(Managed Fund)
SUB-INVESTMENT MANAGEMENT AGREEMENT
AMONG
XXXX XXXXXXX VARIABLE SERIES TRUST I
XXXX XXXXXXX LIFE INSURANCE COMPANY
AND
CAPITAL GUARDIAN TRUST COMPANY
SUB-INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the first day of November, 2000 by and among Xxxx
Xxxxxxx Variable Series Trust I, a Massachusetts business trust (the "Trust"),
Xxxx Xxxxxxx Life Insurance Company, a Massachusetts corporation ("JHLICO"), and
Capital Guardian Trust Company, a California corporation ("Advisers");
WHEREAS, the Trust is organized and is engaged in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940 (the "1940 Act"); and
WHEREAS, JHLICO is engaged in the business of rendering investment advice
under the Investment Advisers Act of 1940, and the Advisers is a state-chartered
bank exempt from registration under the Investment Advisers Act of 1940; and
WHEREAS, the Trust is authorized to issue shares of capital stock in
separate classes with each such class representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust offers shares in several classes, one of which is
designated as the Managed Fund, (together with all other classes established by
the Trust, collectively referred to as the "Funds"), each of which pursues its
investment objectives through separate investment policies; and
WHEREAS, the Trust has retained JHLICO to render investment management
services to the Trust pursuant to an Investment Management Agreement dated as of
April 12, 1988 (the "Investment Management Agreement"), pursuant to which it may
contract with one or more sub-managers with respect to the Managed Fund;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-MANAGER
(a) Subject Fund. Advisers is hereby appointed and Advisers hereby accepts
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the appointment to act as an investment adviser and manager to the
Managed Fund (the "Subject Fund") for the period and on the terms
herein set forth, for the compensation herein provided.
(b) Incumbency Certificates. Advisers shall furnish to JHLICO, immediately
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upon execution of this Agreement, a certificate of authorized
personnel of Advisers setting forth (by name and title, and including
specimen signatures) those individuals of Advisers who are authorized
to act on behalf of the Subject Fund pursuant to the provisions of
this Agreement. Advisers shall promptly provide further supplemental
certificates, as needed, to reflect all changes with respect to such
authorized personnel for the Subject Fund. On behalf of the Trust,
JHLICO shall instruct the custodian for the Subject Fund to accept
instructions with respect to the Subject Fund from the authorized
personnel of Advisers so named.
(c) Independent Contractor. Advisers shall for all purposes herein be
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deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or be
deemed an agent of the Trust.
(d) Advisers' Representations. Advisers represents, warrants and agrees
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(i) that it is a "bank" as defined in the Investment Advisers Act of
1940 and exempt from registration as an investment adviser under the
Investment Advisers Act of 1940, (ii) that it will promptly notify
JHLICO if the foregoing representation and agreement shall cease to be
true (in any material respect) at any time during the term of this
Agreement, (iii) that it will promptly
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notify JHLICO of any material change in the senior management or
ownership of Advisers, or of any change in the identity of the
personnel who manage the Subject Fund(s), (iv) that it has adopted a
code of ethics complying with the requirements of Rule 17j-1 of the
Securities and Exchange Commission (the "SEC") under the 1940 Act and
has provided true and complete copies of such code to the Trust and to
JHLICO, and has adopted procedures reasonably designed to prevent
violations of such code, and (v) that, if applicable, it has furnished
the Trust and JHLICO each with a copy of Advisers' Form ADV, as most
recently filed with the SEC, and will promptly furnish copies of each
future amendment thereto.
