Exhibit (d)27
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"),
X. Xxxx Price International, Inc. (formerly, "Xxxx-Xxxxx Xxxxxxx International,
Inc."), a Maryland corporation ("Adviser"), and Xxxx Xxxxxxx Life Insurance
Company, a Massachusetts corporation ("JHLICO").
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 and Adviser are each engaged in the business of rendering
investment advice under the Investment Adviser 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 International Opportunities 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
March 14, 1996 (the "Investment Management Agreement"), pursuant to which it may
contract with Adviser as a sub-manager as provided for herein;
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-MANAGER
(a) Subject Fund. Adviser is hereby appointed and Adviser hereby accepts
the appointment to act as investment adviser and manager to the International
Opportunities Fund (the "Subject Fund") for the period and on the terms herein
set forth, for the compensation herein provided.
(b) Additional Subject Funds. In the event that the Trust and JHLICO
desire to retain Adviser to render investment advisory services hereunder for
any other Fund, they shall so notify Adviser in writing. If it is willing to
render such services, Adviser shall notify the Trust in writing, whereupon such
Fund shall become a Subject Fund hereunder.
(c) Incumbency Certificates. Adviser shall furnish to JHLICO, immediately
upon execution of this Agreement, a certificate of a senior officer of Adviser
setting forth (by name and title, and including specimen signatures) those
officers of Adviser who are authorized to make investment decisions for the
Subject Fund pursuant to the provisions of this Agreement. Adviser shall
promptly provide supplemental certificates in connection with each additional
Subject Fund (if any) and further supplemental certificates, as needed, to
reflect all changes with respect to such authorized officers for any 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 officers of Adviser so named.
(d) Independent Contractor. Adviser 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 Trust.
(e) Adviser' Representations. Adviser represents, warrants and agrees
(I) that it is registered as an investment adviser under the Investment Adviser
Act of 1940, and that it will remain so registered and will comply with the
requirements of said Act, and the rules and regulations thereunder, at all times
while this Agreement remains in effect, (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 notify JHLICO of any material change in the senior management or
ownership of Adviser, or of any change in the identity of the personnel who
manage the Subject Fund, (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 designed to prevent
violations of such code, and (v) that it has furnished the Trust and JHLICO each
with a copy of Adviser' 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.
Adviser will provide for the Subject Fund 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, the Board of Trustees of the Trust may provide Adviser with additional or
amended investment policies, guidelines and restrictions. Adviser, as
sub-manager, will manage the investment and reinvestment of the assets in the
Subject Fund, 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), 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 Adviser in writing by
JHLICO or the Trust from time to time). By its signature below, Adviser
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.
Adviser will, at its own expense:
(a) advise the Trust in connection with investment policy decisions to be
made by its Board of Trustees or any committee thereof regarding the Subject
Fund and, upon request, furnish the Trust with research, economic and
statistical data in connection with said Fund's investments and investment
policies;
(b) submit such reports and information as JHLICO or the Trust' s Board of
Trustees may reasonably request, to assist the custodian in its determination of
the market value of securities held in the Subject Fund to the extent such
securities are not otherwise priceable using an approved pricing service;
(c) place orders for purchases and sales of portfolio investments for the
Subject Fund;
(d) give instructions to the Subject Fund's custodian concerning the
delivery of securities and transfer of cash for the Subject Fund in connection
with the settlement of trades;
(e) maintain and preserve the records relating to its activities hereunder
required by the 1940 Act to be maintained and preserved by the Trust, to the
extent not maintained by the custodian, transfer agent or JHLICO;
(f) each business day, provide JHLICO with a written daily statement of
the transactions effected for the Subject Fund on the previous business day;
(g) as soon as practicable following the end of each calendar month,
provide JHLICO with a summary listing of all investments held in such Fund as of
the last day of the month, together with the average purchase price per unit of
each investment and such other information as JHLICO may reasonably request; and
(h) absent specific instructions to the contrary provided to it by JHLICO
and subject to its receipt of all necessary voting materials, vote all proxies
with respect to investments of the Subject Fund in accordance with Adviser's
proxy voting policy as most recently provided to JHLICO.
