1
EX-99.B.5(b) Form of Sub-Advisory Agreements between the Sub-Advisers
and the Xxxxxxxxxx
0
VARIABLE INVESTORS SERIES TRUST
SUB-ADVISORY AGREEMENT
This Agreement is made between FIRST VARIABLE ADVISORY SERVICES CORP., a
Massachusetts corporation and a wholly-owned subsidiary of First Variable Life
Insurance Company ("Life Company"), having its principal place of business in
Boston, Massachusetts (hereinafter referred to as "Adviser"), and WARBURG,
XXXXXX COUNSELLORS, INC., a Delaware corporation, having its principal place of
business in New York, New York (hereinafter referred to as "Sub-Adviser").
WHEREAS, Variable Investors Series Trust (the "Trust"), an open-end diversified
management investment company, as that term is defined in the Investment Company
Act of 1940, as amended ("Act"), that is registered as such with the Securities
and Exchange Commission has appointed Adviser as investment adviser for all its
portfolios including the Growth & Income Portfolio; and
WHEREAS, Sub-Adviser is engaged in the business of rendering investment
management services; and
WHEREAS, Adviser desires to retain Sub-Adviser to provide certain investment
management services for the Growth & Income Portfolio (the "Portfolio") of the
Trust as more fully described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Adviser hereby retains Sub-Adviser to assist Adviser in its capacity as
investment adviser for the Portfolio. Subject to the oversight and review of
Adviser and the Board of Trustees of the Trust, Sub-Adviser shall manage the
investment and reinvestment of the assets of the Portfolio. Sub-Adviser will
determine in its discretion, subject to the oversight and review of Adviser, the
investments to be purchased or sold, will provide Adviser with records
concerning its activities which Adviser or the Trust is required to maintain,
and will render regular reports to Adviser and to officers and Trustees of the
Trust concerning its discharge of the foregoing responsibilities. The services
of Sub-Adviser hereunder are not to be deemed exclusive, and the Sub-Adviser
shall be free to render similar services to others.
2. Neither the Trust, Adviser, nor affiliated persons of the Trust or Adviser
shall give any information or make any representations or statements concerning
Sub-Adviser, except with the prior permission of Sub-Adviser.
3. Sub-Adviser, in its supervision of the investments of the Portfolio, will
be guided by the Portfolio's investment objectives and policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws of
the Trust and as set forth in the Registration Statement and exhibits as may be
on file with the Securities and Exchange Commission, all as communicated by
Adviser to Sub-Adviser.
4. Adviser shall pay to Sub-Adviser, for all services rendered to the
Portfolio by Sub-Adviser hereunder, the fees set forth in Exhibit A attached
hereto. During the term of this Agreement, Sub-Adviser will bear all expenses
incurred by it in the performance of its duties hereunder, which shall not
include expenses of the Trust or the Portfolio, such as brokerage fees and
commissions and taxes.
5. The term of this Agreement shall begin on the date of its execution and
shall remain in effect for two years from that date and from year to year
thereafter, subject to the provisions for termination and all of the other terms
and conditions hereof if: (a) such continuation shall be specifically approved
at least annually by the vote of a majority of the Trustees of the Trust,
including a majority of the Trustees who are not "interested persons", as
defined in Section 2(a)(19) of the Act, of any party (other than as Trustees of
the Trust) cast in person at a meeting called for that purpose; and (b) Adviser
shall not have notified the
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Trust in writing at least sixty (60) days prior to the anniversary date of this
Agreement in any year thereafter that it does not desire such continuation with
respect to the Portfolio.
6. Notwithstanding any provision in this Agreement, it may be terminated at
any time without the payment of any penalty, by the Trustees of the Trust or by
a vote of a majority of the outstanding voting securities of the Portfolio, as
defined in Section 2(a)(42) of the Act, on sixty (60) days' written notice to
Sub-Adviser, or by Adviser or Sub-Adviser upon not less than sixty (60) days'
written notice to the other party. Section 9 of this Agreement shall survive any
termination of this Agreement.
7. This Agreement may not be assigned by Adviser or Sub-Adviser and shall
automatically terminate in the event of any assignment. Sub-Adviser may employ
or contract with such other person, persons, corporation, or corporations at its
own cost and expense as it shall determine in order to assist it in carrying out
this Agreement.
8. Sub-Adviser represents and warrants that the Portfolio will at all times
be invested in such a manner as to ensure compliance with Section 817(h) of the
Internal Revenue Code of 1986, as amended and Treasury Regulations Section
1.817-5, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts and any amendments or other modifications
to such Section or Regulations; provided, however, that Adviser shall promptly
provide Sub-Adviser with copies of such Section 817(h) and Regulation Section
1.817-5 as currently in effect and as modified or amended from time to time.
Sub-Adviser will be relieved of this obligation and shall be held harmless when
(i) the Portfolio is invested in compliance with the requirements of Section
817(h) and/or Regulation Section 1.817-5 as most recently provided to
Sub-Adviser by Adviser or (ii) when direction from the Adviser or Trustees
causes non-compliance with Section 817(h) and/or Regulation Section 1.817-5.
Sub-Adviser agrees to provide quarterly reports to Adviser, executed by a duly
authorized officer of Sub-Adviser, within seven (7) days of the close of each
calendar quarter certifying as to compliance with said Section or Regulations.
In addition to the quarterly reports, Adviser may request and Sub-Adviser agrees
to provide Section 817 diversification compliance reports at more frequent
intervals, as reasonably requested by Adviser.
9. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties under this Agreement on the part
of Sub-Adviser ("disabling conduct"), neither Sub-Adviser, any affiliated person
of Sub-Adviser nor any person who controls Sub-Adviser, within the meaning of
Section 15 of the Securities Act of 1933, as amended (the "1933 Act") shall be
liable to Adviser, the Trust, the Portfolio or to any shareholder for any act or
omission in the course of or connected in any way with rendering services or for
any losses that may be sustained in the purchase, holding, or sale of any
security.
10. The Sub-Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of the Portfolio with broker-dealers
selected by the Sub-Adviser. In executing portfolio transactions and selecting
broker-dealers, the Sub-Adviser will use its best efforts to seek best execution
on behalf of the Portfolio. In assessing the best execution available for any
transaction, the Sub-Adviser shall consider all factors it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker-dealer, and the
reasonableness of the commission, if any (all for the specific transaction and
on a continuing basis). In evaluating the best execution available, and in
selecting the broker-dealer to execute a particular transaction, the Sub-Adviser
may also consider the brokerage and research services (as those terms are used
in Section 28(e) of the Securities Exchange Act of 1934 ("1934 Act")) provided
to the Portfolio and/or other accounts over which the Sub-Adviser, an affiliate
of the Sub-Adviser (to the extent permitted by law) or another investment
adviser of the Portfolio exercises investment discretion. The Sub-Adviser is
authorized to cause the Portfolio to pay a broker-dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of commission
another broker-dealer would have charged for effecting that transaction if, but
only if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
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services provided by such broker-dealer viewed in terms of that particular
transaction or in terms of all of the accounts over which investment discretion
is so exercised.
11. This Agreement may be amended at any time by agreement of the parties,
provided that the amendment shall be approved both by the vote of a majority of
the Trustees of the Trust, including a majority of the Trustees who are not
"interested persons," as defined in Section 2(a)(19) of the Act, of any party to
this Agreement (other than as Trustees of the Trust) cast in person at a meeting
called for that purpose, and on behalf of the Portfolio by the holders of a
majority of the outstanding voting securities of the Portfolio, as defined in
Section 2(a)(42) of the Act.
12. This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
13. This Agreement will become binding on the parties hereto upon their
execution of the attached Exhibit A to this Agreement.