2. PROVISION OF INVESTMENT MANAGEMENT SERVICES.
Advisers will provide for the Subject Fund's assets as may be designated to
it by JHLICO from time to time (the "Subject Assets") a continuing and suitable
investment program consistent with the investment policies, objectives and
restrictions of said Fund, as established by the Trust and JHLICO. From time to
time, JHLICO or the Trust may provide Advisers in writing (including, without
limit, electronic communication) with additional or amended investment policies,
procedures, guidelines and restrictions with the opportunity for prior review by
Advisers. Advisers, as a sub-manager, will use due care to manage the investment
and reinvestment of the Subject Assets, and perform the functions set forth
below, subject to the overall supervision, direction, control and review of
JHLICO and the Board of Trustees of the Trust, consistent with the applicable
investment policies, guidelines and restrictions, the provisions of the Trust's
Declaration of Trust, Bylaws, prospectus, statement of additional information
(each as in effect from time to time), provisions of the 1940 Act and all other
applicable laws and regulations deemed to be Sub-Advisers' duty under the
Subject Funds' compliance manual and procedures (including any applicable
investment restrictions imposed by state insurance laws and regulations or any
directions or instructions delivered to Advisers in writing by JHLICO or the
Trust from time to time) as is mutually agreed to from time to time, such
agreement not to be unreasonably withheld. In the event that, in addition to
Advisers, other investment advisers or sub-managers are appointed by the Trust
or JHLICO to render investment advisory services to the Subject Fund, JHLICO and
the Trust each acknowledges and agrees that Advisers will not be held
responsible for such other investment advisers' or sub-managers' compliance with
policies and limitations applicable to the Subject Fund. By its signature below,
Advisers acknowledges receipt of a copy of the Trust's Declaration of Trust,
Bylaws, prospectus, and statement of additional information, each as in effect
on the date of this Agreement.
Advisers will, at its own expense:
(a) upon request, furnish the Trust with research, economic and
statistical data in connection with said Fund's investments and
investment policies including , without limit, investment policy
decisions to be made by the Trust's Board of Trustees or any committee
thereof regarding the Subject Fund;
(b) submit such reports and information as JHLICO or the Trust's Board of
Trustees may reasonably request, to reasonably assist the custodian in
its determination of the market value of securities held in the
Subject Assets;
(c) place orders for purchases and sales of portfolio investments for the
Subject Assets;
(d) give instructions to the Subject Fund's custodian concerning the
delivery of securities and transfer of cash for the Subject Assets;
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(e) maintain and preserve the records relating to its activities hereunder
required by the 1940 Act to be maintained and preserved by the Trust;
(f) at the close of business each day, provide JHLICO and the custodian
with copies of trade tickets for each transaction effected for the
Subject Assets, and promptly forward to the custodian copies of all
brokerage or dealer confirmations;
(g) as soon as practicable following the end of each calendar month,
provide JHLICO with written statements showing all transactions
effected for the Subject Assets during the month, a summary listing
all investments held in the Subject Assets as of the last day of the
month, and such other information as JHLICO may reasonably request in
connection with the accounting services that JHLICO provides for the
Subject Fund;
(h) subject to its receipt of all necessary voting materials, vote all
proxies with respect to investments of the Subject Assets in
accordance with Advisers' proxy voting policy as most recently
supplied to JHLICO, or in such other manner as JHLICO and Advisers may
reasonably agree upon from time to time; and
(i) provide timely information to JHLICO and the Trust concerning Advisers
and its activities hereunder in connection with the Subject Assets to
assure accurate disclosure of such matters (or information necessary
to make the statements not misleading) in any Prospectus, Statement of
Additional Information or registration statement of the Trust or
JHLICO, or in any sales literature or materials for the sale or
distribution of the Trust's shares, it being understood that JHLICO
and the Trust shall otherwise be solely responsible for the accuracy
of such documents.
On its own initiative, Advisers will apprise JHLICO and the Trust of
important economic developments materially affecting the marketplace or the
Subject Assets, and will furnish JHLICO and the Trust's Board of Trustees from
time to time such information as is appropriate for this purpose. Advisers will
also make its personnel available in Boston or other reasonable locations as
often as quarterly to discuss the Subject Assets and Advisers' management
thereof, to educate JHLICO sales personnel with respect thereto (in such manner
and format as the parties reasonably agree upon from time to time), and for such
other purposes as the Trust or JHLICO may reasonably request.
The Trust and JHLICO will provide timely information to Advisers regarding
such matters as purchases and redemptions of shares in the Subject Fund and the
cash requirements of, and cash available for investment in, the Subject Fund.
JHLICO will timely provide Advisers with copies of monthly accounting statements
for the Subject Fund, and such other information (including, without limitation,
reports concerning the classification of portfolio securities of the Subject
Fund for purposes of Subchapter M of the Internal Revenue Code and Treasury
Regulations Section 1.817) as may be reasonably necessary or appropriate in
order for Advisers to perform its responsibilities hereunder.
Advisers shall have no duty or obligation to the Trust or to JHLICO, and
shall not be expected or responsible to perform any service or function with
respect thereto, except as is expressly stated in this Agreement.
