Exhibit 23(h)(11)
SUBADVISORY AGREEMENT
AGREEMENT made as of the 1st day of September, 1999, between Xxxxxxx
Xxxxxx Investments, Inc., a Delaware corporation (hereinafter called the
"Manager"), and Bankers Trust Company, a New York corporation (hereinafter
called the "Subadviser").
WITNESSETH:
WHEREAS, Xxxxxx Variable Series (the "Trust") is a Massachusetts
business trust organized with one or more series of shares, and is registered as
an investment company under the Investment Company Act of 1940 (the "1940 Act");
and
WHEREAS, the Manager desires to utilize the services of the Subadviser
as investment counsel with respect to certain portfolio assets of the Trust; and
WHEREAS, the Subadviser is willing to perform such services on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, it is agreed as follows:
1. The Subadviser's Services. The Subadviser will serve the Manager as
investment counsel with respect to the investment portfolio of Xxxxxx Index 500
Portfolio (the "Series"), being one of the portfolio series of the Trust, which
is under the management of the Manager pursuant to an Investment Management
Agreement between the Manager and the Trust dated September 1, 1999.
The Subadviser is hereby authorized and directed and hereby agrees,
subject to the stated investment policies and restrictions of the Series as set
forth in the current Prospectus and Statement of Additional Information of the
Trust (including amendments) and in accordance with the Fund's Declaration of
Trust and By-laws, as both may be amended from time to time, governing the
offering of its shares and subject to such resolutions as from time to time may
be adopted by the Fund's Trustees and furnished to the Subadviser, to develop,
recommend and implement such investment program and strategy for the Series as
may from time to time be most appropriate to the achievement of the investment
objectives of the Series as stated in the aforesaid Prospectus, to provide
research and analysis relative to the investment program and investments of the
Series, to determine what securities should be purchased and sold and to monitor
on a continuing basis the performance of the portfolio securities of the Series.
In addition, the Subadviser will place orders for the purchase and sale of
portfolio securities and, subject to the
provisions of the following paragraph, will take reasonable steps to assure that
portfolio transactions are effected at the best price and execution available.
The Subadviser will advise the Fund's custodian and the Manager on a prompt
basis of each purchase and sale of a portfolio security specifying the name of
the issuer, the description and amount or number of shares of the security
purchased, the market price, commission and gross or net price, trade date,
settlement date and identity of the effecting broker or dealer. From time to
time as the Trustees of the Trust or the Manager may reasonably request, the
Subadviser will furnish to the Manager, Trust's officers and to each of its
Trustees reports on portfolio transactions and reports on assets held in the
Series, all in such detail as the Trust or the Manager may reasonably request.
The Subadviser will also inform the Manager, Trust's officers and Trustees on a
current basis of changes in investment strategy or tactics or any other
developments materially affecting the Series. The Subadviser will make its
officers and employees available to meet with the Manager, Trust's officers and
Trustees at least quarterly on due notice to review the investments and
investment performance of the Series in the light of the Trust's investment
objectives and policies and market conditions.
In using its best efforts to obtain for the Series the most favorable
price and execution available, the Subadviser, bearing in mind the Series' best
interests at all times, shall consider all factors it deems relevant, including,
by way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker or dealer involved and the
quality of service rendered by the broker or dealer in other transactions.
Subject to such policies as the Trustees of the Trust may determine, the
Subadviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Series to pay an unaffiliated broker or dealer that provides
brokerage and research services to the Subadviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Subadviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Subadviser's overall responsibilities with respect
to the clients of the Subadviser for whom the Subadviser exercises investment
discretion.
It shall be the duty of the Subadviser to furnish to the Trustees of
the Trust such information as may reasonably be requested in order for such
Trustees to evaluate this Agreement or any proposed amendments thereto for the
purposes of casting a vote pursuant to Section 9 hereof.
In the performance of its duties hereunder, the Subadviser is and shall
be an independent contractor and except as otherwise expressly provided herein
or otherwise authorized in writing, shall have no authority to act for or
represent the Trust, the Series
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or the Manager in any way or otherwise be deemed to be an agent of the Trust,
the Series or the Manager.