14. It is understood that any information or recommendation supplied by the
Sub-Adviser in connection with the performance of its obligations hereunder is
to be regarded as confidential and for use only by the Adviser, the Trust or
such persons as the Adviser may designate in connection with the Portfolio. It
is also understood that any information supplied to Sub-Adviser in connection
with the performance of its obligations hereunder, particularly, but not
necessarily limited to, any list of securities which, on a temporary basis, may
not be bought or sold for the Portfolio, is to be regarded as confidential and
for use only by the Sub-Adviser in connection with its obligation to provide
investment advice and other services to the Portfolio.
15. Each party to this Agreement hereby acknowledges that it is registered as
an investment adviser under the Investment Advisers Act of 1940, it will use its
reasonable best efforts to maintain such registration, and it will promptly
notify the other if it ceases to be so registered, if its registration is
suspended for any reason, or if it is notified by any regulatory organization or
court of competent jurisdiction that it should show cause why its registration
should not be suspended or terminated.
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EXHIBIT A
VARIABLE INVESTORS SERIES TRUST
SUB-ADVISORY COMPENSATION
For all services rendered by Sub-Adviser hereunder, Adviser shall pay to
Sub-Adviser and Sub-Adviser agrees to accept as full compensation for all
services rendered hereunder, an annual fee as follows:
GROWTH & INCOME PORTFOLIO
.50 of 1% on an annualized basis of the average daily net assets
of the Portfolio.
Such fees shall accrue daily and be paid monthly.
Witness the due execution hereof this 1st day of June, 1995.
FIRST VARIABLE ADVISORY SERVICES CORP.
Attest
__________________________ By:________________________________
WARBURG, XXXXXX COUNSELLORS, INC.
Attest:
__________________________ By:_________________________________
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VARIABLE INVESTORS SERIES TRUST
SUB-ADVISORY AGREEMENT
This Agreement is made between FIRST VARIABLE ADVISORY SERVICES CORP., a
Massachusetts corporation and a wholly-owned subsidiary of First Variable Life
Insurance Company ("Life Company"), having its principal place of business in
Boston, Massachusetts (hereinafter referred to as "Adviser"), and PILGRIM XXXXXX
& ASSOCIATES, LTD., a Delaware corporation, having its principal place of
business in Wayne, Pennsylvania (hereinafter referred to as "Sub-Adviser").
WHEREAS, Variable Investors Series Trust (the "Trust"), an open-end diversified
management investment company, as that term is defined in the Investment Company
Act of 1940, as amended ("Act"), that is registered as such with the Securities
and Exchange Commission has appointed Adviser as investment adviser for all its
portfolios including the Small Cap Portfolio; and
WHEREAS, Sub-Adviser is engaged in the business of rendering investment
management services; and
WHEREAS, Adviser desires to retain Sub-Adviser to provide certain investment
management services for the Small Cap Portfolio (the "Portfolio") of the Trust
as more fully described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Adviser hereby retains Sub-Adviser to assist Adviser in its capacity as
investment adviser for the Portfolio. Subject to the oversight and review of
Adviser and the Board of Trustees of the Trust, Sub-Adviser shall manage the
investment and reinvestment of the assets of the Portfolio. Sub-Adviser will
determine in its discretion, subject to the oversight and review of Adviser, the
investments to be purchased or sold, will provide Adviser with records
concerning its activities which Adviser or the Trust is required to maintain,
and will render regular reports to Adviser and to officers and Trustees of the
Trust concerning its discharge of the foregoing responsibilities. The services
of Sub-Adviser hereunder are not to be deemed exclusive, and the Sub-Adviser
shall be free to render similar services to others.
2. Sub-Adviser, in its supervision of the investments of the Portfolio, will
be guided by the Portfolio's investment objectives and policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws of
the Trust and as set forth in the Registration Statement and exhibits as may be
on file with the Securities and Exchange Commission, all as communicated by
Adviser to Sub-Adviser.
3. Adviser shall pay to Sub-Adviser, for all services rendered to the
Portfolio by Sub-Adviser hereunder, the fees set forth in Exhibit A attached
hereto. During the term of this Agreement, Sub-Adviser will bear all expenses
incurred by it in the performance of its duties hereunder.
4. The term of this Agreement shall begin on the date of its execution and
shall remain in effect for two years from that date and from year to year
thereafter, subject to the provisions for termination and all of the other terms
and conditions hereof if: (a) such continuation shall be specifically approved
at least annually by the vote of a majority of the Trustees of the Trust,
including a majority of the Trustees who are not "interested persons", as
defined in Section 2(a)(19) of the Act, of any party (other than as Trustees of
the Trust) cast in person at a meeting called for that purpose; and (b) Adviser
shall not have notified the Trust in writing at least sixty (60) days prior to
the anniversary date of this Agreement in any year thereafter that it does not
desire such continuation with respect to the Portfolio.
5. Notwithstanding any provision in this Agreement, it may be terminated at
any time without the payment of any penalty, by the Trustees of the Trust or by
a vote of a majority of the outstanding voting securities of the Portfolio, as
defined in Section 2(a)(42) of the Act, on sixty (60) days' written notice to
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Sub-Adviser, or by Adviser or Sub-Adviser upon not less than sixty (60) days'
written notice to the other party.
6. This Agreement may not be assigned by Adviser or Sub-Adviser and shall
automatically terminate in the event of any assignment. Sub-Adviser may employ
or contract with such other person, persons, corporation, or corporations at its
own cost and expense as it shall determine in order to assist it in carrying out
this Agreement.
7. Sub-Adviser represents and warrants that the Portfolio will at all times
be invested in such a manner as to ensure compliance with Section 817(h) of the
Internal Revenue Code of 1986, as amended and Treasury Regulations Section
1.817-5, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts and any amendments or other modifications
to such Section or Regulations; provided, however, that Adviser shall promptly
provide Sub-Adviser with copies of such Section 817(h) and Regulation Section
1.817-5 as currently in effect and as modified or amended from time to time.
Sub-Adviser will be relieved of this obligation and shall be held harmless when
(i) the Portfolio is invested in compliance with the requirements of Section
817(h) and/or Regulation Section 1.817-5 as most recently provided to
Sub-Adviser by Adviser or (ii) when direction from the Adviser or Trustees
causes non-compliance with Section 817(h) and/or Regulation Section 1.817-5.
Sub-Adviser agrees to provide quarterly reports to Adviser, executed by a duly
authorized officer of Sub-Adviser, within seven (7) days of the close of each
calendar quarter certifying as to compliance with said Section or Regulations.
In addition to the quarterly reports, Adviser may request and Sub-Adviser agrees
to provide Section 817 diversification compliance reports at more frequent
intervals, as reasonably requested by Adviser.
8. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties under this Agreement on the part
of Sub-Adviser, Sub-Adviser shall not be liable to Adviser, the Trust, the
Portfolio or to any shareholder for any act or omission in the course of or
connected in any way with rendering services or for any losses that may be
sustained in the purchase, holding, or sale of any security.
9. The Sub-Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of the Portfolio with broker-dealers
selected by the Sub-Adviser. In executing portfolio transactions and selecting
broker-dealers, the Sub-Adviser will use its best efforts to seek best execution
on behalf of the Portfolio. In assessing the best execution available for any
transaction, the Sub-Adviser shall consider all factors it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker-dealer, and the
reasonableness of the commission, if any (all for the specific transaction and
on a continuing basis). In evaluating the best execution available, and in
selecting the broker-dealer to execute a particular transaction, the Sub-Adviser
may also consider the brokerage and research services (as those terms are used
in Section 28(e) of the Securities Exchange Act of 1934 ("1934 Act")) provided
to the Portfolio and/or other accounts over which the Sub-Adviser, an affiliate
of the Sub-Adviser (to the extent permitted by law) or another investment
adviser of the Portfolio exercises investment discretion. The Sub-Adviser is
authorized to cause the Portfolio to pay a broker-dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of commission
another broker-dealer would have charged for effecting that transaction if, but
only if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer viewed in terms of that particular transaction or
in terms of all of the accounts over which investment discretion is so
exercised.
