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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Chubb America Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Chubb America Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
CHUBB LIFE INSURANCE COMPANY OF AMERICA
INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE POLICIES
JULY 11, 1997
Dear Policy owner:
On Friday, August 15, 1997 a Special Meeting of Shareholders ("Special
Meeting") of Chubb America Fund, Inc. (the "Fund"), on behalf of its World
Growth Stock, Money Market, Gold Stock, Bond, Domestic Growth Stock, Growth
and Income, Capital Growth, Balanced, and Emerging Growth Portfolios (the
"Portfolios"), will be held at One Granite Place, Concord, New Hampshire for
the purposes set forth in the attached Notice.
As you may know, the investment manager to the Fund is Chubb Investment
Advisory Corporation (the "Adviser"). The Adviser's parent company, Chubb Life
Insurance Company of America ("Chubb Life"), was purchased by Jefferson-Pilot
Corporation, effective April 30, 1997. As a result of this change of
ownership, the Fund must enter into a new Investment Management Agreement with
the Adviser and new Investment Subadvisory Agreements with the subadvisers to
the Portfolios. In addition, the Fund's Board of Directors has decided to
replace the investment subadvisers for three of the Portfolios.
The Special Meeting has been called primarily so that shareholders may
consider and vote on the new Investment Management Agreement between the Fund
and the Adviser, which is substantially the same as the original agreement
between the parties. Shareholders will also be asked to consider and vote on
new subadvisory agreements between the Adviser and each of the subadvisers to
the Portfolios (including the new subadvisers), to vote on a proposal to
permit the Fund in the future to change or add subadvisers without a
shareholder vote, and to elect directors.
Shares of the Fund's Portfolios are purchased by corresponding divisions of
Chubb Separate Account A ("Separate Account A") to fund the flexible premium
variable life insurance policies (the "Policies") issued by Chubb Life. At the
Special Meeting, Chubb Life will vote the shares of the Portfolios held in
Separate Account A based on voting instructions received from owners of the
Policies ("Policy owners"). Each Policy owner is entitled to give voting
instructions to Chubb Life with respect to the number of shares of the
respective Portfolios attributable to the Policy owner as of the record date
of June 20, 1997. As the owner of a Policy, you are being asked for your
voting instructions on the proposals described in the attached Proxy and
Voting Instructions Statement.
1
<PAGE>
Attached are the formal Notice of Special Meeting of Shareholders and the
Proxy and Voting Instructions Statement setting forth the matters to come
before the Special Meeting. A form of Voting Instruction for each Portfolio
with respect to which you are entitled to provide voting instructions is also
enclosed for your use.
Your interest in the Fund is gratefully acknowledged. PLEASE SIGN, DATE AND
RETURN THE ENCLOSED VOTING INSTRUCTIONS SO THAT YOUR INSTRUCTIONS CAN BE
REPRESENTED. Thank you for your prompt response.
Sincerely,
Charles C. Cornelio
Executive Vice President
IMPORTANT: You will receive one Proxy and Voting Instructions Statement for
each Portfolio you have designated for the investment of your Policy. Please
complete and return a separate Voting Instruction card for each Portfolio.
2
<PAGE>
CHUBB AMERICA FUND, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 15, 1997
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders of Chubb
America Fund, Inc. (the "Fund"), on behalf of its World Growth Stock, Money
Market, Gold Stock, Bond, Domestic Growth Stock, Growth and Income, Capital
Growth, Balanced, and Emerging Growth Portfolios (each a "Portfolio"), will be
held at Chubb Life Insurance Company of America, One Granite Place, Concord,
New Hampshire 03301 on August 15, 1997 at 8:00 a.m., Eastern Time. The purpose
of the Special Meeting is to consider and act on the following proposals, all
of which are more fully discussed in the accompanying Proxy and Voting
Instructions Statement dated July 11, 1997, and to transact such other
business as may properly come before the meeting or any adjournments.
1. To elect a Board of Directors.
2. To consider and act on a new Investment Management Agreement between
the Fund, on behalf of each of its Portfolios, and Chubb Investment
Advisory Corporation (the "Adviser").
3. To consider and act on new forms of Investment Subadvisory Agreements
to be entered into between the Adviser and (a) the current investment
subadvisers to the Domestic Growth Stock Portfolio, World Growth Stock
Portfolio, Emerging Growth Portfolio, Capital Growth Portfolio, Gold Stock
Portfolio, and Bond Portfolio, and (b) the proposed new investment
subadvisers to the Growth and Income Portfolio, Money Market Portfolio,
and Balanced Portfolio.
4. To consider and act on a proposal to permit the Adviser to replace
investment subadvisers ("Subadvisers") or add Subadvisers to each existing
Portfolio or new Portfolio added as a series of the Fund in the future,
and to enter into subadvisory agreements with those Subadvisers without
further shareholder approval.
Please note that the form of Voting Instructions provides a space on which
you may grant or withhold authority to mark your instructions for voting in
the election of directors and on each of the other proposals. Voting on
Proposal 1 will be tabulated on a Fund-wide basis. Voting on Proposals 2, 3,
and 4 will be tabulated separately for each Portfolio.
VOTING INSTRUCTIONS WHICH ARE PROPERLY EXECUTED BUT NOT OTHERWISE MARKED
WILL BE TREATED AS INSTRUCTIONS TO VOTE IN
<PAGE>
FAVOR OF THE ELECTION OF THE PROPOSED DIRECTORS AND IN FAVOR OF EACH OF THE
OTHER PROPOSALS.
The Board of Directors has fixed the close of business on June 20, 1997 as
the record date for determining shareholders entitled to notice of and to vote
at the Special Meeting or any adjournment of the Special Meeting.
By order of the Board of Directors
Shari J. Lease
Secretary
<PAGE>
CHUBB AMERICA FUND, INC.
WORLD GROWTH STOCK PORTFOLIO
MONEY MARKET PORTFOLIO
GOLD STOCK PORTFOLIO
BOND PORTFOLIO
DOMESTIC GROWTH STOCK PORTFOLIO
GROWTH AND INCOME PORTFOLIO
CAPITAL GROWTH PORTFOLIO
BALANCED PORTFOLIO
EMERGING GROWTH PORTFOLIO
ONE GRANITE PLACE
CONCORD, NEW HAMPSHIRE 03301
PROXY AND VOTING INSTRUCTIONS STATEMENT:
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
AUGUST 15, 1997
INTRODUCTION
This Proxy and Voting Instructions Statement (the "Statement") and Notice of
Special Meeting with accompanying Voting Instruction Form (the "Form") are
furnished in connection with the solicitation of proxy and voting instructions
for use at the Special Meeting of Shareholders ("Special Meeting") of the
World Growth Stock, Money Market, Gold Stock, Bond, Domestic Growth Stock,
Growth and Income, Capital Growth, Balanced, and Emerging Growth Portfolios
(the "Portfolios") of Chubb America Fund, Inc. (the "Fund") to be held on
August 15, 1997 and at any adjournment of the Special Meeting. Proxy and
voting instructions are deemed solicited on behalf of the Board of Directors
of the Fund and Chubb Life Insurance Company of America ("Chubb Life").
Holders of common stock of each Portfolio as of the close of business on
June 20, 1997 (the "Record Date") will be entitled to cast one vote for each
share held. As of the Record Date, the Fund had outstanding the following
number of shares: World Growth Stock Portfolio: 4,355,893; Money Market
Portfolio: 896,143; Gold Stock Portfolio: 486,491; Bond Portfolio: 1,198,945;
Domestic Growth Stock Portfolio: 3,948,303; Growth and Income Portfolio:
1,667,712; Capital Growth Portfolio: 5,349,551; Balanced Portfolio: 1,716,588;
and Emerging Growth Portfolio: 2,221,398.
<PAGE>
The shares of each Portfolio are currently sold to corresponding divisions
of Chubb Separate Account A ("Separate Account A") to fund flexible premium
life insurance policies (the "Policies") issued by Chubb Life. The assets in
Separate Account A are invested in shares of the corresponding Portfolios of
the Fund. Separate Account A was established by The Volunteer State Life
Insurance Company ("Volunteer") in 1984 pursuant to Tennessee insurance laws
and is registered as a unit investment trust with the U.S. Securities and
Exchange Commission ("SEC") under the Investment Company Act of 1940, as
amended (the "1940 Act"). On July 1, 1991, Volunteer changed its name to Chubb
Life Insurance Company of America and redomesticated from the State of
Tennessee to the State of New Hampshire with the result that Separate Account
A is now governed by the New Hampshire insurance laws.
The initial mailing of this Statement and the enclosed Form of Proxy to
owners of Policies ("Policy owners") will be made on or about July 14, 1997.
Chubb Life will vote the shares of the Portfolios held in Separate Account A
that are attributable to the Policies based on instructions received from
Policy owners participating in Separate Account A. The number of votes on
which each Policy owner has the right to provide instructions is determined by
dividing the Policy's cash value in each Portfolio by the net asset value per
share of the relevant Portfolio. The number of shares in each Portfolio for
which a Policy owner has the right to give voting instructions is determined
as of the Record Date for the Special Meeting.
Shares for which no timely voting instructions are received, shares
representing charges imposed by Chubb Life or its affiliates against Separate
Account A, and shares held by Chubb Life that are not otherwise attributable
to Policies will be voted by Chubb Life in the same proportion as the voting
instructions received from Policy owners participating in each Portfolios'
division of Separate Account A.
In order to facilitate the commencement of operations of each Portfolio,
Chubb Life purchased $1 million of shares of each Portfolio, other than the
Balanced Portfolio and the Emerging Growth Portfolio. Chubb Life purchased $5
million of shares of the Balanced Portfolio and $3 million of shares of the
Emerging Growth Portfolio in order to facilitate the commencement of
operations of each of those Portfolios. As of the Record Date, Chubb Life
owned the following number of shares in its general account, representing the
percentage indicated of the outstanding shares: Growth and Income Portfolio:
8,864 (0.5%); Capital Growth Portfolio: 7,128 (0.1%); and Balanced Portfolio:
12,716 (0.6%).
As of the Record Date, Separate Account A owned of record the following
number of shares of each Portfolio, representing the percentage indicated of
the outstanding shares: World Growth Stock Portfolio: 4,355,893 (100%); Money
Market
2
<PAGE>
Portfolio: 896,143 (100%); Gold Stock Portfolio: 486,491 (100%); Bond
Portfolio: 1,198,945 (100%); Domestic Growth Stock Portfolio: 3,948,303
(100%); Growth and Income Portfolio: 1,658,848 (99.5%); Capital Growth
Portfolio: 5,342,423 (99.9%); Balanced Portfolio: 1,703,872 (99.4%); and
Emerging Growth Portfolio: 2,221,398 (100%).
If the enclosed Form is executed and returned, it may nevertheless be
revoked at any time before the Special Meeting by (1) submitting a written
revocation or later Form, as appropriate, effective upon receipt at Chubb
Life, One Granite Place, Concord, New Hampshire 03301; or (2) attending the
Meeting and instructing Chubb Life in person. The expense of printing and
distributing to Policy owners the Statement, the Form, and other solicitation
materials, as well as any other solicitations by telephone, electronic
transmission or personal interviews conducted by personnel of Chubb Life
and/or Chubb Investment Advisory Corporation (the "Adviser"), and other costs
of the Special Meeting will be paid by Chubb Life.
A copy of the Fund's most recent annual report is available, without charge,
upon request by writing to the Chubb Life Insurance Corporation, One Granite
Place, Concord, New Hampshire 03301 or by calling 1-800-452-4822.
BACKGROUND
Chubb Investment Advisory Corporation, the Adviser, whose principal business
office is at One Granite Place, Concord, New Hampshire 03301, has managed the
investment and reinvestment of assets of the Portfolios since the Fund
commenced operations on April 18, 1986. The Adviser is wholly-owned by Chubb
Life, which is, in turn, wholly-owned by Jefferson-Pilot Corporation, a North
Carolina corporation ("Jefferson-Pilot"). The Adviser provides investment
management services to the Fund pursuant to Investment Management Agreements
dated April 27, 1989 (a single Agreement for the World Growth Stock, Money
Market, Domestic Growth Stock, Gold Stock and Bond Portfolios), February 25,
1992 (separate Agreements for the Growth and Income, Capital Growth and
Balanced Portfolios), and April 14, 1995 (with respect to the Emerging Growth
Portfolio).(/1/) In addition, the Fund and the Adviser have entered into Sub-
Investment Management Agreements with investment subadvisers ("Subadvisers")
that manage each Portfolio's assets. (The current Investment Management
Agreements and Sub-Investment Management Agreements will be referred to
together as the "Existing Agreements".) The Existing Agreements were last
approved by the Board of Directors on January 30, 1997 at a regularly-
- -----------
(1) The Adviser does not provide investment management services to any other
registered investment company.
3
<PAGE>
scheduled meeting of the Board. The date of each Existing Sub-Investment
Management Agreement and the date on which Existing Investment Management and
Sub-Investment Management Agreements with respect to each Portfolio were last
approved by the shareholders are shown on the following chart:
<TABLE>
<CAPTION>
DATE OF SUB-
INVESTMENT DATE LAST APPROVED
PORTFOLIO MANAGEMENT AGREEMENT BY SHAREHOLDERS
- --------- -------------------- ------------------
<S> <C> <C>
Gold Stock Portfolio.................... February 27, 1985 April 22, 1986
Domestic Growth Stock Portfolio......... January 28, 1986 April 8, 1987
Money Market Portfolio.................. May 1, 1989 April 27, 1989
Bond Portfolio.......................... May 1, 1992 April 25, 1991
Growth and Income Portfolio............. March 9, 1992 April 23, 1992
Capital Growth Portfolio................ April 1, 1992 April 23, 1992
Balanced Portfolio...................... March 6, 1992 April 23, 1992
World Growth Stock Portfolio............ October 30, 1992 October 28, 1992
Emerging Growth Portfolio............... April 14, 1995 April 23, 1995
</TABLE>
On February 23, 1997, Jefferson-Pilot entered into a Stock Purchase
Agreement with Chubb providing for the transfer of 100% of the shares of Chubb
Life to Jefferson-Pilot in exchange for a cash payment from Jefferson-Pilot to
The Chubb Corporation, a New Jersey Corporation ("Chubb"). As of the effective
date of the transaction (the "Acquisition"), which occurred on April 30, 1997,
the Adviser became an indirect wholly-owned subsidiary of Jefferson-Pilot.
Although the Acquisition is not anticipated to affect the day-to-day
operations under the Existing Agreements, such a change in ownership of the
Adviser automatically terminates the Existing Agreements in accordance with
their terms as required by the Investment Company Act of 1940, as amended (the
"1940 Act").
By this Proxy and Voting Instructions Statement the Fund seeks shareholder
approval of a new Investment Management Agreement to replace the Existing
Investment Management Agreements. In addition, the Adviser will be required to
enter into new Investment Subadvisory Agreements with each of the Subadvisers
that provide advisory services to the Portfolios. (The new Investment
Management and Investment Subadvisory Agreements will together be referred to
as the "New Agreements.") As described below, if the New Agreements are
approved, six of the Portfolios will continue to have the same Subadvisers and
three of the Portfolios will have new Subadvisers. Policy owners are asked to
provide voting instructions on each of the New Agreements as described in
Items 2 and 3. In addition, Policy owners are asked to provide voting
instructions on the election of Directors to the Board of Directors (Item 1),
and on whether to permit the Adviser to replace Subadvisers or add new
Subadvisers to the Portfolios, and to enter into Subadvisory Agreements with
those Subadvisers, without further shareholder approval (Item 4).
4
<PAGE>
Vote Required
A plurality of all votes cast at the meeting will be sufficient to approve
Item 1. Approval of Items 2 through 4 for each Portfolio requires the
affirmative vote of "majority of the outstanding voting securities" of that
Portfolio. Under the 1940 Act, a "majority vote of the outstanding voting
securities" means the affirmative vote of the lesser of (a) 67% or more of the
shares of the Portfolio present at the Special Meeting or represented by proxy
if the holders of more than 50% of the outstanding shares are present or
represented by proxy or (b) more than 50% of the outstanding shares.
ITEM 1. ELECTION OF DIRECTORS
Nominees for Director
Four individuals have been nominated for election as Directors of the Fund,
all of whom are currently directors and have served in that capacity
continuously since originally elected or appointed. None of the nominees is
related to one another. Each nominee has consented to continue to serve if
elected at the Special Meeting.
If elected, the Directors will hold office until a successor has been
elected and has qualified, or until such Director's earlier death, resignation
or removal. However, any Director may resign, and any Director may be removed
with or without cause at any time by a vote of a majority of the votes
entitled to be cast for the election of Directors at any meeting of
shareholders, duly called and at which a quorum is present. In case of a
vacancy on the Board, the remaining Directors may, in their discretion,
appoint any person to fill the vacancy. If at any time less than two-thirds of
the Directors have been elected by shareholders, the Directors then in office
will promptly call a meeting of shareholders for the purpose of electing
Directors. Other than when that situation occurs, no shareholder meetings will
be held for the purpose of electing Directors, unless otherwise required.
Each of the nominees for Director is listed in the chart below. An asterisk
(*) next to a name indicates that the nominee is an "interested person" of the
Fund and/or the Adviser, as defined in the 1940 Act.
<TABLE>
<CAPTION>
NOMINEE YEAR OF
(AGE) PRINCIPAL OCCUPATIONS ELECTION OR
ADDRESS DURING THE PAST FIVE YEARS APPOINTMENT
------- -------------------------- -----------
<S> <C> <C>
Ronald Angarella* ................. President, the Fund; Senior 1995
(39) Vice President, Chubb Life;
One Granite Place President and Director, the
Concord, NH 03301 Adviser, Chubb Securities
Corporation ("CSC") and
Hampshire Funding, Inc.;
Senior Vice President and
Director, Chubb Investment
Funds Inc. ("CIF").
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NOMINEE YEAR OF
(AGE) PRINCIPAL OCCUPATIONS ELECTION OR
ADDRESS DURING THE PAST FIVE YEARS APPOINTMENT
------- -------------------------- -----------
<S> <C> <C>
James J. Weisbart.................. Retired, previously President 1989
(62) of Bird Bath Laundromats and
301 Smithfield Road President of Solomon's Inc.
Contoocook, NH 03329 (retail clothing company);
Director of CIF.
Michael D. Coughlin ............... President of Concord Litho 1989
(54) Company, Inc. (printing
106 School Street company); Director of CIF.
Concord, NH 03301
Elizabeth S. Hager................. Executive Director, United Way 1989
(52) of Merrimack County, NH
5 Auburn Street (since 1996); State
Concord, NH 03301 Representative, New
Hampshire; Consultant, Fund
Development; Director of CIF;
previously, City Councilor,
City of Concord, NH and
Mayor, City of Concord, NH.
</TABLE>
- -----------
* Mr. Angarella is an "interested person" of the Fund by virtue of his
position as an officer of the Fund and his positions with the Adviser and
CSC. The Adviser is the investment adviser to the Fund, and CSC is the
principal underwriter and distributor of the Fund. The Adviser, CSC, and
Hampshire Funding, Inc. are wholly-owned subsidiaries of Chubb Life and
Jefferson-Pilot. As of the effective date of the Acquisition, CIF is not
related to Chubb Life, Jefferson Pilot, or their wholly-owned subsidiaries
identified above.
The officers and directors of the Fund cannot directly own shares of the
Fund without purchasing a Policy. As a result, the amount of shares owned by
the directors and officers of the Fund as a group is less than 1% of each
Portfolio.
Committees of the Board of Directors
The Board has an Audit Committee that normally meets two times per year,
prior to the first two quarterly meetings of the Board of Directors, or as
required. The Audit Committee oversees and monitors the financial reporting
process, including recommending to the Board the independent accountants to be
selected for the Fund, reviewing internal controls and the auditing function
(both internal and external), reviewing the qualifications of key personnel
performing audit work, and overseeing compliance procedures. The Audit
Committee is composed entirely of Directors who are not interested persons of
the Fund, its principal underwriter, the Adviser or its
6
<PAGE>
affiliates or any of the Subadvisers. Messrs. Weisbart and Coughlin and Ms.
Hager are members of the Audit Committee.
The Board also has a Valuation Committee, the purpose of which is to review
and ratify certain portfolio securities pricing decisions made on behalf of
the Fund. The members of the Valuation Committee are Mr. Angarella and Ms.
Hager.
Information on Board Meetings During Fiscal Year 1996
The Directors met four times during the fiscal year ended December 31, 1996,
and each Director attended at least 75% of the meetings.
For the year ended December 31, 1996, the following Directors received
compensation for services as a director on the Fund's Board from the Fund.
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION
NAME FROM FUND
---- ----------------------
<S> <C>
Michael Coughlin........................................ $5,000
Elizabeth Hager......................................... 5,000
James Weisbart.......................................... 5,000
</TABLE>
Officers of the Fund
The following information relates to the executive officers of the Fund who
are not directors of the Fund. Each officer also serves as an officer of the
Adviser.
<TABLE>
<CAPTION>
NAME (AGE) POSITIONS WITH PRINCIPAL OCCUPATIONS YEAR OF
ADDRESS THE FUND FOR THE PAST FIVE YEARS APPOINTMENT
---------- -------------- ----------------------- -----------
<S> <C> <C> <C>
Charles C. Cornelio Vice President Executive Vice 1992
(37).................. President and
One Granite Place Assistant Secretary,
Concord, N.H. 03301 Chubb Life and CIF;
Vice President and
Secretary, CSC and
Hampshire Funding,
Inc.; Secretary, the
Adviser.
Shari J. Lease (42)..... Secretary Assistant Vice 1992
One Granite Place President and
Concord, N.H. 03301 Associate Counsel,
Chubb Life;
Secretary, CIF;
Assistant Secretary,
the Adviser;
previously Assistant
Counsel and
Assistant Vice
President, State
Bond and Mortgage
Company and
affiliated
companies.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NAME (AGE) POSITIONS WITH PRINCIPAL OCCUPATIONS YEAR OF
ADDRESS THE FUND FOR THE PAST FIVE YEARS APPOINTMENT
---------- -------------- ----------------------- -----------
<S> <C> <C> <C>
John A. Weston (37).......... Treasurer Assistant Vice 1992
One Granite Place President of Chubb
Concord, N.H. 03301 Life; Treasurer of
CSC, the Adviser and
Hampshire Funding,
Inc.; formerly,
Treasurer of Chubb
Series Trust; Mutual
Fund Accounting
Officer for the
Fund, CIF and the
Adviser and
Assistant Treasurer
for CSC and
Hampshire Funding,
Inc.
Thomas H. Elwood (49)........ Assistant Assistant Counsel, 1994
One Granite Place Secretary Chubb Life;
Concord, N.H. 03301 Assistant Secretary,
CIF; formerly,
Assistant Secretary,
Chubb Series Trust;
Associate Counsel,
New York Life
Insurance Company;
Secretary, New York
Life Institutional
Funds, Inc.;
Assistant Secretary,
Mainstay Funds and
MFA Funds.
Mark D. Landry (32).......... Assistant Mutual Fund Accounting 1993
One Granite Place Treasurer and Operations
Concord, N.H. 03301 Officer for Chubb
Life and the
Adviser; Assistant
Treasurer of CIF;
formerly, Mutual
Fund Accounting and
Operations Manager
for the Fund, CIF
and the Adviser.
</TABLE>
Voting Instructions
Properly-executed Forms will be deemed to authorize the approval of all of
the four nominees, unless authority has been withheld on any or all of the
nominees according to the directions on the Forms.
8
<PAGE>
Recommendation
The Board of Directors recommends that shareholders vote FOR this proposal.
ITEM 2. TO CONSIDER AND ACT ON A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN
THE FUND AND THE ADVISER
The Board of Directors of the Fund held an in-person Board of Directors
meeting on April 3, 1997 and has unanimously approved the New Investment
Management Agreement between the Fund, on behalf of each Portfolio, and
Adviser in accordance with Section 15(c) of the 1940 Act. The New Investment
Management Agreement became effective on April 30, 1997, the date of the
consummation of the Acquisition (the "Closing"), subject to the outcome of
this Special Meeting of Shareholders. In approving the New Investment
Management Agreement, the Board took into consideration that the need to
approve the New Investment Management Agreement arose because of the
acquisition of the Adviser's parent, the New Agreement would continue the
Fund's relationship with its existing investment adviser, and the Adviser
would continue to provide the same services, at the same fee rates, and with
the same personnel. The Board also took into consideration information
(including comparisons with other advisory firms) showing that the fees
charged by the Adviser were reasonable, in light of the services provided and
the performance of the Portfolios. For these reasons, the Board of Directors
approved the New Investment Management Agreement and recommends that
policyholders give instructions to vote for this proposal.
The Fund's Exemption from Section 15(a) of the 1940 Act
The Closing was effective as of April 30, 1997. Since the Closing date did
not permit a reasonable amount of time for the Fund to call and hold a Special
Meeting of Shareholders prior to the Closing, the Fund sought and obtained
from the SEC an order of exemption from the provisions of Section 15(a) of the
1940 Act, which requires that advisory agreements terminate upon their
assignment. The order of exemption permits the Adviser to continue to provide
investment management services to the Fund, on behalf of each Portfolio, from
the Closing until the date the New Investment Management Agreement is approved
or disapproved by shareholders, but in no event later than August 28, 1997
(the "Interim Period").
The Board of Directors of the Fund, by unanimous written consent, voted to
authorize the Fund and the Adviser to request such exemptive relief from the
SEC. The sale of Chubb Life to Jefferson-Pilot arose primarily out of business
considerations unrelated to the Fund and the Adviser, and the parties to the
Acquisition deemed it important to hold the Closing as soon as practicable.
Specifically, it is generally recognized that the period following the
announcement of
9
<PAGE>
a significant corporate change, such as the Acquisition, and the completion of
such an event is a period of great uncertainty and considerable anxiety. This
uncertainty and anxiety can be damaging to relationships and may cause key
employees, service providers, and perhaps even Policy owners to seek more
stable arrangements elsewhere. The parties to the Acquisition believe that
prompt completion of the Acquisition will minimize this period of uncertainty
and anxiety.