In furnishing the services under this Agreement, the Subadviser will
comply with the requirements of the 1940 Act applicable to it, and the
regulations promulgated thereunder. The Subadviser will immediately notify the
Manager and the Trust in the event that the Subadviser: (i) becomes subject to a
statutory disqualification that prevents the Subadviser from serving as an
investment adviser pursuant to this Agreement; or (ii) is or expects to become
the subject of an administrative proceeding or enforcement action by the
Securities and Exchange Commission or other regulatory authority. The Subadviser
will immediately forward, upon receipt, to the Manager any correspondence from
the Securities and Exchange Commission or other regulatory authority that
relates to the Series.
2. Delivery of Documents to Subadviser. The Manager will furnish to the
Subadviser copies of each of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date
hereof;
(b) The By-laws of the Trust in effect on the date hereof;
(c) The resolutions of the Trustees approving the engagement of the
Subadviser as subadviser to the Series and approving the form of this
agreement;
(d) The resolutions of the Trustees selecting the Manager as investment
manager to the Trust and approving the form of the Investment
Management Agreement with the Trust, on behalf of the Series;
(e) The Investment Management Agreement with the Trust, on behalf of
the Series;
(f) The Code of Ethics of the Trust and of the Manager as currently in
effect; and
(g) Current copies of the Series' Prospectus and Statement of
Additional Information.
The Manager will furnish the Subadviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any. Such amendments or supplements as to Items
(a) though (g) above will be provided within 30 days of the time such materials
became available to the Manager and until so provided the Subadviser may
continue to rely on those documents previously provided.
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During the term of this Agreement, the Manager also will furnish to the
Subadviser prior to use thereof copies of all Trust documents, proxy statements,
reports to shareholders, sales literature, or other material prepared for
distribution to shareholders of the Series or the public that refer in any way
to the Subadviser, and will not use such material if the Subadviser reasonably
objects in writing within five business days (or such other time period as may
be mutually agreed) after receipt thereof. However, the Manager and the
Subadviser may agree amongst themselves that certain of the above-mentioned
documents do not need to be furnished to the Subadviser prior to the document's
use.
In the event of termination of this Agreement, the Manager will
continue to furnish to the Subadviser copies of any of the above-mentioned
materials that refer in any way to the Subadviser. The Manager shall furnish or
otherwise make available to the Subadviser such other information relating to
the business affairs of the Trust as the Subadviser at any time, or from time to
time, reasonably requests in order to discharge its obligations hereunder.
3. Delivery of Documents to the Manager. The Subadviser has furnished
the Manager with copies of each of the following documents:
(a) The Subadviser's most recent balance sheet;
(b) Separate lists of persons who the Subadviser wishes to have
authorized to give written and/or oral instructions to Custodians and
the fund accounting agent of Trust assets for the Series; and
(c) The Code of Ethics of the Subadviser as currently in effect.
The Subadviser will maintain a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide Trust with a
copy of the code of ethics, including any amendments thereto, and evidence of
its adoption. Within 45 days of the end of each year while this Agreement is in
effect (or more frequently if required by Rule 17j-1 or as the Trust may
reasonably request), an officer of the Subadviser shall certify to Trust that
the Subadviser has complied with the requirements of Rule 17j-1 during the
previous year and that there has been no violation of its code of ethics or, if
such a violation has occurred, that appropriate action was taken in response to
such violation. Upon the written request of the Trust, the Subadviser shall
permit Trust to examine the reports to be made by the Subadviser under Rule
17j-1(c)(1).
The Subadviser will furnish the Manager from time to time with copies,
properly certified or otherwise authenticated, of all material amendments of or
supplements to the foregoing, if any. Additionally, the Subadviser will provide
to the Manager such other documents relating to its services under this
Agreement as the Manager may reasonably request on a periodic basis. Such
amendments or supplements as to items (a) through (c)
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above will be provided within 30 days of the time such materials became
available to the Subadviser.