10. This Agreement may be amended at any time by agreement of the parties,
provided that the amendment shall be approved both by the vote of a majority of
the Trustees of the Trust, including a majority of the Trustees who are not
"interested persons," as defined in Section 2(a)(19) of the Act, of any party to
this Agreement (other than as Trustees of the Trust) cast in person at a meeting
called for that
8
purpose, and on behalf of the Portfolio by the holders of a majority of the
outstanding voting securities of the Portfolio, as defined in Section 2(a)(42)
of the Act.
11. This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
12. This Agreement will become binding on the parties hereto upon their
execution of the attached Exhibit A to this Agreement.
13. It is understood that any information or recommendation supplied by the
Sub-Adviser in connection with the performance of its obligations hereunder is
to be regarded as confidential and for use only by the Adviser, the Trust or
such persons as the Adviser may designate in connection with the Portfolio. It
is also understood that any information supplied to Sub-Adviser in connection
with the performance of its obligations hereunder, particularly, but not
necessarily limited to, any list of securities which, on a temporary basis, may
not be bought or sold for the Portfolio, is to be regarded as confidential and
for use only by the Sub-Adviser in connection with its obligation to provide
investment advice and other services to the Portfolio.
14. Each party to this Agreement hereby acknowledges that it is registered as
an investment adviser under the Investment Advisers Act of 1940, it will use its
reasonable best efforts to maintain such registration, and it will promptly
notify the other if it ceases to be so registered, if its registration is
suspended for any reason, or if it is notified by any regulatory organization or
court of competent jurisdiction that it should show cause why its registration
should not be suspended or terminated.
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EXHIBIT A
VARIABLE INVESTORS SERIES TRUST
SUB-ADVISORY COMPENSATION
For all services rendered by Sub-Adviser hereunder, Adviser shall pay to
Sub-Adviser and Sub-Adviser agrees to accept as full compensation for all
services rendered hereunder, an annual fee as follows:
SMALL CAP PORTFOLIO
.50 of 1% on an annualized basis of the average daily net assets of the
Portfolio.
Such fees shall accrue daily and be paid monthly.
Witness the due execution hereof this 1st day of June, 1995.
FIRST VARIABLE ADVISORY SERVICES CORP.
Attest:
/s/Xxxxxx X. Xxxxxxx By: /s/Xxxx X. Xxxxxxxx
--------------------------- ---------------------------------
PILGRIM XXXXXX & ASSOCIATES, LTD.
Attest:
By:
--------------------------- ---------------------------------
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SUB-ADVISORY AGREEMENT
AGREEMENT dated as of September 22, 1994, among STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company (the "Sub-Adviser"), FIRST VARIABLE
ADVISORY SERVICES CORP. (the "Adviser") and VARIABLE INVESTORS SERIES TRUST (the
"Trust").
An Investment Advisory Agreement (the "Advisory Agreement") dated
September 22, 1994, between the Adviser and the Trust on behalf of the Tilt
Utility Portfolio (the "Portfolio"), provides that the Adviser shall manage the
investment of the Portfolio's assets in accordance with the Trust's prospectus
and statement of additional information (the "Prospectus") and may delegate
responsibilities to a sub-adviser.
1. The Sub-Adviser will manage the investment and reinvestment of the assets
of the Portfolio in accordance with the Prospectus and will perform the
other services herein set forth, subject to the supervision of the Adviser
and the Board of Trustees of the Trust.
2. In carrying out its obligations hereunder, the Sub-Adviser shall:
(a) evaluate such economic, statistical and financial information and
undertake such investment research as it shall believe advisable;
(b) purchase and sell securities and other investments for the Portfolio
in accordance with the procedures described in the Prospectus; and
(c) provide such reports and data in hard copy and machine readable form
as are requested by Adviser.
3. The Adviser shall pay the Sub-Adviser monthly a fee at the annual rate of
.40% of the average daily net assets of the Portfolio on the first $100
million of net assets under management and .30% of the average daily net
assets of the Portfolio on any net assets under management over and above
$100 million. During the term of this Agreement, the Sub-Adviser will bear
all expenses incurred by it in the performance of its duties hereunder.
4. The Sub-Adviser shall be free to render similar services to others so long
as its services hereunder are not impaired thereby.
5. This Agreement shall become effective as of the date of its execution, and
(a) unless otherwise terminated, shall continue until two years from its
date of execution and from year to year thereafter so long as approved
annually in accordance with the Investment Company Act of 1940, as
amended, and the rules thereunder (the "1940 Act"); (b) may be terminated
without penalty on sixty (60) days' written notice to the Sub-Adviser (i)
by the Adviser, (ii) by vote of the Board of Trustees of the Trust or
(iii) by vote of a majority of the outstanding voting securities of the
Portfolio; (c) shall automatically terminate in the event of its
assignment; and (d) may be terminated without penalty by the Sub-Adviser
on sixty (60) days' written notice to the Adviser and the Trust.
6. This Agreement may be amended in accordance with the 1940 Act.
7. For the purpose of this Agreement, the terms "vote of a majority of the
outstanding voting securities" and "assignment" shall have their
respective meanings defined in the 1940 Act and exemptions and
interpretations issued by the Securities and Exchange Commission under the
1940 Act.
8. Sub-Adviser represents and warrants that the Portfolio will at all times
be invested in such a manner as to ensure compliance with Section 817(h)
of the Internal Revenue Code of 1986, as
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amended and Treasury Regulations Section 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications to such
Section or Regulations. Sub-Adviser agrees to provide quarterly reports to
Adviser, executed by a duly authorized officer of Sub-Adviser, within
seven (7) days of the close of each calendar quarter certifying as to
compliance with said Section or Regulations. In addition to the quarterly
reports, Adviser may request and Sub-Adviser agrees to provide Section 817
diversification compliance reports at more frequent intervals, as
reasonably requested by Adviser.
9. In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Sub-Adviser or reckless disregard of its obligations and
duties hereunder, the Sub-Adviser shall not be subject to any liability to
the Adviser, the Trust or the Portfolio, or to any shareholder of the
Trust or the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder.
10. The Sub-Adviser shall provide marketing support to the Adviser in
connection with the sale of Trust shares and/or Life Company variable
insurance contracts, as reasonably requested by the Adviser. Such support
shall include, but not necessarily be limited to, presentations by
representatives of the Sub-Adviser at investment seminars, conferences and
other industry meetings. Any materials utilized by the Adviser which
contain any information relating to the Sub-Adviser shall be submitted to
the Sub-Adviser for approval prior to use, not less than five (5) business
days before such approval is needed by the Adviser. Any materials utilized
by the Sub-Adviser which contain any information relating to the Adviser,
the Life Company (including any information relating to its separate
accounts or variable insurance contracts) or the Trust shall be submitted
to the Adviser for approval prior to use, not less than five (5) business
days before such approval is needed by the Sub-Adviser.
VARIABLE INVESTORS SERIES TRUST
By: /s/Xxxx X. Xxxxxxxx
-----------------------------------
Title: Xxxx X. Xxxxxxxx, Treasurer
FIRST VARIABLE ADVISORY SERVICES CORP.
By: /s/Xxxx X. Xxxxxxxx
-----------------------------------
Title: Xxxx X. Xxxxxxxx, Treasurer
STATE STREET BANK AND TRUST COMPANY
By:
------------------------------------
Title:
A copy of the document establishing the Trust is filed with the Secretary of the
Commonwealth of Massachusetts. This Agreement is executed by officers not as
individuals and is not binding upon any of the Trustees, officers or
shareholders of the Trust individually but only upon the assets of the
Portfolio.
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SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 22nd day of September, 1994, between FIRST
VARIABLE ADVISORY SERVICES CORP., a corporation organized under the laws of the
Commonwealth of Massachusetts and a wholly-owned subsidiary of First Variable
Life Insurance Company ("Life Company"), and having its principal place of
business in Boston, Massachusetts (the "Adviser"), and VALUE LINE, INC., a
corporation organized under the laws of the state of New York and having its
principal place of business at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000
("Sub-Adviser").
