Mid Cap Value Fund
Total Return Bond Fund
Financial Industries Fund
INVESTMENT MANAGEMENT AGREEMENT
BY AND BETWEEN
XXXX XXXXXXX VARIABLE SERIES TRUST I
AND
XXXX XXXXXXX LIFE INSURANCE COMPANY
MANAGEMENT AGREEMENT
AGREEMENT made as of the thirtieth day of April, 2003 by and between
Xxxx Xxxxxxx Variable Series Trust I, a Massachusetts business trust having a
place of business at Xxxx Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
(hereinafter called the "Series Fund") and Xxxx Xxxxxxx Life Insurance Company,
a Massachusetts corporation having its principal place of business at Xxxx
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter called "JHLICO").
WHEREAS, the Series Fund is organized and 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 is engaged in the business of rendering investment
management services and is registered as an investment adviser under the
Investment Advisers Act of 1940; and
WHEREAS, the Series Fund is authorized to issue shares of beneficial
interest in separate series with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Series Fund currently offers shares of beneficial interest
in twenty seven series which are subject to separate management agreements with
JHLICO, and
WHEREAS, the Series Fund intends to offer shares of beneficial interest
in three additional series (the "Initial Funds" under this Agreement) designated
as the Mid Cap Value Fund, the Total Return Bond Fund, and the Financial
Industries Fund
WHEREAS, the Series Fund desires to retain JHLICO to render investment
advisory services to the Initial Fund, and JHLICO is willing to do so.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
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1. APPOINTMENT OF JHLICO AS MANAGER.
(a) Initial Funds. The Series Fund hereby appoints JHLICO, and JHLICO
hereby accepts the appointment, to act as investment adviser and manager to the
Initial Funds for the period and on the terms herein set forth, for the
compensation herein provided.
(b) Additional Funds. In the event that the Series Fund desires to
retain JHLICO to render investment advisory and management services hereunder
with respect to other series, it shall so notify JHLICO in writing. If it is
willing to render such services JHLICO shall notify the Series Fund in writing,
whereupon such other series shall become a Fund hereunder.
(c) Independent Contractor. JHLICO 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 Series Fund.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
JHLICO will provide to the Funds a continuing and suitable investment
program consistent with the investment policies, objectives and restrictions of
the Series Fund. JHLICO will manage the investment and reinvestment of the
assets in the Funds, and perform the other functions set forth below, subject to
the overall supervision, direction, control and review of the Board of Trustees
of the Series Fund and, as in effect from time to time, the provisions of the
Series Fund's Declaration of Trust, Bylaws, prospectus, statement of additional
information, 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 JHLICO in
writing by the Series Fund from time to time.
Except to the extent that the Board of Trustees approves performance of
any of the following functions by any custodian, transfer agent, independent
counsel, or other independent agent, JHLICO will, with respect to the Funds:
(a) advise the Series Fund in connection with policy decisions
to be made by its Board of Trustees or any committee thereof and, upon
request, furnish the Series Fund with research,
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economic and statistical data in connection with the Series Fund's
investments and investment policies;
(b) provide administration of the day to day operations of the
Series Fund;
(c) submit such reports relating to the valuation of the
Series Fund's securities as its Board of Trustees may reasonably
request;
(d) assist the Series Fund in any negotiations relating to its
investments with issuers, investment banking firms, securities brokers
or dealers and other institutions or investors and place orders for
purchases and sales of portfolio investments;
(e) provide office space and office equipment and supplies
(including telephone and other utility services), accounting and data
processing equipment and necessary executive, legal, accounting,
clerical and secretarial personnel for the administration of the
affairs of the Series Fund;
(f) maintain and preserve the records required by the 1940 Act
to be maintained and preserved by the Series Fund, to the extent not
maintained by the Series Fund's custodian, distributor, transfer agent
or any Sub-Investment Manager;
(g) oversee, and use its best efforts to assure the
performance of all the activities and services of any custodian,
distributor, transfer agent or other similar agent retained by the
Series Fund;
(h) value the assets and liabilities of the Series Fund,
compute the daily income, net asset value and yield of each Fund; and
(i) supervise the activities of each Sub-Investment Manager.
The Series Fund will provide timely information to JHLICO regarding
such matters as purchases and redemptions of shares in each Fund and the cash
requirements of, and cash available for investment in, each Fund, and all other
information as may be reasonably necessary or appropriate in order for JHLICO to
perform its responsibilities hereunder.
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3. ALLOCATION OF EXPENSES.
Except as set forth below, each party to this Agreement shall bear the
costs and expenses of performing its obligations hereunder.
