INVESTMENT SUB-ADVISORY AGREEMENT
Exhibit (d)(9)
THIS INVESTMENT SUB-ADVISORY AGREEMENT (“Agreement”), made this 31 day of December,
2008 by and between Xxxxxx Advisors LLC, a Delaware limited liability company
(“Adviser”), and JPMorgan Investment Management Inc. (“Sub-Adviser”).
Adviser and Sub-Adviser agree as follows:
1. Appointment of Sub-Adviser. Adviser hereby engages the services of Sub-Adviser in connection
with Adviser’s management of the Xxxxxx/XX Xxxxxx Small Cap Growth Portfolio (“Portfolio”) of MLIG
Variable Insurance Trust (“Trust”). Pursuant to this Agreement and subject to the oversight and
supervision by Adviser and the officers and the board of trustees of the Trust, Sub-Adviser shall
manage the investment and reinvestment of that portion or portions of the assets of the Portfolio
that the Adviser shall, from time to time, direct the
Sub-Adviser to manage.
Sub-Adviser to manage.
2. Services to be Provided by the Sub-Adviser. Sub-Adviser hereby accepts the appointment by
Adviser in the foregoing capacity and agrees to render the services set forth herein and to
provide the office space, furnishings, equipment and personnel required by it to perform such
services under the terms and conditions set forth in this Agreement and for the compensation to
the
Sub-Adviser specified in this Agreement.
(a) In particular, Sub-Adviser shall furnish continuously an investment program for the
Portfolio and shall determine from time to time, in its discretion, the securities and other
investments to be purchased or sold or exchanged and what portion or portions of the Portfolio
shall be held in various securities, cash or other investments. In this connection, Sub-Adviser
shall provide Adviser and the officers and trustees of the Trust with such reports and
documentation as the latter shall reasonably request regarding Sub-Adviser’s management of the
Portfolio assets.
(b) Sub-Adviser shall carry out its responsibilities under this Agreement in compliance
with: (1) the Portfolio’s investment objective, policies and restrictions as set forth in the
Trust’s current registration statement, (2) all policies, procedures, guidelines or directives as
the board of trustees of the Trust may, from time to time, approve and adopt and communicate in
writing to the Sub-Adviser, and (3) applicable law and related regulations. Sub-Adviser will not
be required under this Agreement to comply with any policies, procedures, guidelines or
directives that are in clear violation of applicable laws or regulations.
(i) Adviser shall promptly notify Sub-Adviser in writing of changes to (1) or (2) above and
shall notify Sub-Adviser in writing of changes to (3) above promptly after it becomes aware of
such changes.
(ii) In particular, the Sub-Adviser shall be responsible to ensure that each portion of the
assets of the Portfolio that it manages: (1) complies with the diversification requirements of
Section 817(h) of the Internal Revenue Code of 1986, as amended, (“Code”) and regulations issued
thereunder as these apply to separate accounts through which variable life insurance contracts
and variable annuity contracts are issued, and (2) satisfies the requirements of Section
851(b)(2) and 851(b)(3) of the Code. In addition, the Sub-Adviser agrees that it shall
take no action that would call into question the Portfolio’s status as a “regulated investment
company” within the meaning of Section 851 of the Code and shall not fail to take any action
reasonably related to the duties described in this Agreement that would be required to preserve
the Portfolio’s status as a “regulated investment company” within the meaning of Section 851 of
the Code.
(iii) Sub-Adviser shall not consult with other sub-advisers of the Portfolio, or with
sub-advisers of other investment portfolios of the Trust, concerning transactions in portfolio
securities or other portfolio investments of the Portfolio.
(c) Sub-Adviser shall take all actions which it considers necessary to implement the
investment objective and policies of the Portfolio, and in particular, to place all orders for the
purchase or sale of securities or other investments for the Portfolio with brokers or dealers
selected by it (or with brokers and dealers selected by the Adviser or the board of trustees of
the Trust) and, to that end, Sub-Adviser is authorized as the agent of the Trust to give
instructions to the Trust’s custodian as to deliveries of securities or other investments and
payments of cash for the account of the Portfolio. In connection with the selection of brokers or
dealers and the placing of purchase and sale orders with respect to securities or other
investments of the Portfolio, Sub-Adviser will at all times seek to obtain best execution and
price in compliance with the policies, procedures, guidelines and directives approved and adopted
by the board of trustees of the Trust and provided to the Sub-Adviser in writing, except when the
Adviser or board of trustees of the Trust directs the Sub-Adviser to place orders with a
particular broker or dealer. In those instances in which the Adviser or the board of trustees of
the Trust directs the Sub-Adviser to place purchaser or sale orders with a particular broker or
dealer, Adviser acknowledges that the use of a designated broker or dealer may result in less
favorable execution of some transactions, higher net purchase prices, lower net sales prices and
the execution of an order for the Portfolio after completion of the orders for the Sub-Adviser’s
other clients. In addition, Adviser recognizes that the use of a designated broker or dealer may
cause the Portfolio to be unable to participate in allocations of new issues or other investment
opportunities.
