Exhibit 99.4(o)
INVESTMENT SUBADVISORY AGREEMENT
S & P 500 INDEX PORTFOLIO
THIS AGREEMENT, made this 11th day of December, 2003, is between JEFFERSON
PILOT INVESTMENT ADVISORY CORPORATION, a Tennessee corporation with offices at
Xxx Xxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxxxxx, 00000 (the "Investment Manager" or
"Manager"), and Mellon Capital Management Corporation, (the "Subadviser") a
Delaware corporation with offices at 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 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, as amended (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 and
variable annuity contracts under which income, gains, losses, whether or not
realized, from assets allocated to such accounts are, in accordance with the
policies and contracts, 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 Fund's S & P 500 Index Portfolio (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, as amended (the "Advisers Act");
WHEREAS, the Investment Manager desires to retain the Subadviser to render
investment management services to 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:
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 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. The Fund will be a party to any agreement or contract
which opens a futures account or options account.
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 incurred by it in
the performance of its services and obligations under this Agreement.
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 direction and supervison of the Directors of
the Fund and the Investment Manager and in accordance with the provisions of the
Fund's Prospectus and Statement of Additional Information ("SAI"), as amended
from time to time. The Subadviser is authorized to invest in financial futures
contracts and to cause the assets of the Portfolio to be invested in Mellon
Financial Corporation stock consistent with the applicable rules, releases and
no-action letters of the Securities and Exchange Commission. In fulfilling its
obligations to manage the investment and reinvestment of the assets of the
Portfolio, the Subadviser will:
(i) formulate and implement a continuous investment program for
the Portfolio consistent with the investment objectives, policies, and
restrictions of the Portfolio as stated in the Portfolio's currently effective
Prospectus and SAI, as amended from time to time;
(ii) comply with the requirements of the Investment Company Act and
the Advisers Act, and the rules and regulations thereunder, as well as all other
federal and state securities laws and regulations applicable to registered
investment companies and with any applicable procedures adopted by the Fund and
communicated in writing to the Subadviser by the Investment Manager or the Fund;
(iii) comply with the diversification requirements, and the rules
and regulations thereunder, set forth in the following: (a) Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), as applicable to
regulated investment companies, and (b) Section 817(h) of the Code as applicable
to variable contracts;
(iv) implement the investment program for the Portfolio by the
purchase and sale of securities, financial futures and other investments
authorized under such Portfolio's currently effective Prospectus and SAI,
including the placing of orders for such purchases and sales;
(v) 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 or administration;
(vi) 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; and
(vii) where practical, establish appropriate interfaces with the
Investment Manager in order to provide such Investment Manager with all
necessary information reasonably 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, on an ongoing basis, to provide
the Subadviser with all amendments and supplements to the Fund's Prospectus and
SAI affecting the Portfolio, including changes to the Portfolio's fundamental
and nonfundamental investment policies, before the amendments and supplements
become effective. However, amendments and supplements which the Investment
Manager reasonably believes could impact on the Subadviser's ability to manage
the Portfolio's assets shall be provided to the Subadviser prior to filing with
SEC;
(ii) 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 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;
(iii) 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
Investment 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
(iv) 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 Investment Manager represents that neither it, the Fund, or their
respective designees or agents, will, 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 to this
Section D, 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 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.
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. Purchase and sale
orders will be placed with brokers who are selected by the Subadviser (including
affiliates of Subadviser in accordance with Rule 17(e)) as able to achieve "best
execution" of such orders. "Best execution" shall mean prompt and reliable
execution at the most favorable total cost for the transaction under the
circumstances, taking into account the full range and quality of a broker's
services in placing brokerage including, among other things, execution
capability, commission rate, financial responsibility and responsiveness to the
Subadviser as well as 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, viewed in terms either of the Portfolio or the
Subadviser's overall responsibilities to the Subadviser's discretionary
accounts.
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, lower
brokerage commissions or more 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 applicable
guidelines approved by the Fund's Board of Directors and communicated to the
Subadviser, or, absent any applicable guidelines in the manner the Subadviser
considers to be the most equitable and consistent with its fiduciary obligations
to the Portfolio and to its other clients.
The Subadviser may perform its services through any employee, 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.
Subadviser makes no representation or warranty, express or implied, that any
level of performance or investment results will be achieved by the S & P 500
Index 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, prepare and preserve 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. Commodity Futures Trading Commission. Investment Manager represents that it
is excluded from the definition of a commodity pool operator under CFTC Rule 4.5
and in connection with such exemption has filed a notice of eligibility and will
provide Subadviser with a copy of such notice of eligibility.
5. 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.
6. Non-Exclusivity. The Investment Manager represents and agrees, on behalf of
itself and the Fund, 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 accounts. Subadviser may take action with respect to other
clients that may differ from action taken or from the timing or nature of action
taken by Subadviser for the Fund.
7. 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, upon
receipt of a request from Investment Manager or the Fund, promptly to return to
the Investment Manager on behalf of the Fund, all records relating to the
Portfolio, copies of which may be retained by the Subadviser. The Subadviser
also agrees upon request of the Investment Manager or the Fund, promptly to
surrender the books and records to either party (copies of which may be retained
by the Subadviser) or make the books and records available for inspection by
representatives of regulatory authorities.