It is anticipated that the scope and quality of services provided by the
Adviser for the Portfolios during and following the Interim Period will not be
diminished from the current level of service. During and following the Interim
Period, each Portfolio will operate under the New Agreements, including the
New Investment Management and Investment Subadvisory Agreements (see Item 3
below for a discussion of the form of Investment Subadvisory Agreement), which
are identical to the Existing Agreements in all material respects, except for
the effective and termination dates and other modifications necessary both to
create one Investment Management Agreement to cover all existing and future
Portfolios and to reflect the proposal described in Item 4 below. During the
Interim Period, fees paid by the Fund, on behalf of each Portfolio, for
advisory services are being held in escrow. If the Policy owners of each of
the Portfolios approve this Item, the escrow agent will release the fees to
the Adviser. If Policy owners of each of the Portfolios do not vote in favor
of this Item, the escrow agent will return the advisory fees attributable to
those Portfolios to such Portfolios and will release all other advisory fees
to the Adviser. In addition, the Board of Directors will reconvene to
determine what action to take with respect to advisory services for those
Portfolios not approving the New Investment Management Agreement.
The Fund is not aware of any material changes in the personnel that are
providing or will provide investment management services during and following
the Interim Period. Accordingly, each Portfolio should receive, during and
following the Interim Period, the same investment advisory services, provided
in the same manner, at the same fee levels (assuming release of the fees held
in escrow during the Interim Period), and by the same personnel as before the
Closing. If the investment personnel providing investment management services
pursuant to the New Agreements changes materially, the Adviser will apprise
and consult with the Board of Directors to assure that the Board (including a
majority of the Independent Directors of the Board) is satisfied that the
services provided by the Adviser will not be diminished in scope or quality.
The Investment Management Agreement
The New Investment Management Agreement is the same as the Existing
Investment Management Agreements in all material respects. The five Existing
Agreements will be replaced by one New Agreement that will continue to set
forth the Adviser's duties in the body of the agreement, but will indicate
that the New
10
<PAGE>
Agreement applies to each of the Portfolios listed on Schedule A to the New
Agreement. Fees applicable to each Portfolio will also be set forth in
Schedule A. This format will allow the Fund to continue to use a single
agreement--even when Portfolios are added or deleted or fees are changed--
simply by memorializing changes approved by the Board and/or shareholders in
Schedule A, which will bear the date of the most recent change.
(Notwithstanding that there will be only one Investment Management Agreement,
any future change that affects only one Portfolio will be required to be
approved only by the affected Portfolio.) A copy of the proposed New Agreement
appears as Exhibit A.
Under the New Investment Management Agreement, as under the Existing
Agreement, the Adviser will recommend and oversee, monitor and evaluate the
activities of the Subadvisers and review the practices of broker-dealers
selected by the Subadvisers. The Adviser will also be responsible for
providing office space and related utilities necessary for the Fund's
operations, recommending auditors, counsel and custodians, maintaining records
not otherwise maintained by other parties, and providing personnel, data
processing services and supplies to the Fund. The cost of such facilities,
supplies and services will continue to be included in the investment
management fee.
The Adviser will be responsible for certain administrative services such as
valuing portfolio securities, net asset value ("NAV") calculation,
coordinating and conducting meetings of the Board and shareholders,
recommending auditors, counsel, custodial and other services, preparing with
the assistance of the Fund's auditor tax filings, preparing SEC related
filings, and providing professional, administrative and clerical staff for
shareholder relations and other functions. The Adviser may also subcontract
the management or administrative responsibilities it has toward the
Portfolios.
Investment management fees are paid monthly to the Adviser at an annual rate
based on the daily net asset value of each Portfolio, as shown below:
<TABLE>
<CAPTION>
WORLD GROWTH STOCK, GOLD
STOCK, DOMESTIC GROWTH
MONEY MARKET STOCK, GROWTH AND INCOME CAPITAL EMERGING
AVERAGE DAILY NET ASSETS AND BOND AND BALANCED GROWTH GROWTH
- ------------------------ ------------ ------------------------ ------- --------
<S> <C> <C> <C> <C>
First $200 Million...... .50% .75% 1.00% .80%
Next $1.1 Billion....... .45% .70% .95% .75%
Over $1.3 Billion....... .40% .65% .90% .70%
</TABLE>
For the fiscal year ended December 31, 1996, the Fund paid the Adviser
$656,061, $42,558, $62,705, $53,464, $480,015, $135,739, $703,701, $134,709,
and $173,563
11
<PAGE>
for the World Growth Stock Portfolio, the Money Market Portfolio, the Gold
Stock Portfolio, the Bond Portfolio, the Domestic Growth Stock Portfolio, the
Growth and Income Portfolio, the Capital Growth Portfolio, the Balanced
Portfolio, and the Emerging Growth Portfolio, respectively, pursuant to the
Existing Agreements.
Management of the Adviser
The names, addresses and principal occupations of the Adviser's principal
executive officer and each of its directors are as follows:
<TABLE>
<CAPTION>
NAME POSITIONS WITH ADVISER PRINCIPAL OCCUPATION
---- ---------------------- ------------------------
<S> <C> <C>
Ronald Angarella............... President and Senior Vice President,
One Granite Place Director Chubb Life; President
Concord, N.H. 03301 and Director, CSC,
Hampshire Funding,
Inc. and the Fund;
Senior Vice President
and Director, CIF.
Ronald H. Emery................ Senior Vice President Senior Vice President
One Granite Place and Director and Controller, Chubb
Concord, N.H. 03301 Life
Shari J. Lease................. Secretary Assistant Vice President
One Granite Place and Counsel, Chubb
Concord, N.H. 03301 Life; Secretary, CIF
John A. Weston................. Treasurer Assistant Vice
One Granite Place President, Mutual Fund
Concord, N.H. 03301 Accounting Officer,
Chubb Life; Treasurer,
CSC, CIF, and
Hampshire Funding,
Inc.; previously
Treasurer, Chubb
Series Trust;
Financial Reporting
Officer, Chubb Life
Carol R. Hardiman.............. Assistant Vice Vice President of CSC
One Granite Place President and Hampshire Funding,
Concord, N.H. 03301 Inc.
Thomas H. Elwood............... Assistant Secretary Assistant Counsel, Chubb
One Granite Place Life; Assistant
Concord, N.H. 03301 Secretary, CIF
</TABLE>
12
<PAGE>
Recommendation
The Board of Directors recommends that shareholders vote FOR this proposal.
ITEM 3. TO CONSIDER AND ACT ON NEW FORMS OF INVESTMENT SUBADVISORY AGREEMENTS
TO BE ENTERED INTO BETWEEN THE ADVISER AND (A) THE CURRENT
SUBADVISERS TO THE DOMESTIC GROWTH STOCK PORTFOLIO, WORLD GROWTH
STOCK PORTFOLIO, EMERGING GROWTH PORTFOLIO, CAPITAL GROWTH PORTFOLIO,
GOLD STOCK PORTFOLIO, AND BOND PORTFOLIO, AND (B) THE PROPOSED NEW
SUBADVISERS TO THE GROWTH AND INCOME PORTFOLIO, MONEY MARKET
PORTFOLIO, AND BALANCED PORTFOLIO.
Each of the nine Portfolios of the Fund is currently managed by a Subadviser
pursuant to a Sub-Investment Management Agreement. Each Sub-Investment
Management Agreement provides for its automatic termination in the event the
Investment Management Agreement terminates. As described above, the Existing
Investment Management Agreements terminated as a result of the sale of Chubb
Life to Jefferson-Pilot. Consequently, the Subadvisers will be required to
enter into new Investment Subadvisory Agreements with the Adviser.
The Adviser also has recommended the replacement of the Subadvisers for
three of the Portfolios. If this proposal is approved, Massachusetts Financial
Services Company ("MFS") (which currently is Subadviser to the Emerging Growth
Portfolio) will replace Chubb Asset Managers, Inc. ("Chubb Asset") as
Subadviser to the Money Market Portfolio. Warburg, Pincus Counsellors, Inc.
("Warburg") will replace Chubb Asset as the Subadviser to the Growth and
Income Portfolio, and J.P. Morgan Investment Management, Inc. ("JPMIM") will
replace Phoenix Investment Counsel, Inc. ("Phoenix") as the Subadviser to the
Balanced Portfolio.
The Adviser believes that the proposed Subadviser replacements will be in
the best interests of the affected Portfolios and the Policy owners. The
Adviser recommends that Chubb Asset be replaced as Subadviser to the Money
Market Portfolio and the Growth and Income Portfolio because, in light of the
sale of Chubb Life to Jefferson-Pilot, Chubb Asset no longer will be available
to act as Subadviser. The Adviser is not recommending that Chubb Asset be
replaced at this time as Subadviser to the Bond Fund, because Chubb Life is
preparing an application to the Securities and Exchange Commission to
substitute an unaffiliated bond fund for the Bond Portfolio as an investment
option under the Policies (the "Substitution Application"). Accordingly,
approval of a new contract with Chubb Asset is necessary to enable it to
continue to provide subadvisory services to the Bond Portfolio until the
Substitution Application is approved and the proposed substitution takes
place. The Adviser recommends that Phoenix be replaced as Subadviser to the
Balanced Fund to seek to improve that Portfolio's performance. In addition,
the
13
<PAGE>
Adviser believes that the greater name-recognition of the New Subadvisers may
make those Portfolios more attractive investment alternatives for Policy
owners. Based on discussion with the current Subadvisers, the Adviser believes
that they do not dispute the Adviser's recommendations.
The Investment Subadvisory Agreements
The proposed form of New Investment Subadvisory Agreement to be entered into
with the six Subadvisers who will continue to provide subadvisory services to
one or more Portfolios is attached as Exhibit B. The proposed forms of New
Investment Subadvisory Agreement, as particularized with respect to Janus
Capital Corporation, Massachusetts Financial Services Company, and Templeton
Global Advisors Limited, are attached as Exhibits B-1, B-2, and B-3,
respectively. The proposed forms of New Investment Subadvisory Agreements with
Warburg and JPMIM are attached as Exhibits C and D respectively. All of the
New Investment Subadvisory Agreements are substantially the same and are
described below.
The proposed form of New Investment Subadvisory Agreement and the
particularized versions mentioned above are the same as the Existing Sub-
Investment Management Agreement in all material respects, except as described
below. The terms provide that the Subadviser, subject to the supervision of
the Adviser and the Board of Directors of the Fund, will manage the investment
and reinvestment of the relevant Portfolio's assets. The Subadviser will
provide the Adviser and the Fund with, among other things, investment research
and advice, and will select the securities or other investments to be held by
the Portfolio.
The Subadvisers are obligated to use their best efforts to obtain for the
Portfolios they manage the most favorable price and best execution available
under the circumstances. However, a Subadviser may, to the extent permitted by
applicable law and to the extent the Subadviser determines the arrangement is
reasonable, pay a broker or dealer that provides research or other brokerage
services a commission in excess of the amount another broker or dealer may
have charged for effecting the transaction.
The Adviser pays each Subadviser compensation out of the fees the Fund pays
the Adviser for its services to the Fund. The subadvisory fee rates to be paid
to each Subadviser will not change as a result of the Acquisition, except as
indicated below in the description of the Subadviser for each Portfolio. For
providing subadvisory services to the Portfolios for the year 1996, the
Adviser paid each current Subadviser as follows: $437,374 to Templeton Global
Advisors Limited for the World Growth Stock Portfolio; $29,791 to Chubb Asset
for the Money Market Portfolio; $41,803 to Van Eck Associates Corporation for
the Gold Stock Portfolio; $320,010 to Pioneering Management Corporation for
the Domestic Growth Stock Portfolio; $37,425 to Chubb
14
<PAGE>
Asset for the Bond Portfolio; $90,493 to Chubb Asset for the Growth and Income
Portfolio; $527,776 to Janus Capital Corporation for the Capital Growth
Portfolio; $89,806 to Phoenix for the Balanced Portfolio; and $108,477 to MFS
for the Emerging Growth Portfolio.
The Existing Sub-Investment Management Agreements are styled as three-party
agreements among the Adviser, the Subadviser and the Fund. In those
agreements, the fee structure is included in the body of the agreement. The
proposed New Investment Subadvisory Agreements will be between the Adviser and
the Subadviser only, which is the more common structure for such arrangements.
In addition, for ease of maintenance, the fee to be paid to each Subadviser
will be set forth in an addendum to the agreement.
The Board of Directors of the Fund held an in-person meeting on June 19,
1997 and unanimously approved each of the New Sub-Investment Management
Agreements, subject to the outcome of this Special Meeting of Shareholders.
In approving the New Sub-Investment Management Agreements with the existing
Subadvisers, the Board of Directors took into consideration that the need to
approve the New Sub-Investment Management Agreements arose because of the
acquisition of the Adviser's parent, not because of any change of control or
personnel of the existing Subadvisers, and that each such existing Subadviser
would continue to provide the same services, with the same personnel, and at
the same fee rates (except that, as described below, the subadvisory fee rate
to be charged with respect to the Emerging Growth Portfolio will be reduced on
the first $1.3 billion of average daily net assets). The Board of Directors
also took into consideration information (including comparisons with other
advisory firms) showing that the fees charged by the Subadvisers were
reasonable, in light of the services provided and the performance of the
Portfolios. With respect to continuing the Sub-Investment Management Agreement
with Chubb Asset with respect to the Bond Fund, the Board of Directors also
took into consideration the reasons set forth above relating to the
Substitution Application, and the difficulty of obtaining a short-term
replacement to act as Subadviser to the Bond Fund. For these reasons, the
Board of Directors approved the New Investment Sub-Management Agreements with
the existing Subadvisers and recommends that policyholders give instructions
to vote in favor of the approval of these Agreements.
As to the New Sub-Investment Management Agreements with respect to the
Portfolios that will receive replacement Subadvisers, the Board of Directors
decided to replace the existing Subadvisers for the reasons set forth above.
In approving the selection of replacement Subadvisers, in each instance the
Board of Directors took into consideration information showing that the fees
proposed to be charged by each replacement Subadviser were reasonable, in
light of the services to be provided and
15
<PAGE>
the fees charged by other advisory firms for similar services (including the
fees charged by the existing Subadvisers to those Portfolios). The Board of
Directors also based its decision on factors particular to each replacement
Subadviser. In approving the selection of MFS to become Subadviser to the
Money Market Portfolio, the Board of Directors also took into consideration
MFS' experience and reputation as a manager of money market and fixed-income
portfolios and the Fund's favorable experience with MFS as Subadviser to the
Fund's Emerging Growth Portfolio. In approving the selection of Warburg to
become Subadviser for the Growth and Income Portfolio, the Board of Directors
also took into consideration Warburg's experience and reputation generally as
an equity manager and its performance as subadviser for other growth and
income portfolios. And in approving the selection of JPMIM to become
Subadviser to the Balanced Portfolio, the Board of Directors also took into
consideration JPMIM's general reputation as an investment manager and its
performance as subadviser for the other balanced portfolios. For all of the
foregoing reasons, the Board of Directors approved the New Sub-Investment
Management Agreements with the replacement Subadvisers and recommends that the
policyholders give instructions to vote in favor of the approval of the
Agreements.
Portfolios that Will Continue to use their Current Subadvisers
World Growth Stock Portfolio: Templeton Global Advisors Limited
Templeton Global Advisors Limited (formerly known as Templeton, Galbraith &
Hansberger Ltd.) ("Templeton") serves as Subadviser to the World Growth Stock
Portfolio. Templeton is organized under the laws of the Bahamas, and is a
wholly-owned subsidiary of Franklin Resources, Inc., a Delaware corporation
("Franklin"). Franklin is a publicly-traded company, and its ordinary shares
of common stock are listed on the New York Stock Exchange. Templeton serves as
an investment adviser or subadviser to various investment companies registered
under the 1940 Act, subject to the supervision and direction of each company's
Board of Directors and, where appropriate, the company's investment adviser,
as well as to investment companies registered in foreign jurisdictions. In
this capacity, Templeton is responsible, on a daily basis, for managing the
companies' investments and making investment decisions on behalf of the
companies. Templeton may also provide investment research and advice to
certain common trust vehicles. Templeton is also an adviser or subadviser to
various private accounts. Templeton and its affiliates currently manage over
$199 billion in assets.
Under the proposed New Investment Subadvisory Agreement, each month the
Adviser will pay Templeton a fee at the annual rate, accruing daily, of 0.50%
on the first $200 million of the average daily net assets of the Portfolio.
The fee will be reduced to 0.45% of average net assets in excess of $200
million up to $1.3 billion,
16
<PAGE>
and will be further reduced to 0.40% of net assets in excess of $1.3 billion.
The average daily closing value of the aggregate net assets of the Portfolio
will continue to be determined and computed in accordance with the description
of the method of determination of net asset value contained in the prospectus
for the Fund.
Bond Portfolio: Chubb Asset Managers, Inc.
Chubb Asset is a Delaware corporation and a wholly-owned subsidiary of
Chubb. Persons employed by Chubb Asset, who are also investment personnel of
Chubb & Son, Inc., a wholly-owned subsidiary of Chubb, currently provide
investment advice to and supervise and monitor certain investment portfolios
for Chubb and its affiliates, including general accounts of insurance
affiliates of Chubb. In addition, certain investment personnel employed by
Chubb Asset currently provide advice to other investment portfolios of
entities not affiliated with Chubb or its affiliates.
Under the proposed New Investment Subadvisory Agreement, each month the
Adviser will pay Chubb Asset a fee at the annual rate, accruing daily, of
0.35% on the first $200 million of the average daily net assets of the
Portfolio. The fee will be reduced to 0.30% of average net assets in excess of
$200 million up to $1.3 billion, and will be further reduced to 0.25% of net
assets in excess of $1.3 billion. The average daily closing value of the
aggregate net assets of the Portfolio will continue to be determined and
computed in accordance with the description of the method of determination of
net asset value contained in the prospectus for the Fund.
Gold Stock Portfolio: Van Eck Associates Corporation
Van Eck Associates Corporation ("Van Eck") is a Delaware corporation. Mr.
John C. van Eck owns 25.6% of the outstanding voting securities of Van Eck,
and his wife and two sons, Jan and Derek van Eck, 270 River Road, Briarcliff
Manor, New York, are each the beneficial owners of 24.8% of such securities.
Mr. John C. van Eck has retained the right to direct the voting and
disposition of the shares of Van Eck held by his wife.
Under the proposed New Investment Subadvisory Agreement, each month the
Adviser will pay Van Eck a fee at the annual rate, accruing daily, of 0.50% on
the first $200 million of the average daily net assets of the Portfolio. The
fee will be reduced to 0.45% of average net assets in excess of $200 million
up to $1.3 billion, and will be further reduced to 0.40% of net assets in
excess of $1.3 billion. The average daily closing value of the aggregate net
assets of the Portfolio will continue to be determined and computed in
accordance with the description of the method of determination of net asset
value contained in the prospectus for the Fund. Van Eck currently provides
investment advisory or subadvisory services to other funds with investment
objectives similar to those of the Portfolio. It provides advisory services to
17
<PAGE>
Van Eck Funds International Investors Gold Fund and Gold/Resources Fund, and
to PIMCO Funds Multi-Manager Series Precious Metals Fund. The following chart
shows the net assets and rate of annual compensation received by Van Eck for
providing advisory or subadvisory services to each of these Funds.
<TABLE>
<CAPTION>
FEE RATE
NET ASSETS (AS A PERCENTAGE OF
FUND NAME (AS OF 7/8/97) AVERAGE DAILY NET ASSETS)
- --------- -------------- -----------------------------
<S> <C> <C>
Van Eck Funds International $292.4 million .75% on the first
Investors Gold Fund $500 million
.65% on the next $250 million
.50% on the balance
in excess of $750
million
Van Eck Funds $88.0 million .75% on the first
Gold/Resources Fund $500 million
.65% on the next $250 million
.50% on the balance
in excess of $750
million
PIMCO Funds Multi-Manager $29.4 million .375% on the first
Series Precious Metals Fund $200 million
.35% on the balance
in exccess of $200
million
</TABLE>
Domestic Growth Stock Portfolio: Pioneering Management Corporation
Pioneering Management Corporation ("Pioneer") is a Delaware corporation. It
is a wholly-owned subsidiary of The Pioneer Group, Inc., also a Delaware
corporation. Robert Benson, Senior Vice President of Pioneer, has been
primarily responsible for the day-to-day management of the Portfolio since
1986. Mr. Benson has been employed by Pioneer since 1974.
Under the proposed New Investment Subadvisory Agreement, each month the
Adviser will pay Pioneer a fee at the annual rate, accruing daily, of 0.50% on
the first $200 million of the average daily net assets of the Portfolio. The
fee will be reduced to 0.45% of average net assets in excess of $200 million
up to $1.3 billion, and will be further reduced to 0.40% of net assets in
excess of $1.3 billion. The average daily closing value of the aggregate net
assets of the Portfolio will continue to be determined and computed in
accordance with the description of the method of determination of net asset
value contained in the prospectus for the Fund.
18
<PAGE>
Pioneer currently provides investment advisory services to other growth and
income funds. Specifically, it provides services to the Pioneer Fund, Pioneer
II, Pioneer Balanced Fund, Pioneer Equity-Income Fund, Pioneer Real Estate
Fund, and the Balanced, Equity-Income, and Real Estate Growth Portfolios of
the Pioneer Variable Contracts Trust. The following chart shows the net assets
and the rate of annual compensation received by Pioneer for providing advisory
or subadvisory services to each of these funds.
<TABLE>
<CAPTION>
FEE RATE
(AS A PERCENTAGE
NET ASSETS OF AVERAGE DAILY
FUND NAME (AS OF 6/30/97) NET ASSETS)
--------- ---------------- -------------------------
<C> <C> <S>
Pioneer Fund....................... $3,523.3 million .60% plus or minus a
Performance Fee
Adjustment (see below)
Pioneer II......................... $6,822.2 million .60% plus or minus a
Performance Fee
Adjustment (see below)
Pioneer Balanced Fund.............. $ 284.1 million .65% on the first $1
billion; .60% on the next
$4 billion; .55% on the
balance
Pioneer Equity-Income Fund......... $ 606.7 million .65% on the first $300
million; .60% on the next
$200 million; .50% on the
next $500 million; and
.45% on the balance
Pioneer Real Estate Fund........... $ 175.2 million 1.00%
Pioneer Variable Contracts Trust $ 28.1 million
("PVCT") Balanced Portfolio...... .65%
PVCT Equity Income Portfolio....... $ 82.7 million .65%
PVCT Real Estate Growth Portfolio.. $ 24.1 million 1.00%
</TABLE>
Description of the Performance Fee Adjustment for Pioneer Fund and Pioneer
II (the "PFA Funds"). The basic fee (stated above) for the PFA Funds is
subject to an upward or downward adjustment, depending on whether, and to what
extent, the investment performance of the relevant PFA Fund's Class A shares
for the performance period exceeds, or is exceeded by, the record of the index
determined by the Fund to be appropriate over the same period. The Trustee of
each PFA Fund have designated the Lipper Growth and Income Funds Index (the
"Index") for this purpose. The Index represents the arithmetic mean
performance (i.e., equally weighted) of the thirty largest funds with a growth
and income investment objective.
19
<PAGE>
The performance period consists of the current month and the prior 35 months
("performance period"). Each percentage point of difference (up to a minimum
of ^10) is multiplied by a performance adjustment rate of 0.01. Thus, the
maximum annualized adjustment rate is ^0.10%. This performance comparison is
made at the end of each month. An appropriate percentage of this rate (based
upon the number of days in the current month) is then multiplied by the
relevant PFA Fund's average net assets for the entire performance period,
giving a dollar amount that will be added to (or subtracted from) the Basic
Fee. At the end of each month, the performance period rolls forward one month
so that it is always a 36-month period consisting of the current month and the
prior 35 months as described above. If including the initial rolling
performance period (that is, the period prior to the effective date (May 1,
1996) of the management contracts for the PFA Funds) has the effect of
increasing the total management fee for any month, such aggregate prior
results will be treated as Index neutral for purposes of calculating the
performance adjustment for such month. Otherwise, the performance adjustment
will be as described above.
Performance is calculated based on the net asset value per share of the
relevant PFA Fund's Class A shares. For purposes of calculating the
performance adjustment, any dividends or capital gains distributions paid by
such Fund are treated as if reinvested in Class A shares at the net asset
value per share as of the record date for payment. The record for the Index is
based on change in value and is adjusted for any cash distributions from the
companies whose securities comprise the Index.
Capital Growth Portfolio: Janus Capital Corporation
Janus Capital Corporation ("Janus") is a Colorado corporation. In addition
to serving as investment adviser to other registered investment companies, as
indicated below, Janus provides investment advice to individual, corporate and
pension and profit-sharing accounts. Kansas City Southern Industries, Inc.
("KCSI") owns approximately 83% of the outstanding voting stock of Janus, most
of which it acquired in 1984. KCSI is a publicly-traded holding company whose
primary subsidiaries are engaged in transportation, financial services and
real estate.
Under the proposed New Investment Subadvisory Agreement, each month the
Adviser will pay Janus a fee at the annual rate, accruing daily, of 0.75% on
the first $200 million of the average daily net assets of the Portfolio. The
fee will be reduced to 0.70% of average net assets in excess of $200 million
up to $1.3 billion, and will be further reduced to 0.65% of net assets in
excess of $1.3 billion. The average daily closing value of the aggregate net
assets of the Portfolio will continue to be determined and computed in
accordance with the description of the method of determination of net asset
value contained in the prospectus for the Fund.
20
<PAGE>
Janus currently provides investment advisory or subadvisory services to
other investment company portfolios that have investment objectives similar to
that of the Portfolio. Specifically, it provides services to the Janus Twenty
Fund, the American Skandia JanCap Growth Portfolio, American Skandia
MasterTrust ASMT Janus Capital Growth Portfolio, and the Travelers Fund U
Capital Appreciation Fund. The following chart shows the net assets and the
rates of annual compensation received by Janus for providing advisory or
subadvisory services to each of these funds.