4. Other Agreements, etc. It is understood that any of the
shareholders, Trustees, officers and employees of the Trust or the Series may be
a shareholder, director, officer or employee of, or be otherwise interested in,
the Subadviser, any interested person of the Subadviser, any organization in
which the Subadviser may have an interest or any organization which may have an
interest in the Subadviser, and that any such interested person or any such
organization may have an interest in the Trust or the Series. It is also
understood that the Subadviser, the Manager and the Trust may have advisory,
management, service or other contracts with other individuals or entities, and
may have other interests and businesses. When a security proposed to be
purchased or sold for the Series is also to be purchased or sold for other
accounts managed by the Subadviser at the same time, the Subadviser shall make
such purchases or sales on a pro-rata, rotating or other equitable basis so as
to avoid any one account's being preferred over any other account.
The Subadviser may give advice and take action with respect to other
funds or clients, or for its own account which may differ from the advice or the
timing or nature of action taken with respect to the Series.
Nothing in this Agreement shall be implied to prevent the (i) Manager
from engaging other subadvisers to provide investment advice and other services
in relation to portfolios of the Trust for which the Subadviser does not provide
such services, or to prevent the Manager from providing such services itself in
relation to such portfolios; or (ii) the Subadviser from providing investment
advice and other services to other funds or clients.
5. Fees, Expenses and Other Charges.
(a) For its services hereunder, the Subadviser shall be paid a
management fee by the Manager according to the fee schedule attached
hereto as Schedule A.
(b) The Subadviser, at its expense, will furnish all necessary
investment facilities, including salaries of personnel required for it
to execute its duties under this Agreement.
6. Confidential Treatment. It is understood that any information or
recommendation supplied by the Subadviser in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Manager, the Trust or such persons as the Manager may designate in
connection with the Series. It is also understood that any information supplied
to the Subadviser in connection with the performance of its obligations
hereunder, particularly, but not limited to, any list of securities which, on a
temporary basis, may not be bought or sold for the Series, is to be
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regarded as confidential and for use only by the Subadviser in connection with
its obligation to provide investment advice and other services to the Series.
The Subadviser will maintain and enforce adequate security procedures
with respect to all materials, records, documents and data relating to any of
its responsibilities pursuant to this Agreement including all means for the
effecting of securities transactions.
7. Representations and Covenants of the Parties. The Subadviser hereby
acknowledges that it is a "bank" as defined in Section 202(a)(2) of the
Investment Advisers Act of 1940 (the "Adviser's Act") and neither it nor any
"affiliated person" of it, as defined in the 1940 Act, is subject to any
disqualification that would make the Subadviser unable to serve as an investment
adviser to a registered investment company under Section 9 of the 1940 Act. The
Subadviser covenants that it will carry out appropriate compliance procedures
necessary to the operation of the Series as the Subadviser and the Manager may
agree. The Subadviser also covenants that it will manage the Series in
conformity with all applicable rules and regulations of the Securities and
Exchange Commission in all material respects and so that the Trust will qualify
as a regulated investment company under Subchapter M and Section 817 of the
Internal Revenue Code.
8. Reports by the Subadviser and Records of the Series. The Subadviser
shall furnish the Manager monthly, quarterly and annual reports concerning
transactions and performance of the Series, including information required to be
disclosed in the Trust's registration statement, in such form as may be mutually
agreed, to review the Series and discuss the management of it. The Subadviser
shall permit the financial statements, books and records with respect to the
Series to be inspected and audited by the Trust, the Manager or their agents at
all reasonable times during normal business hours. The Subadviser shall
immediately notify and forward to both the Manager and legal counsel for the
Series any legal process served upon it on behalf of the Manager or the Trust.
The Subadviser shall promptly notify the Manager of any changes in any
information concerning the Subadviser of which the Subadviser becomes aware that
would be required to be disclosed in the Trust's registration statement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Subadviser agrees that all records it maintains for the Trust are the
property of the Trust and further agrees to surrender promptly to the Trust or
the Manager any such records upon the Trust's or the Manager's request. The
Subadviser further agrees to maintain for the Trust the records the Trust is
required to maintain under Rule 31a-1(b) insofar as such records relate to the
investment affairs of the Trust. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records it maintains
for the Trust.