3. ALLOCATION OF EXPENSES.
Each party to this Agreement shall bear the costs and expenses of
performing its obligations hereunder. In this regard, the Trust specifically
agrees to assume the expense of:
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(a) brokerage commissions for transactions in the portfolio investments of
the Trust and similar fees and charges for the acquisition,
disposition, lending or borrowing of such portfolio investments;
(b) custodian fees and expenses;
(c) all taxes, including issuance and transfer taxes, and reserves for
taxes payable by the Trust to federal, state or other governmental
agencies; and
(d) interest payable on the Trust's borrowings.
Nothing in this Agreement shall alter the allocation of expenses and costs
agreed upon between the Trust and JHLICO in the Investment Management Agreement
or any other agreement to which they are parties.
4. SUB-ADVISORY FEES.
For all of the services rendered with respect to the Subject Assets as
herein provided, JHLICO shall pay to Advisers a fee (for the payment of which
the Trust shall have no obligation or liability), based on the Current Net
Assets (as defined below) of the Subject Assets, as set forth in Schedule I
attached hereto and made a part hereof. Such fee shall be accrued daily and
payable monthly, as soon as practicable after the last day of each calendar
month. In the case of termination of this Agreement with respect to the Subject
Assets during any calendar month, the fee with respect to the Subject Assets
accrued to but excluding the date of termination shall be paid promptly
following such termination. For purposes of computing the amount of advisory fee
accrued for any day, "Current Net Assets" shall mean the net assets as of the
most recent preceding day for which that Subject Fund's net assets were
determined by the Subject Fund's Custodian or by the Subject Fund's
administrator, as the case may be.
5. PORTFOLIO TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Subject Assets, Advisers is authorized to select the brokers or dealers that
will execute purchase and sale transactions for the Subject Assets and to use
its best efforts to obtain the best available price and most favorable execution
with respect to all such purchases and sales of portfolio securities for said
Subject Assets. Advisers shall maintain records adequate to demonstrate
compliance with this requirement. Subject to this primary requirement, and
maintaining as its first consideration the benefits to the Subject Fund and its
shareholders, Advisers shall have the right subject to the control of the Board
of Trustees, and to the extent authorized by the Securities Exchange Act of
1934, to follow a policy of selecting brokers who furnish brokerage and research
services to the Subject Fund or to the Advisers, and who charge a higher
commission rate to the Subject Fund than may result when allocating brokerage
solely on the basis of seeking the most favorable price and execution. Advisers
shall determine in good faith that such higher cost was reasonable in relation
to the value of the brokerage and research services provided.
Advisers will not receive any tender offer solicitation fees or similar
payments in connection with the tender of investments of any Fund.
6. OWNERSHIP OF INFORMATION, RECORDS, AND CONFIDENTIALITY.
The Trust shall own and control all records maintained hereunder by
Advisers on the Trust's behalf and, in the event of termination of this
Agreement with respect to the Subject Assets for any reason, upon request of the
Trust or its designee, all records relating to the Subject Fund shall be
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promptly returned to the Trust, free from any claim or retention of rights by
Advisers, provided that (subject to the last paragraph of this Section 6)
Advisers may retain copies of such records. Advisers also agrees, upon request
of the Trust, promptly to surrender such books and records or, at its expense,
copies thereof, to the Trust or make such books and records available for audit
or inspection by representatives of regulatory authorities or other persons
reasonably designated by the Trust. Advisers further agrees that with respect to
its activities hereunder, it shall maintain, prepare and preserve such books and
records as are required in accordance with the 1940 Act and rules thereunder,
including but not limited to Rules 31a-1 and 31a-2, and supply all information
requested by any insurance regulatory authorities to determine whether all
insurance laws and regulations are being complied with. Advisers shall supply
the Board of Trustees and officers of the Trust and JHLICO with all statistical
information regarding investments made on behalf of the Subject Assets which is
reasonably required by them and reasonably available to Advisers.
Advisers shall not disclose or use any records or information obtained
pursuant hereto in any manner whatsoever except as expressly authorized herein,
and will keep confidential any information obtained pursuant hereto, and
disclose such information only if the Trust has authorized such disclosure, or
(after reasonable notice to the Trust) if such disclosure is expressly requested
by applicable federal or state regulatory authorities.