<TABLE>
<CAPTION>
FEE RATE
(AS A PERCENTAGE
NET ASSETS OF AVERAGE DAILY
FUND NAME (AS OF 6/30/97) NET ASSETS)
- --------- --------------- ----------------
<S> <C> <C>
Janus Investment Fund $5,292.3 million 1.00% of first $30
Twenty Fund million; .75% of next $270
million; 70% of next $200
million; .65% on assets
over $500 million
American Skandia JanCap Growth $1,291.1 million .60% on first $100
Portfolio million; .55% on $100
million to $1 billion;
.50% over $1 billion(/1/)
American Skandia Master Trust ASMT $387,403 .45%
Janus Capital Growth Portfolio
Travelers Fund U $327.0 million .55% of first $100
Capital Appreciation Fund million; .50% of next $400
million; .45% over $500
million
</TABLE>
- -----------
(1) Commencing September 4, 1996, Janus Capital has voluntarily agreed to
waive a portion of its fee equal to .10% of the Portfolio's average daily
net assets over $500 million but not in excess of $1 billion; and .05% of
the portion of the Portfolio's average daily net assets over $1 billion.
Janus Capital may terminate this voluntary agreement at any time.
Emerging Growth Portfolio: Massachusetts Financial Services Company
MFS is America's oldest mutual fund organization. MFS and its predecessor
organizations have a history of money management dating from 1924 and the
founding of the first mutual fund in the United States, Massachusetts
Investors Trust. As of May 31, 1997, MFS managed approximately $34.19 billion
of assets invested in equity securities and approximately $19.93 billion of
assets invested in fixed income securities. Approximately $4 billion of the
assets managed by MFS are invested in securities of foreign issuers and non-
U.S. dollar denominated securities of
21
<PAGE>
U.S. issuers. MFS is a subsidiary of Sun Life Assurance Company of Canada
(U.S.), a subsidiary of Sun Life of Canada (U.S.) Holdings Inc., which in turn
is a wholly-owned subsidiary of Sun Life Assurance Company of Canada. MFS and
its wholly-owned subsidiary, MFS Institutional Advisors, Inc., provide
investment advice to substantial private clients.
Under the proposed New Investment Subadvisory Agreement, each month the
Adviser will pay MFS a fee at the annual rate, accruing daily, of 0.40% of the
average daily net assets of the Portfolio. This represents a fee reduction of
0.10% on net assets up to $200 million and 0.05% on net assets in excess of
$200 million up to $1.3 billion. The average daily closing value of the
aggregate net assets of the Portfolio will continue to be determined and
computed in accordance with the description of the method of determination of
net asset value contained in the prospectus for the Fund.
MFS currently serves as investment adviser to each of the other funds in the
MFS Family of Funds, and to twelve variable accounts established by Sun Life
Assurance Company of Canada. MFS also provides advisory or subadvisory
services to other investment company portfolios with investment objectives
similar to those of the Portfolio. Specifically, it provides services to MFS
Emerging Growth Fund, MFS Emerging Growth Series, MFS/Sun Life Emerging Growth
Series, and Travelers Emerging Growth Portfolio. The following chart shows the
net assets and the rates of annual compensation received by MFS for providing
advisory or subadvisory services to each of these funds.
<TABLE>
<CAPTION>
FEE RATE
(AS A PERCENTAGE
NET ASSETS OF AVERAGE
FUND NAME (AS OF 6/30/97) DAILY NET ASSETS)
- --------- ---------------- -----------------------
<S> <C> <C>
MFS Emerging Growth Fund $7,781.0 million .75% of the first
$2.5 billion
.70% on the balance
MFS Emerging Growth Series $248.2 million .75%
MFS/Sun Life Emerging Growth Series $338.4 million .75% of the first
$300 million
.675% on the next
$700 million
.60% on the balance
in excess of $1 billion
Travelers Emerging Growth Portfolio $35.3 million .375%
</TABLE>
22
<PAGE>
Portfolios that Will Receive New Subadvisers
Money Market Portfolio: Massachusetts Financial Services Company
MFS, which currently manages the Emerging Growth Portfolio, is described
above. If this proposal is approved, MFS will replace Chubb Asset, which also
is described above, as the Subadviser to the Money Market Portfolio.
Under the proposed New Investment Subadvisory Agreement, each month the
Adviser will pay MFS a fee at the annual rate, accruing daily, of 0.30% on the
first $200 million of the average daily net assets of the Portfolio. The fee
will be reduced to 0.25% of average net assets in excess of $200 million. The
Adviser currently pays Chubb Asset a fee at an annual rate of 0.35% on the
first $200 million of the average daily net assets of the Portfolio during the
quarter preceding such payment, 0.30% of average net assets in excess of $200
million up to $1.3 billion, and 0.25% of average net assets in excess of $1.3
billion. The average daily closing value of the aggregate net assets of
Portfolio will continue to be determined and computed in accordance with the
description of the method of determination of net asset value contained in the
prospectus for the Fund.
MFS currently provides advisory or subadvisory services to other investment
company portfolios with objectives similar to the Portfolio. Specifically, it
provides services to the MFS Cash Reserve Fund, the MFS Money Market Fund, the
MFS Money Market Series, the MFS Government Money Market Fund, and the MFS/Sun
Life Money Market Series. The following chart shows the net assets and rates
of annual compensation received by MFS for providing advisory or subadvisory
services to these Funds.
<TABLE>
<CAPTION>
NET ASSETS
(AS OF FEE RATE (AS A PERCENTAGE
FUND NAME 6/30/97) OF AVERAGE DAILY NET ASSETS)
- --------- -------------- ------------------------------
<S> <C> <C>
MFS Cash Reserve Fund $315.3 million .55%*
MFS Money Market Fund $627.3 million .50% of the first $300 million
.45% of the next $400 million
.40% of the next $300 million
.35% on the balance
MFS Money Market Series $6.8 million .50%
MFS Government Money Market Fund $35.9 million .50% of the first $300 million
.45% of the next $400 million
.40% of the next $300 million
.35% on the balance
MFS/Sun Life Money Market Series $388.5 million .50%
</TABLE>
- -----------
*Currently MFS waives .10% of this fee.
23
<PAGE>
Growth and Income Portfolio: Warburg, Pincus Counsellors, Inc.
Warburg is a professional investment counselling firm which provides
investment services to investment companies, employee benefit plans, endowment
funds, foundations and other institutions and individuals. As of May 31, 1997,
Warburg managed approximately $18.8 billion of assets, including approximately
$11.0 billion of investment company assets. Incorporated in 1970, Warburg is a
wholly owned subsidiary of Warburg, Pincus Counsellors G.P. ("Warburg G.P."), a
New York general partnership, which itself is controlled by Warburg, Pincus &
Co. ("WP&Co."), also a New York general partnership. Lionel I. Pincus may be
deemed to control both WP&Co. and Warburg. Warburg G.P. has no business other
than being a holding company of Warburg and its subsidiaries.
Under the proposed New Investment Subadvisory Agreement, each month the
Adviser will pay Warburg a fee at the annual rate, accruing daily, of 0.50% of
the average daily net assets of the Portfolio. The average daily closing value
of the aggregate net assets of the Portfolio will continue to be determined and
computed in accordance with the description of the method of determination of
net asset value contained in the prospectus for the Fund.
Under the Existing Investment Subadvisory Agreement, the Subadviser to the
Portfolio is Chubb Asset, which is described above. The Adviser pays Chubb
Asset a fee quarterly at the annual rate of 0.50% on the first $200 million of
the average daily net assets of the Portfolio during the quarter preceding such
payment, 0.45% of average net assets in excess of $200 million up to $1.3
billion, and 0.40% of average net assets in excess of $1.3 billion. Although
the fee rate charged by Warburg on assets in excess of $200 million is higher
than the corresponding rates charged by Chubb Asset, it is not proposed to
change the fee rate paid by the Portfolio to the Adviser. Accordingly, approval
of the Subadvisory Agreement with Warburg will not affect the total amount of
advisory fees paid by the Portfolio. Moreover, since the Portfolio's assets are
less than $200 million, approval of the New Investment Subadvisory Agreement
will not affect the amount of subadvisory fees paid by the Adviser with respect
to the Portfolio, unless the Portfolio's assets increase significantly.
Warburg currently provides advisory or subadvisory services to other
investment company portfolios with objectives similar to those of the
Portfolio. Specifically, it provides services to Warburg Pincus Growth & Income
Fund, the Growth and Income Fund of the Alexander Hamilton Variable Insurance
Trust, and the Growth & Income Portfolio of the Variable Investors Series
Trust. The following chart shows the net assets and rates of annual
compensation received by Warburg for providing advisory or subadvisory services
to these funds.
24
<PAGE>
<TABLE>
<CAPTION>
FEE RATE
(AS A PERCENTAGE
OF AVERAGE DAILY
FUND NAME NET ASSETS NET ASSETS)
- --------- --------------- ----------------
<S> <C> <C>
Warburg Pincus Growth & Income Fund.......... $674.1 million
(as of 7/8/97) .75%
Alexander Hamilton Variable Insurance Trust
Growth & Income Fund....................... $6.5 million
(as of 6/30/97) .50%
Variable Investors Series Trust Growth &
Income Portfolio........................... $16.8 million
(as of 7/8/97) .50%
</TABLE>
Balanced Portfolio: J.P. Morgan Investment Management Inc.
JPMIM is a wholly-owned subsidiary of J.P. Morgan & Co. Incorporated, a bank
holding company organized under the laws of Delaware. JPMIM offers a wide range
of investment management services and acts as investment adviser to corporate
and institutional clients. JPMIM uses a sophisticated, disciplined,
collaborative process for managing all asset classes. As of March 31, 1997,
JPMIM had assets under management of approximately $180 billion.
If this proposal is approved, JPMIM will replace Phoenix Investment Counsel
("Phoenix") as the Subadviser to the Portfolio. Phoenix is a Massachusetts
corporation. It was originally organized in 1932 as John P. Chase, Inc. and has
been engaged in the management of the Phoenix Series Fund since 1958. All of
the outstanding stock of Phoenix is owned by Phoenix Equity Planning
Corporation, an indirect subsidiary of Phoenix Home Life Mutual Insurance
Company. Phoenix Home Life Mutual Insurance Company is in the business of
writing ordinary and group life and health insurance and annuities, including
variable life insurance and variable annuities.
Under the proposed New Investment Subadvisory Agreement, each month the
Adviser will pay JPMIM a fee at the annual rate, accruing daily, of 0.45% on
the first $100 million of the average daily net assets of the Portfolio, 0.40%
on the next $100 million of average daily net assets, 0.35% on the next $200
million of average daily net assets, and 0.30% of net assets in excess of $400
million. The Adviser currently pays Phoenix a fee at the annual rate of 0.50%
on the first $200 million of average daily net assets, 0.45% on average daily
net assets from $200 million up to $1.3 billion, and 0.40% on average daily net
assets in excess of $1.3 billion. The average daily closing value of the
aggregate net assets of the Portfolio will continue to be determined and
computed in accordance with the description of the method of determination of
net asset value contained in the prospectus for the Fund.
25
<PAGE>
JPMIM currently provides advisory or subadvisory services to other investment
company portfolios with objectives similar to those of the Portfolio.
Specifically, it provides services to Alexander Hamilton Balanced Fund and
Pacific Select Fund--Multi Strategy Portfolio. The following chart shows the
net assets and rates of annual compensation received by JPMIM for providing
advisory or subadvisory services to these funds.
<TABLE>
<CAPTION>
FEE RATE
(AS A PERCENTAGE
NET ASSETS OF AVERAGE DAILY
FUND NAME (AS OF 6/30/97) NET ASSETS)
- --------- --------------- ------------------------------
<S> <C> <C>
Alexander Hamilton Balanced
Fund......................... $5.8 Million .45% on the first $100 million
.40% on the next $100 million
.35% on the next $200 million
.30% on the balance
Pacific Select Fund Multi-
Strategy..................... $151.9 Million .45% on the first $100 million
.40% on the next $100 million
.35% on the next $200 million
.30% on the balance
</TABLE>
Recommendation
The Board of Directors recommends that shareholders vote FOR each of the New
Investment Subadvisory Agreements.
ITEM 4. TO CONSIDER AND ACT ON A PROPOSAL TO PERMIT THE ADVISER TO REPLACE
SUBADVISERS OR ADD SUBADVISERS TO THE PORTFOLIOS, AND TO ENTER INTO
SUBADVISORY AGREEMENTS WITH THOSE SUBADVISERS WITHOUT FURTHER
SHAREHOLDER APPROVAL
The Fund requests that it be permitted to replace Subadvisers or add
Subadvisers to each Portfolio and enter into Subadvisory Agreements in
substantially the form as appears in Exhibit B without obtaining additional
approval from the relevant Portfolio's shareholders. This proposal is being
submitted to the shareholders of each Portfolio for approval as required by the
terms of a second request for exemptive relief (the "Exemptive Application")
filed with the SEC. This proposal will not become effective with respect to any
Portfolio unless and until (i) the SEC has granted the relief requested in the
Exemptive Application and (ii) this proposal has been approved by shareholders
of that Portfolio.
In the Exemptive Application, the Fund seeks an exemptive order (the
"Exemption") from the SEC from the provisions of Section 15(a) of the 1940 Act
that, if granted, would permit the Adviser to enter into Investment Subadvisory
26
<PAGE>
Agreements with Subadvisers for the Portfolios upon approval of the Board but
without the formal shareholder approval currently required under that Section.
There can be no assurance that the Exemption will be granted. The requested
relief is subject to the following conditions set forth in the Exemptive
Application requiring that:
(1) Before a Portfolio may rely on the order requested in the
Application, the operation of the Portfolio in the manner described in the
Application will be approved by a majority of its outstanding voting
securities (in the case of the Fund, pursuant to voting instructions
provided by Policy owners with assets allocated to any sub-account of a
registered separate account for which a Portfolio of the Fund serves as a
funding medium) as defined in the 1940 Act, or, in the case of a new
Portfolio whose public shareholders purchased shares on the basis of a
prospectus containing the disclosure contemplated by condition 2 below, by
the sole initial shareholder before offering shares of such Portfolio to
the public.
(2) The Prospectus for each Portfolio will disclose the existence,
substance, and effect of any order granted pursuant to the Application. In
addition, each Portfolio will hold itself out to the public as employing
the management structure described in the Application. The prospectus and
any sales materials or other shareholder communications relating to the
structure of the Fund or the management of a Portfolio will prominently
disclose that the Adviser has ultimate responsibility for the investment
management of the Portfolio due to its responsibility to oversee
Subadvisers and recommend their hiring, termination, and replacement.
(3) Within sixty (60) days of the hiring of any new Subadviser or the
implementation of any proposed material change in an Investment
Subadvisory Agreement, shareholders will be furnished all information
about the new Subadviser or Investment Subadvisory Agreement that would be
included in a proxy statement, except as modified by the order with
respect to Aggregate Fee Disclosure. Such information will include
Aggregate Fee Disclosure and any proposed material change in the
Portfolio's Investment Subadvisory Agreement To meet this condition, the
Adviser will provide shareholders with an information statement meeting
the requirements of Regulation 14C under the 1934 Act, Schedule 14C
thereunder and Item 22 of Schedule 14A, except as modified by the order
with respect to Aggregate Fee Disclosure. The Fund will ensure that the
information statement is furnished to Policy owners with assets allocated
to any registered separate account for which the Fund serves as a funding
medium.
(4) The Adviser will not enter into an Investment Subadvisory Agreement
with any Affiliated Subadviser without that agreement, including the
compensation to be paid thereunder, being approved by the shareholders of
the applicable Portfolio.
27
<PAGE>
(5) At all times, a majority of the Directors of the Fund will be
Independent Directors, and the nomination of new or additional Independent
Directors will be placed within the discretion of the then-existing
Independent Directors.
(6) When a Subadviser change is proposed for a Portfolio with an
Affiliated Subadviser, the Board of Directors, including a majority of the
Independent Directors, will make a separate finding, reflected in the
Board's minutes, that such change is in the best interests of the
Portfolio and its shareholders (in the case of the Fund, the Policy owners
with assets allocated to any sub-account for which a Portfolio serves as a
funding medium) and does not involve a conflict of interest from which the
Adviser or the Affiliated Subadviser derives an inappropriate advantage.
(7) Independent counsel knowledgeable about the 1940 Act and the duties
of Independent Directors will be engaged to represent the Independent
Directors of the Fund. The selection of such counsel will remain within
the discretion of the Independent Directors.
(8) The Adviser will provide the Board of Directors of the Fund, no less
frequently than quarterly, with information about the Adviser's
profitability for each Portfolio relying on the relief requested in the
Application. Such information will reflect the impact on profitability of
the hiring or termination of any Subadviser during the applicable quarter.
(9) Whenever a Subadviser for a particular Portfolio is hired or
terminated, the Adviser will provide the Board of Directors with
information showing the expected impact on the Adviser's profitability.
(10) The Adviser will provide general management services to the Fund
and its Portfolios, and, subject to review and approval by the Board of
Directors will (i) set each Portfolio's overall investment strategies;
(ii) select and recommend Subadvisers; (iii) allocate and, when
appropriate, reallocate a Portfolio's assets among Subadvisers; (iv)
monitor and evaluate the investment performance of Subadvisers; and (v)
oversee Subadviser compliance with each Portfolio's investment objective,
policies, and restrictions.
(11) No director or officer of the Fund or the Adviser will own directly
or indirectly (other than through a pooled investment vehicle over which
such person does not have control) any interest in any Subadviser except
for: (i) ownership of interests in the Adviser or any entity that
controls, is controlled by, or is under common control with the Adviser;
or (ii) ownership of less than 1% of the outstanding securities of any
class of any equity or debt of a publicly-traded company that is either a
Subadviser or an entity that controls, is controlled by, or is under
common control with a Subadviser.
28
<PAGE>
(12) Each Portfolio will disclose in its registration statement the
Aggregate Fee Disclosure.
As used in the foregoing conditions, "Aggregate Fee Disclosure" means
disclosure (both as a dollar amount and as a percentage of the relevant
Portfolio's net assets) of: (1) the total management fee charged by the
Adviser with respect to each Portfolio; (2) the aggregate advisory fees paid
by the Adviser to all Subadvisers managing assets of each Portfolio; and (3)
the net management fee retained by the Adviser with respect to each Portfolio
after the Adviser pays all Subadvisers managing assets of that Portfolio.
"Aggregate Fee Disclosure" will also include separate disclosure of any
advisory fees paid to any Affiliated Subadviser (of which there currently are
none).
Thus, where a Portfolio has only one Subadviser (as is currently true of all
of the Portfolios), the requested relief will not affect the information
provided to policyholders concerning the Subadviser's compensation, because
the fees paid to the sole Subadviser comprise all of the subadvisory fees paid
with respect to that Portfolio. If a Portfolio were to have two or more
Subadvisers, however, under the requested relief policyholders would no longer
be provided with information concerning the separate compensation paid by the
Adviser to each Subadviser (unless a Subadviser was an Affiliated Subadviser),
but would be provided with information concerning the total compensation paid
all Subadvisers to that Portfolio. In this circumstance, the Aggregate Fee
Disclosure would provide policyholders with full information concerning the
amount and rate of advisory fees paid by the Portfolio to the Adviser (which
amount includes the amounts paid by the Adviser to the Subadvisers) and would
provide the policyholders with sufficient information to evaluate whether the
cost of the management services provided to the Portfolio (including the cost
of subadvisory services) is competitive with the fees charged by other
advisory firms for similar services.
While the foregoing conditions are consistent with relief previously granted
by the Commission to other similar investment companies, the Commission may
require modifications of the foregoing conditions as a condition to granting
relief to the Fund.
The Directors, including a majority of the Independent Directors (in
consultation with counsel), believe that the authority to replace Subadvisers
or add Subadvisers and enter into Investment Subadvisory Agreements with the
Adviser, subject to the conditions described above, would allow the Adviser to
better perform the functions the Portfolios are currently paying it to perform
- --i.e., selecting Subadvisers, monitoring their performance and making
whatever changes to the roster of Subadvisers as the Adviser deems
appropriate, subject to approval by the Fund's Board of Directors. The
Directors further believe that requiring shareholder approval
29
<PAGE>
of each new Investment Subadvisory Agreement results in unnecessary
administrative expenses to the Portfolios and may result in delays in executing
changes in Subadvisers or their Investment Subadvisory Agreements, which may be
detrimental to the Portfolios.
Shareholders should recognize that in engaging new Subadvisers and entering
into Investment Subadvisory Agreements, the Adviser will negotiate fees with
those Subadvisers and, because these fees are paid by the Adviser and not
directly by each Portfolio, any fee reduction negotiated by the Adviser will
inure to the Adviser's benefit and any increase will inure to its detriment.
The fees paid to the Adviser by the Portfolios and the fees paid to the
Subadvisers by the Adviser are considered by the Board in approving the
advisory and subadvisory arrangements, and any change in fees paid by a
Portfolio to the Adviser would require shareholder approval.
Recommendation
The Board of Directors recommends that shareholders vote FOR this proposal.
OTHER BUSINESS
The Board of Directors knows of no other business that will come before the
Special Meeting. Should any matters other than the matter referred to above
properly come before the Special Meeting, it is the intention of Chubb Life to
vote on such matters in its discretion.
ADDITIONAL INFORMATION
Shareholder Proposals
The Fund does not hold annual shareholder meetings. According to the Fund's
Bylaws, annual meetings, when held, will be held in the month of April of any
year. Shareholders who would like to submit proposals for consideration at
future shareholder meetings should send written proposals to Chubb America
Fund, Inc., One Granite Place, Concord, New Hampshire 03301.
Principal Underwriter
The principal underwriter and distributor for the Fund's Portfolios is Chubb
Securities Corporation, One Granite Place, Concord, New Hampshire 03301, a New
Hampshire corporation ("CSC"). CSC is a wholly-owned subsidiary of Chubb Life
and Jefferson-Pilot.
Under the terms of CSC's distribution agreement with the Fund, CSC makes a
continuous offering of the Fund's shares. CSC is responsible for paying the
costs of printing copies of prospectuses and periodic reports for distribution
to new or
30
<PAGE>
prospective Policy owners, preparation, printing and distribution of sales
literature, and all other expenses arising primarily in connection with
promoting the sale of the Fund's shares. CSC must, as the Fund's agent, cause
any sales literature, advertising or other similar material to be filed with
the appropriate authorities. As a result of the Acquisition, CSC has entered
into a new underwriting agreement with the Fund under the same terms as the
previously existing agreement. CSC continues to be an affiliate of Chubb Life.
The President and a Director of the Fund, Ronald Angarella, is also President
and a Director of CSC. The Fund's Vice President and Assistant Secretary,
Charles C. Cornelio, is Vice President and Secretary to CSC. John A. Weston is
Treasurer to both the Fund and CSC. Shari J. Lease is Assistant Secretary of
CSC.
31
<PAGE>
EXHIBIT A
FORM OF INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT made this day of April 1997, between CHUBB AMERICA FUND,
INC., a Maryland corporation with offices at One Granite Place, Concord, New
Hampshire (the "Fund"), and CHUBB INVESTMENT ADVISORY CORPORATION, a Tennessee
corporation with offices at One Granite Place, Concord, New Hampshire ("Chubb
Investment");
WITNESSETH
WHEREAS, the Fund is engaged in business as a diversified open-end
management investment company and is registered as such under the Investment
Company of 1940 (the "Investment Company Act");
WHEREAS, the Fund is authorized to issue shares of common stock, $.01 par
value, ("Stock") in separate classes or series with each such class or series
representing an interest in a separate portfolio of securities and other
assets, and each with its own investment objectives, investment policies and
restrictions (individually, a "Portfolio", collectively, the "Portfolios");
WHEREAS, Chubb Investment is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940;
WHEREAS, the Board of Directors of the Fund desires to retain Chubb
Investment to render investment management and corporate administrative
services to the Fund's Portfolios set forth in Schedule A hereto, as such may
be revised from time to time, in the manner and on the terms set forth herein;
and
WHEREAS, the Board of Directors of the Fund believes that Chubb Investment's
expertise and business contacts are and will be of material benefit to the
Fund in employing and supervising any investment subadviser ("Subadviser"), as
further described below;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and Chubb Investment hereby agree as follows:
1. APPOINTMENT OF MANAGER. The Fund hereby appoints Chubb Investment as the
investment manager ("Investment Manager" or "Manager") or for each of the
1
<PAGE>
Portfolios of the Fund specified in Appendix A to this Agreement, as such
Appendix A may be amended by the Manager and the Fund from time to time,
subject to the supervision of the Directors of the Fund and in the manner
under the terms and conditions set forth in this Agreement.
2. (a) DUTIES OF CHUBB INVESTMENT. Chubb Investment hereby agrees, subject
to the supervision of the Board of Directors of the Fund (i) to act as the
investment manager of the Portfolios, and, in that connection, (ii) to select
and contract, at its own expense, with investment subadvisers ("Subadvisers")
to manage the investment operations and composition of each and every
Portfolio of the Fund, including the purchase, retention, and disposition of
the investments, securities and cash contained in each Portfolio.
In taking any action hereunder, Chubb Investment shall always be subject to,
and shall follow at all times (i) any restrictions of the Fund's Articles of
Incorporation and By-Laws, as amended from time to time, (ii) the applicable
provisions of the Investment Company Act, and any rules and regulations
adopted thereunder, (iii) the statements relating to the Portfolios'
investment objectives, policies and restrictions as the same are set forth in
the prospectus of the Fund and Statement of Additional Information then
currently effective under the Securities Act of 1933 (the "Prospectus"), and
(iv) any other provisions of state and federal law applicable to it in
connection with its duties hereunder, including any applicable provisions
imposed by state insurance regulations and under the Internal Revenue Code of
1986, as amended, and regulations thereunder (the "Code").