9. Continuance and Termination. This Agreement shall remain in full
force and effect through September 30, 2000, and is renewable annually
thereafter by specific approval of the Board of Trustees of the Trust or by the
affirmative vote of a majority of
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the outstanding voting securities of the Series. Any such renewal shall be
approved by the vote of a majority of the Trustees of the Trust who are not
interested persons under the 1940 Act, cast in person at a meeting called for
the purpose of voting on such renewal. This Agreement may be terminated without
penalty at any time by the Trustees, by vote of a majority of the outstanding
voting securities of the Series, or by the Manager or by the Subadviser upon 60
days written notice, and will automatically terminate in the event of its
assignment by either party to this Agreement, as defined in the 1940 Act, or
upon termination of the Manager's Investment Management Agreement with the
Trust. In addition, the Manager or the Trust may terminate this Agreement upon
immediate notice if the Subadviser becomes statutorily disqualified from
performing its duties under this Agreement or otherwise is legally prohibited
from operating as an investment adviser.
10. Voting Rights. The Manager shall be responsible for exercising any
voting rights of any securities of the Series.
11. Indemnification. The Subadviser agrees to indemnify and hold
harmless the Manager, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act ("affiliated person") of the Manager and each person, if
any, who, within the meaning of Section 15 of the Securities Act of 1933 (the
"1933 Act"), controls ("controlling person") the Manager, against any and all
losses, claims damages, liabilities or litigation (including reasonable legal
and other expenses), to which the Manager or such affiliated person or
controlling person may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, under any other statute, at common law or otherwise, arising out
of Subadviser's responsibilities as portfolio manager of the Series (1) to the
extent of and as a result of the willful misconduct, bad faith, or gross
negligence by the Subadviser, any of the Subadviser's employees or
representatives or any affiliate of or any person acting on behalf of the
Subadviser, or (2) as a result of any untrue statement or alleged untrue
statement of a material fact contained in a prospectus or statement of
additional information covering the Series or the Trust or any amendment thereof
or any supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if such a statement or omission was made in reliance
upon written information furnished by the Subadviser to the Manager, the Trust
or any affiliated person of the Manager or the Trust expressly for use in the
Trust's registration statement, or upon verbal information confirmed by the
Subadviser in writing expressly for use in the Trust's registration statement or
(3) to the extent of, and as a result of, the failure of the Subadviser to
execute, or cause to be executed, portfolio transactions according to the
standards and requirements of the 1940 Act; provided, however, that in no case
is the Subadviser's indemnity in favor of the Manager or any affiliated person
or controlling person of the Manager deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misconduct, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
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The Manager agrees to indemnify and hold harmless the Subadviser, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act
("affiliated person") of the Subadviser and each person, if any, who, within the
meaning of Section 15 of the 1933 Act, controls ("controlling person") the
Subadviser, against any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses), to which the
Subadviser or such affiliated person or controlling person may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, under any other statute, at
common law or otherwise, arising out of the Manager's responsibilities as
investment manager of the Series (1) to the extent of and as a result of the
willful misconduct, bad faith, or gross negligence by the Manager, any of the
Manager's employees or representatives or any affiliate of or any person acting
on behalf of the Manager, or (2) as a result of any untrue statement or alleged
untrue statement of a material fact contained in a prospectus or statement of
additional information covering the Series or the Trust or any amendment thereof
or any supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if such a statement or omission was made by the Trust
other than in reliance upon written information furnished by the Subadviser, or
any affiliated person of the Subadviser, expressly for use in the Trust's
registration statement or other than upon verbal information confirmed by the
Subadviser in writing expressly for use in the Trust's registration statement;
provided, however, that in no case is the Manager's indemnity in favor of the
Subadviser or any affiliated person or controlling person of the Subadviser
deemed to protect such person against any liability to which any such person
would otherwise be subject by reason of willful misconduct, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
12. Certain Definitions. For the purposes of this Agreement, the "vote
of a majority of the outstanding voting securities of the Series" means the
affirmative vote, at a duly called and held meeting of shareholders of the
Series, (a) of the holders of 67% or more of the shares of the Series present
(in person or by proxy) and entitled to vote at such meeting, if the holders of
more than 50% of the outstanding shares of the Series entitled to vote at such
meeting are present in person or by proxy, or (b) of the holders of more than
50% of the outstanding shares of the Series entitled to vote at such meeting,
whichever is less.