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect Advisers against
any liability to the Trust or its shareholders to which it might otherwise be
subject by reason of any willful misfeasance, bad faith or negligence in the
performance of its duties or the reckless disregard of its obligations and
duties under this Agreement. No provision of this Agreement shall be deemed to
protect JHLICO against any liability to the Trust or its shareholders to which
it might otherwise be subject by reason of any willful misfeasance, bad faith or
negligence in the performance of its duties or the reckless disregard of its
obligations and duties under the Investment Management Agreement. Nor shall any
provision hereof be deemed to protect any trustee or officer of the Trust
against any such liability to which he might otherwise be subject by reason of
any willful misfeasance, bad faith or negligence in the performance his duties
or the reckless disregard of his obligations and duties. Advisers shall employ
only qualified personnel to manage the Subject Assets; shall comply with all
applicable laws and regulations in the discharge of its duties under this
Agreement; shall (as provided in Section 2 above) use due care to comply with
the investment policies, guidelines and restrictions of the Subject Fund and
with the provisions of the Trust's Declaration of Trust, Bylaws, prospectus and
statement of additional information; shall manage the Subject Assets (subject to
the receipt of, and based upon the information contained in, periodic reports
from JHLICO or the custodian concerning the classification of Fund securities
for such purposes) as a regulated investment company in accordance with
subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and
Treasury Regulations Section 1.817-5(b); shall act at all times in the best
interests of the Trust; and shall discharge its duties with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use in the
conduct of a similar enterprise. However, Advisers shall not be obligated to
perform any service not described in this Agreement, and shall not be deemed by
virtue of this Agreement to have made any representation or warranty that any
level of investment performance or level of investment results will be achieved.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
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Subject Fund on the date hereof and, unless terminated as herein
provided, shall remain in full force and effect for two years from the
date hereof, and shall continue in full force and effect thereafter so
long as such continuance is approved at least annually (a) by either
the Board of Trustees of
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the Trust or by vote of a majority of the outstanding voting shares of
such Fund, and (b) in either event by the vote of a majority of the
trustees of the Trust who are not parties to this Agreement or
"interested persons" of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
Any approval of this Agreement by the holders of a majority of the
outstanding shares of the Subject Fund shall be effective to continue
this Agreement with respect to such Fund notwithstanding (A) that this
Agreement has not been approved by the holders of a majority of the
outstanding shares of any other Fund affected hereby, and (B) that
this Agreement has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless such approval shall be
required by any other applicable law or otherwise. The terms
"assignment," "vote of a majority of the outstanding shares" and
"interested person," when used in this Agreement, shall have the
respective meanings specified in the 1940 Act and rules thereunder.
(b) Termination. This Agreement may be terminated with respect to the
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Subject Fund at any time, without payment of any penalty, by vote of
the trustees of the Trust or by vote of a majority of the outstanding
shares of such Fund, by Advisers on at least sixty days' written
notice to the Trust and JHLICO, or by JHLICO on at least sixty days'
written notice to the Trust and Advisers.
(c) Automatic Termination. This Agreement shall automatically and
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immediately terminate in the event of its assignment (other than as
permitted pursuant to Section 15 below) or if the Investment
Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE; USE OF ADVISERS' NAME AND LOGO.
(a) The services of Advisers to the Trust are not to be deemed exclusive
and it shall be free to render similar services to others so long as
its services hereunder are not impaired thereby. It is specifically
understood that directors, officers and employees of Advisers and of
its subsidiaries and affiliates may continue to engage in providing
Fund management services and advice to other investment companies,
whether or not registered, and other investment advisory clients.
(b) The parties agree that the name "Capital Guardian Trust Company", the
names of the Advisers' affiliates within The Capital Group Companies,
Inc. as listed on Schedule II to this Agreement, and any logo or trade
or service xxxx (including but not limited to the American Funds Group
of mutual funds) (collectivley referred to as the "Protected
Information"), are the valuable property of the Advisers and its
affiliates. The Trust and JHLICO shall have the right to use the
Protected Information provided that, prior to distribution of any
materials which refer to Advisers or the Protected Information, JHLICO
shall consult with Advisers and shall furnish to Advisers a copy of
such materials. Advisers agrees to cooperate with JHLICO and to review
such materials promptly. JHLICO shall not distribute such materials if
Advisers reasonably objects in writing, within five (5) business days
of its receipt of such copy (or such other time as may be mutually
agreed), to the manner in which its name and the Protected Information
are used.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Subject Fund, Advisers 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 Subject Fund with those for other accounts by
Advisers or its affiliates, if orders are allocated in a manner deemed equitable
by Advisers among the accounts and at a price approximately averaged.