(b) INTERIM ARRANGEMENTS. Notwithstanding the provisions of subsection (a)
of this paragraph, the Manager may, in the event of a Subadviser becomes
unable to provide portfolio management services to a Portfolio, itself provide
to the Portfolio those services normally provided by the Subadviser under the
Subadviser's agreement with the Manager, until such time as the Manager
selects and contracts with a replacement Subadviser.
(c) ADMINISTRATIVE SERVICES. Subject to the direction and control of the
Board of Directors of the Fund, Chubb Investment shall perform administrative
services in connection with the management of the Portfolios and will
supervise all aspects of the Portfolios' operations. In this connection, Chubb
Investment agrees to perform the following administrative functions:
(1) Determine the value of each Portfolio's assets and liabilities,
compute the daily income and net asset value of each Portfolio and compute
the yield and/or total return of each Portfolio as may be required, in
accordance with applicable law;
2
<PAGE>
(2) Schedule, plan agendas for and conduct directors and shareholders
meetings;
(3) Recommend auditors, counsel, Custodian and others;
(4) Coordinate, supervise and direct any Subadviser, the Fund's
Custodian and the Fund's Distributor, auditors and counsel on a day-to-day
basis;
(5) Prepare and distribute all required proxy statements, reports, and
other communications with shareholders;
(6) Prepare and file tax returns, reports due and other required filings
with the Securities and Exchange Commission ("SEC"), the National
Association of Securities Dealers, Inc., state blue sky authorities, and
generally monitor compliance with all federal and state securities laws
and the Code;
(7) Supply clerical, secretarial, accounting and bookkeeping services,
data processing services, office supplies and stationery;
(8) Provide persons to perform such professional, administrative and
clerical functions as are necessary in connection with shareholder
relations, reports, redemption requests and account adjustments, including
the receipt, handling and coordination of shareholder complaints;
(9) Provide adequate office space and related services (including
telephone and other utility service) necessary for the Fund's operations;
(10) Maintain corporate records not otherwise maintained by the Fund's
Custodian, Distributor, or any Subadviser; and
(11) Assist, generally, in all aspects of the Fund's operations with
respect to the Portfolios.
The Manager may enter into arrangements with its parent or other persons
affiliated or unaffiliated with the Manager for the provisions of certain
personnel and facilities to the Manager to enable the Manager to fulfill its
duties and obligations under this Agreement. Nothing herein will be construed
to restrict the Fund's right, at its own expense, to contract for services to
be performed by third parties.
(d) ARRANGEMENTS WITH SUBADVISERS. Notwithstanding any other provision
hereof, Chubb Investment, with the approval of the Board of Directors of the
Fund, may contract with one or more Subadvisers to perform any of the
investment management services required by the Fund, and may contract with one
or more Subadvisers or other parties to perform any of the administrative
services required of Chubb Investment hereunder; provided, however, that the
compensation of such other parties will be the sole responsibility of Chubb
Investment and the duties and
3
<PAGE>
responsibilities of such other Subadviser or other parties shall be as set
forth in an agreement or agreements between Chubb Investment and such other
parties.
Chubb Investment shall exercise reasonable care in recommending, monitoring,
and supervising the performance of Subadviser and others serving pursuant to
the foregoing paragraph, but Chubb Investment shall not otherwise be liable or
legally responsible for the conduct of any Subadviser. In this connection, it
shall be a particular responsibility of Chubb Investment to evaluate the
investment performance of Subadviser and that of potential Subadviser, and
Chubb Investment shall supply the Board of Directors of the Fund with such
statistical and research data bearing on each Portfolio's performance and that
of Subadviser and potential Subadviser as they and Chubb Investment deem
necessary. It shall also be a particular responsibility of Chubb Investment to
supervise and monitor the practices of Subadviser in placing orders and
selecting brokers and dealers to effect Portfolio transactions and in
negotiating commission rates with them, and the services provided by such
brokers and dealers.
It also is understood that Chubb Investment, at its expense, will enter into
an agreement with Chubb America Service Corporation, a New Hampshire
corporation, pursuant to which Chubb Investment will obtain from said
corporation most staff, facilities and services necessary to meet its
obligations hereunder. Entering into said agreement shall in no way diminish
any obligation or liability of Chubb Investment hereunder.
3. (a) PURCHASE AND SALE OF ASSETS. Nothing in this Investment Management
Agreement shall preclude the combining of orders for the sale or purchase of
securities or other investments with other accounts managed by Chubb
Investment, provided that Chubb Investment does not favor any account over any
other account and provided further that any purchase or sale orders executed
contemporaneously shall be allocated in a manner that Chubb Investment deems
to be equitable to all accounts involved and, under normal circumstances, such
transactions will be (1) done on a pro rata basis substantially in proportion
to the amounts ordered by each account, (2) entered into only if, in Chubb
Investment's opinion, the trade is likely to produce a benefit for the
Portfolio, and (3) is at a price which is approximately the same for all
parties involved. Neither Chubb Investment, nor any of its directors,
officers, or employees, nor any person, firm, or corporation controlling,
controlled by or under common control with it shall act as a principal or
receive any commission as agent in connection with the purchase or sale of
assets for the Portfolios.
(b) BROKERAGE FEES. In placing orders for the purchase or sale of
investments for the Portfolios, in the name of the Portfolio or their
nominees, Chubb Investment shall use its best efforts to obtain for the
Portfolios the most favorable price and best execution available, considering
all of the circumstances, and shall maintain records
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adequate to demonstrate compliance with this requirement. Notwithstanding the
foregoing, however, and subject to appropriate policies and procedures as then
approved by the Board of Directors of the Fund, Chubb Investment may, to the
extent authorized by Section 28(e) of the Securities Exchange Act of 1934,
cause the Fund to pay a broker or dealer that provides research or other
brokerage services to Chubb Investment and the Fund with respect to the
Portfolio an amount of commission for effecting a portfolio transaction in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if Chubb Investment determines in good faith
that such amount of commission is reasonable in relationship to the value of
such services, viewed in terms of that particular transaction or Chubb
Investment's overall responsibilities to the Portfolios or its other advisory
clients. To the extent authorized by said Section 28(e) and the Fund's Board
of Directors, Chubb Investment shall not be deemed to have acted unlawfully or
to have breached any duty created by this Investment Management Agreement or
otherwise solely by reason of such action.
4. COMPENSATION OF CHUBB INVESTMENT. Except as hereinafter provided, for the
services rendered and expenses assumed by Chubb Investment, while this
Investment Management Agreement is in effect, the Fund shall pay to Chubb
Investment fees at an annual rate set forth in Schedule A attached hereto.
Fees will accrue daily and will be payable as agreed by the Fund and Chubb
Investment, but not more frequently than monthly. The average asset value of
the Portfolios shall be determined and computed in accordance with the
description of the method of determining net asset value contained in the
Prospectus.
The fees payable to Chubb Investment by the Fund hereunder shall be reduced
by any tender solicitation fees or similar payments received by Chubb
Investment, or any affiliated person of Chubb Investment, in connection with
the tender of investments of any Portfolio (less any direct expenses incurred
by Chubb Investment, or any affiliated person of Chubb Investment, in
connection with obtaining such fees or payments). Chubb Investment 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 Chubb Investment shall not be required to
register as a broker-dealer for this purpose. Chubb Investment shall advise
the Board of Directors of any fees or payments of whatever type which it may
be possible for Chubb Investment to receive in connection with the purchase or
sale of investment securities for any Portfolio.
5. NON-EXCLUSIVITY. The Fund agrees that the services of Chubb Investment
are not to be deemed exclusive and Chubb Investment is free to act as
investment manager to various investment companies and as fiduciary for other
managed
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accounts. Chubb Investment shall, for all purposes herein, be deemed to be an
independent contractor and shall, unless otherwise provided or authorized,
have no authority to act for or represent the Fund with respect to the
Portfolios in any way or otherwise be deemed an agent of the Fund with respect
to the Portfolios other than in furtherance of its duties and responsibilities
as set forth in this Investment Management Agreement. It is understood and
agreed that the directors, officers and employees of Chubb Investment are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers,
directors, trustees, or employees of any other firm or corporation, including
other investment companies.
6. BOOKS AND RECORDS. Chubb Investment will maintain all books and records
required for the Fund with respect to the Portfolios, to the extent not
maintained by the Custodian or any Subadviser. Chubb Investment agrees that
all books and records which it maintains for the Fund are the Fund's property,
and, in the event of termination of this Investment Management Agreement for
any reason, Chubb Investment agrees promptly to return to the Fund, free from
any claim or retention of rights by Chubb Investment, all records relating to
the Fund. Chubb Investment also agrees, upon request of the Fund, promptly to
surrender such books and records to the Fund or, at the Fund's expense, to
make copies thereof available to the Fund or to make such books and records
available for inspection by representatives of regulatory authorities or other
persons reasonably designated by the Fund. Chubb Investment further agrees to
maintain, prepare and preserve such books and records in accordance with the
Investment Company Act and rules thereunder, including but not limited to,
Rules 31a-1 and 31a-2.
Chubb Investment will use records or information obtained under this
Investment Management Agreement only for the purposes contemplated hereby, and
will not disclose such records or information in any manner other than as
expressly authorized by the Board of Directors or officers of the Fund, or
unless disclosure is expressly required by applicable federal or state
regulatory authorities or by this Investment Management Agreement. Chubb
Investment shall supply all information requested by any insurance regulatory
authorities to determine whether all insurance laws and regulations are being
complied with.
The records maintained for the Fund hereunder by Chubb Investment shall
include records showing, for each shareholder's account, the following: (a)
name, address and tax identifying number; (b) number and class of shares held;
(c) historical information regarding the account of each shareholder,
including dividends paid and the date, class of Stock and price for all
transactions; (d) any stop or restraining order placed against the account;
(e) any dividend reinvestment order, dividend address and
6
<PAGE>
correspondence relating to the current maintenance of the account; (f)
certificate numbers and denominations for any Stock certificates; (g) any
other information required in order for Chubb Investment to perform the
calculations contemplated or required by this Investment Management Agreement;
and (h) such other records as the Fund may from time to time reasonably
request.
7. LIABILITY. Chubb Investment will not be liable for any loss suffered by
the Portfolios in connection with any investment policy established by the
Fund for the purchase, sale or redemption of any securities at the direction
of the Board of Directors of the Fund. Nothing herein contained shall be
construed to protect Chubb Investment against any liability resulting from the
willful misfeasance, bad faith or negligence of Chubb Investment in the
performance of its duties or from reckless disregard of its obligations and
duties under this Investment Management Agreement or by virtue of violation of
any applicable law.
8. (a) INITIAL DOCUMENTS. The Fund's management shall file with Chubb
Investment the following documents: (i) certified copies of the Articles of
Incorporation of the Fund and all amendments thereto, made from time to time;
(ii) a certified copy of the By-Laws of the Fund as amended, from time to
time; (iii) a copy of the resolution of the Board of Directors of the Fund
authorizing this Investment Management Agreement; (iv) specimens of all forms
of outstanding and new stock certificates, if any, with respect to Portfolio
Stock in the form approved by the Board of Directors of the Fund accompanied
by Board of Directors' resolutions approving such forms, and with a
certificate of the Secretary of the Fund as to such approval; (v) an opinion
of counsel for the Fund with respect to the validity of the Portfolio Stock,
the number of shares authorized, the number of Shares allocated to the
Portfolio's class of Shares, the status of redeemed or repurchased Shares and
the number of Shares with respect to which a registration statement under the
Securities Act of 1933 has been filed and is in effect; and (vi) a listing of
the insurance companies with which Chubb Life through its general account or
Separate Account A or any additional separate accounts established by Chubb
Life, its successors or assigns, is affiliated.
(b) FURTHER DOCUMENTATION. The Fund's management will also furnish to Chubb
Investment from time to time the following documents: (i) each resolution of
the Board of Directors of the Fund authorizing the original issue of the
Portfolio's Shares; (ii) each registration statement filed with the SEC under
the Securities Act of 1933 or under the Investment Company Act and amendments
thereof, orders relating thereto and the Prospectus in effect with respect to
the sale of shares of the Fund; (iii) certified copies of each resolution of
the Board of Directors authorizing officers to give instructions to Chubb
Investment.
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<PAGE>
(c) INFORMATION. The Fund, its officers or agent will provide timely
information to Chubb Investment regarding such matters as purchases and
redemptions of shares in the Portfolios, cash requirements, and cash available
for investment in the Portfolios, and all other information as may be
reasonably necessary, or appropriate, in order for Chubb Investment to perform
its responsibilities hereunder.
(d) RELIANCE ON DOCUMENTS AND INFORMATION. Chubb Investment will be entitled
to rely on all documentation and information furnished to it by the Fund's
management.
9. AUTHORIZED SHARES. The Fund certifies to Chubb Investment, that as of the
close of business on the date of this Investment Management Agreement, it has
authorized one billion shares of its Stock, and further certifies that, by
virtue of its Articles of Incorporation and the provisions of the law of the
state of its incorporation, shares of its Stock which are redeemed or
repurchased by the Fund from its shareholder are restored to the status of
authorized and unissued shares.
10. (a) EXPENSES OF THE FUND. As between the Fund and Chubb Investment, the
following expenses shall be borne exclusively by the Fund;
(i) Brokerage commissions and transfer taxes in connection with
portfolio transactions and similar fees and charges for the acquisition,
disposition, lending or borrowing of portfolio investments;
(ii) All other state, federal, local or foreign governmental fees and
taxes (including any insurance, transfer, franchise or income taxes)
payable by the Fund and all corporate or filing fees payable by the Fund
to any governmental entity or agency;
(iii) All expenses, incidental and otherwise, associated with preparing
and filing with appropriate state, federal, local or foreign governments
or agencies all tax returns, including the expenses associated with any
mailings to the policy owners with respect to such returns.
(iv) Fees and expenses incurred in the registration or qualification
(and maintaining said registration or qualification) of the Fund and its
shares under federal or state securities laws, if deemed applicable,
subsequent to the effective date of the registration statement including
all fees and expenses incurred in connection with the preparation, setting
in type, printing and mailing of the registration statement and any
amendments or supplements that may be made from time to time;
(v) Compensation paid to directors who are not "interested persons" of
the Fund within the meaning of the Investment Company Act and travel
expenses paid to all directors;
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<PAGE>
(vi) Interest and any other cost related to borrowings by the Fund;
(vii) Any extraordinary or non-recurring expenses (such as legal claims
and liabilities, and litigation costs and any indemnification related
thereto);
(viii) Costs of printing and distributing to current policy owners,
shareholder reports, proxy statements, Prospectuses and any stickers and
supplements thereto, and otherwise communicating with the shareholders;
(ix) Costs and all incidental expenses associated with conducting
shareholder meetings;
(x) The cost of the fidelity bond required by Investment Company Act
Rule 17g-1 and any errors and omissions insurance or other liability
insurance covering the Fund and/or its officers, directors and employees;
(xi) The cost of obtaining quotes necessary for valuing the assets and
related liabilities for the Portfolios;
(xii) The charges and expenses of the Custodian, independent accountants
and independent legal counsel retained by the Fund, the charges and
expenses of any independent proxy solicitation firm retained by the Fund
to solicit voting instructions from policy owners with respect to
Portfolio Shares, and the charges and expenses of any trade association
fees; and
(xiii) All other expenses not specifically assumed hereunder by Chubb
Investment.
(b) EXPENSES OF CHUBB INVESTMENT. As between the Fund and Chubb Investment,
the costs and expenses of providing the necessary facilities, personnel,
office equipment and supplies, office space, telephone service, and other
utility service necessary to carry out its obligations hereunder shall be
borne exclusively by Chubb Investment, except as otherwise herein expressly
provided. In addition, Chubb Investment shall pay and assume all expenses
specifically assumed by Chubb Investment as set forth in Paragraphs
2(c)(b)(1), (3), (4), (7), (8), (9), (10) and (11); and 2(d) of this
Investment Management Agreement.
11. DURATION AND TERMINATION OF THE AGREEMENT. This Investment Management
Agreement shall become effective as of the date first written above provided
that it has been approved by the majority of the outstanding shares of each of
the Portfolios. Thereafter, it shall continue in effect with respect to each
of the Portfolios from year to year, but only so long as such continuance is
specifically approved at least annually by the Board of Directors in
conformity with the requirements of the Investment Company Act. This
Investment Management Agreement may be terminated, with respect to each
Portfolio, without the payment of any penalty, by the Board of Directors of
the Fund or by vote of a majority of the
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<PAGE>
outstanding shares of Portfolio on sixty days' written notice to Chubb
Investment, or by Chubb Investment on sixty days' written notice to the Fund.
This Investment Management Agreement shall automatically terminate in the
event of its assignment.
12. AMENDMENT OF THE AGREEMENT. This Investment Management Agreement may be
amended with respect to any Portfolio only if, to the extent required by law,
such amendment is specifically approved by (a) the vote of a majority of the
outstanding shares of the Portfolio, and (b) by the vote of the Board of
Directors of the Fund, including a majority of those directors of the Fund who
are not parties to nor interested persons of any party to this Investment
Management Agreement cast in person at a meeting called for the purpose of
voting on such approval.
13. DEFINITIONS. The terms "assignment," "interested person," and "majority
of the outstanding shares," when used in this Investment Management Agreement,
shall have the respective meanings specified under the Investment Company Act
and rules thereunder.
14. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
15. NAME. This Investment Management Agreement is entered into in
recognition of an agreement, dated February 15, 1985, between the Fund and The
Chubb Corporation granting the Fund a license to use the word "Chubb" in its
corporate name and to use such words in connection with its business.
16. PROVISIONS OF CERTAIN INFORMATION BY MANAGER. The Manager will promptly
notify the Fund in writing of the occurrence of any of the following events:
a. The Manager fails to be registered as a investment adviser under the
Advisers Act or under the laws of any jurisdiction in which the Manager is
required to be registered as an investment adviser in order to perform its
obligations under this Agreement,
b. the Manager is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in the equity,
before or by any court, public board or body, involving the affairs of the
Fund, and/or
c. the chief executive officer or controlling stockholder of the Manager
or the portfolio manager of any Portfolio changes or there is otherwise an
actual change in control or management of the Manager.
17. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement of the Parties.
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<PAGE>
18. HEADINGS. The headings in the sections of this Agreement are inserted
for convenience of reference only and shall not constitute a part hereof.
19. NOTICES. All notices required to be given pursuant to this Agreement
shall be delivered or mailed to the last known business address of the Fund or
Manager in person or by registered mail or a private mail or delivery service
providing the sender with notice of receipt. Notice shall be deemed given on
the date delivered or mailed in accordance with this section.
20. FORCE MAJEURE. The Manager shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including, but not
limited to, acts of civil or military authority, national emergencies, work
stoppages, fire, flood catastrophe, acts of nature, insurrection, war, riot,
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Manager shall take reasonable steps to minimize
service interruptions but shall have no liability with respect to such
undertakings.
21. SEVERABILITY. Should any portion of this Agreement for any reason be
held to be void in law or in equity, the Agreement shall be construed, insofar
as is possible, as if such portion had never been contained in the Agreement.
22. GOVERNING LAW. The provisions of this Investment Management Agreement
shall be construed and interpreted in accordance with the laws of the State of
New Hampshire, as at the time in effect, and the applicable provisions of the
Investment Company Act and rules thereunder or other federal laws and
regulations which may be applicable. To the extent that the applicable law of
the State of New Hampshire, or any of the provisions herein, conflict with the
applicable provisions of the Investment Company Act and rules thereunder or
other federal laws and regulations which may be applicable the latter shall
control.
Chubb America Fund, Inc.
Attest: By: __________________________________
Title: Title:
Chubb Investment Advisory Corporation
Attest: By: __________________________________
Title: Title:
11
<PAGE>
SCHEDULE A
CHUBB AMERICA FUND, INC.
<TABLE>
<CAPTION>
ANNUAL FEE AS A PERCENTAGE OF
NAME OF PORTFOLIO AVERAGE DAILY NET ASSETS
- ----------------- ------------------------------
<S> <C> <C>
World Growth Stock Portfolio..................... .75% of first $ 200 Million
.70% of next $ 1.1 Billion
.65% over $ 1.3 Billion
Money Market Portfolio........................... .50% of first $ 200 Million
.45% of next $ 1.1 Billion
.40% over $ 1.3 Billion
Gold Stock Portfolio............................. .75% of first $ 200 Million
.70% of next $ 1.1 Billion
.65% over $ 1.3 Billion
Bond Portfolio................................... .50% of first $ 200 Million
.45% of next $ 1.1 Billion
.40% over $ 1.3 Billion
Domestic Growth Stock Portfolio.................. .75% of first $ 200 Million
.70% of next $ 1.1 Billion
.65% over $ 1.3 Billion
Growth and Income Portfolio...................... .75% of first $ 200 Million
.70% of next $ 1.1 Billion
.65% over $ 1.3 Billion
Capital Growth Portfolio......................... 1.00% of first $ 200 Million
.95% of next $ 1.1 Billion
.90% over $ 1.3 Billion
Balanced Portfolio............................... .75 of first $ 200 Million
.70% of next $ 1.1 Billion
.65% over $ 1.3 Billion
Emerging Growth Portfolio........................ .80 of first $ 200 Million
.75% of next $ 1.1 Billion
.70% over $ 1.3 Billion
</TABLE>
EFFECTIVE: ______________________________
12
<PAGE>
EXHIBIT B
FORM OF INVESTMENT SUBADVISORY AGREEMENT
THIS AGREEMENT, made this day of , 199 , is between CHUBB INVESTMENT
ADVISORY CORPORATION, a Tennessee corporation with offices at One Granite
Place, Concord, New Hampshire, 03301 (the "Investment Manager" or "Manager")
and , (the "Subadviser") a corporation with offices at .
WITNESSETH:
WHEREAS, Chubb America Fund, Inc. (the "Fund") is engaged in business as a
diversified open-end management investment company and is registered as such
under the Investment Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund issues separate classes or series of stock, each of which
represents a separate portfolio of investments;
WHEREAS, the Fund's shareholders are and will be separate accounts
maintained by insurance companies for variable life insurance policies under
which income, gains, losses, whether or not realized, from assets allocated to
such accounts are, in accordance with the Policies, credited to or charged
against such accounts without regard to other income, gains, or losses of such
insurance companies;
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the Portfolio, as set forth in an Investment Management Agreement
between the Fund and the Investment Manager dated , 199 , (the
"Investment Management Agreement") pursuant to which it was agreed that the
Investment Manager may contract with the Subadviser, or other parties for
certain investment management services;
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act");
WHEREAS, the Investment Manager desires to retain the Subadviser to render
investment management services to the Fund's Portfolio (the "Portfolio")
in the manner and on the terms hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the convenants
hereinafter contained the Investment Manager and the Subadviser hereby agree
as follows:
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1. APPOINTMENT OF THE SUBADVISER. The Manager hereby appoints the Subadviser
to act as an investment subadviser for the Portfolio and to manage the
investment and reinvestment of the assets of the Portfolio, subject to the
supervision of the Directors of the Fund and the terms and conditions of this
Agreement. The Subadviser will be an independent contractor and will have no
authority to act for or represent the Fund or Manager in any way or otherwise
be deemed an agent of the Fund or Manager except as expressly authorized in
this Agreement or another writing by the Fund, Manager and the Subadviser.
Notwithstanding the foregoing, the Subadviser may execute account
documentation, agreements, contracts and other documents as the Subadviser may
be requested by brokers, dealers, counterparts and other persons in connection
with the Subadviser's management of the assets of the Portfolio, provided that
the Subadviser receives the express agreement and consent of the Manager
and/or the Fund's Board of Directors to execute such documentation,
agreements, contracts and other documents. In such respect, and only for this
limited purpose, the Subadviser shall act at the Manager and/or the Fund's
agent and attorney-in-fact.
2. DUTIES OF THE SUBADVISER. The Subadviser hereby agrees, subject to the
supervision of the Investment Manager and the Board of Directors of the Fund,
(1) to act as the Subadviser of the Portfolio, (2) to manage the investment
and reinvestment of the assets of the Portfolio for the period and on the
terms and conditions set forth in this Agreement, and (3) during the term
hereof, to render the services and to assume the obligations herein set forth
in return for the compensation provided for herein and to bear all expenses of
its performance of such services and obligations.
3. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE FUND
A. The Subadviser will manage the investment and reinvestment of the assets
of the Portfolio and determine the composition of the assets of the Portfolio,
subject always to the direction and control of the Directors of the Fund and
the Manager and in accordance with the provisions of the Fund's registration
statement, as amended from time to time. In fulfilling its obligations to
manage the investment and reinvestment of the assets of the Portfolio, the
Subadviser will:
(i) obtain and evaluate pertinent economic, statistical, financial, and
other information affecting the economy generally and individual companies
or industries, the securities of which are included in the Portfolio or
are under consideration for inclusion in the Portfolio;
(ii) formulate and implement a continuous investment program for the
Portfolio (a) consistent with the investment objectives, policies, and
restrictions of the Portfolio as stated in the Fund's Agreement and
Articles of Incorporation,
2
<PAGE>
Bylaws, and such Portfolio's currently effective Prospectus and Statement
of Additional Information ("SAI") as amended from time to time, and (b) in
compliance with the requirements applicable to both regulated investment
companies and segregated asset accounts under Subchapters M and L of the
Internal Revenue Code of 1986, as amended, and requirements applicable to
registered investment companies under applicable laws;
(iii) take whatever steps are necessary to implement the investment
program for the Portfolio by the purchase and sale of securities and other
investments authorized under the Fund's Agreement and Articles of
Incorporation, Bylaws, and such Portfolio's currently effective Prospectus
and SAI, including the placing of orders for such purchases and sales;
(iv) regularly report to the Directors of the Fund and the Manager with
respect to the implementation of the investment program and, in addition,
provide such statistical information and special reports concerning the
Portfolio and/or important developments materially affecting the
investments held, or contemplated to be purchased, by the Portfolio, as
may reasonably be requested by the Manager or the Directors of the Fund,
including attendance at Board of Directors Meetings, as reasonably
requested, to present such information and reports to the Board;
(v) provide determinations of the fair value of certain portfolio
securities when market quotations are not readily available for the
purpose of calculating the Portfolio's net asset value in accordance with
procedures and methods established by the Directors of the Fund;
(vi) provide any and all information, records and supporting
documentation about accounts the Subadviser manages that have investment
objectives, policies, and strategies substantially similar to those
employed by the Subadviser in managing the Portfolio which may be
reasonably necessary, under applicable laws, to allow the Portfolio or its
agent to present information concerning the Subadviser's prior performance
in the Prospectus and the SAI of the Portfolio and any permissible reports
and materials prepared by the Portfolio or its agent; and
(vii) establish appropriate interfaces with the Fund's Manager in order
to provide such Manager with all necessary information requested by the
Manager.