(d) To the extent permitted by the policies, guidelines, procedures or directives approved
and adopted by the board of trustees of the Trust, Sub-Adviser is authorized in selecting brokers
and dealers to execute portfolio transactions, to consider not only the available prices and
rates of brokerage commissions, but also other relevant factors including, without limitation:
(1) the execution capabilities of such brokers and dealers, (2) research and other services
provided by such brokers and dealers which the Sub-Adviser believes will enhance its general
portfolio management capabilities, (3) the size of the transaction, (4) the difficulty of
execution, (5) the operational facilities of such brokers and dealers, (6) the risk to such a
broker or dealer of positioning a block of securities, and (7) the overall quality of brokerage
and research services provided by such brokers and dealers. In connection with the foregoing,
Sub- Adviser is specifically authorized to pay those brokers and dealers who provide brokerage
and research services to it a higher commission than that charged by other brokers and dealers if
the Sub-Adviser determines in good faith that the amount of such commission is reasonable in
relation to the value of such services in terms of either the particular transaction or in terms
of Sub-Adviser’s overall responsibilities with respect to the Portfolio and to any other client
2
accounts or portfolios which Sub-Adviser advises. The execution of such transactions shall not be
considered to represent an unlawful breach of any duty created by this Agreement or otherwise.
(e) In connection with the selection of brokers or dealers and the placing of purchase and
sale orders with respect to securities or other investments of the Portfolio, when directed by
either the board of trustees of the Trust or the Adviser to use designated brokers or dealers,
Sub-Adviser agrees to place orders with one or more brokers or dealers designated by the board of trustees of the Trust or Adviser (including brokers or dealers who are affiliated persons of the Trust or Adviser). The execution of such transactions shall not be considered to represent an unlawful breach of any duty created by this Agreement or otherwise. The Adviser will provide the Sub-Adviser with a copy of the resolution of the Board of Trustees of the Trust approving the Trust’s directed brokerage program.
Sub-Adviser agrees to place orders with one or more brokers or dealers designated by the board of trustees of the Trust or Adviser (including brokers or dealers who are affiliated persons of the Trust or Adviser). The execution of such transactions shall not be considered to represent an unlawful breach of any duty created by this Agreement or otherwise. The Adviser will provide the Sub-Adviser with a copy of the resolution of the Board of Trustees of the Trust approving the Trust’s directed brokerage program.
(f) Sub-Adviser also is authorized to aggregate purchase and sale orders for securities held
(or to be held) in the Portfolio with similar orders being made on the same day for other client
accounts or portfolios managed by Sub-Adviser. When an order is so aggregated: (1) the actual
prices applicable to the aggregated transaction will be averaged and the Portfolio and each other
account or portfolio participating in the aggregated transaction shall be treated as having
purchased or sold its portion of the securities at such average price, and (2) all transaction
costs incurred in effecting the aggregated transaction shall be shared on a pro-rata basis among
the accounts or portfolios (including the Portfolio) participating in the transaction. Adviser
recognizes that in some cases this procedure may adversely affect the size of the position
obtainable for the Portfolio. Minimum allocations are set by multiples of lot size and therefore
there may be circumstances where the allocation is too small for the Portfolio and the cost of
processing the transaction may be greater than the benefit of receiving the allocation. In such
circumstances a pro-rata allocation may not be in the best interest of the Portfolio. The
Sub-Adviser, is therefore, permitted to reallocate small orders to other client accounts.
(g) When recommending or effecting a transaction in a particular security or investment for
more than one client account or portfolio (including the Portfolio), Sub-Adviser may allocate such
recommendations or transactions among all accounts and portfolios for whom the recommendation is
made or transaction is effected on a basis that Sub-Adviser considers equitable. Adviser
recognizes that in some instances this procedure may adversely affect the size of the position
that may be obtained for the Portfolio.
(h) Nothing in this Agreement shall require Sub-Adviser to take or receive physical
possession of cash, securities or other investments of
the Portfolio.
the Portfolio.
3. Not
an Exclusive Arrangement. Sub-Adviser’s services under this Agreement are not
exclusive. Sub-Adviser may provide the same or similar services to other clients. Adviser
acknowledges that, except when transactions for multiple clients are aggregated, transactions in
a specific security or other investment may not be recommended or executed at the same time or
price for all client accounts or portfolios (including the Portfolio) for which that security or
investment is recommended or executed. This Agreement does not require Sub-Adviser to give
priority to the Portfolio over other client accounts or portfolios.