For the purposes of this Agreement, the terms "interested person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act.
For the purposes of this Agreement, the terms "assets", "net assets",
"securities", "portfolio securities" or "investments" of the Series shall mean,
respectively, such assets, net assets, securities, portfolio securities or
investments which are from time to time under the management of the Subadviser
pursuant to this Agreement.
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13. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered or sent by
pre-paid first class letter post to the following addresses or to such other
address as the relevant addressee shall hereafter notify for such purpose to the
others by notice in writing and shall be deemed to have been given at the time
of delivery.
If to the Manager: XXXXXXX XXXXXX INVESTMENTS, INC.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
If to the Trust: XXXXXX VARIABLE SERIES
XXXXXX INDEX 000 XXXXXXXXX
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Secretary
If to the Subadviser: BANKERS TRUST COMPANY
Global Investment Management
Xxx Xxxxxxx Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxx
14. Instructions. The Subadviser is authorized to honor and act on any
notice, instruction or confirmation given by the Trust or Manager in writing
signed or sent by one of the persons whose names, addresses and specimen
signatures will be provided by the Trust or Manager from time to time.
15. Law. This Agreement is governed by and shall be construed in
accordance with the laws of the State of New York in a manner not in conflict
with the provisions of the 1940 Act, except with respect to Section 16, which
shall be construed in accordance with the laws of the State of Massachusetts.
16. Limitation of Liability of the Trust, Trustees, and Shareholders.
It is understood and expressly stipulated that none of the trustees, officers,
agents, or shareholders of the Trust shall be personally liable hereunder. It is
understood and acknowledged that all persons dealing with the Series must look
solely to the property of such Series for the enforcement of any claims against
such Series as neither the trustees, officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the Trust or the
Series. No series of the Trust shall be liable for the obligations of any other
series.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute a single instrument.
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IN WITNESS WHEREOF, the parties hereto have each caused this instrument
to be signed in duplicate on its behalf by the officer designated below
thereunto duly authorized.
XXXXXXX XXXXXX INVESTMENTS,
INC.
Attest: By
--------------------- -------------------------------------
Name: Xxxxxxxx X. Small
Title: Managing Director
BANKERS TRUST COMPANY
Attest: By
--------------------- -------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Director
Deutsche Bank Asset Management
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Schedule A to the Subadvisory Agreement
for the Xxxxxx Index 500 Portfolio (the "Series")
dated as of September 1, 1999 between Xxxxxxx Xxxxxx Investments, Inc.
("Manager") and Bankers Trust Company ("Subadviser")
FEE SCHEDULE
As compensation for its services described herein, Subadviser shall receive from
the Manager a monthly fee based on a percentage of average daily net assets of
the Series calculated according to the following annualized fee schedule:
Series Net Assets Annualized Rate
----------------- ---------------
On the first $200 million 0.08 of 1%
On the next $550 million 0.05 of 1%
On the balance over $750 million 0.025 of 1%
Minimum annual fee: $100,000. The minimum annual fee is not applicable for the
first year of the Subadvisory Agreement.
The "average daily net assets" of the Series shall be calculated at such time or
times as the Trustees of Xxxxxx Variable Series (the "Trust") may determine in
accordance with the provisions of the Investment Company Act of 1940. (All other
terms that were defined in the agreement are defined again in this Schedule).
The value of the net assets of the Series shall always be determined pursuant to
the applicable provisions of the Declaration of Trust and the Registration
Statement of the Trust. If the determination of net asset value does not take
place for any particular day, for the purposes of this Schedule A, the net asset
value shall be deemed to be the net asset value determined as of the close of
business on the last day on which such calculation was made for the purpose of
the foregoing computation. If the Series determines the value of the net assets
of its portfolio more than once on any day, then the last such determination
thereof on that day shall be deemed to be the sole determination thereof on that
day for the purposes of this Schedule A. Fees are charged monthly in arrears
based on one-twelfth of the annual fee rate. Fees will be prorated appropriately
if Subadviser does not perform services pursuant to this Subadvisory Agreement
for a full month.
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