B. To facilitate the Subadviser's fulfillment of its obligations under this
Agreement, the Manager and the Fund will undertake the following:
(i) the Manager agrees promptly to provide the Subadviser with all
amendments or supplements to the Registration Statement, the Fund's
Agreement and Articles of Incorporation, and Bylaws;
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<PAGE>
(ii) the Manager agrees, on an ongoing basis, to notify the Subadviser
expressly in writing of each change in the fundamental and nonfundamental
investment policies of the Portfolio;
(iii) the Manager agrees to provide or cause to be provided to the
Subadviser with such assistance as may be reasonably requested by the
Subadviser in connection with its activities pertaining to the Portfolio
under this Agreement, including, without limitation, information
concerning the Portfolio, its available funds, or funds that may
reasonably become available for investment, and information as to the
general condition of the Portfolio's affairs;
(iv) the Manager agrees to provide or cause to be provided to the
Subadviser on an ongoing basis, such information as is reasonably
requested by the Subadviser for performance by the Subadviser of its
obligations under this Agreement, and the Subadviser shall not be in
breach of any term of this Agreement or be deemed to have acted
negligently if the Manager fails to provide or cause to be provided such
requested information and the Subadviser relies on the information most
recently furnished to the Subadviser; and
(v) the Manager will promptly provide the Subadviser with any guidelines
and procedures applicable to the Subadviser or the Portfolio adopted from
time to time by the Board of Directors of the Fund and agrees to promptly
provide the Subadviser copies of all amendments thereto.
C. The Subadviser, at its expense, will furnish: (i) all necessary
investment and management facilities and investment personnel, including
salaries, expenses and fees of any personnel required for it to faithfully
perform its duties under this Agreement; and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the investment affairs of the Portfolio (excluding that
necessary for the determination of net asset value and shareholder accounting
services). The Subadviser shall not be obligated to pay any expenses of or for
the Portfolio not expressly assumed by the Subadviser pursuant to this Section
3.
D. The Subadviser will select brokers and dealers to effect all portfolio
transactions subject to the conditions set forth herein. The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is directed at
all times to seek to execute brokerage transactions for the Portfolio in
accordance with such policies or practices as may be established by the Board
of Directors and described in the Fund's currently effective Prospectus and
SAI, as amended from time to time. In placing orders for the purchase or sale
of investments for the Portfolio, in the name of the Portfolio or its
nominees, the Subadviser shall use its best efforts to obtain for the
Portfolio the most favorable price and best execution available, considering
all of the circumstances, and shall maintain records adequate to demonstrate
compliance with this requirement.
4
<PAGE>
Subject to the appropriate policies and procedures approved by the Board of
Directors, the Subadviser may, to the extent authorized by Section 28(e) of
the Securities and Exchange Act of 1934, cause the Portfolio to pay a broker
or dealer that provides brokerage or research services to the Manager, the
Subadviser, or the Portfolio an amount of commissions for effecting a
portfolio transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Subadviser
determines, in good faith, that such amount of commission is reasonable in
relationship to the value of such brokerage or research services provided
viewed in terms of that particular transaction or the Subadviser's overall
responsibilities to the Portfolio or its other advisory clients. To the extent
authorized by said Section 28(e) and the Fund's Board of Directors, the
Subadviser shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason of such
action. In addition, subject to seeking the most favorable price and best
execution available, the Subadviser may also consider sales of shares of the
Fund as a factor in the selection of brokers and dealers.
E. On occasions when the Subadviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other clients of the
Subadviser, the Subadviser to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold to attempt to obtain a more favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to the Portfolio and to its other clients.
F. The Subadviser will maintain all accounts, books and records with respect
to the Portfolio as are required of an investment adviser of a registered
investment company pursuant to the Investment Company Act and Advisers Act and
the rules thereunder.
4. COMPENSATION OF THE SUBADVISER. The Investment Manager will pay the
Subadviser, with respect to the Portfolio, the compensation specified in
Appendix A to this Agreement. Payments shall be made to the Subadviser on the
first day of each month; however, this advisory fee will be calculated on the
daily average value of the Portfolio's assets and accrued on a daily basis.
5. NON-EXCLUSIVITY. The Investment Manager agrees that the services of the
Subadviser are not to be deemed exclusive and the Subadviser is free to act as
investment manager to various investment companies and as fiduciary for other
managed accounts. The Subadviser shall, for all purposes herein, be deemed to
be an
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independent contractor and shall, unless otherwise provided or authorized,
have no authority to act for or represent the Fund or the Investment Manager
in any way or otherwise be deemed an agent of the Fund or Investment Manager
other than in furtherance of its duties and responsibilities as set forth in
this Subadvisory Agreement.
6. BOOKS AND RECORDS. The Subadviser agrees that all books and records which
it maintains for the Fund are the Fund's property, and, in the event of
termination of this Agreement for any reason, the Subadviser agrees promptly
to return to the Fund, free from any claim or retention of rights by the
Subadviser, all records relating to the Portfolio. The Subadviser also agrees
upon request of the Investment Manager or the Fund, promptly to surrender the
books and records to either party or make the book and records available for
inspection by representatives of regulatory authorities. In connection with
its duties hereunder, the Subadviser further agrees to maintain, prepare and
preserve books and records in accordance with the Investment Company Act and
rules thereunder, including but not limited to, Rule 31a-1 and 31a-2.
The Subadviser will use records or information obtained under this Agreement
only for the purposes contemplated hereby, and will not disclose such records
or information in any manner other than expressly authorized by the Fund, or
if disclosure is expressly required by applicable federal or state regulatory
authorities or by this Agreement. The Subadviser will furnish any
informational reports requested by any state insurance commissioner.
7. LIABILITY. The Subadviser will not be liable for any loss suffered by the
Fund in connection with any investment policy established by the Fund for the
purchase, sale or redemption of any securities at the direction of the Board
of Directors of the Fund or the Investment Manager. Nothing herein contained
shall be construed to protect the Subadviser against any liability resulting
from the willful misfeasance, bad faith or [gross] negligence of the
Subadviser in the performance of its duties or from reckless disregard of its
obligations and duties under this Subadviser Agreement.
8. RELIANCE ON DOCUMENTS. The Board of Directors of the Fund or its officers
or agent will provide timely information to the Subadviser regarding such
matters as purchases and redemptions of shares in the Portfolio, the cash
requirements, and cash available for investment in the Portfolio, and all
other information as may be reasonably necessary or appropriate in order for
the Subadviser to perform its responsibilities hereunder.
Neither the Fund or the Investment Manager, nor their respective designees
or agents, shall use any material describing or identifying the Subadviser or
its affiliates
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without the prior consent of the Subadviser. Any material utilized by the
Fund, the Investment Manager or their respective designees or agents which
contain information as to the Subadviser and/or its affiliates shall be
submitted to the Subadviser for approval prior to use, not less than five (5)
business days before such approval is requested.
The Investment Manager has herewith furnished the Subadviser copies of the
Fund's Prospectus, Articles of Incorporation and By-Laws as currently in
effect and agrees during the continuance of the Agreement to furnish the
Subadviser copies of any amendments or supplements thereto before or at the
time the amendments or supplements become effective. The Subadviser will be
entitled to rely on all such documents furnished to it by the Investment
Manager or the Fund.
9. DURATION AND TERMINATION OF THE AGREEMENT. This Subadvisory Agreement
shall become effective as of the date first written above and remain in force
until [date]. Thereafter, it shall continue in effect from year to year,
but only so long as such continuance is specifically approved at least
annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Portfolio, and (b) a
majority of those directors who are not parties to this Subadvisory Agreement,
not interested persons of any party to this Subadvisory Agreement, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may be terminated, without the payment of any penalty, by the Board
of Directors of the Fund, by a vote of a majority of the outstanding shares of
the Portfolio, or by the Investment Manager on sixty days' written notice to
the Subadviser, or by the Subadviser on sixty days' written notice to the Fund
or the Investment Manager. Termination by the Board of Directors or by the
Investment Manager shall be subject to shareholder approval to the extent
legally required. This Agreement shall automatically terminate in the event of
its assignment or in the event of termination of the Investment Management
Agreement.
10. AMENDMENTS OF THE AGREEMENT. Except to the extent permitted by the
Investment Company Act or the rules or regulations thereunder or pursuant to
any exemptive relief granted by the Securities and Exchange Commission
("SEC"), this Agreement may be amended by the parties only if such amendment,
if material, is specifically approved by the vote of a majority of the
outstanding voting securities of the Portfolio (unless such approval is not
required by Section 15 of the Investment Company Act as interpreted by the SEC
or its staff) and by the vote of a majority of the Independent Directors cast
in person at a meeting called for the purpose of voting on such approval. The
required shareholder approval shall be effective with respect to the Portfolio
if a majority of the outstanding voting securities of the Portfolio vote to
approve the amendment, notwithstanding that amendment may not have been
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approved by a majority of the outstanding voting securities of any other
portfolio affected by the amendment or all the portfolios of the Fund.
11. DEFINITIONS. The terms "assignment", "interested person", and "majority
of the outstanding voting securities", when used in this Agreement, shall have
the respective meaning specified under the Investment Company Act and the
rules thereunder.
12. NOTICES. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be given in writing, delivered,
or mailed postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
(b) If to the Investment Manager:
Chubb Investment Advisory Corporation
One Granite Place
Concord, NH 03301
Attn: Ronald Angarella
Facsimile (603) 224-1691
13. GOVERNING LAW. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New Hampshire as at
the time in effect and the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable. To the extent
that the applicable law of the State of New Hampshire or any of the provisions
herein, conflict with the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable, the latter
shall control.
14. USE OF SUBADVISER'S NAME. Neither the Fund nor the Manager or any
affiliate or agent thereof shall make reference to or use the name, and any
derivative thereof or logo associated with that name, of the Subadviser or any
of its affiliates in any advertising or promotional materials without the
prior approval of the Subadviser, which approval shall not be unreasonably
withheld or delayed. Upon termination of this Agreement, the Manager and the
Fund shall forthwith cease to use such name (or derivative or logo) as soon as
reasonably practicable.
15. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement of the parties with respect to the Portfolio.
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<PAGE>
16. HEADINGS. The headings in the sections of this Agreement are inserted
for convenience of reference only and shall not constitute a part hereof.
17. SEVERABILITY. Should any portion of this Agreement for any reason be
held to be void in law or in equity, the Agreement shall be construed, insofar
as is possible, as if such portion had never been contained herein.
Chubb Investment Advisory Corporation
Attest: ______________________________ By: __________________________________
Title: _______________________________ Title: _______________________________
Subadviser
Attest: ______________________________ By: __________________________________
Title: _______________________________ Title: _______________________________
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EXHIBIT B-1
JANUS CAPITAL CORPORATION
FORM OF INVESTMENT SUBADVISORY AGREEMENT
THIS AGREEMENT, made this day of , 199 , is between CHUBB INVESTMENT
ADVISORY CORPORATION, a Tennessee corporation with offices at One Granite
Place, Concord, New Hampshire, 03301 (the "Investment Manager" or "Manager")
and Janus Capital Corporation, (the "Subadviser") a Colorado corporation with
offices at 100 Fillmore Street, Suite 300, Denver, Colorado 80206.
WITNESSETH:
WHEREAS, Chubb America Fund, Inc. (the "Fund") is engaged in business as a
diversified open-end management investment company and is registered as such
under the Investment Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund issues separate classes or series of stock, each of which
represents a separate portfolio of investments;
WHEREAS, the Fund's shareholders are and will be separate accounts
maintained by insurance companies for variable life insurance policies under
which income, gains, losses, whether or not realized, from assets allocated to
such accounts are, in accordance with the Policies, credited to or charged
against such accounts without regard to other income, gains, or losses of such
insurance companies;
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the Portfolio, as set forth in an Investment Management Agreement
between the Fund and the Investment Manager dated , 199 , (the "Investment
Management Agreement") pursuant to which it was agreed that the Investment
Manager may contract with the Subadviser, or other parties for certain
investment management services;
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act");
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WHEREAS, the Investment Manager desires to retain the Subadviser to render
investment management services to the Fund's Capital Growth Portfolio (the
"Portfolio") in the manner and on the terms hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained the Investment Manager and the Subadviser hereby agree
as follows:
1. APPOINTMENT OF THE SUBADVISER. The Manager hereby appoints the Subadviser
to act as an investment subadviser for the Portfolio and to manage the
investment and reinvestment of the assets of the Portfolio, subject to the
supervision of the Directors of the Fund and the terms and conditions of this
Agreement. The Subadviser will be an independent contractor and will have no
authority to act for or represent the Fund or Manager in any way or otherwise
be deemed an agent of the Fund or Manager except as expressly authorized in
this Agreement or another writing by the Fund, Manager and the Subadviser.
Notwithstanding the foregoing, the Subadviser may execute account
documentation, agreements, contracts and other documents as the Subadviser may
be requested by brokers, dealers, counterparts and other persons in connection
with the Subadviser's management of the assets of the Portfolio, provided that
the Subadviser receives the express agreement and consent of the Manager
and/or the Fund's Board of Directors to execute such documentation,
agreements, contracts and other documents. In such respect, and only for this
limited purpose, the Subadviser shall act at the Manager and/or the Fund's
agent and attorney-in-fact.
2. DUTIES OF THE SUBADVISER. The Subadviser hereby agrees, subject to the
supervision of the Investment Manager and the Board of Directors of the Fund,
(1) to act as the Subadviser of the Portfolio, (2) to manage the investment
and reinvestment of the assets of the Portfolio for the period and on the
terms and conditions set forth in this Agreement, and (3) during the term
hereof, to render the services and to assume the obligations herein set forth
in return for the compensation provided for herein and to bear all expenses of
its performance of such services and obligations.
3. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE FUND
A. The Subadviser will manage the investment and reinvestment of the assets
of the Portfolio and determine the composition of the assets of the Portfolio,
subject always to the direction and control of the Directors of the Fund and
the Manager and in accordance with the provisions of the Fund's registration
statement, as amended from time to time. In fulfilling its obligations to
manage the investment and reinvestment of the assets of the Portfolio, the
Subadviser will:
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(i) obtain and evaluate pertinent statistical, financial, and other
information relating to individual companies or industries, the securities
of which are included in the Portfolio or are under consideration for
inclusion in the Portfolio;
(ii) formulate and implement a continuous investment program for the
Portfolio (a) consistent with the investment objectives, policies, and
restrictions of the Portfolio as stated in the Fund's Agreement and
Articles of Incorporation, Bylaws, and such Portfolio's currently
effective Prospectus and Statement of Additional Information ("SAI") as
amended from time to time, and (b) in compliance with the requirements
applicable to both regulated Investment companies and segregated asset
accounts under Subchapters M and L of the Internal Revenue Code of 1986,
as amended ("IRC"), and requirements applicable to registered investment
companies under applicable laws;
(iii) take whatever steps are necessary to implement the investment
program for the Portfolio by the purchase and sale of securities and other
investments authorized under the Fund's Agreement and Articles of
Incorporation, Bylaws, and such Portfolio's currently effective Prospectus
and SAI, including the placing of orders for such purchases and sales;
(iv) regularly report to the Directors of the Fund and the Manager with
respect to the implementation of the investment program and, in addition,
provide such statistical information and special reports concerning the
Portfolio and/or important developments materially affecting the
investments held, or contemplated to be purchased, by the Portfolio, as
may reasonably be requested by the Manager or the Directors of the Fund,
including attendance at Board of Directors Meetings, as reasonably
requested, to present such information and reports to the Board, provided
that Subadviser shall not be responsible for fund accounting;
(v) will assist in suggesting methods for determining fair value of
certain portfolio securities when market quotations are not readily
available for the purpose of calculating the Portfolio's net asset value
in accordance with procedures and methods established by the Directors of
the Fund;
(vi) establish appropriate interfaces with the Fund's Manager in order
to provide such Manager with all necessary information requested by the
Manager and required to be provided by Subadviser hereunder.
B. To facilitate the Subadviser's fulfillment of its obligations under this
Agreement, the Manager will undertake the following:
(i) the Manager agrees to provide the Subadviser with all amendments or
supplements to the Registration Statement, the Fund's Agreement and
Articles of Incorporation, and Bylaws prior to filing with SEC;
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<PAGE>
(ii) the Manager agrees, on an ongoing basis, to notify the Subadviser
expressly in writing of each change in the fundamental and nonfundamental
investment policies of the Portfolio prior to the effective date of such
changes;
(iii) the Manager agrees to provide or cause to be provided to the
Subadviser such assistance as may be reasonably requested by the
Subadviser in connection with its activities pertaining to the Portfolio
under this Agreement, including, without limitation, information
concerning the Portfolio, its available funds, or funds that may
reasonably become available for investment, and information as to the
general condition of the Portfolio's affairs and information to enable
Subadviser to monitor the "short-short" test and 90% source tax of
Subchapter M of the IRC;
(iv) the Manager agrees to provide or cause to be provided to the
Subadviser on an ongoing basis, such information as is reasonably
requested by the Subadviser for performance by the Subadviser of its
obligations under this Agreement, and the Subadviser shall not be in
breach of any term of this Agreement or be deemed to have acted
negligently if the Manager fails to provide or cause to be provided such
requested information and the Subadviser relies on the information most
recently furnished to the Subadviser; and
(v) the Manager will promptly provide the Subadviser with any guidelines
and procedures applicable to the Subadviser or the Portfolio adopted from
time to time by the Board of Directors of the Fund and agrees to promptly
provide the Subadviser copies of all amendments thereto.
C. The Fund and the Investment Manager shall not, without the prior written
consent of the Subadviser, make representations in any disclosure document,
advertisement, sales literature or other promotional material regarding the
Subadviser or its affiliates. The Investment Manager shall hold harmless and
indemnify the Subadviser against any loss, liability, cost, damage or expense
(including reasonable attorneys fees and costs) arising out of any use of any
disclosure documents, advertisement, sales literature or other promotional
material without prior written consent by the Subadviser.
D. The Subadviser, at its expense, will furnish all necessary investment and
management facilities and investment personnel, including salaries, expenses
and fees of any personnel required for it to faithfully perform its duties
under this Agreement. The Fund or Investment Manager assumes and shall pay all
expenses incidental to their respective organization, operation and business
not specifically assumed or agreed to be paid by the Subadviser pursuant
hereto, including, but not limited to, investment adviser fees; any
compensation, fees, or reimbursements which
4
<PAGE>
the Fund pays to its Directors; compensation of the Fund's custodian, transfer
agent, registrar and dividend disbursing agent; legal, accounting, audit and
printing expenses; administrative, clerical, record-keeping and bookkeeping
expenses; brokerage commissions and all other expenses in connection with
execution of portfolio transactions (including any appropriate commissions
paid to the Subadviser or its affiliates for effecting exchange listed, over-
the-counter or other securities transactions); interest, all federal, state
and local taxes (including stamp, excise, income and franchise taxes) costs of
stock certificates and expenses of delivering such certificates to the
purchaser thereof; expenses of shareholders' meetings and of preparing,
printing and distributing proxy statements, notices, and reports to
shareholders; regulatory authorities; all expenses incurred in complying with
all federal and state laws and the laws of any foreign country applicable to
the issue, offer, or sale of shares for the Fund, including, but not limited
to all costs involved in the registration or qualification of shares of the
Fund for sale in any jurisdiction, the costs of portfolio pricing services and
systems for compliance with blue sky laws, and all costs involved in
preparing, printing and mailing prospectuses and statements of additional
information of the Fund; and all fees, dues and other expenses incurred by the
Fund in connection with the membership in any trade association or other
investment company organization.
E. The Subadviser will select brokers and dealers to effect all portfolio
transactions subject to the conditions set forth herein. The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is directed at
all times to seek to execute brokerage transactions for the Portfolio in
accordance with such policies or practices as may be established by the Board
of Directors and described in the Fund's currently effective Prospectus and
SAI, as amended from time to time. In placing orders for the purchase or sale
of investments for the Portfolio, in the name of the Portfolio or its
nominees, the Subadviser shall use its best efforts to obtain for the
Portfolio the most favorable price and best execution available, considering
all of the circumstances, and shall maintain records adequate to demonstrate
compliance with this requirement.
Subject to the appropriate policies and procedures approved by the Board of
Directors, the Subadviser may, to the extent authorized by Section 28(e) of
the Securities and Exchange Act of 1934, cause the Portfolio to pay a broker
or dealer that provides brokerage or research services to the Manager, the
Subadviser, or the Portfolio an amount of commissions for effecting a
portfolio transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Subadviser
determines, in good faith, that such amount of commission is reasonable in
relationship to the value of such brokerage or research services provided
viewed in terms of that particular transaction or the Subadviser's
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<PAGE>
overall responsibilities to the Portfolio or its other advisory clients. To
the extent authorized by said Section 28(e) and the Fund's Board of Directors,
the Subadviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of
such action. In addition, subject to seeking the most favorable price and best
execution available, the Subadviser may also consider sales of shares of the
Fund as a factor in the selection of brokers and dealers.
F. On occasions when the Subadviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other clients of the
Subadviser, the Subadviser to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold to attempt to obtain a more favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to the Portfolio and to its other clients.
The Subadviser may perform its services through any employee, officer or
agent of the Subadviser and the Investment Manager and the Fund shall not be
entitled to the advice, recommendation or judgment of any specific person. The
Subadviser makes no representation or warranty, express or implied, that any
level of performance or investment results will be achieved by the Capital
Growth Portfolio or that such Portfolio will perform comparably with any
standard or index, including other clients of the Subadviser, whether public
or private.
G. The Subadviser will maintain all accounts, books and records with respect
to the Portfolio as are required of an investment adviser of a registered
investment company pursuant to the Investment Company Act and Advisers Act and
the rules thereunder.
4. COMPENSATION OF THE SUBADVISER. The Investment Manager will pay the
Subadviser, with respect to the Portfolio, the compensation specified in
Appendix A to this Agreement. Payments shall be made to the Subadviser on the
first day of each month; however, this advisory fee will be calculated on the
daily average value of the Portfolio's assets and accrued on a daily basis.
5. NON-EXCLUSIVITY. The Investment Manager agrees that the services of the
Subadviser are not to be deemed exclusive and the Subadviser is free to act as
investment manager to various investment companies and as fiduciary for other
managed accounts. The Subadviser shall, for all purposes herein, be deemed to
be an independent contractor and shall, unless otherwise provided or
authorized, have no authority to act for or represent the Fund or the
Investment Manager in any way or
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otherwise be deemed an agent of the Fund or Investment Manager other than in
furtherance of its duties and responsibilities as set forth in this
Subadvisory Agreement.
6. BOOKS AND RECORDS. The Subadviser agrees that all books and records which
it maintains for the Fund are the Fund's property, and, in the event of
termination of this Agreement for any reason, the Subadviser agrees promptly
to return to the Fund, free from any claim or retention of rights by the
Subadviser, all records relating to the Portfolio. The Subadviser also agrees
upon request of the Investment Manager or the Fund, promptly to surrender the
books and records to either party or make the book and records available for
inspection by representatives of regulatory authorities. In connection with
its duties hereunder, the Subadviser further agrees to maintain, prepare and
preserve books and records in accordance with the Investment Company Act and
rules thereunder, including but not limited to, Rule 31a-1 and 31a-2.
The Subadviser will use records or information obtained under this Agreement
only for the purposes contemplated hereby, and will not disclose such records
or information in any manner other than expressly authorized by the Fund, or
if disclosure is expressly required by applicable federal or state regulatory
authorities or by this Agreement. The Subadviser will furnish any
informational reports requested by any state insurance commissioner.
7. LIABILITY. Except as may otherwise be provided by the Investment Company
Act, neither the Subadviser nor its officers, directors, employees or agents
shall be subject to any liability to the Investment Manager, the Fund or any
shareholder of the Fund for any error of judgment, mistake of law or any loss
arising out of any investment or other act or omission in the course of,
connected with or arising out of any service to be rendered hereunder, except
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its
obligations and duties under this Agreement. The Investment Manager shall hold
harmless and indemnify the Subadviser for any loss, liability, cost, damage or
expense (including reasonable attorneys fees and costs) arising from any claim
or demand by the Fund or any past or present shareholder of the fund that is
not arising from Subadviser's willful misfeasance, bad faith or gross
negligence.
8. RELIANCE ON DOCUMENTS. The Board of Directors of the Fund or its officers
or agent will provide timely information to the Subadviser regarding such
matters as purchases and redemptions of shares in the Portfolio, the cash
requirements, and cash available for investment in the Portfolio, and all
other information as may be reasonably necessary or appropriate in order for
the Subadviser to perform its
7
<PAGE>
responsibilities hereunder. The Subadviser has provided the Investment Manager
with a copy of its current Form ADV.
Neither the Fund or the Investment Manager, nor their respective designees
or agents, shall use any material describing or identifying the Subadviser or
its affiliates without the prior consent of the Subadviser. Any material
utilized by the Fund, the Investment Manager or their respective designees or
agents which contain information as to the Subadviser and/or its affiliates
shall be submitted to the Subadviser for approval prior to use, not less than
five (5) business days before such approval is requested.
The Investment Manager has herewith furnished the Subadviser copies of the
Fund's Prospectus, Statement of Additional Information, Articles of
Incorporation and By-Laws as currently in effect and agrees during the
continuance of the Agreement to furnish the Subadviser copies of any
amendments or supplements thereto before or at the time the amendments or
supplements become effective. The Subadviser will be entitled to rely on all
such documents furnished to it by the Investment Manager or the Fund.
