(Large Cap Value CORE II)
SUB-INVESTMENT MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
XXXXXXX SACHS ASSET MANAGEMENT
AND
XXXX XXXXXXX LIFE INSURANCE COMPANY
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the May 1, 2001 by and among Xxxx Xxxxxxx Variable
Series Trust I, a Massachusetts business trust (the "Trust"), Xxxxxxx Sachs
Asset Management, a unit of the Investment Management Division of Xxxxxxx, Xxxxx
& Co., a New York limited partnership ("Xxxxxxx Sachs"), and Xxxx Xxxxxxx Life
Insurance Company, a Massachusetts corporation ("JHLICO").
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 Xxxxxxx Sachs 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 Large Cap Value CORE II 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
June 1, 2000 (the "Investment Management Agreement"), pursuant to which it may
contract with Xxxxxxx Xxxxx as a sub-manager as provided for herein;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
1. APPOINTMENT OF SUB-MANAGER
(a) Subject Fund. Xxxxxxx Sachs is hereby appointed and Xxxxxxx Xxxxx
hereby accepts the appointment to act as investment adviser and manager to the
Large Cap Value CORE II Fund (the "Subject Fund"), effective May 1, 2001 for the
period and on the terms herein set forth, for the compensation herein provided.
(b) Additional Subject Funds. In the event that the Trust and JHLICO
desire to retain Xxxxxxx Sachs to render investment advisory services hereunder
for any other Fund, they shall so notify Xxxxxxx Xxxxx in writing. If it is
willing to render such services, Advisers shall notify the Trust in writing,
whereupon such Fund shall become a Subject Fund hereunder.
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(c) Incumbency Certificates. Xxxxxxx Sachs shall furnish to JHLICO,
immediately upon execution of this Agreement, a certificate of a senior officer
of Xxxxxxx Xxxxx setting forth (by name and title, and including specimen
signatures) those officers of Xxxxxxx Sachs who are authorized to make
investment decisions for the Subject Fund pursuant to the provisions of this
Agreement. Xxxxxxx Xxxxx shall promptly provide supplemental certificates in
connection with each additional Subject Fund (if any) and further supplemental
certificates, as needed, to reflect all changes with respect to such authorized
officers 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 officers of Xxxxxxx Sachs so named.
(d) Independent Contractor. Xxxxxxx Xxxxx shall for all purposes herein
be 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.
(e) Xxxxxxx Sachs' Representations. Xxxxxxx Xxxxx represents, warrants
and agrees (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 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 Xxxxxxx Sachs, or of any change in the
identity of the personnel who manage the Subject Fund, (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 Xxxxxxx Xxxxx' 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.
Xxxxxxx Sachs will provide for the Subject Fund a continuing and
suitable investment program consistent with the investment policies, objectives
and restrictions of said Fund, as established by the Trust and JHLICO. From time
to time, JHLICO or the Trust may provide Xxxxxxx Xxxxx with additional or
amended investment policies, guidelines and restrictions. Xxxxxxx Sachs, as
sub-manager, will manage the investment and reinvestment of the assets in the
Subject Fund, and perform the functions set forth below, subject to the overall
supervision, direction, control and review of JHLICO and the Board of Trustees
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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 delivered to Xxxxxxx Xxxxx in
writing by JHLICO or the Trust from time to time). By its signature below,
Xxxxxxx Sachs 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.
Xxxxxxx Xxxxx will, at its own expense:
(a) advise the Trust in connection with investment policy decisions to
be made by its Board of Trustees or any committee thereof regarding the Subject
Fund and, upon reasonable request, furnish the Trust with research, economic and
statistical data in connection with said Fund's investments and investment
policies;
(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 Fund;
(c) place orders for purchases and sales of portfolio investments for
the Subject Fund;
(d) give instructions to the Subject Fund's custodian concerning the
delivery of securities and transfer of cash for the Subject Fund;
(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;
(f) at the close of business each day, provide JHLICO and the custodian
with copies of trade tickets, electronic access to trade records, or other means
to verify trade data received by the custodian from third parties for each
transaction effected for the Subject Fund;
(g) as soon as practicable following the end of each calendar month,
provide JHLICO with written statements showing all transactions effected for the
Subject Fund during the month, a summary listing all investments held in such
Fund 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; 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 Fund in accordance with
Xxxxxxx Sachs' proxy voting policy as most recently provided to JHLICO.