WHEREAS, the Adviser is engaged principally in the business of rendering
investment management services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment management services and is registered as an investment
adviser under the Advisers Act; and
WHEREAS, Variable Investors Series Trust, a Massachusetts business trust
(the "Trust"), engages in business as an open-end management investment company
and is so registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series, with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust currently offers shares in several series including the
Common Stock Portfolio and Multiple Strategies Portfolio, such series together
with all other series subsequently established by the Trust with respect to
which the Sub-Adviser renders management and investment advisory services
pursuant to the terms of this Agreement, being herein collectively referred to
as the "Portfolios" and individually as a "Portfolio"; and
WHEREAS, pursuant to the Investment Advisory Agreement, as of even date
herewith, between the Trust and the Adviser (the "Advisory Agreement"), the
Adviser is required to perform investment advisory services for the Portfolios.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF SUB-ADVISER.
(a) Common Stock Portfolio and Multiple Strategies Portfolio. The Adviser
hereby employs the Sub-Adviser to provide investment advisory services to the
Common Stock Portfolio and the Multiple Strategies Portfolio for the period and
on the terms herein set forth. The Sub-Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
(b) Additional Portfolios. In the event that the Trust establishes one or
more additional series of shares other than the Common Stock Portfolio and the
Multiple Strategies Portfolio with respect to which the Adviser desires to
retain the Sub-Adviser to render investment advisory services hereunder, the
Adviser shall so notify the Sub-Adviser in writing, indicating the advisory fee
to be payable with respect to the additional series of shares. If the
Sub-Adviser is willing to render such services on the terms provided for herein,
it shall so notify the Adviser in writing, whereupon such series shall become a
Portfolio hereunder.
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2. DUTIES OF ADVISER AND SUB-ADVISER.
(i) Delivery of Documents. The Adviser has furnished the Sub-Adviser with
true copies of each of the following:
(a) The Trust's Declaration of Trust, as filed with the Secretary of
State of the Commonwealth of Massachusetts and all amendments thereto
(such Declaration of Trust, as presently in effect and as it shall from
time to time be amended, is herein called the "Declaration");
(b) The Trust's By-Laws and amendments thereto (such By-laws, as
presently in effect and shall from time to time be amended, are herein
called the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Adviser and Sub-Adviser and approving the Advisory
Agreement and this Agreement;
(d) The Trust's Notification of Registration on Form N-8A under the
1940 Act as filed with the Securities and Exchange Commission on January
2, 1987 and all amendments thereto;
(e) The Trust's current Registration Statement on Form N-1A under
the Securities Act of 1933, as amended ("1933 Act") (File No. 33-11182)
and the 1940 Act (File No. 811-4969) as most recently filed with the
Securities and Exchange Commission (the "Registration Statement");
(f) The Trust's most recent prospectus (such prospectus, as
presently in effect and all amendments and supplements thereto are herein
called the "Prospectus");
(g) All resolutions of the Board of Trustees of the Trust pertaining
to the management of the assets of the Portfolios; and
(h) Copies of the Advisory Agreement dated September 22, 1994
between the Trust and the Adviser relating to the Portfolios.
The Adviser will furnish the Sub-Adviser from time to time with
copies of all amendments of or supplements to the foregoing, but, with
respect to items (a), (b) or (h), only if such amendments or supplements
relate to or affect the obligations of the Sub-Adviser hereunder.
(ii) The Sub-Adviser, at its own expense, shall furnish the following
services to the Trust:
(a) Investment Program. The Sub-Adviser is hereby authorized and
directed and hereby agrees, subject to the stated investment objective and
policies of the Portfolios as set forth in the Trust's current
Registration Statement and subject to the supervision of the Adviser and
the Board of Trustees of the Trust, to (i) develop and furnish an
investment program and strategy for each Portfolio as may from time to
time in the circumstances appear most appropriate to the achievement of
the investment objective of each Portfolio as stated in the aforesaid
Registration Statement, (ii) provide research and analysis relative to the
investment program and investments of each Portfolio, (iii) determine from
time to time what securities and other investments will be purchased,
held, sold or exchanged by each Portfolio and what portion, if any, of the
assets of each Portfolio shall be held in cash or cash equivalents, and
(iv) make changes on behalf of the Trust in the investments of each
Portfolio. In accordance with paragraph 2(ii)(b), the Sub-Adviser shall
arrange for the placing of all orders for the purchase and sale of
securities and other investments for each Portfolio's account. The
Sub-Adviser will make its officers and employees
14
available to meet with the Adviser's officers and directors on due notice
at reasonable times to review the investments and investment program of
each Portfolio in the light of current and prospective economic and market
conditions.
In the performance of its duties hereunder, the Sub-Adviser is and
shall be an independent contractor and unless otherwise expressly provided
or authorized shall have no authority to act for or represent any
Portfolio or the Trust in any way or otherwise be deemed to be an agent of
any Portfolio, the Trust or of the Adviser.
(b) Portfolio Transactions. In connection with the management of the
investment and reinvestment of the assets of each Portfolio, the
Sub-Adviser, acting by its own officers, directors or employees or by a
duly authorized subcontractor, is authorized to select the broker or
dealers that will execute purchase and sale transactions for the Trust.
In executing portfolio transactions and selecting brokers or
dealers, if any, the Sub-Adviser will use its best efforts to seek on
behalf of a Portfolio the best overall terms available. In assessing the
best overall terms available for any transaction, the Sub-Adviser shall
consider all factors it deems relevant, including the breadth of the
market and the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of
the commission, if any (for the specific transaction and on a continuing
basis). In evaluating the best overall terms available, and in selecting
the broker or dealer, if any, to execute a particular transaction, the
Sub-Adviser may also consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) provided to any Portfolio of the Trust and/or other accounts over
which the Sub-Adviser exercises investment discretion. With the prior
approval of the Trustees, the Sub-Adviser may pay to a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction which is in excess of the amount of
commission which another broker or dealer would have charged for effecting
that transaction if, but only if, the Sub-Adviser determines in good faith
that such commission was reasonable in relation to the value of the
brokerage and research services provided. Such prior approval may be
obtained from the Trustees with respect to the Sub-Adviser's investment
program and need not be obtained on a transaction-by-transaction basis.
The Sub-Adviser will advise the Portfolios' custodian and the
Adviser promptly of each purchase and sale of a portfolio security,
specifying the name of the issuer, the description and amount or number of
shares of the security purchased, the market price, the commission and
gross or net price, the trade date and settlement date and the identity of
the effecting broker or dealer.
The Sub-Adviser shall, upon due notice from the Adviser, provide
such periodic and special reports describing any such research, advice or
other services received and the incremental commissions, net price or
other consideration to which they relate.
Notwithstanding the foregoing, the Sub-Adviser agrees that the
Adviser shall have the right to identify securities that may not be
purchased on behalf of any Portfolio and/or brokers and dealers through
which portfolio transactions on behalf of the Portfolio may not be
effected, including, without limitation, brokers or dealers affiliated
with the Adviser. The Sub-Adviser shall refrain from purchasing such
securities for the Portfolio or directing any portfolio transaction to any
such broker or dealer on behalf of the Portfolio, unless and until the
written approval of the Adviser to do so is obtained. In addition, the
Sub-Adviser agrees that it shall not direct portfolio transactions for the
Portfolio through any broker or dealer that is an "affiliated person" of
the Sub-Adviser (as that term is defined in the Act or interpreted under
applicable rules and regulations of the Securities and Exchange
Commission) without the prior written approval of the Adviser and in no
event shall the Sub-Adviser direct portfolio transactions on behalf of the
Portfolio to any broker/dealer in recognition of sales of shares of any
investment company or receipt of research or other service without prior
approval of the Adviser.
15
(c) Reports. The Sub-Adviser shall render to the Board of Trustees
of the Trust such periodic and special reports as the Board of Trustees
may request with respect to matters relating to the duties of the
Sub-Adviser set forth herein.