9. DURATION AND TERMINATION OF THE AGREEMENT. This Subadvisory Agreement
shall become effective as of the date first written above and remain in force
until [date]. Thereafter, it shall continue in effect from year to year,
but only so long as such continuance is specifically approved at least
annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Portfolio, and (b) a
majority of those directors who are not parties to this Subadvisory Agreement,
not interested persons of any party to this Subadvisory Agreement, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may be terminated, without the payment of any penalty, by the Board
of Directors of the Fund, by a vote of a majority of the outstanding shares of
the Portfolio, or by the Investment Manager on sixty days' written notice to
the Subadviser, or by the Subadviser on sixty days' written notice to the Fund
or the Investment Manager. Termination by the Board of Directors or by the
Investment Manager shall be subject to shareholder approval to the extent
legally required. This Agreement shall automatically terminate in the event of
its assignment or in the event of termination of the Investment Management
Agreement.
10. AMENDMENTS OF THE AGREEMENT. Except to the extent permitted by the
Investment Company Act or the rules or regulations thereunder or pursuant to
any exemptive relief granted by the Securities and Exchange Commission
("SEC"), this Agreement may be amended by the parties only if such amendment,
if material, is specifically approved by the vote of a majority of the
outstanding voting securities of
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the Portfolio (unless such approval is not required by Section 15 of the
Investment Company Act as interpreted by the SEC or its staff) and by the vote
of a majority of the Independent Directors cast in person at a meeting called
for the purpose of voting on such approval. The required shareholder approval
shall be effective with respect to the Portfolio if a majority of the
outstanding voting securities of the Portfolio vote to approve the amendment,
notwithstanding that amendment may not have been approved by a majority of the
outstanding voting securities of any other portfolio affected by the amendment
or all the portfolios of the Fund.
11. DEFINITIONS. The terms "assignment", "interested person", and "majority
of the outstanding voting securities", when used in this Agreement, shall have
the respective meaning specified under the Investment Company Act and the
rules thereunder.
12. NOTICES. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be given in writing, delivered,
or mailed postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
(b) If to the Investment Manager:
Chubb Investment Advisory Corporation
One Granite Place
Concord, NH 03301
Attn: Ronald Angarella
Facsimile (603) 224-1691
13. GOVERNING LAW. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New Hampshire as at
the time in effect and the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable. To the extent
that the applicable law of the State of New Hampshire or any of the provisions
herein, conflict with the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable, the latter
shall control.
14. USE OF SUBADVISER'S NAME. Neither the Fund nor the Manager or any
affiliate or agent thereof shall make reference to or use the name, and any
derivative thereof or logo associated with that name, of the Subadviser or any
of its affiliates in any advertising or promotional materials without the
prior approval of the Subadviser, which approval shall not be unreasonably
withheld or delayed. Upon termination of
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this Agreement, the Manager and the Fund shall forthwith cease to use such
name (or derivative or logo) as soon as reasonably practicable.
15. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement of the parties with respect to the Portfolio.
16. HEADINGS. The headings in the sections of this Agreement are inserted
for convenience of reference only and shall not constitute a part hereof.
17. SEVERABILITY. Should any portion of this Agreement for any reason be
held to be void in law or in equity, the Agreement shall be construed, insofar
as is possible, as if such portion had never been contained herein.
Chubb Investment Advisory Corporation
Attest: ______________________________ By: __________________________________
Title: _______________________________ Title: _______________________________
Subadviser
Attest: ______________________________ By: __________________________________
Title: _______________________________ Title: _______________________________
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EXHIBIT B-2
FORM OF INVESTMENT SUBADVISORY AGREEMENT
THIS AGREEMENT, made this day of , 199 , is between CHUBB INVESTMENT
ADVISORY CORPORATION, a Tennessee corporation with offices at One Granite
Place, Concord, New Hampshire, 03301 (the "Investment Manager" or "Manager")
and Massachusetts Financial Services Company, (the "Subadviser") a
corporation with offices at 500 Boylston Street, Boston, Massachusetts 02116.
WITNESSETH:
WHEREAS, Chubb America Fund, Inc. (the "Fund") is engaged in business as a
diversified open-end management investment company and is registered as such
under the Investment Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund issues separate classes or series of stock, each of which
represents a separate portfolio of investments;
WHEREAS, the Fund's shareholders are and will be separate accounts
maintained by insurance companies for variable life insurance policies under
which income, gains, losses, whether or not realized, from assets allocated to
such accounts are, in accordance with the Policies, credited to or charged
against such accounts without regard to other income, gains, or losses of such
insurance companies;
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the Portfolio, as set forth in an Investment Management Agreement
between the Fund and the Investment Manager dated , 199 , (the "Investment
Management Agreement") pursuant to which it was agreed that the Investment
Manager may contract with the Subadviser, or other parties for certain
investment management services;
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act");
WHEREAS, the Investment Manager desires to retain the Subadviser to render
investment management services to the Fund's Emerging Growth Portfolio and
Money Market Portfolio (the "Portfolios") in the manner and on the terms
hereinafter set forth;
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NOW, THEREFORE, in consideration of the premises and the convenants
hereinafter contained the Investment Manager and the Subadviser hereby agree
as follows:
1. APPOINTMENT OF THE SUBADVISER. The Manager hereby appoints the Subadviser
to act as an investment subadviser for the Portfolio and to manage the
investment and reinvestment of the assets of the Portfolio, subject to the
supervision of the Directors of the Fund and the terms and conditions of this
Agreement. The Subadviser will be an independent contractor and will have no
authority to act for or represent the Fund or Manager in any way or otherwise
be deemed an agent of the Fund or Manager except as expressly authorized in
this Agreement or another writing by the Fund, Manager and the Subadviser.
Notwithstanding the foregoing, the Subadviser may execute account
documentation, agreements, contracts and other documents as the Subadviser may
be requested by brokers, dealers, counterparties and other persons in
connection with the Subadviser's management of the assets of the Portfolio,
provided that the Subadviser receives the express agreement and consent of the
Manager and/or the Fund's Board of Directors to execute such documentation,
agreements, contracts and other documents. In such respect, and only for this
limited purpose, the Subadviser shall act at the Manager and/or the Fund's
agent and attorney-in-fact.
2. DUTIES OF THE SUBADVISER. The Subadviser hereby agrees, subject to the
supervision of the Investment Manager and the Board of Directors of the Fund,
(1) to act as the Subadviser of the Portfolio, (2) to manage the investment
and reinvestment of the assets of the Portfolio for the period and on the
terms and conditions set forth in this Agreement, and (3) during the term
hereof, to render the services and to assume the obligations herein set forth
in return for the compensation provided for herein and to bear all expenses of
its performance of such services and obligations.
3. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE FUND
A. The Subadviser will manage the investment and reinvestment of the assets
of the Portfolio and determine the composition of the assets of the Portfolio,
subject always to the direction and control of the Directors of the Fund and
the Manager and in accordance with the provisions of the Fund's registration
statement, as amended from time to time. In fulfilling its obligations to
manage the investment and reinvestment of the assets of the Portfolio, the
Subadviser will:
(i) obtain and evaluate pertinent economic, statistical, financial, and
other information affecting the economy generally and individual companies
or industries, the securities of which are included in the Portfolio or
are under consideration for inclusion in the Portfolio;
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(ii) formulate and implement a continuous investment program for the
Portfolio (a) consistent with the investment objectives, policies, and
restrictions of the Portfolio as stated in the Fund's Agreement and
Articles of Incorporation, Bylaws, and such Portfolio's currently
effective Prospectus and Statement of Additional Information ("SAI") as
amended from time to time, and (b) in compliance with the requirements
applicable to both regulated investment companies and segregated asset
accounts under Subchapters M and L of the Internal Revenue Code of 1986,
as amended, and requirements applicable to registered investment companies
under applicable laws;
(iii) take whatever steps are necessary to implement the investment
program for the Portfolio by the purchase and sale of securities and other
investments authorized under the Fund's Agreement and Articles of
Incorporation, Bylaws, and such Portfolio's currently effective Prospectus
and SAI, including the placing of orders for such purchases and sales;
(iv) subject to the consent of the Subadvisor, regularly report to the
Directors of the Fund and the Manager with respect to the implementation
of the investment program and, in addition and subject to the consent of
the Subadviser, provide such statistical information and special reports
concerning the Portfolio and/or important developments materially
affecting the investments held, or contemplated to be purchased, by the
Portfolio, as may reasonably be requested by the Manager or the Directors
of the Fund, including attendance at Board of Directors Meetings, as
reasonably requested, to present such information and reports to the
Board.
B. To facilitate the Subadviser's fulfillment of its obligations under this
Agreement, the Manager will undertake the following:
(i) the Manager agrees promptly to provide the Subadviser with all
amendments or supplements to the Registration Statement, the Fund's
Agreement and Articles of Incorporation, and Bylaws;
(ii) the Manager agrees, on an ongoing basis, to notify the Subadviser
expressly in writing of each change in the fundamental and nonfundamental
investment policies of the Portfolio;
(iii) the Manager agrees to provide or cause to be provided to the
Subadviser with such assistance as may be reasonably requested by the
Subadviser in connection with its activities pertaining to the Portfolio
under this Agreement, including, without limitation, information
concerning the Portfolio, its available funds, or funds that may
reasonably become available for investment, and information as to the
general condition of the Portfolio's affairs;
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(iv) the Manager agrees to provide or cause to be provided to the
Subadviser on an ongoing basis, such information as is reasonably
requested by the Subadviser for performance by the Subadviser of its
obligations under this Agreement, and the Subadviser shall not be in
breach of any term of this Agreement or be deemed to have acted
negligently if the Manager fails to provide or cause to be provided such
requested information and the Subadviser relies on the information most
recently furnished to the Subadviser;
(v) the Manager will promptly provide the Subadviser with any guidelines
and procedures applicable to the Subadviser or the Portfolio adopted from
time to time by the Board of Directors of the Fund and agrees to promptly
provide the Subadviser copies of all amendments thereto; and
(vi) the Board of Directors of the Fund or its officers or agent will
provide timely information to the Subadviser regarding such matters as
purchases and redemptions of shares in the Portfolio, the cash
requirements, and cash available for investment in the Portfolio and all
other information as may be reasonably necessary or appropriate in order
for the Subadviser to perform its responsibilities hereunder.
C. The Subadviser, at its expense, will furnish: (i) all necessary
investment and management facilities and investment personnel, including
salaries, expenses and fees of any personnel required for it to faithfully
perform its duties under this Agreement; and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment required for it to
faithfully perform its duties under this agreement. The Subadviser shall not
be obligated to pay any expenses of or for the Portfolio not expressly assumed
by the Subadviser pursuant to this Section 3.
D. The Subadviser will select brokers and dealers to effect all portfolio
transactions subject to the conditions set forth herein. The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is directed at
all times to seek to execute brokerage transactions for the Portfolio in
accordance with such policies or practices as may be established by the Board
of Directors and described in the Fund's currently effective Prospectus and
SAI, as amended from time to time. In placing orders for the purchase or sale
of investments for the Portfolio, in the name of the Portfolio or its
nominees, the Subadviser shall use its best efforts to obtain for the
Portfolio the most favorable price and best execution available, considering
all of the circumstances, and shall maintain records adequate to demonstrate
compliance with this requirement.
Subject to the appropriate policies and procedures approved by the Board of
Directors, the Subadviser may, to the extent authorized by Section 28(e) of
the Securities and Exchange Act of 1934, cause the Portfolio to pay a broker
or dealer
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that provides brokerage or research services to the Manager, the Subadviser,
or the Portfolio an amount of commissions for effecting a portfolio
transaction in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if the Subadviser
determines, in good faith, that such amount of commission is reasonable in
relationship to the value of such brokerage or research services provided
viewed in terms of that particular transaction or the Subadviser's overall
responsibilities to the Portfolio or its other advisory clients. To the extent
authorized by said Section 28(e) and the Fund's Board of Directors, the
Subadviser shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason of such
action. In addition, subject to seeking the most favorable price and best
execution available, the Subadviser may also consider sales of shares of the
Fund as a factor in the selection of brokers and dealers.
E. On occasions when the Subadviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other clients of the
Subadviser, the Subadviser to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold to attempt to obtain a more favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to the Portfolio and to its other clients.
F. The Subadviser will maintain all accounts, books and records with respect
to the Portfolio as are required of an investment adviser of a registered
investment company pursuant to the Investment Company Act and Advisers Act and
the rules thereunder.
4. COMPENSATION OF THE SUBADVISER. The Investment Manager will pay the
Subadviser, with respect to the Portfolio, the compensation specified in
Appendix A to this Agreement. Payments shall be made to the Subadviser on the
first day of each month; however, this advisory fee will be calculated on the
daily average value of the Portfolio's assets and accrued on a daily basis.
5. NON-EXCLUSIVITY. The Investment Manager agrees that the services of the
Subadviser are not to be deemed exclusive and the Subadviser is free to act as
investment manager to various investment companies and as fiduciary for other
managed accounts.
6. BOOKS AND RECORDS. The Subadviser agrees that all books and records which
it maintains for the Fund are the Fund's property, and, in the event of
termination of this Agreement for any reason, the Subadviser agrees promptly
to
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<PAGE>
return to the Fund, free from any claim or retention of rights by the
Subadviser, all records relating to the Portfolio. The Subadviser also agrees
upon request of the Investment Manager or the Fund, promptly to surrender the
books and records to either party or make the book and records available for
inspection by representatives of regulatory authorities. In connection with
its duties hereunder, the Subadviser further agrees to maintain, prepare and
preserve books and records in accordance with the Investment Company Act and
rules thereunder, including but not limited to, Rule 31a-1 and 31a-2.
The Subadviser will use records or information obtained under this Agreement
only for the purposes contemplated hereby, and will not disclose such records
or information in any manner other than expressly authorized by the Fund, or
if disclosure is expressly required by applicable federal or state regulatory
authorities or by this Agreement. The Subadviser will furnish any
informational reports requested by any state insurance commissioner.
7. LIABILITY. The Subadviser will not be liable for any loss suffered by the
Fund in connection with any investment policy established by the Fund for the
purchase, sale or redemption of any securities at the direction of the Board
of Directors of the Fund or the Investment Manager. Nothing herein contained
shall be construed to protect the Subadviser against any liability resulting
from the willful misfeasance, bad faith or gross negligence of the Subadviser
in the performance of its duties or from reckless disregard of its obligations
and duties under this Subadviser Agreement.
8. DOCUMENTS. Neither the Fund or the Investment Manager, nor their
respective designees or agents, shall use any material describing or
identifying the Subadviser or its affiliates without the prior consent of the
Subadviser. Any material utilized by the Fund, the Investment Manager or their
respective designees or agents which contain information as to the Subadviser
and/or its affiliates shall be submitted to the Subadviser for approval prior
to use, not less than five (5) business days before such approval is
requested.
9. DURATION AND TERMINATION OF THE AGREEMENT. This Subadvisory Agreement
shall become effective as of the date first written above and remain in force
until [date]. Thereafter, it shall continue in effect from year to year,
but only so long as such continuance is specifically approved at least
annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Portfolio, and (b) a
majority of those directors who are not parties to this Subadvisory Agreement,
not interested persons of any party to this Subadvisory Agreement, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may be terminated, without the payment of any penalty, by
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<PAGE>
the Board of Directors of the Fund, by a vote of a majority of the outstanding
shares of the Portfolio, or by the Investment Manager on sixty days' written
notice to the Subadviser, or by the Subadviser on sixty days' written notice
to the Fund or the Investment Manager. Termination by the Board of Directors
or by the Investment Manager shall be subject to shareholder approval to the
extent legally required. This Agreement shall automatically terminate in the
event of its assignment or in the event of termination of the Investment
Management Agreement.
10. AMENDMENTS OF THE AGREEMENT. Except to the extent permitted by the
Investment Company Act or the rules or regulations thereunder or pursuant to
any exemptive relief granted by the Securities and Exchange Commission
("SEC"), this Agreement may be amended by the parties only if such amendment,
if material, is specifically approved by the vote of a majority of the
outstanding voting securities of the Portfolio (unless such approval is not
required by Section 15 of the Investment Company Act as interpreted by the SEC
or its staff) and by the vote of a majority of the Independent Directors cast
in person at a meeting called for the purpose of voting on such approval. The
required shareholder approval shall be effective with respect to the Portfolio
if a majority of the outstanding voting securities of the Portfolio vote to
approve the amendment, notwithstanding that amendment may not have been
approved by a majority of the outstanding voting securities of any other
portfolio affected by the amendment or all the portfolios of the Fund.
11. DEFINITIONS. The terms "assignment", "interested person", and "majority
of the outstanding voting securities", when used in this Agreement, shall have
the respective meaning specified under the Investment Company Act and the
rules thereunder.
12. NOTICES. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be given in writing, delivered,
or mailed postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a)If to the Subadviser:
(b)If to the Investment Manager:
Chubb Investment Advisory Corporation
One Granite Place
Concord, NH 03301
Attn: Ronald Angarella
Facsimile (603) 224-1691
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13. GOVERNING LAW. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the Commonwealth of Massachusetts
as at the time in effect and the applicable provisions of the Investment
Company Act or other federal laws and regulations which may be applicable. To
the extent that the applicable law of the Commonwealth of Massachusetts or any
of the provisions herein, conflict with the applicable provisions of the
Investment Company Act or other federal laws and regulations which may be
applicable, the latter shall control.
14. USE OF SUBADVISER'S NAME. Neither the Fund nor the Manager or any
affiliate or agent thereof shall make reference to or use the name, and any
derivative thereof or logo associated with that name, of the Subadviser or any
of its affiliates in any advertising or promotional materials, without the
prior approval of the Subadviser. Upon termination of this Agreement, the
Manager and the Fund shall forthwith cease to use such name (or derivative or
logo) as soon as reasonably practicable.
15. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement of the parties with respect to the Portfolio.
16. HEADINGS. The headings in the sections of this Agreement are inserted
for convenience of reference only and shall not constitute a part hereof.
17. SEVERABILITY. Should any portion of this Agreement for any reason be
held to be void in law or in equity, the Agreement shall be construed, insofar
as is possible, as if such portion had never been contained herein.
Chubb Investment Advisory Corporation
Attest: ___________________________ By: _____________________________________
Title: ____________________________ Title: __________________________________
Subadviser
Attest: ___________________________ By: _____________________________________
Title: __________________________ Title: __________________________________
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EXHIBIT B-3
FORM OF INVESTMENT SUBADVISORY AGREEMENT
THIS AGREEMENT, made this day of , 199 , is between CHUBB INVESTMENT
ADVISORY CORPORATION, a Tennessee corporation with offices at One Granite
Place, Concord, New Hampshire, 03301 (the "Investment Manager" or "Manager")
and Templeton Global Advisers Limited, (the "Subadviser") a Bahamian
corporation with offices at Nassau, Bahamas.
WITNESSETH:
WHEREAS, Chubb America Fund, Inc. (the "Fund") is engaged in business as a
diversified open-end management investment company and is registered as such
under the Investment Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund issues separate classes or series of stock, each of which
represents a separate portfolio of investments;
WHEREAS, the Fund's shareholders are and will be separate accounts
maintained by insurance companies for variable life insurance policies under
which income, gains, losses, whether or not realized, from assets allocated to
such accounts are, in accordance with the Policies, credited to or charged
against such accounts without regard to other income, gains, or losses of such
insurance companies;
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the Portfolio, as set forth in an Investment Management Agreement
between the Fund and the Investment Manager dated , 199 , (the "Investment
Management Agreement") pursuant to which it was agreed that the Investment
Manager may contract with the Subadviser, or other parties for certain
investment management services;
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940;
WHEREAS, the Investment Manager desires to retain the Subadviser to render
investment management services to the Fund's World Growth Stock Portfolio (the
"Portfolio") in the manner and on the terms hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained the Investment Manager and the Subadviser hereby agree
as follows:
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1. DUTIES OF THE SUBADVISER. The Subadviser hereby agrees, subject to the
instructions and supervision of the Investment Manager: (1) to act as the
Subadviser of the Portfolio, (2) to manage the investment and reinvestment of
the assets of the Portfolio for the period and on the terms and conditions set
forth in this Agreement, and (3) during the term hereof, to render the
services and to assume the obligations herein set forth in return for the
compensation provided for herein and to bear all expenses of its performance
of such services and obligations. It is understood that all acts of the
Subadviser in performing this Agreement are to be performed by it outside the
United States.
2. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE FUND
A. The Subadviser will manage the investment and reinvestment of the assets
of the Portfolio and determine the composition of the assets of the Portfolio,
subject to the instructions and supervision of the Manager and consistent with
the provisions of the Fund's registration statement, as amended from time to
time. In fulfilling its obligations to manage the investment and reinvestment
of the assets of the Portfolio, the Subadviser will:
(i) formulate and implement a continuous investment program for the
Portfolio (a) consistent with the investment objectives, policies, and
restrictions of the Portfolio as stated in the Fund's Agreement and
Articles of Incorporation, Bylaws, and such Portfolio's currently
effective Prospectus and Statement of Additional Information ("SAI") as
amended from time to time, and (b) in compliance with the requirements
communicated in writing by the Investment Manager to the Subadviser and
applicable to regulated investment companies and segregated asset accounts
under Subchapters M and L of the Internal Revenue Code of 1986, as
amended, and applicable to registered investment companies under
applicable laws;
(ii) implement the investment program for the Portfolio by the purchase
and sale of securities and other investments authorized under the Fund's
Agreement and Articles of Incorporation, Bylaws, and such Portfolio's
currently effective Prospectus and SAI, including the placing of orders
for such purchases and sales;
(iii) regularly report to the Directors of the Fund and the Manager with
respect to the implementation of the investment program and, in addition,
provide such statistical information and special reports concerning the
Portfolio and/or important developments materially affecting the
investments held, or contemplated to be purchased, by the Portfolio, as
may reasonably be requested by the Manager or the Directors of the Fund;
(iv) provide determinations of the fair value of certain portfolio
securities when market quotations are not readily available for the
purpose of calculating
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the Portfolio's net asset value in accordance with procedures and methods
established by the Directors of the Fund; and
(v) the Subadviser is not required to furnish any personnel, overhead
items or facilities for the Investment Manager or the Fund, including
trading desk facilities or daily pricing of the Fund's portfolio.
B. To enable the Subadviser's fulfillment of its obligations under this
Agreement, the Manager will undertake the following:
(i) the Manager agrees promptly to provide the Subadviser with all
amendments or supplements to the Registration Statement, the Fund's
Agreement and Articles of Incorporation, and Bylaws;
(ii) the Manager agrees, on an ongoing basis, to notify the Subadviser
expressly in writing of each change in the fundamental and nonfundamental
investment policies of the Portfolio;
(iii) the Manager agrees to provide or cause to be provided to the
Subadviser with such assistance as may be reasonably requested by the
Subadviser in connection with its activities pertaining to the Portfolio
under this Agreement, including, without limitation, information
concerning the Portfolio, its available funds, or funds that may
reasonably become available for investment, and information as to the
general condition of the Portfolio's affairs;
(iv) the Manager agrees to provide or cause to be provided to the
Subadviser on an ongoing basis, such information as is reasonably
requested by the Subadviser for performance by the Subadviser of its
obligations under this Agreement, and the Subadviser shall not be in
breach of any term of this Agreement or be deemed to have acted
negligently if the Manager fails to provide or cause to be provided such
requested information and the Subadviser relies on the information most
recently furnished to the Subadviser; and
(v) the Manager will promptly provide the Subadviser with any guidelines
and procedures applicable to the Subadviser or the Portfolio adopted from
time to time by the Board of Directors of the Fund and agrees to promptly
provide the Subadviser copies of all amendments thereto.
C. The Subadviser, at its expense, will furnish all necessary investment and
management facilities and investment personnel, including salaries, expenses
and fees of any personnel required for it to faithfully perform its duties
under this Agreement.
D. The Subadviser shall be responsible for selecting members of securities
exchanges, brokers and dealers (such members, brokers and dealers being
hereinafter referred to as "brokers") for the execution of the Fund's
portfolio transactions
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consistent with the Fund's brokerage policies and, when applicable, the
negotiation of commissions in connection therewith.
All decisions and placements shall be made in accordance with the following
principles:
(i) Purchase and sale orders will usually be placed with brokers which
are selected by the Subadviser as able to achieve "best execution" of such
orders. "Best execution" shall mean prompt and reliable execution at the
most favorable security price, taking into account the other provisions
hereinafter set forth. The determination of what may constitute best
execution and price in the execution of a securities transaction by a
broker involves a number of considerations, including, without limitation,
the overall direct net economic result to the Fund (involving both price
paid or received and any commissions and other costs paid), the efficiency
with which the transaction is effected, the ability to effect the
transaction at all where a large block is involved, availability of the
broker to stand ready to execute possibly difficult transactions in the
future, and the financial strength and stability of the broker. Such
considerations are judgmental and are weighed by the Subadviser in
determining the overall reasonableness of brokerage commissions.
(ii) In selecting brokers for portfolio transactions, the Subadviser
shall take into account its past experience as to brokers qualified to
achieve "best execution," including brokers who specialize in any foreign
securities held by the Fund.