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11. AMENDMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing agreed to by the parties
hereto. Additionally, no amendment of this Agreement shall be effective with
until approved specifically by (a) the Board of Trustees of the Trust, or by
vote of a majority of the outstanding shares of the Subject Fund, and (b) by
vote of a majority of those trustees of the Trust who are not interested persons
of any party to this Agreement cast in person at a meeting called for the
purpose of voting on such approval.
12. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the trustees, shareholders, officers, agents or
employees of the Trust personally, but only bind the trust property of the
Trust, as provided in the Trust's Declaration of Trust.
13. NOTICES
Notices and other communications required or permitted under this Agreement
shall be in writing, shall be deemed to be effectively delivered when actually
received, and may be delivered by US mail (first class, postage prepaid), by
facsimile transmission, by hand or by commercial overnight delivery service,
addressed as follows:
ADVISERS Capital Guardian Trust Company
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Treasurer
Fax #: (000) 000-0000
JHLICO: Xxxx Xxxxxxx Life Insurance Company
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
TRUST: Xxxx Xxxxxxx Variable Series Trust I
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
14. GOVERNING LAW.
This agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act and
rules thereunder.
15. ASSIGNMENT.
This Agreement may not be assigned by any party, either in whole or in
part, without the prior written consent of each other party.
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TRUST: Xxxx Xxxxxxx Variable Series Trust I
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: 000-000-0000
14. GOVERNING LAW.
This agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act and
rules thereunder.
15. ASSIGNMENT.
This Agreement may not be assigned by any party, either in whole or in
part, without the prior written consent of each other party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.
XXXX XXXXXXX VARIABLE SERIES TRUST I
By: /s/Xxxxxxx X. Xxx Xxxx
Title: Chairman
XXXX XXXXXXX LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
Title: Senior Vice President
CAPITAL GUARDIAN TRUST COMPANY
By: /s/ Xxxxxxx Xxxx
Title: Vice President
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SCHEDULE I
FEES
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Current Net Assets Under Management Sub-Advisory Fee
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On the first $ 150 million of Subject Assets 50 basis points (0.50%) per annum
On the next $ 150 million of Subject Assets 45 basis points (0.45%) per annum
On the first $ 200 million of Subject Assets 30 basis points (0.30%) per annum
On Subject Assets over $ 500 million 25 basis points (0.25%) per annum
SCHEDULE II
The Capital Group Companies, Inc. and its Affiliates
1. AFD American Funds Distributors, Inc.
2. AFS American Funds Service Company
3. CGC The Capital Group Companies, Inc.
4. CGII Capital Group International, Inc.
5. CGRI Capital Group Research, Inc.
6. CGCI Capital Guardian (Canada), Inc.
7. CGRC Capital Guardian Research Company
8. CGTC Capital Guardian Trust Company
9. CGTN Capital Guardian Trust Company, a Nevada Corporation
10. CIAC Capital International Advisory Company S.A.
11. CIACFMC Capital International All Countries Fund Management Company
S.A.
12. CIEFMC Capital International Europe Fund Management Company
13. CIGSMC Capital International Global Small Cap Fund Management Company
S.A.
14. CII Capital International, Inc.
15. CIKK Capital International K.K.
16. CIKFMC Capital International Kokusai Fund Management Company S.A.
17. CIL Capital International Limited
18. CIL-B Capital International Limited (Bermuda)
19. CIMC Capital International Management Company S.A.
20. CIRI Capital International Research, Inc.
21. CISA Capital International S.A.
22. CMS Capital Management Services, Inc.
23. CRC Capital Research Company
24. CRMC Capital Research and Management Company
25. CSR Capital Strategy Research, Inc.
26. CIHACFMC CIHAC Fund Management Company S.A.
27. CIAM Capital International Asset Management, Inc.
28. CIAM Canada Capital International Asset Management (Canada), Inc.
29. CIFS Capital International Financial Services, Inc.