(d) Attendance of Board Meetings. The Sub-Adviser's Portfolio
manager shall attend at least two (2) regularly scheduled meetings of the
Board of Trustees of the Trust annually and shall attend such additional
meetings of the Board of Trustees as is deemed necessary or advisable by
the Board of Trustees and/or the Adviser, all as reasonably requested by
the Board of Trustees and/or the Adviser.
(e) Marketing Expenses. The Sub-Adviser shall not be responsible for
the payment of any marketing expenses with respect to the distribution of
Trust shares and/or Life Company variable insurance contracts.
3. SUB-ADVISORY FEE.
For the services to be provided by the Sub-Adviser as provided in
Paragraph 2 hereof, the Adviser shall pay to the Sub-Adviser an annual gross
sub-advisory fee equal to .45% of the average daily net assets of the
Portfolios.
Such fees shall be accrued daily and paid as soon as practicable after the
last day of each calendar month but not later than 30 days thereafter. A late
payment penalty of 1 1/2% shall be applied for every month or fraction thereof
that payment is delayed beyond 30 days.
The Sub-Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation hereunder to the extent the Sub-Adviser may,
by notice to the Adviser, voluntarily declare.
In the case of commencement or termination of this Agreement with respect
to any Portfolio during any calendar month, the fee with respect to such
Portfolio for that month shall be reduced proportionately based upon the number
of calendar days during which it is in effect, and the fee shall be computed
based upon the average daily net assets of such Portfolio for the days during
which it is in effect.
16
4. EXPENSES.
During the term of this Agreement, the Sub-Adviser will bear all expenses
incurred by it in the performance of its duties hereunder.
5. REPRESENTATION AND WARRANTY.
COMPLIANCE WITH APPLICABLE REGULATIONS.
In performing its duties hereunder, the Sub-Adviser
(i) shall establish compliance procedures (copies of which shall be
provided to the Adviser, and shall be subject to review and approval by
the Adviser) reasonably calculated to ensure compliance at all times with:
all applicable provisions of the 1940 Act and the Advisers Act, and any
rules and regulations adopted thereunder; Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"); Section 817(h) of the Code
and Treasury Regulations Section 1.817-5 relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts
and any amendments or other modifications to such Section or Regulations,
which compliance procedures shall include regular quarterly reports to be
provided within seven (7) days of the close of each calendar quarter by
the Sub-Adviser to the Adviser, which reports will be executed by a duly
authorized officer of the Sub-Adviser and will certify as to compliance
with said Section or Regulations, and more frequent Section 817
diversification compliance reports as reasonably requested by the Adviser;
the provisions of the Registration Statement; the provisions of the
Declaration and the By-laws of the Trust, as the same may be amended from
time to time; and any other applicable provisions of state, federal or
foreign law.
(ii) acknowledges that the Trust has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the Act and that the
Sub-Adviser and certain of its employees, officers and directors may be
subject to reporting requirements thereunder and, accordingly, agrees that
it shall, on a timely basis, furnish, and shall cause its employees,
officers and directors to furnish, to the Adviser and/or to the Trust, all
reports and information required to be provided under such code of ethics
with respect to such persons.
(iii) agrees that all records it maintains for the Trust are the property
of the Trust and further agrees to surrender promptly to the Trust any
such records upon the Trust's request all in accordance with Rule 31a-3
under the 1940 Act.
6. LIABILITY OF SUB-ADVISER.
Neither the Sub-Adviser nor the officers, directors, employees, agents,
legal representatives or controlling persons (collectively, "Related Persons")
of the Sub-Adviser shall be liable for any error of judgment or mistake of law,
or for any loss suffered by any Portfolio or its shareholders in connection with
the matters to which this Agreement relates; provided that, except as set forth
in the succeeding paragraph, no provision of this Agreement shall be deemed to
protect the Sub-Adviser or its Related Persons against any liability to which it
might otherwise be subject by reason of any willful misfeasance, bad faith or
gross negligence or the reckless disregard of the Sub-Adviser's obligations and
duties under this Agreement (each of which is hereby referred to as a "Culpable
Act").
Neither the Sub-Adviser nor its Related Persons shall be liable for any
error of judgment or mistake of law, or for any loss suffered by the Adviser or
its Related Persons in connection with the matters to which this Agreement
relates; provided that this provision shall not be deemed to protect the
Sub-Adviser or its Related Persons against any liability to which it might
otherwise be subject by reason of any
17
Culpable Act by the Sub-Adviser or its Related Persons or arising out of the
negligence of the Sub-Adviser or its Related Persons.
The Sub-Adviser and its Related Persons shall incur no liability arising
from the failure of any Service Provider to provide complete and accurate
information to the Sub-Adviser, it being the intention that, in performing
hereunder, the Sub-Adviser and its Related Persons may rely on the accuracy of
all information received from the Trust, the Adviser or from any Service
Provider and on all instructions and directions received from the Adviser or the
Trust.
7. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. This Agreement shall become effective with respect to the
Common Stock Portfolio and the Multiple Strategies Portfolio on the date hereof
and, with respect to any additional Portfolio(s), on the date of receipt by the
Adviser of notice from the Sub-Adviser in accordance with Paragraph 1(b) hereof
that the Sub-Adviser is willing to serve as Sub-Adviser with respect to such
Portfolio(s). Unless terminated as herein provided, this Agreement shall remain
in full force and effect for two years from the date hereof with respect to the
Common Stock Portfolio and the Multiple Strategies Portfolio and, with respect
to each additional Portfolio, for two years from the date on which such
Portfolio becomes a Portfolio hereunder. Subsequent to such initial periods of
effectiveness, this Agreement shall continue in full force and effect for
periods of one year thereafter with respect to each Portfolio so long as such
continuance with respect to any such Portfolio is approved at least annually (a)
by either the Trustees of the Trust or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of such Portfolio, and (b), in
either event, by the vote of a majority of the Trustees of the Trust who are not
parties to this Agreement or "interested persons" (as defined in the 0000 Xxx)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.
(b) Amendment. This Agreement may be amended by agreement of the parties,
provided that the amendment shall be approved both by the vote of a majority of
the Trustees of the Trust, including a majority of the Trustees who are not
parties to this Agreement or interested persons of any such party to this
Agreement cast in person at a meeting called for that purpose, and by the
holders of a majority of the outstanding voting securities of the Trust.
(c) Termination. This Agreement may be terminated with respect to any
Portfolio at any time, without payment of any penalty, by vote of the Trustees
of the Trust or by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of the Portfolio, or by the Adviser or Sub-Adviser, in
each case on sixty (60) days' prior written notice to the other party. Upon the
effective date of termination of this Agreement, the Sub-Adviser shall deliver
all books and records of the Trust or any Portfolio held by it (i) to such
entity as the Trust may designate as a successor sub-adviser, or (ii) to the
Adviser.
(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).
(e) Approval, Amendment or Termination by Individual Portfolio. Any
approval, amendment or termination of this Agreement by the holders of a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of
any Portfolio shall be effective to continue, amend or terminate this Agreement
with respect to any such Portfolio notwithstanding (i) that such action has not
been approved by the holders of a majority of the outstanding voting securities
of any other Portfolio affected thereby, and (ii) that such action has not been
approved by the vote of a majority of the outstanding voting securities of the
Trust, unless such action shall be required by any applicable law or otherwise.
18
8. SERVICES NOT EXCLUSIVE.
The services of the Sub-Adviser to the Adviser in connection with the
Portfolios hereunder are not to be deemed exclusive, and the Sub-Adviser shall
be free to render similar services to others so long as its services hereunder
are not impaired thereby. It is understood that the persons employed by the
Sub-Adviser to assist it in the performance of its duties hereunder will not
devote their full time to such services and nothing hereunder contained shall be
deemed to limit or restrict the right of the Sub-Adviser to engage in or devote
time and attention to other businesses or to render services of whatever kind or
nature.