(iii) The Subadviser is authorized to allocate brokerage business to
brokers who have provided brokerage and research services, as such
services are defined in Section 28(e) of the Securities Exchange Act of
1934 (the "1934 Act"), for the Fund and/or other accounts, if any, for
which the Subadviser exercises investment discretion (as defined in
Section 3(a)(35) of the 1934 Act) and, as to transactions for which fixed
minimum commission rates are not applicable, to cause the Fund to pay a
commission for effecting a securities transaction in excess of the amount
another broker would have charged for effecting that transaction, if the
Subadviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker, viewed in terms of either that particular
transaction or the Subadviser's overall responsibilities with respect to
the Fund and the other accounts, if any, as to which it exercises
investment discretion. In reaching such determination, the Subadviser will
not be required to place or attempt to place a specific dollar value on
the research or execution services of a broker or on the portion of any
commission reflecting either of said services. In demonstrating that such
determinations were made in good faith, the Subadviser
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shall be prepared to show that all commissions were allocated and paid for
purposes contemplated by the Fund's brokerage policy; that the research
services provide lawful and appropriate assistance to the Subadviser in
the performance of its investment decision-making responsibilities; and
that the commissions paid were within a reasonable range. Any evaluation
as to whether commissions were within a reasonable range shall be based on
any available information as to the level of commission known to be
charged by other brokers on comparable transactions, but shall also take
into consideration that (i) obtaining a low commission is deemed secondary
to obtaining a favorable securities price, since it is recognized that
usually it is more beneficial to the Fund to obtain a favorable price than
to pay the lowest commission; and (ii) the quality, comprehensiveness and
frequency of research studies that are provided for the Subadviser are
useful to the Subadviser in performing its advisory services under this
Agreement. Research services provided by brokers to the Subadviser are
considered to be in addition to, and not in lieu of, services required to
be performed by the Subadviser under this Agreement. Research furnished by
brokers through which the Fund effects securities transactions may be used
by the Subadviser for any of its accounts, and not all research may be
used by the Subadviser for the Fund. When execution of portfolio
transactions is allocated to brokers trading on exchanges with fixed
brokerage commission rates, account may be taken of various services
provided by the broker.
(iv) Purchases and sales of portfolio securities within the United
States other than on a securities exchange shall be executed with primary
market makers acting as principal, except where, in the judgment of the
Subadviser, better prices and execution may be obtained on a commission
basis or from other sources.
(v) Sales of the Fund's shares by a broker are one factor among others
to be taken into account in deciding to allocate portfolio transactions
(including agency transactions, principal transactions, purchases in
underwritings or tenders in response to tender offers) for the account of
the Fund to that broker, provided that the broker shall furnish "best
execution," as defined in subparagraph (i) above, and that such allocation
shall be within the scope of the Fund's policies as stated above; provided
further, that in every allocation made to a broker in which the sale of
Fund shares is taken into account, there shall be no increase in the
amount of the commissions or other compensation paid to such broker beyond
a reasonable commission or other compensation determined, as set forth in
subparagraph (iii) above, on the basis of best execution alone or best
execution plus research services, without taking account of or placing any
value upon such sale of the Fund's shares.
E. On occasions when the Subadviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other clients of the
Subadviser, the
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Subadviser to the extent permitted by applicable laws and regulations, may,
but shall be under no obligation to, aggregate the securities to be purchased
or sold to attempt to obtain a more favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Subadviser in the manner the Subadviser
considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to its other clients.
F. The Subadviser will maintain all accounts, books and records with respect
to the Portfolio as are required of an investment adviser of a registered
investment company pursuant to the Investment Company Act and Advisers Act and
the rules thereunder.
3. COMPENSATION OF THE SUBADVISER. The Investment Manager will pay the
Subadviser, with respect to the Portfolio, the compensation specified in
Appendix A to this Agreement. Payments shall be made to the Subadviser on the
first day of each month; however, this advisory fee will be calculated on the
daily average value of the Portfolio's assets and accrued on a daily basis.
4. NON-EXCLUSIVITY. It is understood that the services of the Subadviser are
not deemed to be exclusive, and nothing in this Agreement shall prevent the
Subadviser, or any affiliate thereof, from providing similar services to other
investment companies and other clients, including clients which may invest in
the same types of securities as the Fund, or, in providing such services, from
using information furnished by others. The Subadviser shall, for all purposes
herein, be deemed to be an independent contractor and shall, unless otherwise
provided or authorized, have no authority to act for or represent the Fund or
the Investment Manager in any way or otherwise be deemed an agent of the Fund
or Investment Manager other than in furtherance of its duties and
responsibilities as set forth in this Subadvisory Agreement.
5. BOOKS AND RECORDS. The Subadviser agrees that all books and records which
it maintains concerning the Fund are the Fund's property, and, in the event of
termination of this Agreement for any reason, the Subadviser agrees promptly
to return to the Fund, free from any claim or retention of rights by the
Subadviser, except the right to make and retain copies, all records relating
to the Portfolio. The Subadviser also agrees upon request of the Investment
Manager or the Fund, promptly to surrender the books and records to either
party or make the books and records available for inspection by
representatives of regulatory authorities. The Subadviser will furnish any
information or reports requested by any state insurance commissioner. The
Investment Manager shall reimburse the Subadviser for its costs and expenses
in complying with any such request.
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Each party will use records or information obtained under this Agreement
only for the purposes contemplated hereby, and will not disclose such records
or information (except information which is a matter of public record) in any
manner other than expressly authorized by the other party, or if disclosure is
expressly required by applicable federal or state regulatory authorities or by
this Agreement.
7. LIABILITY. Except as may otherwise be provided by the 1940 Act, neither
the Subadviser nor its officers, directors, employees or agents shall be
subject to any liability for any error of judgment, mistake of law, or any
loss arising out of any investment or other act or omission in the performance
by the Subadviser of its duties under this Agreement or for any loss or damage
resulting from the imposition by any government of exchange control
restrictions which might affect the liquidity of the Fund's assets, or from
acts or omissions of custodians, or securities depositories, or from any war
or political act of any foreign government to which such assets might be
exposed, or for failure, on the part of the custodian or otherwise, timely to
collect payments, except for any liability, loss or damage resulting from
willful misfeasance, bad faith or gross negligence on the Subadviser's part or
by reason of reckless disregard of the Subadviser's duties under this
Agreement. It is hereby understood and acknowledged by the Investment Manager
that the value of the investments made for the Fund may increase as well as
decrease and are not guaranteed by the Subadviser. It is further understood
and acknowledged by the Investment Manager that investment decisions made on
behalf of the Fund by the Subadviser are subject to a variety of factors which
may affect the values and income generated by the Fund's portfolio securities,
including general economic conditions, market factors and currency exchange
rates, and that investment decisions made by the Subadviser will not always be
profitable or prove to have been correct.
8. RELIANCE ON DOCUMENTS. The Investment Manager shall assure that the Fund
or its officers or agent will provide timely information to the Subadviser
regarding such matters as purchases and redemptions of shares in the
Portfolio, the cash requirements, and cash available for investment in the
Portfolio, and all other information as may be reasonably necessary or
appropriate in order for the Subadviser to perform its responsibilities
hereunder.
Neither the Fund or the Investment Manager, nor their respective designees
or agents, shall use any material describing or identifying the Subadviser or
its affiliates without the prior consent of the Subadviser. Any material
utilized by the Fund, the Investment Manager or their respective designees or
agents which contains information as to the Subadviser and/or its affiliates
shall be submitted to the Subadviser for approval prior to use, not less than
ten (10) business days before such approval is requested.
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The Investment Manager has herewith furnished the Subadviser copies of the
Investment Management Agreement and the Fund's Prospectus, Articles of
Incorporation and By-Laws as currently in effect and agrees during the
continuance of the Agreement to furnish the Subadviser copies of any
amendments or supplements thereto before or at the time the amendments or
supplements become effective. The Investment Manager also agrees to notify the
Subadviser of any federal or state law or regulation, including tax laws or
regulations, which restrict the activities of the Subadviser hereunder. The
Subadviser will be entitled to rely on all such documents or other information
furnished to it by the Investment Manager or the Fund.
9. DURATION AND TERMINATION OF THE AGREEMENT. This Subadvisory Agreement
shall become effective as of the date first written above and remain in force
until [date]. Thereafter, it shall continue in effect from year to year,
but only so long as such continuance is specifically approved at least
annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Portfolio, and (b) a
majority of those directors who are not parties to this Subadvisory Agreement,
not interested persons of any party to this Subadvisory Agreement, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may be terminated, without the payment of any penalty, by the Board
of Directors of the Fund, by a vote of a majority of the outstanding shares of
the Portfolio, or by the Investment Manager on sixty days' written notice to
the Subadviser, or by the Subadviser on sixty days' written notice to the Fund
or the Investment Manager. Termination by the Board of Directors or by the
Investment Manager shall be subject to shareholder approval to the extent
legally required. This Agreement shall automatically terminate in the event of
its assignment or in the event of termination of the Investment Management
Agreement.
10. AMENDMENTS OF THE AGREEMENT. Except to the extent permitted by the
Investment Company Act or the rules or regulations thereunder or pursuant to
any exemptive relief granted by the Securities and Exchange Commission
("SEC"), this Agreement may be amended by the parties only if such amendment,
if material, is specifically approved by the vote of a majority of the
outstanding voting securities of the Portfolio (unless such approval is not
required by Section 15 of the Investment Company Act as interpreted by the SEC
or its staff) and by the vote of a majority of the Independent Directors cast
in person at a meeting called for the purpose of voting on such approval. The
required shareholder approval shall be effective with respect to the Portfolio
if a majority of the outstanding voting securities of the Portfolio vote to
approve the amendment, notwithstanding that amendment may not have been
approved by a majority of the outstanding voting securities of any other
portfolio affected by the amendment or all the portfolios of the Fund.
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11. DEFINITIONS. The terms "assignment", "interested person", and "majority
of the outstanding voting securities", when used in this Agreement, shall have
the respective meaning specified under the Investment Company Act and the
rules thereunder.
12. NOTICES. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be given in writing, delivered,
or mailed postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Karen L. Skidmore
Senior Corporate Counsel
Franklin Resources, Inc.
777 Mariners Island Boulevard
San Mateo, CA 94404
with a copy to:
Secretary
Templeton Global Advisors, Limited
Box N-7759
Nassau, Bahamas
(b) If to the Investment Manager:
Chubb Investment Advisory Corporation
One Granite Place
Concord, NH 03301
Attn: Ronald Angarella
Facsimile (603) 224-1691
13. GOVERNING LAW. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New Hampshire as at
the time in effect and the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable. To the extent
that the applicable law of the State of New Hampshire or any of the provisions
herein, conflict with the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable, the latter
shall control.
14. USE OF SUBADVISER'S NAME. In the event this Agreement is terminated and
the Subadviser no longer acts as Subadviser to the Fund, the Subadviser
reserves the right to withdraw from the Investment Manager and the Fund the
use of names "Franklin," "Templeton" or any name misleadingly implying a
continuing relationship between the Investment Manager or the Fund and the
Subadviser or any of its affiliates.
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15. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement of the parties with respect to the Portfolio.
16. HEADINGS. The headings in the sections of this Agreement are inserted
for convenience of reference only and shall not constitute a part hereof.
17. SEVERABILITY. Should any portion of this Agreement for any reason be
held to be void in law or in equity, this Agreement shall be construed,
insofar as is possible, as if such portion had never been contained herein.
Chubb Investment Advisory Corporation
Attest: ______________________________ By: __________________________________
Title: _______________________________ Title: _______________________________
Subadviser
Attest: ______________________________ By: __________________________________
Title: _______________________________ Title: _______________________________
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EXHIBIT C
FORM OF INVESTMENT SUBADVISORY AGREEMENT
THIS AGREEMENT, made this day of , 199 , is between CHUBB INVESTMENT
ADVISORY CORPORATION, a Tennessee corporation with offices at One Granite
Place, Concord, New Hampshire, 03301 (the "Investment Manager" or "Manager")
and Warburg, Pincus Counsellors, Inc., ("Subadviser") a Delaware corporation
with offices at 466 Lexington Avenue, New York, New York 10017.
WITNESSETH:
WHEREAS, Chubb America Fund, Inc. (the "Fund") is engaged in business as a
diversified open-end management investment company and is registered as such
under the Investment Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund issues separate classes or series of stock, each of which
represents a separate portfolio of investments;
WHEREAS, the Fund's shareholders are and will be separate accounts
maintained by insurance companies for variable life insurance policies under
which income, gains, losses, whether or not realized, from assets allocated to
such accounts are, in accordance with the Policies, credited to or charged
against such accounts without regard to other income, gains, or losses of such
insurance companies;
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the Portfolio, as set forth in an Investment Management Agreement
between the Fund and the Investment Manager dated , 199 , (the
"Investment Management Agreement") pursuant to which it was agreed that the
Investment Manager may contract with the Subadviser, or other parties for
certain investment management services;
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act");
WHEREAS, the Investment Manager desires to retain the Subadviser to render
investment management services to the Fund's Growth and Income Portfolio (the
"Portfolio") in the manner and on the terms hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the convenants
hereinafter contained the Investment Manager and the Subadviser hereby agree
as follows:
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1. APPOINTMENT OF THE SUBADVISER. The Investment Manager hereby appoints the
Subadviser to act as an investment subadviser for the Portfolio and to manage
the investment and reinvestment of the assets of the Portfolio, subject to the
supervision of the Directors of the Fund and the terms and conditions of this
Agreement. The Subadviser will be an independent contractor and will have no
authority to act for or represent the Fund or Investment Manager in any way or
otherwise be deemed an agent of the Fund or Investment Manager except as
expressly authorized in this Agreement or another writing by the Fund,
Investment Manager and the Subadviser. Notwithstanding the foregoing, the
Subadviser may execute account documentation, agreements, contracts and other
documents as the Subadviser may be requested by brokers, dealers, counterparts
and other persons in connection with the Subadviser's management of the assets
of the Portfolio, provided that the Subadviser receives the express agreement
and consent of the Investment Manager and/or the Fund's Board of Directors to
execute such documentation, agreements, contracts and other documents. In such
respect, and only for this limited purpose, the Subadviser shall act as the
Investment Manager and/or the Fund's agent and attorney-in-fact.
2. DUTIES OF THE SUBADVISER. The Subadviser hereby agrees, subject to the
supervision of the Investment Manager and the Board of Directors of the Fund,
(1) to act as the Subadviser of the Portfolio, (2) to manage the investment
and reinvestment of the assets of the Portfolio for the period and on the
terms and conditions set forth in this Agreement, and (3) during the term
hereof, to render the services and to assume the obligations herein set forth
in return for the compensation provided for herein and to bear all expenses of
its performance of such services and obligations.
3. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE FUND
A. The Subadviser will manage the investment and reinvestment of the assets
of the Portfolio and determine the composition of the assets of the Portfolio,
subject always to the direction and control of the Directors of the Fund and
the Investment Manager and in accordance with the provisions of the Fund's
registration statement, as amended from time to time. In fulfilling its
obligations to manage the investment and reinvestment of the assets of the
Portfolio, the Subadviser will:
(i) obtain and evaluate pertinent economic, statistical, financial, and
other information affecting the economy generally and individual companies
or industries, the securities of which are included in the Portfolio or
are under consideration for inclusion in the Portfolio;
(ii) formulate and implement a continuous investment program for the
Portfolio (a) consistent with the investment objectives, policies, and
restrictions of the Portfolio as stated in the Fund's Agreement and
Articles of Incorporation,
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Bylaws, and such Portfolio's currently effective Prospectus and Statement
of Additional Information ("SAI") as amended from time to time, and (b) in
compliance with the requirements applicable to both regulated investment
companies and segregated asset accounts under Subchapters M and L of the
Internal Revenue Code of 1986, as amended, and requirements applicable to
registered investment companies under applicable laws;
(iii) take whatever steps are necessary to implement the investment
program for the Portfolio by the purchase and sale of securities and other
investments authorized under the Fund's Agreement and Articles of
Incorporation, Bylaws, and such Portfolio's currently effective Prospectus
and SAI, including the placing of orders for such purchases and sales;
(iv) regularly report to the Directors of the Fund and the Investment
Manager with respect to the implementation of the investment program and,
in addition, provide such statistical information and special reports
concerning the Portfolio and/or important developments materially
affecting the investments held, or contemplated to be purchased, by the
Portfolio, as may reasonably be requested by the Investment Manager or the
Directors of the Fund, including attendance at Board of Directors
Meetings, as reasonably requested, to present such information and reports
to the Board;
(v) Assist in the determination of the fair value of certain portfolio
securities when market quotations are not readily available for the
purpose of calculating the Portfolio's net asset value in accordance with
procedures and methods established by the Directors of the Fund;
(vi) establish appropriate interfaces with the Fund's Investment Manager
in order to provide such Investment Manager with all necessary information
requested by the Manager.
B. To facilitate the Subadviser's fulfillment of its obligations under this
Agreement, the Investment Manager will undertake the following:
(i) the Manager agrees promptly to provide the Subadviser with all
amendments or supplements to the Registration Statement, the Fund's
Agreement and Articles of Incorporation, and Bylaws;
(ii) the Manager agrees, on an ongoing basis, to notify the Subadviser
expressly in writing of each change in the fundamental and nonfundamental
investment policies of the Portfolio;
(iii) the Manager agrees to provide or cause to be provided to the
Subadviser with such assistance as may be reasonably requested by the
Subadviser in connection with its activities pertaining to the Portfolio
under this Agreement, including, without limitation, information
concerning the Portfolio,
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its available funds, or funds that may reasonably become available for
investment, and information as to the general condition of the Portfolio's
affairs;
(iv) the Manager agrees to provide or cause to be provided to the
Subadviser on an ongoing basis, such information as is reasonably
requested by the Subadviser for performance by the Subadviser of its
obligations under this Agreement, and the Subadviser shall not be in
breach of any term of this Agreement or be deemed to have acted
negligently if the Manager fails to provide or cause to be provided such
requested information and the Subadviser relies on the information most
recently furnished to the Subadviser; and
(v) the Manager will promptly provide the Subadviser with any guidelines
and procedures applicable to the Subadviser or the Portfolio adopted from
time to time by the Board of Directors of the Fund and agrees to promptly
provide the Subadviser copies of all amendments thereto.
C. The Subadviser, at its expense, will furnish: (i) all necessary
investment and management facilities and investment personnel, including
salaries, expenses and fees of any personnel required for it to faithfully
perform its duties under this Agreement; and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the investment affairs of the Portfolio (excluding that
necessary for the determination of net asset value and shareholder accounting
services). The Subadviser shall not be obligated to pay any expenses of or for
the Portfolio not expressly assumed by the Subadviser pursuant to this Section
3.
D. The Subadviser will select brokers and dealers to effect all portfolio
transactions subject to the conditions set forth herein. The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is directed at
all times to seek to execute brokerage transactions for the Portfolio in
accordance with such policies or practices as may be established by the Board
of Directors and described in the Fund's currently effective Prospectus and
SAI, as amended from time to time. In placing orders for the purchase or sale
of investments for the Portfolio, in the name of the Portfolio or its
nominees, the Subadviser shall use its best efforts to obtain for the
Portfolio the most favorable price and best execution available, considering
all of the circumstances, and shall maintain records adequate to demonstrate
compliance with this requirement.
Subject to the appropriate policies and procedures approved by the Board of
Directors, the Subadviser may, to the extent authorized by Section 28(e) of
the Securities and Exchange Act of 1934, cause the Portfolio to pay a broker
or dealer that provides brokerage or research services to the Manager, the
Subadviser, or the Portfolio an amount of commissions for effecting a
portfolio transaction in excess of
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the amount of commission another broker or dealer would have charged for
effecting that transaction if the Subadviser determines, in good faith, that
such amount of commission is reasonable in relationship to the value of such
brokerage or research services provided viewed in terms of that particular
transaction or the Subadviser's overall responsibilities to the Portfolio or
its other advisory clients. To the extent authorized by said Section 28(e) and
the Fund's Board of Directors, the Subadviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of such action. In addition, subject to seeking the
most favorable price and best execution available, the Subadviser may also
consider sales of shares of the Fund as a factor in the selection of brokers
and dealers.
E. On occasions when the Subadviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other clients of the
Subadviser, the Subadviser to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold to attempt to obtain a more favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to the Portfolio and to its other clients over time. It
is recognized that in some cases this practice may adversely affect the price
paid or received by the Portfolio or the size of the position obtainable for,
or disposed of by, the Portfolio.
F. The Subadviser will maintain all accounts, books and records with respect
to the Portfolio as are required of an investment adviser of a registered
investment company pursuant to the Investment Company Act and Advisers Act and
the rules thereunder.
4. COMPENSATION OF THE SUBADVISER. The Investment Manager will pay the
Subadviser, with respect to the Portfolio, the compensation specified in
Appendix A to this Agreement. Payments shall be made to the Subadviser on the
first day of each month; however, this advisory fee will be calculated on the
daily average value of the Portfolio's assets and accrued on a daily basis.
5. NON-EXCLUSIVITY. The Investment Manager agrees that the services of the
Subadviser are not to be deemed exclusive and the Subadviser is free to act as
investment manager to various investment companies and as fiduciary for other
managed accounts. The Subadviser shall, for all purposes herein, be deemed to
be an independent contractor and shall, unless otherwise provided or
authorized, have no authority to act for or represent the Fund or the
Investment Manager in any way or otherwise be deemed an agent of the Fund or
Investment Manager other than in
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furtherance of its duties and responsibilities as set forth in this
Subadvisory Agreement.
6. BOOKS AND RECORDS. The Subadviser agrees that all books and records which
it maintains for the Fund are the Fund's property, and, in the event of
termination of this Agreement for any reason, the Subadviser agrees promptly
to return to the Fund, free from any claim or retention of rights by the
Subadviser, all records relating to the Portfolio. The Subadviser also agrees
upon request of the Investment Manager or the Fund, promptly to surrender the
books and records to either party or make the book and records available for
inspection by representatives of regulatory authorities. In connection with
its duties hereunder, the Subadviser further agrees to maintain, prepare and
preserve books and records in accordance with the Investment Company Act and
rules thereunder, including but not limited to, Rule 31a-1 and 31a-2.
The Subadviser will use records or information obtained under this Agreement
only for the purposes contemplated hereby, and will not disclose such records
or information in any manner other than expressly authorized by the Fund, or
if disclosure is expressly required by applicable federal or state regulatory
authorities or by this Agreement. The Subadviser will furnish any
informational reports requested by any state insurance commissioner.
7. REPRESENTATIONS AND WARRANTIES BY THE INVESTMENT MANAGER AND THE
SUBADVISER. The Investment Manager and the Subadviser each hereby represents
and warrants to the other that:
A. it is registered as an investment adviser under the Advisers Act;
B. it is a corporation duly organized and validly existing under the
laws of its state of incorporation with the power to own and possess its
assets and carry on its business as it is now being conducted;
C. the execution, delivery and performance of this Agreement by such
party are within such party's powers and have been duly authorized by all
necessary action and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of such
party for the execution, delivery and performance of this Agreement by
such party and such execution, delivery and performance by such party do
not contravene or constitute a default under (i) any provision of
applicable law, rule or regulation, (ii) such party's governing
instruments and (iii) any material agreement, judgment, injunction, order,
decree or other instrument binding upon such party; and
D. the Form ADV of such party previously provided to the other party is
a true and complete copy of the form filed with the Securities and
Exchange
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Commissions (the "SEC") and the information contained therein is accurate
and complete in all material respects.
The Investment Manager acknowledges that it received a copy of the
Subadviser's Form ADV more than 48 hours prior to the execution of this
Agreement.
8. REPRESENTATIONS AND WARRANTIES ON BEHALF OF THE FUND AND THE
PORTFOLIO. The Investment Manager hereby represents and warrants, on behalf of
the Fund and the Portfolio, that:
A. the Fund is registered as an investment company under the Investment
Company Act and the Portfolio's shares are registered under the Securities
Act of 1933, as amended (the "Securities Act");
B. the Fund, on behalf of the Portfolio, has filed a notice of exemption
pursuant to Rule 4.5 under the Commodity Exchange Act with the Commodity
Futures Trading Commission and the National Futures Association; and
C. The Fund is a Maryland corporation duly organized and validly
existing under the laws of the State of Maryland with the power to own and
possess its assets and carry on its business as it is now being conducted.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; DUTY TO UPDATE
INFORMATION. All representations and warranties made pursuant to Sections 7
and 8 of this Agreement shall survive for the duration of this Agreement and
each party hereto shall promptly notify the other in writing upon becoming
aware that any of the foregoing representations and warranties made by such
party are no longer true.
10. LIABILITY. Neither the Subadviser nor any of its affiliates, directors,
officers, or employees shall be liable to the Investment Manager, the Fund or
any shareholder thereof or any service provider to any Portfolio of the Fund
for any loss suffered by the Investment Manager, the Fund or any shareholder
thereof or any service provider to any portfolio resulting from its acts or
omissions as Subadviser to the Portfolio, except for losses resulting from
willful misconduct, bad faith or gross negligence in the performance of, or
from reckless disregard of, the duties of the Subadviser or any of its
affiliates, directors, officers or employees. The Subadviser, its affiliates,
directors, officers or employees shall not be liable to the Investment Manager
or the Fund for any loss suffered as a consequence of any action or inaction
of other service providers to the Fund, provided such action or inaction of
such other service providers to any Portfolio of the Fund is not a result of
the willful misconduct, bad faith or gross negligence in the performance of,
or from reckless disregard of, the duties of the Subadviser under this
Agreement.
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11. INDEMNIFICATIONS.
A. The Investment Manager shall indemnify the Subadviser and its affiliates,
officers, directors, employees, agents, legal representatives and persons
controlled by it (which shall not include the Fund or any portfolio)
(collectively, "Subadviser Related Persons") to the fullest extent permitted
by law against any and all loss, damage, judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees (collectively
"Losses"), incurred by the Subadviser or Subadviser Related Persons arising
from or in connection with this Agreement or the performance by the Subadviser
or Subadviser Related Persons of its or their duties hereunder so long as such
Losses arise out of the Investment Manager's gross negligence, willful
misconduct or bad faith, in performing its responsibilities hereunder or under
its agreements with the Fund or the gross negligence, willful misconduct or
bad faith of any service provided to any portfolio of the Fund, including
without limitation, such Losses arising under any applicable law or that may
be based upon any untrue statement of a material fact contained in the Fund's
registration statement, or any amendment thereof or any supplement thereto, or
the omission to state therein a material fact known or which should have been
known and was required to be stated therein or necessary to make the statement
therein not misleading, unless such statement or omission was made in reliance
upon written information furnished to the Investment Manager or the Fund by
the Subadviser or any Subadviser Related Person specifically for inclusion in
the registration statement or any amendment or supplement thereto, except to
the extent any such Losses referred to in this paragraph A (i.e., paragraph
A.) result from willful misfeasance, bad faith, gross negligence or reckless
disregard on the part of the Subadviser or a Subadviser Related Person in the
performance of any of its duties under, or in connection with, this Agreement.