The Trust and JHLICO will provide timely information to Adviser 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 Fund. JHLICO
will timely provide Adviser with copies of monthly accounting statements for the
Subject Fund, and such other information (including, without limitation, reports
concerning the classification of Portfolio securities for purposes of Subchapter
M of the Internal Revenue Code and Treasury Regulation Section 1.817) as may be
reasonably necessary or appropriate in order for Adviser to perform its
responsibilities hereunder. Adviser will apprise JHLICO and the Trust of
important political and economic developments materially affecting the
marketplace or the Subject Fund, and will furnish JHLICO and the Trust's Board
of Trustees from time to time such information as is appropriate for this
purpose. Adviser will also make such personnel as it deems appropriate available
in Boston or other reasonable locations as often as quarterly to discuss the
Subject Fund and Adviser's management thereof, to educate JHLICO sales personnel
with respect thereto, and for such other purposes as the Trust or JHLICO may
reasonably request.
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:
(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 Fund as
herein provided, JHLICO shall pay to Adviser a fee (for the payment of which the
Trust shall have no obligation or liability), based on the Current Net Assets of
the Subject Fund, 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 Fund during any
calendar month, the fee with respect to such Fund 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 Subject Fund's net assets as of the most recent
preceding day for which the Subject Fund's net assets were computed.
5. FUND TRANSACTIONS.
In connection with the investment and reinvestment of the assets of the
Subject Fund, Adviser is authorized to select the brokers or dealers that will
execute purchase and sale transactions for the Fund and to use reasonable
efforts to obtain the best available price and most favorable execution with
respect to all such purchases and sales of portfolio securities for said Fund.
Adviser shall maintain records adequate to demonstrate compliance with this
requirement. Adviser shall have the right subject to the control of the Trust's
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 Adviser, 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. Adviser
shall determine in good faith that such higher cost was reasonable in relation
to the value of the brokerage and research services provided.
Adviser 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
Adviser on the Trust'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
be promptly returned to the Trust, free from any claim or retention of rights by
Adviser, provided that (subject to the last paragraph of this Section 6) Adviser
may retain copies of such records. Adviser 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. Adviser 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. Adviser also
agrees to supply all information in its possession required by any insurance
regulatory authorities to determine whether all insurance laws and regulations
are being complied with. Adviser shall supply the Board of Trustees and officers
of the Trust and JHLICO with all statistical information regarding the
investments in the Subject Fund which is reasonably required by them and
reasonably available to Adviser, provided that Adviser shall not be required to
incur any additional expense in connection therewith.
Adviser 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 if such disclosure is expressly required by
applicable federal or state regulatory authorities.
7. LIABILITY; STANDARD OF CARE.
No provision of this Agreement shall be deemed to protect Adviser or
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 this Agreement or 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 gross negligence in
the performance his duties or the reckless disregard of his obligations and
duties. Adviser shall employ only qualified personnel to manage the Subject
Fund; shall comply with all applicable laws and regulations in the discharge of
its duties under this Agreement; shall (as provided in Section 2 above) 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 Fund (subject
to the receipt of and based upon the information contained in periodic reports
from JHLICO or the custodian concerning the classification of Portfolio
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 to Section 1.817-5(b). However, Adviser 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.