9. MISCELLANEOUS.
(a) Notices. All notices or other communications given under this
Agreement shall be made by guaranteed overnight delivery, telecopy or certified
mail; notice is effective when received. Notice shall be given to the parties at
the following addresses:
Adviser: Xxxx X. Xxxxxxxx
Treasurer
First Variable Advisory Services Corp.
Federal Reserve Building
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Sub-Adviser: Value Line, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
ATTN: Xxxx Xxxxx
with a copy to the Chairman
(b) Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall not
be thereby affected.
(c) Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Agreement to be executed as of the date first set forth above.
19
FIRST VARIABLE ADVISORY SERVICES CORP.
ATTEST:
By: _________________________ By: _______________________________
Xxxx X. Xxxxxxxx
Its: ________________________ Its: ______________________________
Treasurer
VALUE LINE, INC.
ATTEST:
By: _________________________ By: _______________________________
Its: ________________________ Its: ______________________________
20
VARIABLE INVESTORS SERIES TRUST
SUB-ADVISORY AGREEMENT
This Agreement is made between FIRST VARIABLE ADVISORY SERVICES CORP., a
Massachusetts corporation and a wholly-owned subsidiary of First Variable Life
Insurance Company ("Life Company"), having its principal place of business in
Boston, Massachusetts (hereinafter referred to as "Adviser"), and
STRONG/CORNELIUSON CAPITAL MANAGEMENT, INC., a Wisconsin corporation, having its
principal place of business in Menomonee Falls, Wisconsin (hereinafter referred
to as "Sub-Adviser").
WHEREAS, Variable Investors Series Trust (the "Trust"), an open-end diversified
management investment company, as that term is defined in the Investment Company
Act of 1940, as amended ("1940 Act"), that is registered as such with the
Securities and Exchange Commission has appointed Adviser as investment adviser
for all its portfolios including the U.S. Government Bond Portfolio; and
WHEREAS, Sub-Adviser is engaged in the business of rendering investment
management services; and
WHEREAS, Adviser desires to retain Sub-Adviser to provide certain investment
management services for the U.S. Government Bond Portfolio (referred to
hereinafter as the "Portfolio") of the Trust as more fully described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Adviser hereby retains Sub-Adviser to act as investment adviser for the
Portfolio, subject to the oversight and review of Adviser and the Board of
Trustees of the Trust, and subject to the terms of this Agreement.
Sub-Adviser shall manage the investment and reinvestment of the assets of
the Portfolio and is hereby authorized and directed, and hereby agrees,
subject to the stated investment policies and restrictions of the
Portfolio as set forth in the Trust's current prospectus and statement of
additional information as currently in effect and as supplemented or
amended from time to time and subject to the directions of the Adviser and
the Trust's Board of Trustees, to purchase, hold and sell investments for
the account of the Portfolio and to monitor on a continuous basis the
performance of such investments.
2. The Sub-Adviser is authorized, subject to the supervision of the Adviser
and the Board of Trustees of the Trust, to place orders for the purchase
and sale of the Portfolio's investments with or through such persons,
brokers or dealers as it may determine, and to negotiate commissions to be
paid on such transactions in accordance with the Portfolio's policy with
respect to brokerage as set forth in the prospectus. The Sub-Adviser may,
on behalf of the Portfolio, pay brokerage commissions to a broker which
provides brokerage and research services to the Sub-Adviser in excess of
the amount another broker would have charged for effecting the
transaction, provided (i) the Sub-Adviser determines in good faith that
the amount is reasonable in relation to the value of the brokerage and
research services provided by the executing broker in terms of the
particular transaction or in terms of the Sub-Adviser's overall
responsibilities with respect to the Portfolio and the accounts as to
which the Sub-Adviser exercises investment discretion, (ii) such payment
is made in compliance with Section 28(e) of the Securities Exchange Act of
1934, as amended, and any other applicable laws and regulations, and (iii)
in the opinion of the Sub-Adviser, the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio
over the long term. It is recognized that the services provided by such
brokers may be useful to the Sub-Adviser in connection with the
Sub-Adviser's services to other clients. On occasions when the Sub-Adviser
deems the purchase or sale of a security to be in the best interests of
the Portfolio as well as other clients of the Sub-Adviser, the
Sub-Adviser, to the extent permitted by applicable laws and regulations,
may, but shall be under no obligation to, aggregate the securities to be
sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation
of securities so sold or purchased, as well as the expenses incurred in
the transaction, will be made by the Sub-Adviser in the manner the
Sub-Adviser considers to be the most equitable and consistent with its
fiduciary obligations to the Portfolio and to such other clients.
3. The Sub-Adviser will maintain all books and records required to be
maintained pursuant to the 1940 Act and the rules and regulations
promulgated thereunder with respect to transactions made by it on behalf
of the Portfolio including, without limitation, the books and records
required by subsections (b)(1), (5), (6), (7), (9), (10) and (11) and
subsection (f) of Rule 31a-1 under the 1940 Act and shall timely furnish
to the
21
Adviser all information relating to the Sub-Adviser's services hereunder
needed by the Adviser to keep such other books and records of the
Portfolio required by Rule 31a-1 under the 1940 Act. The Sub-Adviser will
also preserve all such books and records for the periods prescribed in
Rule 31a-2 under the 1940 Act. The Sub-Adviser further agrees that all
books and records maintained hereunder shall be made available to the
Portfolio or the Adviser at any time upon request, including telecopy
without delay, during any business day.
4. From time to time as the Adviser or the Portfolio may request, the
Sub-Adviser will furnish the requesting party reports on portfolio
transactions and reports on investments held in the portfolio, all in such
detail as the Adviser or the Portfolio may reasonably request.
5. The Sub-Adviser acknowledges receipt of a Custody Agreement dated as of
April 30, 1988, for the Portfolio and agrees to comply at all times with
all requirements relating to such agreement. The Sub-Adviser shall provide
the Adviser, and the Adviser shall provide the Portfolio's custodian, on
each business day with information relating to all transactions concerning
the Portfolio's assets.
6. The Sub-Adviser agrees to act in accordance with the Trust's Declaration
of Trust, By-Laws, currently effective registration statement under the
1940 Act, including any amendments or supplements thereto, and Notice of
Eligibility under Rule 4.5 of the Commodity Exchange Act ("CEA"), if
applicable, (collectively, "Governing Instruments and Regulatory Filings")
and any instructions or directions of the Trust, its Board of Trustees or
the Adviser. The Sub-Adviser acknowledges receipt of the Trust's Governing
Instruments and Regulatory Filings. The Adviser hereby agrees to provide
to the Sub-Adviser any amendments, supplements or other changes to the
Governing Instruments and Regulatory Filings as soon as practicable after
such materials become available and, upon receipt by the Sub-Adviser, the
Sub-Adviser will act in accordance with such amended, supplemented or
otherwise changed Governing Instruments and Regulatory Filings.
7. The Sub-Adviser shall direct the custodian as to how to vote such proxies
as may be necessary or advisable in connection with any matters submitted
to a vote of shareholders of securities held by the Portfolio.
8. Adviser shall pay to Sub-Adviser, for all services rendered to the
Portfolio by Sub-Adviser hereunder, the fees set forth in Exhibit A
attached hereto. During the term of this Agreement, Sub-Adviser will bear
all expenses incurred by it in the performance of its duties hereunder.
9. The Sub-Adviser shall provide marketing support to the Adviser in
connection with the sale of Trust shares and/or Life Company variable
insurance contracts, as reasonably requested by the Adviser. Such support
shall include, but not necessarily be limited to, presentations by
representatives of the Sub-Adviser at investment seminars, conferences and
other industry meetings. Any materials utilized by the Adviser which
contain any information relating to the Sub-Adviser shall be submitted to
the Sub-Adviser for approval prior to use, not less than five (5) business
days before such approval is needed by the Adviser. Any materials utilized
by the Sub-Adviser which contain any information relating to the Adviser,
the Life Company (including any information relating to its separate
accounts or variable insurance contracts) or the Trust shall be submitted
to the Adviser for approval prior to use, not less than five (5) business
days before such approval is needed by the Sub-Adviser.
