Investment Manager and the Subadviser hereby agree as
follows:
Page 1
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 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
Page 2
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.
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
Page 3
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.
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
Page 4
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.
Notwithstanding anything herein, the Subadviser shall be responsible for
any and all commercially reasonable expenses relating to the filing, printing
and mailing of supplements to the Fund's registration statement, provided that
such supplements relate solely to an action taken or proposed to be taken by the
Subadviser, including, but not limited to, changes in portfolio manager(s) or
other organizational changes.
E. The Subadviser will select brokers and dealers to effect all
portfolio transactions subject to the conditions set forth herein (except to the
extent such transactions are cross-trades effected in accordance with Rule 17a-7
and such policies or procedures as may be established by the Board of
Directors). 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. The Investment
Manager reserves the right to direct the Subadviser upon written notice not to
execute transactions through any particular broker(s) or dealer(s), and the
Subadviser agrees to comply with such request within ten business days of
receiving written notice.
The Subadviser will monitor the use of broker-dealers. 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 "Best execution" shall mean prompt and reliable execution
at the most favorable securities price, taking into account the other provisions
hereinafter set forth. Whenever the Subadviser places orders, or directs the
placement of orders, for the purchase or sale of portfolio securities on behalf
of the Portfolio, in selecting brokers or dealers to execute such orders, the
Subadviser is expressly authorized to consider the fact that a broker or dealer
has furnished statistical, research or other information or services which
enhance the Subadviser's research and portfolio management capability generally.
It is further understood in accordance with Section 28(e) of the Securities
Exchange Act of 1934, as amended, that the Subadviser may negotiate with and
assign to a broker a commission which may exceed the commission which another
broker would have charged for effecting the transaction if the Subadviser
determines in good faith that the amount of commission charged was reasonable in
relation to the value of brokerage and/or research services (as defined in
Section 28(e)) provided by such broker. 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
Page 5
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 accordance with guidelines
adopted by the Board of Directors of the Fund and communicated to the
Subadviser, or, absent any guidelines, in the manner the Subadviser considers to
be the most equitable and consistent with its fiduciary obligations to the
Portfolio.
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-Cap Value 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
Appendix A to this Agreement. Payments shall be made to the Subadviser within
the first five business days 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. Solely for the purpose of determining the promptness of payments,
payments shall be considered made upon mailing or wiring pursuant to wiring
instructions provided by the Subadviser.
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.
Page 6
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 past or present shareholder of the fund that is not arising from
Subadviser's 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
Page 7
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, 2003. 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.
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.
Page 8
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:
Dalton, Greiner, Xxxxxxx, Xxxxx & Co.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxx
Facsimile
(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 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.
Page 9
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:____________________ BY: _______________________
TITLE:_____________________ TITLE:_____________________
DALTON, GREINER, XXXXXXX, XXXXX & CO.
ATTEST:____________________ BY: _______________________
TITLE:_____________________ TITLE:_____________________
Page 10