On its own initiative, Xxxxxxx Xxxxx will apprise JHLICO and the Trust
of important political and economic developments materially affecting the
marketplace or the Subject Fund, and will furnish JHLICO and the Trust's Board
of Trustees from time to time such information as is appropriate for this
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purpose. Xxxxxxx Sachs will also make its personnel available in Boston or other
reasonable locations as often as quarterly to discuss the Subject Fund and
Xxxxxxx Xxxxx' 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 Xxxxxxx Sachs
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
Fund. JHLICO will timely provide Xxxxxxx Xxxxx with copies of monthly accounting
statements for the Subject Fund, and such other information (including, without
limitation, reports concerning the classification of Fund securities for
purposes of Subchapter M of the Internal Revenue Code and Treasury Regulations
Section 1.817) as may be reasonably necessary or appropriate in order for
Xxxxxxx Sachs to perform its responsibilities hereunder. Without limiting the
foregoing, JHLICO will perform quarterly and annual tax compliance tests to
measure whether the Subject Fund is in compliance with Subchapter M and Section
817(h) of the Internal Revenue Code. JHLICO will apprise Xxxxxxx Xxxxx promptly
after each tax quarter end of any non-compliance with the diversification
requirements in such provisions of the Internal Revenue Code. If so apprised,
Xxxxxxx Sachs will take prompt action to remedy any such non-compliance
identified by JHLICO and bring the Subject Fund back into compliance with such
diversification provisions of the Internal Revenue Code.
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.
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4. SUB-ADVISORY FEES.
For all of the services rendered with respect to the Subject Fund as
herein provided, JHLICO shall pay to Xxxxxxx Xxxxx a fee (for the payment of
which the Trust shall have no obligation or liability), based on the Current Net
Assets of the Subject Fund, 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 Fund during any
calendar month, the fee with respect to such Fund 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 Subject Fund's 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 assets of the
Subject Fund, Xxxxxxx Sachs is authorized to select the brokers or dealers
(including affiliated broker-dealers) that will execute purchase and sale
transactions for the Fund 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 Fund. Xxxxxxx Xxxxx 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, Xxxxxxx Sachs 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 Xxxxxxx Xxxxx, 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. Xxxxxxx Sachs shall determine in good
faith that such higher cost was reasonable in relation to the value of the
brokerage and research services provided.
Xxxxxxx Xxxxx 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.
The Trust shall own and control all records maintained hereunder by
Xxxxxxx Sachs on the Trust's behalf and, in the event of termination of this
Agreement with respect to any Fund for any reason, all records relating to that
Fund shall be promptly returned to the Trust, free from any claim or retention
of rights by Xxxxxxx Xxxxx, provided that (subject to the last paragraph of this
Section 6) Xxxxxxx Sachs may retain copies of such records. Xxxxxxx Xxxxx 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. Xxxxxxx Sachs further
5
agrees to maintain, prepare and preserve such books and records in accordance
with the 1940 Act and rules thereunder, including but not limited to Rules 31a-1
and 31a-2, and to supply all information requested by any insurance regulatory
authorities to determine whether all insurance laws and regulations are being
complied with. Xxxxxxx Xxxxx shall supply the Board of Trustees and officers of
the Trust and JHLICO with all statistical information regarding investments
which is reasonably required by them and reasonably available to Xxxxxxx Sachs.
Xxxxxxx Xxxxx 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 required by applicable federal or state
regulatory authorities, is required by applicable law, legal process or in
connection with any litigation arising out of the subject matter of this
Agreement, or is otherwise publicly disclosed and such public disclosure is not
in breach of any confidentiality restriction.
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect Xxxxxxx Sachs
or JHLICO against any liability to the Trust or its shareholders to which it
might otherwise be subject by reason of any willful misfeasance, bad faith or
gross negligence in the performance of its duties or the reckless disregard of
its obligations and duties under this Agreement or the Investment Management
Agreement. Nor shall any provision hereof 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.
Xxxxxxx Xxxxx shall employ only qualified personnel to manage the Subject Fund;
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 Fund (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, Xxxxxxx Xxxxx shall not be obligated
to perform any service not described in this Agreement, 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,
and shall not be obligated to comply with any applicable insurance laws and
regulations unless previously notified thereof in writing by JHLICO or the
Trust.
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8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
Subject Fund on the date hereof and, with respect to any additional Subject
Fund, on the date of receipt by the Trust of notice from Xxxxxxx Sachs in
accordance with Paragraph 1(b) hereof that it is willing to serve with respect
to such Fund. Unless terminated as herein provided, this Agreement shall remain
in full force and effect for two years from the date hereof with respect to the
initial Subject Fund and, with respect to each additional Subject Fund, until
two years following the date on which such Fund becomes a Subject Fund
hereunder, and shall continue in full force and effect thereafter with respect
to each Subject Fund so long as such continuance with respect to any such Fund
is approved at least annually (i) by either the Board of Trustees of the Trust
or by vote of a majority of the outstanding voting shares of such Fund, and (ii)
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.