JHLICO agrees to hold harmless Adviser, its directors and officers and each
person if any, who controls Adviser within the meaning of Section 15 of the
Securities Act of 1933, as amended, from and against any and all losses, claims,
damages liabilities and expenses (including reasonable attorneys' fees and
expenses and costs of investigation) arising out of or based upon (a) the
failure of the Trust's Registration Statement, including the prospectus and
statement of additional information, or any amendment or supplement thereto, any
preliminary prospectus, any other written communication with investors or any
other submission to governmental bodies or self-regulatory bodies filed on or
subsequent to the date of this Agreement (collectively, the "Disclosure
Documents") to comply with the requirements of applicable federal and state
securities, insurance or other laws; (b) any untrue statement or alleged untrue
statement of a material fact contained in any Disclosure Document; or (c) any
omission or alleged omission in any Disclosure Document to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; except insofar as such losses, claims damages, liabilities and
expenses arise out of or are based upon any such statement or omission which is
in turn based upon information furnished in writing to JHLICO or the Trust by
Adviser and which Adviser was informed or otherwise knew was to be used in the
Disclosure Document.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
Subject Fund on the date hereof and, with respect to any additional Subject
Fund, on the date of receipt by the Trust of notice from Adviser in accordance
with Paragraph 1(b) hereof that it 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
Subject Fund and, with respect to each additional Subject Fund, until two years
following the date on which such Fund becomes a Subject Fund hereunder, and
shall continue in full force and effect thereafter with respect to each Subject
Fund so long as such continuance with respect to any such Fund is approved at
least annually (a) by either the Board of Trustees of 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 any Subject Fund shall be effective to continue this
Agreement with respect to any 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. The Trust may terminate this Agreement with respect to
any Fund at any time, without payment of any penalty, pursuant to a vote of the
trustees of the Trust or a vote of a majority of the outstanding shares of such
Fund, by giving written notice thereof to Advisers and to JHLICO. Any such
termination shall be effective as of the later of the date specified in such
notice or the date such notice is delivered to Advisers. Advisers may terminate
this Agreement with respect to any Fund on at least sixty days' prior written
notice delivered to the Trust and to JHLICO. JHLICO may terminate this Agreement
with respect to any Fund on at least sixty days' prior written notice delivered
to the Trust and to Advisers.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (other than as permitted in
Section 15 below) or if the Investment Management Agreement is terminated.
9. SERVICES NOT EXCLUSIVE; USE OF ADVISER'S NAME AND LOGO.
The services of Adviser 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 Adviser 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.
During the term of this Agreement, and subject to a separate agreement
among JHLICO, the Trust and Adviser, JHLICO and the Trust shall have the
non-exclusive, non-transferable right to use Adviser' name and logo as set forth
in Exhibit A hereto in all materials relating to the Subject Fund, including all
prospectuses, proxy statements, reports to shareholders, sales literature and
other written materials prepared for distribution to shareholders of the Trust
or the public. However, prior to distribution of any materials which refer to
Adviser, JHLICO shall consult with Adviser and shall furnish to Adviser a copy
of such materials. Adviser agrees to cooperate with JHLICO and to review such
materials promptly. JHLICO shall not distribute such materials if
Adviser 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 logo are used.
10. AVOIDANCE OF INCONSISTENT POSITION.
In connection with the purchase and sale of portfolio securities of the
Subject Fund, Adviser and its directors, officers and employees will not act as
principal. Nothing in this Agreement shall preclude the combination of orders
for the sale or purchase of portfolio securities of the Subject Fund with those
for other registered investment companies managed by Adviser or its affiliates,
if orders are allocated in a manner deemed equitable by Adviser among the
accounts and at a price approximately averaged.
11. 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 Trust, 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 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 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:
Adviser: X. Xxxx Price Associates, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Fax #: (000) 000-0000
cc: Xxxxx X. Xxxxxxx, Esq.
X. Xxxx Price Associates, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day first set forth above.
ATTEST: XXXX XXXXXXX VARIABLE SERIES
/s/ Xxxxx X. Xxxxxx TRUST I
By: /s/ Xxxxxxx X. Xxx Xxxx
Title: Chairman
ATTEST: XXXX XXXXXXX LIFE
INSURANCE COMPANY
/s/ Xxxxx X. Xxxxxx
By: /s/ Xxxxxx X. Xxxxxxx
Title: Senior Vice President and Chief
Investment Strategist
ATTEST: X. XXXX PRICE INTERNATIONAL, INC.
/s/ Illegible By: /s/ Xxxxx X. Xxxxxx
Title: Vice President
SCHEDULE I
FEES
Current Net Assets Under Management Sub-Advisory Fee
----------------------------------- ----------------
When Amounts under Management are less than $200 million:
On the first $20 million 75 basis points (0.75%) per annum
On the next $30 million 60 basis points (0.60%) per annum
On Amounts over $50 million 50 basis points (0.50%) per annum
When Amounts under Management are $200 million or more:
All Amounts 50 basis points (0.50%) per annum