10. The term of this Agreement shall begin on the date of its execution and
shall remain in effect for two years from that date and from year to year
thereafter, subject to the provisions for termination and all of the other
terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
"interested persons", as defined in Section 2(a)(19) of the Act, of any
party to this Agreement (other than as Trustees of the Trust), cast in
person at a meeting called for that purpose; and (b) Adviser shall not
have notified the Sub-Adviser in writing at least sixty (60) days prior to
the anniversary date of this Agreement in any year thereafter that it does
not desire such continuation with respect to the Portfolio.
11. Notwithstanding any provision herein to the contrary, this Agreement may
be terminated at any time, without the payment of any penalty, by the
Trustees of the Trust or by a vote of a majority of the outstanding voting
securities of the Portfolio, as defined in Section 2(a)(42) of the Act, on
sixty (60) days' written notice to Sub-Adviser, or by Adviser or
Sub-Adviser upon not less than sixty (60) days' written notice to the
other party.
22
12. This Agreement may not be assigned by Adviser or Sub-Adviser without the
prior written consent of the parties hereto and shall automatically
terminate in the event of any assignment without such consent. Sub-Adviser
may employ or contract with such other person, persons, corporation, or
corporations at its own cost and expense as it shall determine in order to
assist it in carrying out this Agreement.
13. Sub-Adviser represents and warrants that the Portfolio will at all times
be invested in such a manner as to ensure compliance with Section 817(h)
of the Internal Revenue Code of 1986, as amended and Treasury Regulations
Section 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or
other modifications to such Section or Regulations.
14. The Adviser represents and warrants to the Sub-Adviser as follows:
(a) The Adviser is registered as an investment adviser under the
Investment Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to Rule 4.14
under the CEA with the Commodity Futures Trading Commission (the
"CFTC") and the National Futures Association;
(c) The Adviser is a corporation duly organized and validly existing
under the laws of the Commonwealth of Massachusetts with the power
to own and possess its assets and carry on its business as it is now
being conducted;
(d) The execution, delivery and performance by the Adviser of this
Agreement are within Adviser's powers and have been duly authorized
by all necessary action on the part of its shareholders, and no
action by or in respect of, or filing with, any governmental body,
agency or official is required on the part of the Adviser for the
execution, delivery and performance by the Adviser of this
Agreement, and the execution, delivery and performance by the
Adviser of this Agreement do not contravene or constitute a default
under (i) any provision of applicable law, rule or regulation, (ii)
the Adviser's governing instruments, or (iii) any agreement,
judgment, injunction, order, decree or other instrument binding upon
the Adviser;
(e) This Agreement is a valid and binding agreement of the Adviser;
(f) The Adviser and any affiliated person of the Adviser have not:
(i) within the past 10 years been convicted of any felony or
misdemeanor involving the purchase or sale of any securities
or arising out of their conduct as an underwriter, broker,
dealer, investment adviser, municipal securities dealer,
government securities broker, government securities dealer,
transfer agent, or entity or person required to be registered
under the CEA, or as an affiliated person, salesman, or
employee of any investment company, bank, insurance company,
or entity or person required to be registered under the CEA;
or
(ii) except as previously disclosed, by reason of any misconduct,
been permanently or temporarily enjoined by an order, judgment
or decree of any court of competent jurisdiction or other
governmental authority from acting as an underwriter, broker,
dealer, investment adviser, municipal securities dealer,
government securities broker, government securities dealer,
transfer agent, or entity or person required to be registered
under the CEA, or an affiliated person, salesman, or employee
of any investment company, bank, insurance company, or entity
or person required to be registered under the CEA or from
engaging in or continuing any conduct or practice in
connection with any such activity or in connection with the
purchase or sale of any security; or
23
(iii) been a party to litigation or other adversarial proceedings
involving any former or current client;
(g) The Adviser acknowledges that it received a copy of the
Sub-Adviser's Form ADV, part II "Brochure" at least 48 hours prior
to the execution of this Agreement.
15. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties under this Agreement on
the part of Sub-Adviser, Sub-Adviser shall not be liable to Adviser, the
Trust, the Portfolio or to any shareholder for any act or omission in the
course of or connected in any way with rendering services or for any
losses that may be sustained in the purchase, holding, or sale of any
security.
16. This Agreement may be amended at any time by agreement of the parties,
provided that the amendment shall be approved both by the vote of a
majority of the Trustees of the Trust, including a majority of the
Trustees who are not "interested persons," as defined in Section 2(a)(19)
of the Act, of any party to this Agreement (other than as Trustees of the
Trust), cast in person at a meeting called for that purpose, and by a vote
of a majority of the outstanding voting securities of the Portfolio, as
defined in Section 2(a)(42) of the Act.
17. This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
18. This Agreement will become binding on the parties hereto upon their
execution of the attached Exhibit A to this Agreement.
24
EXHIBIT A
VARIABLE INVESTORS SERIES TRUST
SUB-ADVISORY COMPENSATION
For all services rendered by Sub-Adviser hereunder, Adviser shall pay to
Sub-Adviser and Sub-Adviser agrees to accept as full compensation for all
services rendered hereunder, an annual fee (the "Sub-Advisory Fee") as follows:
U.S. GOVERNMENT BOND PORTFOLIO
An annual rate of .35 of 1% of the Portfolio's average daily net asset
value of the first $200 million of the Portfolio's net assets under management.
An annual rate of .25 of 1% of the Portfolio's average daily net asset
value of any net assets of the Portfolio under management over and above $200
million.
The Sub-Advisory Fee shall be accrued for each calendar day the
Sub-Adviser renders subadvisory services hereunder and the sum of the daily fee
accruals shall be paid monthly to the Sub-Adviser as soon as practicable
following the last day of each month, by wire transfer if so requested by the
Sub-Adviser, but no later than seven (7) calendar days thereafter. The daily fee
accruals on the first $200 million of the Portfolio's net assets will be
computed by multiplying the fraction of one (1) over the number of calendar days
in the year by the appropriate annual rate described above and multiplying the
product by the net asset value of the Portfolio as determined in accordance with
the Trust's prospectus as of the close of business on the previous business day
on which the Portfolio was open for business. The daily fee accruals on the
Portfolio's net assets in excess of $200 million will be computed by multiplying
the fraction of one (1) over the number of calendar days in the year by the
appropriate annual rate described above and multiplying the product by the
amount by which the net asset value of the Portfolio, as determined in
accordance with the Trust's prospectus as of the close of business on the
previous business day on which the Portfolio was open for business, exceeds $200
million.
Witness the due execution hereof this 22nd day of September, 1994.
FIRST VARIABLE ADVISORY SERVICES CORP.
Attest:
__________________________ By:___________________________________
Xxxx X. Xxxxxxxx, Treasurer
STRONG/CORNELIUSON CAPITAL MANAGEMENT, INC.
Attest:
__________________________ By:__________________________________
25
VARIABLE INVESTORS SERIES TRUST
SUB-ADVISORY AGREEMENT
This Agreement is made between FIRST VARIABLE ADVISORY SERVICES CORP., a
Massachusetts corporation and a wholly-owned subsidiary of First Variable Life
Insurance Company ("Life Company"), having its principal place of business in
Boston, Massachusetts (hereinafter referred to as "Adviser"), and FEDERATED
INVESTMENT COUNSELING, a Delaware business trust, having its principal place of
business in Pittsburgh, Pennsylvania (hereinafter referred to as "Sub-Adviser").