Any approval of this Agreement by the holders of a majority of the
outstanding shares of any 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.
(b) Termination. This Agreement may be terminated with respect to any
Subject Fund at any time, without 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 such Fund, which termination shall be effective
immediately upon delivery of notice thereof to Xxxxxxx Xxxxx and JHLICO (unless
a later effective date is specified in such notice). This Agreement may be
terminated by Xxxxxxx Sachs 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 Xxxxxxx Xxxxx. In the event of any termination
of this Agreement with respect to a Subject Fund, the parties agree to cooperate
and to use reasonable efforts to effect the transition of daily management
services for such Subject Fund from Xxxxxxx Sachs to JHLICO (or to another
sub-investment manager identified by JHLICO); it being understood and agreed
that Xxxxxxx Xxxxx shall not be liable for any loss, cost or expense (including
without limitation any loss, cost or expense arising out of any termination
pursuant to the first sentence of this Section 8(b) which is effective upon less
than 30 days' prior written notice) incurred by the Trust or by the Subject Fund
arising out of any such termination and transition of daily management services,
except as may be caused by Xxxxxxx Sachs' willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties under this Agreement. On the
effective date of any termination, Xxxxxxx Xxxxx shall cease its activities
under this Agreement with respect to, and shall cease to be responsible for, the
continuing management of any terminated Subject Fund.
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(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (other than as permitted
pursuant to Section 15 below) or if the Investment Management Agreement is
terminated.
9. SERVICES NOT EXCLUSIVE; USE OF XXXXXXX SACHS' NAME AND LOGO.
The services of Xxxxxxx Xxxxx 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 Xxxxxxx Sachs and of its subsidiaries
and affiliates may continue to engage in providing portfolio management services
and advice to other investment companies, whether or not registered, and other
investment advisory clients.
During the term of this Agreement, JHLICO and the Trust shall have the
non-exclusive and non-transferable right to use Xxxxxxx Xxxxx' 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 Xxxxxxx Sachs,
JHLICO shall consult with Xxxxxxx Xxxxx and shall furnish to Xxxxxxx Sachs a
copy of such materials. Xxxxxxx Xxxxx agrees to cooperate with JHLICO and to
review such materials promptly. JHLICO shall not distribute such materials if
Xxxxxxx Sachs reasonably objects in writing, within five (5) business 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 Fund, Xxxxxxx Xxxxx and its directors, officers and employees will not
act as principal or agent or receive any commission, except as may be permitted
under the 1940 Act, including but not limited to securities or futures
transactions complying with Rule 17e-1 under the 1940 Act and joint repurchase
transactions complying with the conditions of any exemptive order obtained by
Xxxxxxx Sachs. Nothing in this Agreement, however, shall preclude the
combination of orders for the sale or purchase of portfolio securities of the
Subject Fund with those for other registered investment companies or other
clients managed by Xxxxxxx Xxxxx or its affiliates, if orders are allocated in a
manner deemed equitable by Xxxxxxx Sachs 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 with respect to any Fund until approved
specifically by (a) the Board of Trustees of the Trust, or by vote of a majority
of the outstanding shares of that 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.
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12. LIMITATION OF LIABILITY.
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:
XXXXXXX XXXXX: Xxxxxxx Sachs Asset Management
00 Xxx Xxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Fax #: 000-000-0000
JHLICO: Xxxx Xxxxxxx Life Insurance Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx 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.
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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.
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/ XXXXXX X. XXX
--------------------- -----------------
Xxxxxx X. Xxxxxxx Title: President and Vice Chairman
Counsel Xxxxxx X. Xxx
ATTEST: XXXX XXXXXXX LIFE INSURANCE COMPANY
/s/ XXXXXX X. XXXXXXX
---------------------
Xxxxxx X. Xxxxxxx By: /s/ XXXXXXX X. XXX XXXX
Counsel -----------------------
Title: Senior Vice President
Xxxxxxx X. Xxx Xxxx
ATTEST: XXXXXXX SACHS ASSET MANAGEMENT, a unit of
the Investment Management Division of Xxxxxxx,
Sachs & Co.
/s/ XXXXXX X. XXXXXXX
---------------------
Xxxxxx X. Xxxxxxx By: /s/ XXXXX X. XXXX
-----------------
Title: Managing Director
Xxxxx X. Xxxx
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SCHEDULE I
FEES
----
Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------
On the first $50,000,000 40 basis points (0.40%) per annum
On the next $150,000,000 30 basis points (0.30%) per annum
On amounts over $200,000,000 25 basis points (0.25%) per annum
11