(a) The Series Fund agrees to assume the Funds' share of the
expense of:
(i) brokerage commissions for transactions in the
portfolio investments of the Series Fund and similar fees and
charges for the acquisition, disposition, lending or borrowing
of such portfolio investments;
(ii) the advisory fees called for in this Agreement;
(iii) all taxes, including issuance and transfer
taxes, and reserves for taxes payable by the Series Fund to
federal, state or other governmental agencies, and the
expenses and costs associated with the preparation and filing
of all tax returns;
(iv) interest payable on the Series Fund's
borrowings;
(v) extraordinary or non-recurring expenses, such as
legal claims and liabilities and litigation costs and
indemnification payments by the Series Fund in connection
therewith;
(vi) the charges and expenses of any custodian or
depository appointed by the Series Fund for the safekeeping of
its cash, portfolio securities and other property, for
providing accounting and valuation services, and for
monitoring compliance with federal laws and regulations,
subject to the Board of Trustees' approval as to the scope of
such accounting, valuation, and monitoring functions;
(vii) the charges and expenses of its independent
auditors;
(viii) the cost of the fidelity bond required by 1940
Act Rule 17g-l;
(ix) the compensation and travel expenses of trustees
who are not "interested persons" within the meaning of the
1940 Act;
(x) the expenses in preparing, printing and
distributing voting instruction information statements to
persons entitled to give voting instructions in tabulating
proxy votes and in printing and distributing to policyowners
and contractowners annual and semi-annual reports;
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(xi) fees and costs for legal services provided to or
on behalf of the Series Fund (including fees and costs of
independent counsel and an allocable portion of the cost of
JHLICO's Law Department rendering such services) (for this
purpose, "legal services" includes (but is not limited to) the
services of such independent counsel or Law Department
employees in the course of administering the business and
affairs of the Series Fund);
(xii) charges of any independent agents (other than
independent counsel) approved by the Board of Trustees;
(xiii) the fees and expenses involved in registering
and maintaining registrations of the Series Fund and its
shares with the Securities and Exchange Commission and various
states and other jurisdictions; and
(xiv) membership or association dues for the
Investment Company Institute, the National Association of
Variable Annuities, or similar trade association or for any
self-regulatory organization.
(b) To the extent not assumed by the Series Fund pursuant to
(a) above, JHLICO agrees to assume the Funds' share of the expense of:
(i) the charges and expenses of any registrar, stock
transfer or dividend disbursing agent;
(ii) the cost of any stock certificates representing
shares of the Series Fund;
(iii) the expenses of shareholders' meetings;
trustees' meetings; printing and distributing Prospectuses and
statements of additional information to prospective and
existing policyowners and contractowners; preparing, printing,
and distributing any advertising or sales literature to
prospective and existing policyowners and contractowners; and
any other activity and related legal services primarily
intended to result in the sale of the Series Fund's shares;
(iv) the expense of furnishing each shareholder
statements of account;
(v) the cost of and any errors and omissions
insurance or other liability insurance covering the Series
Fund and/or its officers, directors and employees; and
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(vi) the fees and costs of independent counsel to
Series Fund not incurred in the actual conduct of the Series
Fund's affairs.
4. SUB-INVESTMENT MANAGERS.
Notwithstanding any other provision hereof, JHLICO, with the approval
of the Series Fund, may contract with one or more Sub-Investment Managers to
perform any of the investment management services required of JHLICO under this
Agreement; provided, however, that the compensation of any such Sub-Investment
Manager will be the sole responsibility of JHLICO and the duties and
responsibilities of any such Sub-Investment Manager shall be as set forth in an
agreement between the Series Fund, JHLICO and such Sub-Investment Manager. It is
anticipated that JHLICO and the Series Fund will agree to contract initially
with X. Xxxx Price Associates, Inc. to be Sub-Investment Manager for the Mid Cap
Value Fund, with Pacific Investment Management Company LLC to be Sub-Investment
Manager for the Total Return Bond Fund, and with Xxxx Xxxxxxx Advisers, LLC to
be Sub-Investment Manager for the Financial Industries Fund.
JHLICO shall exercise reasonable care in selecting, for approval by the
Series Fund, any Sub-Investment Manager and in monitoring and supervising the
performance of any Sub-Investment Manager but, except as provided in Section 14
hereof, shall not otherwise be legally responsible or liable for any action of
any Sub-Investment Manager. It shall be a particular responsibility of JHLICO to
evaluate the investment performance of Sub-Investment Managers and that of
potential Sub-Investment Managers and to supervise and monitor the practices of
Sub-Investment Managers in selecting brokers and dealers to effect portfolio
transactions, including the negotiation of commissions and the evaluation of
services provided by such brokers and dealers.
