American Leaders Large Cap Value
Core Bond
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 first day of June, 2000 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") 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 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 is authorized to issue shares of beneficial interest in
separate classes with each such class representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Series currently offers shares of beneficial interest in thirty-
one classes which are subject to separate management agreements with JHLICO that
do not apply to the Portfolios referred to below, and
WHEREAS, the Series intends to offer shares of beneficial interest in two
additional classes (the "Initial Portfolios" under this Agreement) designated as
the American Leaders Large Cap Value Fund and the Core Bond Fund (together with
other classes subsequently established by the Series, the "Portfolios) and the
Series desires to retain JHLICO to render investment advisory services under
this Agreement, 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 Portfolios. The Series hereby appoints JHLICO and JHLICO hereby
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accepts the appointment, to act as investment adviser and manager to each of the
Initial Portfolios for the period and on the terms herein set forth, for the
compensation herein provided.
(b) Additional Portfolios. In the event that the Series establishes one or
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more classes of shares other than the Initial Portfolios with respect to which
it desires to retain JHLICO to render investment advisory and management
services hereunder, it shall so notify JHLICO in writing. If it is willing to
render such services JHLICO shall notify the Series in writing, whereupon such
class of shares shall become a Portfolio hereunder.
(c) Independent Contractor. JHLICO shall for all purposes herein be deemed
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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.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
JHLICO will provide to the Portfolios a continuing and suitable investment
program consistent with the investment policies, objectives and restrictions of
the Series. JHLICO will manage the investment and reinvestment of the assets in
the Portfolios, 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 and, as in effect from time to time, the provisions of the Series'
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 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
Portfolios:
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(a) advise the Series in connection with policy decisions to be made by its
Board of Trustees or any committee thereof and, upon request, furnish the Series
with research, economic and statistical data in connection with the Series'
investments and investment policies;
(b) provide administration of the day to day operations of the Series;
(c) submit such reports relating to the valuation of the Series' securities
as its Board of Trustees may reasonably request;
(d) assist the Series 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;
(f) maintain and preserve the records required by the 1940 Act to be
maintained and preserved by the Series, to the extent not maintained by the
Series' 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;
(h) value the assets and liabilities of the Series, compute the daily income,
net asset value and yield of each Portfolio; and
(i) supervise the activities of each Sub-Investment Manager.
The Series will provide timely information to JHLICO regarding such matters as
purchases and redemptions of shares in each Portfolio and the cash requirements
of, and cash available for investment in, each Portfolio, 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 agrees to assume the Portfolios' share of the expense of:
(i) brokerage commissions for transactions in the portfolio
investments of the Series 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 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' borrowings;
(v) extraordinary or non-recurring expenses, such as legal claims and
liabilities and litigation costs and indemnification payments by the Series in
connection therewith;
(vi) the charges and expenses of any custodian or depository appointed
by the Series 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 (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);
(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 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 pursuant to (a) above, JHLICO
agrees to assume the Portfolios' 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;
(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' 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 and/or its officers, directors and
employees; and
(vi) the fees and costs of independent counsel to Series not incurred
in the actual conduct of the Series' affairs.
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4. SUB-INVESTMENT MANAGERS.
Notwithstanding any other provision hereof, JHLICO, with the approval of the
Series, 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, JHLICO and such Sub-Investment Manager. It is anticipated that JHLICO
and the Series will agree to contract initially with Federated Investment
Management Company to be Sub-Investment Manager for each of the Initial
Portfolios.
JHLICO shall exercise reasonable care in selecting, for approval by the
Series, 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 shall pay to JHLICO a fee, which fee
shall, with respect to each Portfolio, be at an effective rate of:
(a) For the American Leaders Large Cap Value Fund:
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.80% of the first $50 million, .65% of the next $200 million; .60% of the
next $250 million; and .55% above $500 million on an annual basis of the
Current Net Assets of such Portfolio.
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(b) For the Core Bond Fund:
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.70% of the first $25 million; .65% of the next $25 million; .60% of the
next $100 million; and .55% above $150 million on an annual basis of the
Current Net Assets of such Portfolio.
The fee shall be accrued daily and payable monthly as soon as possible after
the last day of each calendar month. In the case of termination of this
Agreement with respect to any Portfolio during any calendar month, the amount of
the fee accrued to the date of termination shall be paid.