WHEREAS, Variable Investors Series Trust (the "Trust"), an open-end diversified
management investment company, as that term is defined in the Investment Company
Act of 1940, as amended ("Act"), that is registered as such with the Securities
and Exchange Commission has appointed Adviser as investment adviser for all its
portfolios including the High Income Bond Portfolio and the Cash Management
Portfolio; and
WHEREAS, Sub-Adviser is engaged in the business of rendering investment
management services; and
WHEREAS, Adviser desires to retain Sub-Adviser to provide certain investment
management services for the High Income Bond Portfolio and the Cash Management
Portfolio (referred to hereinafter individually as the "Portfolio" or
collectively as the "Portfolios") of the Trust as more fully described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Adviser hereby retains Sub-Adviser to assist Adviser in its capacity as
investment adviser for the Portfolios. Subject to the oversight and review
of Adviser and the Board of Trustees of the Trust, Sub-Adviser shall
manage the investment and reinvestment of the assets of the Portfolios.
Sub-Adviser will determine in its discretion, subject to the oversight and
review of Adviser, the investments to be purchased or sold, will provide
Adviser with records concerning its activities which Adviser or the Trust
is required to maintain, and will render regular reports to Adviser and to
officers and Trustees of the Trust concerning its discharge of the
foregoing responsibilities.
2. Sub-Adviser, in its supervision of the investments of the Portfolios, will
be guided by each Portfolio's investment objectives and policies and the
provisions and restrictions contained in the Declaration of Trust and
By-Laws of the Trust and as set forth in the Registration Statements and
exhibits as may be on file with the Securities and Exchange Commission,
all as communicated by Adviser to Sub-Adviser.
3. Adviser shall pay to Sub-Adviser, for all services rendered to the
Portfolios by Sub-Adviser hereunder, the fees set forth in Exhibit A
attached hereto. During the term of this Agreement, Sub-Adviser will bear
all expenses incurred by it in the performance of its duties hereunder.
4. The term of this Agreement shall begin on the date of its execution and
shall remain in effect for two years from that date and from year to year
thereafter, subject to the provisions for termination and all of the other
terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
"interested persons", as defined in Section 2(a)(19) of the Act, of any
party (other than as Trustees of the Trust) cast in person at a meeting
called for that purpose; and (b) Adviser shall not have notified the Trust
in writing at least sixty (60) days prior to the anniversary date of this
Agreement in any year thereafter that it does not desire such continuation
with respect to a Portfolio.
5. Notwithstanding any provision in this Agreement, it may be terminated at
any time without the payment of any penalty, by the Trustees of the Trust
or by a vote of a majority of the outstanding voting securities of a
Portfolio, as defined in Section 2(a)(42) of the Act, on sixty (60) days'
written notice to Sub-Adviser, or by Adviser or Sub-Adviser upon not less
than sixty (60) days' written notice to the other party.
6. This Agreement may not be assigned by Adviser or Sub-Adviser and shall
automatically terminate in the event of any assignment. Sub-Adviser may
employ or contract with such other person, persons, corporation, or
corporations at its own cost and expense as it shall determine in order to
assist it in carrying out this Agreement.
26
7. Sub-Adviser represents and warrants that the Portfolios will at all times
be invested in such a manner as to ensure compliance with Section 817(h)
of the Internal Revenue Code of 1986, as amended and Treasury Regulations
Section 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or
other modifications to such Section or Regulations. Sub-Adviser will be
relieved of this obligation and shall be held harmless when direction from
the Adviser or Trustees causes non-compliance with Section 817(h) and/or
Regulation Section 1.817-5. Sub-Adviser agrees to provide quarterly
reports to Adviser, executed by a duly authorized officer of Sub-Adviser,
within seven (7) days of the close of each calendar quarter certifying as
to compliance with said Section or Regulations. In addition to the
quarterly reports, Adviser may request and Sub-Adviser agrees to provide
Section 817 diversification compliance reports at more frequent intervals,
as reasonably requested by Adviser.
8. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties under this Agreement on
the part of Sub-Adviser, Sub-Adviser shall not be liable to Adviser, the
Trust, the Portfolios or to any shareholder for any act or omission in the
course of or connected in any way with rendering services or for any
losses that may be sustained in the purchase, holding, or sale of any
security.
9. This Agreement may be amended at any time by agreement of the parties,
provided that the amendment shall be approved both by the vote of a
majority of the Trustees of the Trust, including a majority of the
Trustees who are not "interested persons," as defined in Section 2(a)(19)
of the Act, of any party to this Agreement (other than as Trustees of the
Trust) cast in person at a meeting called for that purpose, and on behalf
of a Portfolio by the holders of a majority of the outstanding voting
securities of a Portfolio, as defined in Section 2(a)(42) of the Act.
10. Adviser is hereby expressly put on notice of the limitation of liability
as set forth in the Declaration of Trust of Sub-Adviser and agrees that
the obligations assumed by Sub-Adviser pursuant to this Agreement shall be
limited in any case to Sub-Adviser and its assets and shall not seek
satisfaction of any such obligation from the shareholders of Sub-Adviser,
the Trustees, officers, employees or agents of Sub-Adviser, or any of
them.
11. This Agreement shall be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts.
12. This Agreement will become binding on the parties hereto upon their
execution of the attached Exhibit A to this Agreement.
13. It is understood that any information or recommendation supplied by the
Sub-Adviser in connection with the performance of its obligations
hereunder is to be regarded as confidential and for use only by the
Adviser, the Trust or such persons as the Adviser may designate in
connection with the Portfolios. It is also understood that any information
supplied to Sub-Adviser in connection with the performance of its
obligations hereunder, particularly, but not limited to, any list of
securities which, on a temporary basis, may not be bought or sold for the
Portfolios, is to be regarded as confidential and for use only by the
Sub-Adviser in connection with its obligation to provide investment advice
and other services to the Portfolios.
14. Each party to this Agreement hereby acknowledges that it is registered as
an investment adviser under the Investment Advisers Act of 1940, it will
use its reasonable best efforts to maintain such registration, and it will
promptly notify the other if it ceases to be so registered, if its
registration is suspended for any reason, or if it is notified by any
regulatory organization or court of competent jurisdiction that it should
show cause why its registration should not be suspended or terminated.
15. The Sub-Adviser shall provide marketing support to the Adviser in
connection with the sale of Trust shares and/or Life Company variable
insurance contracts, as reasonably requested by the Adviser. Such support
shall include, but not necessarily be limited to, presentations by
representatives of the Sub-Adviser at investment seminars, conferences and
other industry meetings. Any materials utilized by the Adviser which
contain any information relating to the Sub-Adviser shall be submitted to
the Sub-Adviser for approval prior to use, not less than five (5) business
days before such approval is needed by the Adviser. Any materials utilized
by the Sub-Adviser which contain any information relating to the Adviser,
the Life Company (including any information relating to its separate
accounts or variable insurance contracts) or the
27
Trust shall be submitted to the Adviser for approval prior to use, not
less than five (5) business days before such approval is needed by the
Sub-Adviser.
28
EXHIBIT A
VARIABLE INVESTORS SERIES TRUST
SUB-ADVISORY COMPENSATION
For all services rendered by Sub-Adviser hereunder, Adviser shall pay to
Sub-Adviser and SubAdviser agrees to accept as full compensation for all
services rendered hereunder, an annual fee as follows:
HIGH INCOME BOND PORTFOLIO
.45 of 1 % on an annualized basis of the first $40 million of net assets
under management.
.40 of 1 % on an annualized basis of any net assets under management over
and above $40 million but not exceeding $60 million.
.30 of 1 % on an annualized basis of any net assets under management over
and above $60 million but not exceeding $75 million.
.25 of 1% on an annualized basis of any net assets under management over
and above $75 million.
CASH MANAGEMENT PORTFOLIO
.25 of 1 % on an annualized basis of the first $70 million of net assets
under management.
.20 of 1% on an annualized basis of any net assets under management over
and above $70 million.
Such fees shall accrue daily and be paid monthly.
Witness the due execution hereof this 17th day of June, 1994.
FIRST VARIABLE ADVISORY SERVICES CORP.
Attest:
______________________________ By: _________________________
FEDERATED INVESTMENT COUNSELING
Attest:
By: _________________________