B. The Subadviser shall indemnify the Investment Manager and its controlling
persons, officers, directors, employees, agents, legal representatives and
persons controlled by it (which shall not include the Fund or any Portfolio)
(collectively, "Investment Manager Related Persons") to the fullest extent
permitted by law against any and all Losses incurred by the Investment Manager
or Investment Manager Related Persons arising from or in connection with this
Agreement or the performance by the Investment Manager or Investment Manager
Related Persons of its or their duties hereunder so long as such Losses arise
out of the Subadviser's gross negligence, willful misconduct or bad faith in
performing its responsibilities hereunder, including, without limitation, such
Losses arising under any applicable law or that may be based upon any untrue
statement of a material fact contained in the Fund's registration statement,
or any amendment thereof or any supplement thereto or the omission to state
therein a material fact known or which should have been known and was
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required to be stated therein or necessary to make the statement therein not
misleading, provided that such statement or omission was made in reliance upon
written information furnished by the Subadviser or Subadviser Related Person
to the Investment Manager or the Fund, except to the extent any such Losses
referred to in this paragraph B (i.e., paragraph B.) result from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
the Investment Manager or a Investment Manager Related Person in the
performance of any of its duties under, or in connection with, this Agreement.
C. The indemnifications provided in this Section shall survive the
termination of this Agreement.
12. RELIANCE ON DOCUMENTS. The Board of Directors of the Fund or its
officers or agent will provide timely information to the Subadviser regarding
such matters as purchases and redemptions of shares in the Portfolio, the cash
requirements, and cash available for investment in the Portfolio, and all
other information as may be reasonably necessary or appropriate in order for
the Subadviser to perform its responsibilities hereunder.
Neither the Fund or the Investment Manager, nor their respective designees
or agents, shall use any material describing or identifying the Subadviser or
its affiliates without the prior consent of the Subadviser. Any material
utilized by the Fund, the Investment Manager or their respective designees or
agents which contain information as to the Subadviser and/or its affiliates
shall be submitted to the Subadviser for approval prior to use, not less than
five (5) business days before such approval is requested.
The Investment Manager has herewith furnished the Subadviser copies of the
Fund's Prospectus, Articles of Incorporation and By-Laws as currently in
effect and agrees during the continuance of the Agreement to furnish the
Subadviser copies of any amendments or supplements thereto before or at the
time the amendments or supplements become effective. The Subadviser will be
entitled to rely on all such documents furnished to it by the Investment
Manager or the Fund.
13. DURATION AND TERMINATION OF THE AGREEMENT. This Subadvisory Agreement
shall become effective as of the date first written above and remain in force
until [date]. Thereafter, it shall continue in effect from year to year,
but only so long as such continuance is specifically approved at least
annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Portfolio, and (b) a
majority of those directors who are not parties to this Subadvisory Agreement,
not interested persons of any party to this Subadvisory Agreement, cast in
person at a meeting called for the purpose of voting on such
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<PAGE>
approval. This Agreement may be terminated, without the payment of any
penalty, by the Board of Directors of the Fund, by a vote of a majority of the
outstanding shares of the Portfolio, or by the Investment Manager on sixty
days' written notice to the Subadviser, or by the Subadviser on sixty days'
written notice to the Fund or the Investment Manager. Termination by the Board
of Directors or by the Investment Manager shall be subject to shareholder
approval to the extent legally required. This Agreement shall automatically
terminate in the event of its assignment or in the event of termination of the
Investment Management Agreement.
14. AMENDMENTS OF THE AGREEMENT. Except to the extent permitted by the
Investment Company Act or the rules or regulations thereunder or pursuant to
any exemptive relief granted by the Securities and Exchange Commission
("SEC"), this Agreement may be amended by the parties only if such amendment,
if material, is specifically approved by the vote of a majority of the
outstanding voting securities of the Portfolio (unless such approval is not
required by Section 15 of the Investment Company Act as interpreted by the SEC
or its staff) and by the vote of a majority of the Independent Directors cast
in person at a meeting called for the purpose of voting on such approval. The
required shareholder approval shall be effective with respect to the Portfolio
if a majority of the outstanding voting securities of the Portfolio vote to
approve the amendment, notwithstanding that amendment may not have been
approved by a majority of the outstanding voting securities of any other
portfolio affected by the amendment or all the portfolios of the Fund.
15. DEFINITIONS. The terms "assignment", "interested person", and "majority
of the outstanding voting securities", when used in this Agreement, shall have
the respective meaning specified under the Investment Company Act and the
rules thereunder.
16. NOTICES. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be given in writing, delivered,
or mailed postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Warburg, Pincus Counsellors, Inc.
466 Lexington Avenue
New York, New York 10017
Attn: Eugene P. Grace
Facsimile: (212) 878-9351
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(b) If to the Investment Manager:
Chubb Investment Advisory Corporation
One Granite Place
Concord, NH 03301
Attn: Ronald Angarella
Facsimile (603) 224-1691
17. GOVERNING LAW. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New Hampshire as at
the time in effect and the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable. To the extent
that the applicable law of the State of New Hampshire or any of the provisions
herein, conflict with the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable, the latter
shall control.
18. USE OF NAME. Neither the Fund nor the Investment Manager or any
affiliate, designee or agent thereof shall make reference to or use the name,
and any derivative thereof or logo associated with that name, of the
Subadviser or any of its clients or affiliates or use any material describing
the Subadviser without the prior approval of the Subadviser. Upon termination
of this Agreement, the Investment Manager and the Fund shall forthwith cease
to use such name (or derivative or logo) as soon as reasonably practicable.
19. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement of the parties with respect to the Portfolio and the Fund with
respect to the subject matter contained herein.
20. HEADINGS. The headings in the sections of this Agreement are inserted
for convenience of reference only and shall not constitute a part hereof.
11
<PAGE>
21. SEVERABILITY. Should any portion of this Agreement for any reason be
held to be void in law or in equity, the Agreement shall be construed, insofar
as is possible, as if such portion had never been contained herein.
Chubb Investment Advisory Corporation
Attest: ______________________________ By: __________________________________
Title: _______________________________ Title: _______________________________
Subadviser
Attest: ______________________________ By: __________________________________
Title: _______________________________ Title: _______________________________
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EXHIBIT D
FORM OF INVESTMENT SUBADVISORY AGREEMENT
THIS AGREEMENT, made this day of , 199 , is between CHUBB INVESTMENT
ADVISORY CORPORATION, a Tennessee corporation with offices at One Granite
Place, Concord, New Hampshire, 03301 (the "Investment Manager" or "Manager")
and JP Morgan Investment Management, Inc. (the "Subadviser") a New York
corporation with offices at 522 Fifth Avenue, New York, New York 10036.
WITNESSETH:
WHEREAS, Chubb America Fund, Inc. (the "Fund") is engaged in business as a
diversified open-end management investment company and is registered as such
under the Investment Company Act of 1940 (the "Investment Company Act");
WHEREAS, the Fund issues separate classes or series of stock, each of which
represents a separate portfolio of investments;
WHEREAS, the Fund's shareholders are and will be separate accounts
maintained by insurance companies for variable life insurance policies under
which income, gains, losses, whether or not realized, from assets allocated to
such accounts are, in accordance with the Policies, credited to or charged
against such accounts without regard to other income, gains, or losses of such
insurance companies;
WHEREAS, the Fund has employed the Investment Manager to act as investment
manager of the Fund's Balanced Portfolio (the "Portfolio"), as set forth in an
Investment Management Agreement between the Fund and the Investment Manager
dated , 199 , (the "Investment Management Agreement") pursuant to which it
was agreed that the Investment Manager may contract with the Investment
Subadviser, or other parties for certain investment management services;
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act");
WHEREAS, the Investment Manager desires to retain the Subadviser to render
investment management services to the Portfolio in the manner and on the terms
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the convenants
hereinafter contained the Investment Manager and the Subadviser hereby agree
as follows:
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<PAGE>
1. APPOINTMENT OF THE SUBADVISER. The Investment Manager hereby appoints the
Subadviser to act as an investment subadviser for the Portfolio and to manage
the investment and reinvestment of the assets of the Portfolio, subject to the
supervision of the Directors of the Fund and the terms and conditions of this
Agreement. The Subadviser will be an independent contractor and will have no
authority to act for or represent the Fund or Investment Manager in any way or
otherwise be deemed an agent of the Fund or Investment Manager except as
expressly authorized in this Agreement or another writing by the Fund,
Investment Manager and the Subadviser. Notwithstanding the foregoing, the
Subadviser may execute account documentation, agreements, contracts and other
documents as the Subadviser may be requested by brokers, dealers, counterparts
and other persons in connection with the Subadviser's management of the assets
of the Portfolio, provided that the Subadviser receives the express agreement
and consent of the Investment Manager and/or the Fund's Board of Directors to
execute such documentation, agreements, contracts and other documents. In such
respect, and only for this limited purpose, the Subadviser shall act as the
Investment Manager and/or the Fund's agent and attorney-in-fact.
2. DUTIES OF THE SUBADVISER. The Subadviser hereby agrees, subject to the
supervision of the Investment Manager and the Board of Directors of the Fund,
(1) to act as the Subadviser of the Portfolio, (2) to manage the investment
and reinvestment of the assets of the Portfolio for the period and on the
terms and conditions set forth in this Agreement, and (3) during the term
hereof, to render the services and to assume the obligations herein set forth
in return for the compensation provided for herein and to bear all expenses of
its performance of such services and obligations.
3. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE FUND
A. The Subadviser will manage the investment and reinvestment of the assets
of the Portfolio and determine the composition of the assets of the Portfolio,
subject always to the direction and control of the Directors of the Fund and
the Investment Manager and in accordance with the provisions of the Fund's
registration statement, as amended from time to time. In fulfilling its
obligations to manage the investment and reinvestment of the assets of the
Portfolio, the Subadviser will:
(i) obtain and evaluate pertinent economic, statistical, financial, and
other information affecting the economy generally and individual companies
or industries, the securities of which are included in the Portfolio or
are under consideration for inclusion in the Portfolio;
(ii) formulate and implement a continuous investment program for the
Portfolio (a) consistent with the investment objectives, policies, and
restrictions of the Portfolio as stated in the Fund's Agreement and
Articles of Incorporation,
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<PAGE>
Bylaws, and such Portfolio's currently effective Prospectus and Statement
of Additional Information ("SAI") as amended from time to time, and (b) in
compliance with the requirements applicable to both regulated investment
companies and segregated asset accounts under Subchapters M and L of the
Internal Revenue Code of 1986, as amended, and requirements applicable to
registered investment companies under applicable laws;
(iii) take whatever steps are necessary to implement the investment
program for the Portfolio by the purchase and sale of securities and other
investments authorized under the Fund's Agreement and Articles of
Incorporation, Bylaws, and such Portfolio's currently effective Prospectus
and SAI, including the placing of orders for such purchases and sales;
(iv) regularly report to the Directors of the Fund and the Investment
Manager with respect to the implementation of the investment program and,
in addition, provide such statistical information and special reports
concerning the Portfolio and/or important developments materially
affecting the investments held, or contemplated to be purchased, by the
Portfolio, as may reasonably be requested by the Investment Manager or the
Directors of the Fund, including attendance at Board of Directors
Meetings, as reasonably requested, to present such information and reports
to the Board;
(v) assist in determination of the fair value of certain portfolio
securities when market quotations are not readily available for the
purpose of calculating the Portfolio's net asset value in accordance with
procedures and methods established by the Directors of the Fund;
(vi) establish appropriate interfaces with the Fund's Investment Manager
in order to provide such Investment Manager with all necessary information
requested by the Investment Manager.
B. To facilitate the Subadviser's fulfillment of its obligations under this
Agreement, the Investment Manager will undertake the following:
(i) the Manager agrees promptly to provide the Subadviser with all
amendments or supplements to the Registration Statement, the Fund's
Agreement and Articles of Incorporation, and Bylaws;
(ii) the Manager agrees, on an ongoing basis, to notify the Subadviser
expressly in writing of each change in the fundamental and nonfundamental
investment policies of the Portfolio;
(iii) the Manager agrees to provide or cause to be provided to the
Subadviser with such assistance as may be reasonably requested by the
Subadviser in connection with its activities pertaining to the Portfolio
under this Agreement, including, without limitation, information
concerning the Portfolio,
3
<PAGE>
its available funds, or funds that may reasonably become available for
investment, and information as to the general condition of the Portfolio's
affairs;
(iv) the Manager agrees to provide or cause to be provided to the
Subadviser on an ongoing basis, such information as is reasonably
requested by the Subadviser for performance by the Subadviser of its
obligations under this Agreement, and the Subadviser shall not be in
breach of any term of this Agreement or be deemed to have acted
negligently if the Manager fails to provide or cause to be provided such
requested information and the Subadviser relies on the information most
recently furnished to the Subadviser; and
(v) the Manager will promptly provide the Subadviser with any guidelines
and procedures applicable to the Subadviser or the Portfolio adopted from
time to time by the Board of Directors of the Fund and agrees to promptly
provide the Subadviser copies of all amendments thereto.
C. The Subadviser, at its expense, will furnish: (i) all necessary
investment and management facilities and investment personnel, including
salaries, expenses and fees of any personnel required for it to faithfully
perform its duties under this Agreement; and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the investment affairs of the Portfolio (excluding that
necessary for the determination of net asset value and shareholder accounting
services). The Subadviser shall not be obligated to pay any expenses of or for
the Portfolio not expressly assumed by the Subadviser pursuant to this Section
3.
D. The Subadviser will select brokers and dealers to effect all portfolio
transactions subject to the conditions set forth herein. The Subadviser will
place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Subadviser is directed at
all times to seek to execute brokerage transactions for the Portfolio in
accordance with such policies or practices as may be established by the Board
of Directors and described in the Fund's currently effective Prospectus and
SAI, as amended from time to time. In placing orders for the purchase or sale
of investments for the Portfolio, in the name of the Portfolio or its
nominees, the Subadviser shall use its best efforts to obtain for the
Portfolio the most favorable price and best execution available, considering
all of the circumstances, and shall maintain records adequate to demonstrate
compliance with this requirement.
Subject to the appropriate policies and procedures approved by the Board of
Directors, the Subadviser may, to the extent authorized by Section 28(e) of
the Securities and Exchange Act of 1934, cause the Portfolio to pay a broker
or dealer that provides brokerage or research services to the Manager, the
Subadviser, or the Portfolio an amount of commissions for effecting a
portfolio transaction in excess of
4
<PAGE>
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Subadviser determines, in good faith, that
such amount of commission is reasonable in relationship to the value of such
brokerage or research services provided viewed in terms of that particular
transaction or the Subadviser's overall responsibilities to the Portfolio or
its other advisory clients. To the extent authorized by said Section 28(e) and
the Fund's Board of Directors, the Subadviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of such action. In addition, subject to seeking the
most favorable price and best execution available, the Subadviser may also
consider sales of shares of the Fund as a factor in the selection of brokers
and dealers.
E. On occasions when the Subadviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other clients of the
Subadviser, the Subadviser to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold to attempt to obtain a more favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to the Portfolio and to its other clients.
F. The Subadviser will maintain all accounts, books and records with respect
to the Portfolio as are required of an investment adviser of a registered
investment company pursuant to the Investment Company Act and Advisers Act and
the rules thereunder.
4. COMPENSATION OF THE SUBADVISER. The Investment Manager will pay the
Subadviser, with respect to the Portfolio, the compensation specified in
Appendix A to this Agreement. Payments shall be made to the Subadviser on the
first day of each month; however, this advisory fee will be calculated on the
daily average value of the Portfolio's assets and accrued on a daily basis.
5. NON-EXCLUSIVITY. The Investment Manager agrees that the services of the
Subadviser are not to be deemed exclusive and the Subadviser is free to act as
investment manager to various investment companies and as fiduciary for other
managed accounts. The Subadviser shall, for all purposes herein, be deemed to
be an independent contractor and shall, unless otherwise provided or
authorized, have no authority to act for or represent the Fund or the
Investment Manager in any way or otherwise be deemed an agent of the Fund or
Investment Manager other than in furtherance of its duties and
responsibilities as set forth in this Subadvisory Agreement.
5
<PAGE>
6. BOOKS AND RECORDS. The Subadviser agrees that all books and records which
it maintains for the Fund are the Fund's property, and, in the event of
termination of this Agreement for any reason, the Subadviser agrees promptly
to return to the Fund, free from any claim or retention of rights by the
Subadviser, all records relating to the Portfolio. The Subadviser also agrees
upon request of the Investment Manager or the Fund, promptly to surrender the
books and records to either party or make the book and records available for
inspection by representatives of regulatory authorities. In connection with
its duties hereunder, the Subadviser further agrees to maintain, prepare and
preserve books and records in accordance with the Investment Company Act and
rules thereunder, including but not limited to, Rule 31a-1 and 31a-2.
The Subadviser will use records or information obtained under this Agreement
only for the purposes contemplated hereby, and will not disclose such records
or information in any manner other than expressly authorized by the Fund, or
if disclosure is expressly required by applicable federal or state regulatory
authorities or by this Agreement. The Subadviser will furnish any
informational reports requested by any state insurance commissioner.
7. LIABILITY. The Subadviser will not be liable for any loss suffered by the
Fund in connection with any investment policy established by the Fund for the
purchase, sale or redemption of any securities at the direction of the Board
of Directors of the Fund or the Investment Manager. Nothing herein contained
shall be construed to protect the Subadviser against any liability resulting
from the willful misfeasance, bad faith or gross negligence of the Subadviser
in the performance of its duties or from reckless disregard of its obligations
and duties under this Subadviser Agreement.
8. INDEMNIFICATION. The Adviser agrees to indemnify and hold harmless the
Subadviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) ("Losses"),
howsoever arising, from or in connection with this Agreement or the
performance by the Subadviser of its duties hereunder; provided, however, that
nothing contained herein shall require that the Subadviser be indemnified for
Losses resulting from willful misfeasance, bad faith or gross negligence of,
or from reckless disregard of, the duties of the Subadviser or any of its
employees.
9. RELIANCE ON DOCUMENTS. The Board of Directors of the Fund or its officers
or agent will provide timely information to the Subadviser regarding such
matters as purchases and redemptions of shares in the Portfolio, the cash
requirements, and cash available for investment in the Portfolio, and all
other information as may be
6
<PAGE>
reasonably necessary or appropriate in order for the Subadviser to perform its
responsibilities hereunder.
Neither the Fund or the Investment Manager, nor their respective designees
or agents, shall use any material describing or identifying the Subadviser or
its affiliates without the prior consent of the Subadviser. Any material
utilized by the Fund, the Investment Manager or their respective designees or
agents which contain information as to the Subadviser and/or its affiliates
shall be submitted to the Subadviser for approval prior to use, not less than
five (5) business days before such approval is requested.
The Investment Manager has herewith furnished the Subadviser copies of the
Fund's Prospectus, Articles of Incorporation and By-Laws as currently in
effect and agrees during the continuance of the Agreement to furnish the
Subadviser copies of any amendments or supplements thereto before or at the
time the amendments or supplements become effective. The Subadviser will be
entitled to rely on all such documents furnished to it by the Investment
Manager or the Fund.
10. DURATION AND TERMINATION OF THE AGREEMENT. This Subadvisory Agreement
shall become effective as of the date first written above and remain in force
until [date]. Thereafter, it shall continue in effect from year to year,
but only so long as such continuance is specifically approved at least
annually by (a) the Board of Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Portfolio, and (b) a
majority of those directors who are not parties to this Subadvisory Agreement,
not interested persons of any party to this Subadvisory Agreement, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may be terminated, without the payment of any penalty, by the Board
of Directors of the Fund, by a vote of a majority of the outstanding shares of
the Portfolio, or by the Investment Manager on sixty days' written notice to
the Subadviser, or by the Subadviser on sixty days' written notice to the Fund
or the Investment Manager. Termination by the Board of Directors or by the
Investment Manager shall be subject to shareholder approval to the extent
legally required. This Agreement shall automatically terminate in the event of
its assignment or in the event of termination of the Investment Management
Agreement.
11. AMENDMENTS OF THE AGREEMENT. Except to the extent permitted by the
Investment Company Act or the rules or regulations thereunder or pursuant to
any exemptive relief granted by the Securities and Exchange Commission
("SEC"), this Agreement may be amended by the parties only if such amendment,
if material, is specifically approved by the vote of a majority of the
outstanding voting securities of the Portfolio (unless such approval is not
required by Section 15 of the Investment
7
<PAGE>
Company Act as interpreted by the SEC or its staff) and by the vote of a
majority of the Independent Directors cast in person at a meeting called for
the purpose of voting on such approval. The required shareholder approval
shall be effective with respect to the Portfolio if a majority of the
outstanding voting securities of the Portfolio vote to approve the amendment,
notwithstanding that amendment may not have been approved by a majority of the
outstanding voting securities of any other portfolio affected by the amendment
or all the portfolios of the Fund.
12. DEFINITIONS. The terms "assignment", "interested person", and "majority
of the outstanding voting securities", when used in this Agreement, shall have
the respective meaning specified under the Investment Company Act and the
rules thereunder.
13. NOTICES. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be given in writing, delivered,
or mailed postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
J.P. Morgan Investment Management Inc.
522 Fifth Avenue
New York, N.Y. 10036
Attn: Diane Minardi
(b) If to the Investment Manager:
Chubb Investment Advisory Corporation
One Granite Place
Concord, NH 03301
Attn: Ronald Angarella
Facsimile (603) 224-1691
14. GOVERNING LAW. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New Hampshire as at
the time in effect and the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable. To the extent
that the applicable law of the State of New Hampshire or any of the provisions
herein, conflict with the applicable provisions of the Investment Company Act
or other federal laws and regulations which may be applicable, the latter
shall control.
15. USE OF SUBADVISER'S NAME. Neither the Fund nor the Manager or any
affiliate or agent thereof shall make reference to or use the name, and any
derivative
8
<PAGE>
thereof or logo associated with that name, of the Subadviser or any of its
affiliates in any advertising or promotional materials without the prior
approval of the Subadviser. Upon termination of this Agreement, the Manager
and the Fund shall forthwith cease to use such name (or derivative or logo) as
soon as reasonably practicable.
16. ENTIRE AGREEMENT. This Agreement contains the entire understanding and
agreement of the parties with respect to the Portfolio.
17. HEADINGS. The headings in the sections of this Agreement are inserted
for convenience of reference only and shall not constitute a part hereof.
18. SEVERABILITY. Should any portion of this Agreement for any reason be
held to be void in law or in equity, the Agreement shall be construed, insofar
as is possible, as if such portion had never been contained herein.
Chubb Investment Advisory Corporation
Attest: ______________________________ By: __________________________________
Title: _______________________________ Title: _______________________________
Subadviser
Attest: ______________________________ By: __________________________________
Title: _______________________________ Title: _______________________________
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<PAGE>
CHUBB LIFE INSURANCE CHUBB AMERICA FUND, INC.
COMPANY OF AMERICA VOTING INSTRUCTIONS
To be voted at the August 15, 1997
Special Meeting of Shareholders
[ ] Portfolio
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
I hereby instruct the Chubb Life Insurance Company of America ("Chubb
Life") to vote the shares of the above - referenced Portfolio (the "Portfolio"),
as to which I am entitled to give voting instructions, at the Special Meeting of
Shareholders of the Portfolio to be held at the offices of Chubb Life, One
Granite Place, Concord, New Hampshire 03301, on August 15, 1997 at 8:00 a.m. and
at any adjournment of the Special Meeting. Chubb Life is instructed to vote as
indicated on the matters referred to in the Proxy and Voting Instructions
Statement for the Special Meeting, receipt of which is hereby acknowledged, with
discretionary power to vote on such other business as may properly come before
the Special Meeting or any adjournment of the Special Meeting.
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
Date: _____________, 1997
NOTE: Please sign exactly as your name appears on this Voting Instruction form.
When signing in a fiduciary capacity, such as an executor, administrator,
trustee, guardian, etc., please so indicate. Corporate and partnership proxies
should be signed by an authorized person indicating the person's title.
- --------------------------------------
Signature(s), Title(s) (if applicable)
<PAGE>
PLEASE VOTE BY FILING IN THE BOXES BELOW
IMPORTANT: YOUR VOTING INSTRUCTION IS
NOT VALID UNLESS IT IS SIGNED
PLEASE SIGN ON THE REVERSE SIDE.
The Board of Directors recommends that you vote FOR the proposals.
1. To elect the following persons to the Board of Directors:
Ronald Angarella
James J. Weisbart
Michael D. Coughlin
Elizabeth S. Hager
YES to all
---
WITHHOLD AUTHORITY as to all
---
If you are not voting in favor of all of the Directors, write that
nominees's name on the line below.
- ---------------------------------
2. To consider and act on a new Investment Management Agreement
between the Fund, on behalf of each of its Portfolios, and Chubb Investment
Advisory Corporation (the "Adviser").
For Against Abstain
--- --- ---
3. For the Domestic Growth Stock, World Growth Stock, Emerging
Growth, Capital Stock, Gold Stock and Bond Portfolios, to consider and act on a
new form of Investment Subadvisory Agreement between the Adviser and the current
investment subadviser to the relevant Portfolio; and, for the Growth and Income,
Money Market and Balanced Portfolios, to consider and act on a new form of
Investment Subadvisory Agreement between the Adviser and the proposed new
investment subadviser to the relevant Portfolios.
For Against Abstain
--- --- ---
4. To consider and act on a proposal to permit the Adviser to
replace investment subadvisers ("Subadvisers") or add Subadvisers to each
existing Portfolio or new Portfolio added as a series of the Fund in the future,
and to enter into subadvisory agreements with those Subadvisers without further
shareholder approval.
For Against Abstain
--- --- ---