5. INVESTMENT ADVISORY FEE AND EXPENSE LIMITATION.
For all of the services rendered, facilities furnished and expenses
paid or assumed as herein provided, the Series Fund shall pay to JHLICO a fee,
which fee shall, with respect to each Fund, be based on the Current Net Assets
as set forth in Schedule I attached hereto and made a part hereof. The fee shall
be accrued daily and payable monthly as soon as possible after the last day of
each calendar month. In the
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case of termination of this Agreement with respect to any Fund during any
calendar month, the amount of the fee accrued to the date of termination shall
be paid.
"Current Net Assets" of any Fund for purposes of computing the amount
of advisory fee accrued for any day shall mean that Fund's net assets for the
most recent preceding day for which that Fund's net assets were computed.
For any fiscal year in which the normal operating costs and expenses of
any Fund of the Series Fund, exclusive of the investment advisory fee, interest,
brokerage commissions, taxes and extraordinary expenses outside the control of
JHLICO exceed 0.10% of that Fund's average daily net assets, JHLICO will
reimburse that Fund promptly after the end of the fiscal year in an amount equal
to such excess. In the event of termination of this Agreement as of a date other
than the last day of Series Fund's fiscal year, JHLICO shall pay any Fund of
Series Fund the amount by which such expenses incurred by that Fund prior to the
date of termination exceeds a pro rata portion of the expense limitation.
6. PORTFOLIO TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Funds, JHLICO is authorized to select the brokers or dealers that will execute
purchase and sale transactions for the Series 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 the Series Fund. JHLICO
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 Series Fund and its shareholders, JHLICO shall have the
right, subject to the control of the Board of Trustees, and to the extent
authorized by the Securities and Exchange Act of 1934, to follow a policy of
selecting brokers who furnish brokerage and research services to the Series Fund
or to JHLICO, who charge a higher commission rate to the Series Fund than may
result when allocating brokerage solely on the basis of seeking the most
favorable price and execution. JHLICO shall determine in good faith that such
higher cost was reasonable in relation to the value of the brokerage and
research services provided.
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The fees payable to JHLICO by the Series Fund hereunder shall be
reduced by any tender solicitation fees or similar payments received by JHLICO,
or any affiliated person of JHLICO, in connection with the tender of investments
of any Fund (less any direct expenses incurred by JHLICO, or any affiliated
person of JHLICO, in connection with obtaining such fees or payments). JHLICO
shall use its best efforts to recapture all available tender offer solicitation
fees and similar payments in connection with tenders of the securities of any
Fund, provided, however, that neither JHLICO nor any affiliated person shall be
required to register as a broker-dealer for this purpose. JHLICO shall advise
the Board of Trustees of any fees or payments of whatever type which it may be
possible for JHLICO or an affiliate of JHLICO to receive in connection with the
purchase or sale of investment securities for any Fund.
7. INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Series Fund shall own and control all records maintained hereunder
by JHLICO on the Series Fund'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 promptly be returned to the Series Fund, free from any claim or
retention of rights by JHLICO. JHLICO also agrees, upon request of the Series
Fund, promptly to surrender such books and records or, at JHLICO's expense,
copies thereof to the Series Fund or make such books and records available for
inspection by representatives of regulatory authorities or other persons
reasonably designated by the Series Fund. JHLICO further 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. JHLICO
shall supply all information requested by any insurance regulatory authorities
to determine whether all insurance laws and regulations are being complied with.
JHLICO 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 Series Fund has authorized such
disclosure, or if such disclosure is expressly required by applicable Federal or
state regulatory authorities.
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JHLICO shall supply the Board of Trustees and officers of the Series
Fund with all statistical information regarding investments of the Funds which
is reasonably required by them and reasonably available to JHLICO.