"Current Net Assets" of any Portfolio for purposes of computing the amount of
advisory fee accrued for any day shall mean that Portfolio's net assets for the
most recent preceding day for which that Portfolio's net assets were computed.
For any fiscal year in which the normal operating costs and expenses of any
Portfolio of the Series, exclusive of the investment advisory fee, interest,
brokerage commissions, taxes and extraordinary expenses outside the control of
JHLICO exceed 0.10% of that Portfolio's average daily net assets, JHLICO will
reimburse that Portfolio 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' fiscal year, JHLICO shall pay any
Portfolio of Series the amount by which such expenses incurred by that Portfolio
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
Portfolios, JHLICO is authorized to select the brokers or dealers that will
execute purchase and sale transactions for the Series 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.
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 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 or
to JHLICO, who charge a higher commission rate to the Series than may result
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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.
The fees payable to JHLICO by the Series 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
Portfolio (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
Portfolio, 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 Portfolio.
7. INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Series shall own and control all records maintained hereunder by JHLICO
on the Series' behalf and, in the event of termination of this Agreement with
respect to any Portfolio for any reason, all records relating to that Portfolio
shall promptly be returned to the Series, free from any claim or retention of
rights by JHLICO. JHLICO also agrees, upon request of the Series, promptly to
surrender such books and records or, at JHLICO's expense, copies thereof to the
Series or make such books and records available for inspection by
representatives of regulatory authorities or other persons reasonably designated
by the Series. 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
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pursuant hereto, and disclose such information only if the Series has authorized
such disclosure, or if such disclosure is expressly required by applicable
Federal or state regulatory authorities.
JHLICO shall supply the Board of Trustees and officers of the Series with all
statistical information regarding investments of the Portfolios 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 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 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 each
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Initial Portfolio on the date hereof and, with respect to any additional
Portfolio, on the date of receipt by the Series of notice from JHLICO in
accordance with Paragraph 1(b) hereof that JHLICO is willing to serve with
respect to such Portfolio. 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 Portfolios and, with respect to each additional Portfolio
until two years following the date on which such Portfolio becomes a Portfolio
hereunder, and shall continue in full force and effect thereafter with respect
to each Portfolio so long as such continuance with respect to any such Portfolio
is approved at least annually (i) by either the Board of Trustees of the Series
or by vote of a majority of the outstanding voting shares of such Portfolio, and
(ii) in either event by the vote of a majority of the Board of Trustees of the
Series who are not parties to this Agreement or
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"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 Portfolio shall be effective to continue this
Agreement with respect to any such Portfolio notwithstanding (A) that this
Agreement has not been approved by the holders of a majority of the outstanding
shares of any other Portfolio affected hereby, and (B) that this Agreement has
not been approved by the vote of a majority of the outstanding shares of the
Series, 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
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Portfolio at any time, without payment of any penalty, by vote of the Board of
Trustees of the Series, by vote of a majority of the outstanding shares of such
Portfolio, or by JHLICO on at least sixty (60) days written notice to the
Series.
(c) Automatic Termination. This Agreement shall automatically and
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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 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 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' name.
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11. SERVICES NOT EXCLUSIVE.
The services of JHLICO to the Series with respect to the Portfolios 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.
12. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Portfolios, 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 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 Portfolio until approved
specifically by (a) the Board of Trustees of the Series, or by vote of a
majority of the outstanding shares of that Portfolio, and (b) by vote of a
majority of those Trustees of the Series 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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14. INDEMNIFICATION
Except to the extent that a member of the Board of Trustees would thereby be
protected against any liability to the Series 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
Portfolios, regardless of whether a Sub-Investment Manager has been retained in
connection with the Portfolio 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 hereunder shall
not be binding upon any of the Trustees, shareholders, officers, agents or
employees of Series personally, but bind only the trust property of the Series,
as provided in the Series' Declaration of Trust.
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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/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxx Xxxx
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Assistant Secretary Title: Chairman and CEO
XXXX XXXXXXX LIFE INSURANCE COMPANY
ATTEST:
/s/ Xxxxxxxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxxx
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Assistant Secretary Title: Senior Vice President