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 as: (i) expressly authorized by
the Investment Manager or the Fund; (ii) required by applicable federal or state
law, regulation or regulatory authorities; (iii) required by this Agreement or
to perform obligations pursuant to this Agreement; or (iv) required by an
auditor of Subadviser. The Subadviser will furnish any informational reports
requested by any state insurance commissioner and the Investment Manager shall
reimburse the Subadviser for its commercially reasonable costs and expenses in
complying with any such document request by any state insurance commissioner.
8. 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
past or present 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 and
its officers, directors, employees and agents (the "Covered Parties") 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 the Covered Parties' willful
misfeasance, bad faith or gross negligence.
Notwithstanding any other provision of this Agreement, the Subadviser shall
not be liable for any loss to the Portfolio or the Investment Manager caused by
circumstances beyond the Subadviser's reasonable control including, but not
limited to, government restrictions, exchange or market rulings, suspensions of
trading, acts of civil or military authority, national emergencies, earthquakes,
floods or other catastrophes, acts of God, wars or failures of communication or
power supply. In the event of equipment breakdowns caused by circumstances
beyond its reasonable control, the Subadviser shall take all commercially
reasonable steps necessary to minimize interruptions in the services
contemplated under this Agreement.
Federal and state securities laws may impose liabilities under certain
circumstances on persons who act in good faith, and therefore nothing herein
shall in any way constitute a waiver
or limitation of any right which Investment Manager may have under any
applicable laws. This entire Section 8 shall survive the termination of the
Agreement.
9. 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 and
Investment Manager acknowledges that it received a copy of Part II of Form ADV
not less than forty-eight (48) hours prior to the date of the execution of this
Agreement, as required by Rule 204-3 of the Advisers Act.
The Investment Manager represents that neither it, the Fund, or their
respective designees or agents, shall use any material describing or identifying
the Subadviser or its affiliates without the prior written consent of the
Subadviser. Any materials utilized by the Fund, the Investment Manager or their
respective designees or agents which contain information as to the Subadviser
and/or its affiliates shall be submitted to the Subadviser for approval prior to
use, not less than ten (10) business days before such approval is requested.
The Investment Manager has herewith furnished the Subadviser copies of the
Portfolio's Prospectus and Statement of Additional Information, as currently in
effect. The Subadviser will be entitled to rely on all documents and other
information furnished to it by the Investment Manager or the Fund, or the
representatives of either.
10. Duration and Termination of the Agreement. This Subadvisory Agreement shall
become effective as of the date first written above and remain in force until
December 11, 2005. 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 between the Fund and
the Investment Manager with respect to the Portfolio.
11. 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.
12. 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.
13. 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 parties:
(a) If to the Subadviser:
Mellon Capital Management Corporation
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Legal Department
Facsimile: 000-000-0000
(b) If to the Investment Manager:
Jefferson Pilot Investment Advisory Corporation
Xxx Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx
Facsimile (000) 000-0000
14. 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.
15. Proxies. Unless the Investment Manager or the Fund notifies the Subadviser
in writing that it will retain the right to vote all proxies, the Subadviser
shall vote all proxies solicited by or with respect to the issuers of securities
in which assets of the Portfolio may be invested in a manner which best serves
the interests of the Portfolio's shareholders. The Subadviser shall use its best
good faith judgment to vote such proxies in a manner which best serves the
interests of the Portfolio's shareholders. The Subadviser, or its agent, shall
maintain a record of how the Subadviser voted and such record shall be available
to the Investment Manager or Fund upon request.
16. Custody of Assets. Subadviser shall at no time have the right to physically
possess the assets of the Portfolio or have the assets registered in its own
name or the name of its nominee, nor shall Subadviser in any manner acquire or
become possessed of any income, whether in kind or cash, or proceeds, whether in
kind or cash, distributable by reason of selling, holding or controlling such
assets of the Portfolio. In accordance with the preceding sentence, Subadviser
shall have no responsibility with respect to the collection of income, physical
acquisition or the safekeeping of the assets of the Portfolio. All such duties
of collection, physical acquisition and safekeeping shall be the sole obligation
of the custodian.
17. Use of Subadviser's Name. The Investment Manager represents that neither
it, the Fund, 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 written 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 names (or
derivatives or logos) as soon as reasonably practicable.
18. Entire Agreement. This Agreement contains the entire understanding and
agreement of the parties with respect to the Portfolio.
19. Headings. The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
20. 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.
21. Counterparts. This Agreement may be executed in counterparts, including via
facsimile, each of which shall be deemed an original for all purposes, including
judicial proof of the terms hereof, and all of which taken together shall
constitute and be deemed one and the same agreement.
JEFFERSON PILOT INVESTMENT ADVISORY
CORPORATION
ATTEST: BY:
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TITLE: TITLE:
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MELLON CAPITAL MANAGEMENT
CORPORATION
ATTEST: BY:
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TITLE: TITLE:
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APPENDIX A
FEE SCHEDULE
[To be completed]