8. LIABILITY.
No provision of this Agreement shall be deemed to protect JHLICO
against any liability to the Series Fund or its shareholders to which it might
otherwise be subject by reason of any willful misfeasance, bad faith or
negligence in the performance of its duties or the reckless disregard of its
obligations and duties under this Agreement. Nor shall any provision hereof be
deemed to protect any Trustee or officer of the Series Fund against any such
liability to which he might otherwise be subject by reason of any willful
misfeasance, bad faith or negligence in the performance of his duties or the
reckless disregard of his obligations and duties.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
Initial Fund on the date hereof and, with respect to any additional Fund, on the
date of receipt by the Series Fund of notice from JHLICO in accordance with
Paragraph 1(b) hereof that JHLICO 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 Fund
and, with respect to each additional Fund until two years following the date on
which such Fund becomes a Fund hereunder, and shall continue in full force and
effect thereafter with respect to each 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 Series Fund 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 Board of Trustees of the Series Fund 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 Fund shall be effective to continue this Agreement
with respect to any such Fund notwithstanding (A) that this
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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 Series
Fund, 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
Fund at any time, without payment of any penalty, by vote of the Board of
Trustees of the Series Fund, by vote of a majority of the outstanding shares of
such Fund, or by JHLICO on at least sixty (60) days written notice to the Series
Fund.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment.
10. NAME OF XXXX XXXXXXX.
It is understood that the name "Xxxx Xxxxxxx", or any name derived from
or similar to that name, and any logo associated with that name, is the valuable
property of JHLICO, and that the Series Fund has the right to include "Xxxx
Xxxxxxx" as a part of its name only so long as this Agreement shall continue.
Upon termination of this Agreement the Series Fund shall forthwith cease to use
the Xxxx Xxxxxxx name and logos and shall submit to its shareholders, if
necessary, an amendment to its Declaration of Trust to change the Series Fund's
name.
11. SERVICES NOT EXCLUSIVE.
The services of JHLICO to the Series Fund with respect to the Funds are
not to be deemed exclusive and JHLICO 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 JHLICO 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.
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12. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Funds, JHLICO and its directors, officers and employees will not act as
principal or agent or receive any commission. Nothing in this Agreement,
however, shall preclude the combination of orders for the sale or purchase of
portfolio securities of the Series Fund with those for other registered
investment companies managed by JHLICO or its affiliates, if orders are
allocated in a manner deemed equitable by JHLICO among the accounts and at a
price approximately averaged.
13. 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 Series Fund, 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 Series Fund 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.
14. INDEMNIFICATION
Except to the extent that a member of the Board of Trustees would
thereby be protected against any liability to the Series Fund or its
shareholders to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of the member's
duties, or by reason of the member's reckless disregard either of the member's
obligations and duties under this Agreement or of the duties involved in the
conduct of the member's office, JHLICO hereby indemnifies each person who is or
has been a member of the Board of Trustees and will hold each harmless against
any and all losses, claims, damages, liabilities or litigation (including legal
and other expenses) to which the member may become subject under the 1940 Act or
any other statute or at common law or otherwise, by reason of his or her failure
or alleged failure to take any action relating to the investment or reinvestment
of assets in the Funds, regardless of whether a Sub-Investment Manager has been
retained in
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connection with the Fund concerned, including any failure or alleged failure to
seek or retain investment advice or management in addition to or in place of
that provided by JHLICO and its Sub-Investment Managers, if any. With respect to
any losses, claims, damages, liabilities or litigation arising out of events
occurring prior to the termination of this Agreement, this indemnity shall
survive said termination.
15. LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Series Fund
hereunder shall not be binding upon any of the Trustees, shareholders, officers,
agents or employees of Series Fund personally, but bind only the trust property
of the Series Fund, as provided in the Series Fund's Declaration of Trust.
16. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first set forth above.
XXXX XXXXXXX VARIABLE SERIES TRUST I
ATTEST:
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxx Xxxx
----------------------------------- -----------------------------------
Secretary Title: Chairman and CEO
XXXX XXXXXXX LIFE INSURANCE COMPANY
ATTEST:
/s/ Xxxxxx X. Xxxxxxx By: Xxxxxx X. Xxxxxxx
----------------------------------- -----------------------------------
Assistant Secretary Title: Senior Vice President and
Chief Investment Strategist
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SCHEDULE I
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MID CAP VALUE FUND
CURRENT NET ASSETS UNDER MANAGEMENT
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On the first $50,000,000 110 basis points (1.10%) per annum
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On the next $50,000,000 100 basis points (1.00%) per annum
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On amounts over $100,000,000 95 basis points (0.95%) per annum
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TOTAL RETURN BOND FUND
CURRENT NET ASSETS UNDER MANAGEMENT
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On the first 250,000,000 70 basis points (0.70%) per annum
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On the next $250,000,000 68 basis points (0.68%) per annum
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On amounts over $500,000,000 65 basis points (0.65%) per annum
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FINANCIAL INDUSTRIES
CURRENT NET ASSETS UNDER MANAGEMENT
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All net assets 80 basis points (0.80%) per annum
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