3
4. Independent Contractor. Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no authority to act
for or represent the Adviser, the Trust or the Portfolio or otherwise be deemed agents of the
Adviser, the Trust or the Portfolio.
5. Use of Affiliated Broker Dealer. Sub-Adviser, an affiliated person of Sub-Adviser, the Adviser,
or an affiliated person of the Adviser or the Trust may act as broker for the Portfolio in
connection with the purchase or sale of securities or other investments for the Portfolio, subject
to: (1) the requirement that Sub-Adviser seeks to obtain best execution and price in accordance
with the policies, guidelines, procedures or directives approved and adopted by the board of
trustees of the Trust; (2) the provisions of the Investment Company Act of 1940, as amended (“1940
Act”) and regulations thereunder; (3) the provisions of the Investment Advisers Act of 1940, as
amended (“Advisers Act”) and the regulations thereunder; (4) the provisions of the Securities
Exchange Act of 1934, as amended, and the regulations thereunder; and (5) other applicable
provisions of law. Such brokerage services are not within the scope of the duties of Sub-Adviser
under this Agreement. Subject to the requirements of applicable law and any policies, guidelines,
procedures and directives approved and adopted by Trust’s board of trustees, Sub-Adviser or its
affiliated persons may receive brokerage commissions, fees or other remuneration from the Portfolio
or the Trust for such services in addition to Sub-Adviser’s fees for services under this Agreement.
6. Voting Rights. The Adviser delegates the Adviser’s discretionary authority to exercise voting
rights with respect to the securities and other investments in the Portfolio to the Sub-Adviser.
The Sub-Adviser shall exercise these voting rights unless and until the Adviser revokes this
delegation. The Adviser may revoke this delegation at any time without cause. The Sub-Adviser
shall maintain and preserve a record, in an easily-accessible place for a period of not less than
three years, of the Sub-Adviser’s voting procedures, and of the Sub-Adviser’s actual votes, and
shall supply this record to the Adviser, or any authorized representative of the Adviser, upon the
written request of the Adviser or the Adviser’s authorized representative, as appropriate.
7. Representations and Warranties of the Sub-Adviser.
(a) Sub-Adviser is registered with the U.S. Securities and Exchange Commission (“SEC”) under
the Advisers Act. Sub-Adviser shall remain so registered throughout the term of this Agreement and
shall notify Adviser immediately if Sub-Adviser ceases to be so registered as an investment
adviser.
(b) Sub-Adviser is duly organized and validly existing under the laws of the Delaware with
the power to own and possess its assets and carry on its business as it is now being conducted,
(c) Sub-Adviser has the authority to enter into and perform the services contemplated by
this Agreement,
4
(d) Sub-Adviser is not prohibited by the Investment Company Act of 1940, as amended, (“1940
Act”) or the Advisers Act from performing the services contemplated by this Agreement,
(e) Sub-Adviser has met, and will continue to seek to meet for the duration of this Agreement,
any other applicable federal or state requirements, or the applicable requirements of any
regulatory or industry self-regulatory agency, necessary to be met in order to perform the services
this Agreement, and
(f) Sub-Adviser will promptly notify Adviser of the occurrence of any event that would
disqualify it from serving as an investment adviser to an investment company pursuant to Section
9(a) of the 1940 Act.
8. Representation and Warranties of the Adviser.
(a) Adviser is duly organized and validly existing under the laws of the State of Delaware
with the power to own and possess its assets and carry on its business as it is now being
conducted,
(b) Adviser has the authority to enter into and perform the services contemplated by this
Agreement,
(c) Adviser is not prohibited by the 1940 Act or the Advisers Act from performing the
services contemplated by this Agreement,
(d) Adviser has met, and will continue to seek to meet for the duration of this Agreement,
any other applicable federal or state requirements, or the applicable requirements of any
regulatory or industry self-regulatory agency, necessary to be met in order to perform the
services this Agreement, and
(e) Adviser will promptly notify Sub-Adviser of the occurrence of any event that would
disqualify it from serving as an investment adviser to an investment company pursuant to Section
9(a) of the 1940 Act.
(f) Adviser represents that the Trust is (and during the term of this Agreement, will
remain) registered as an open-end management investment company under the 1940 Act and that the
shares of the Trust representing an interest in the Portfolio are (and during the term of this
Agreement will remain) registered under the Securities Act of 1933 and under any applicable state
securities laws.
9.
Code of Ethics. Sub-Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide Adviser and the Trust with a copy
of that code, together with evidence of its adoption. Within 20 days of the end of each calendar
quarter during which this Agreement remains in effect, the president or a vice president of
Sub-Adviser shall certify to Adviser or the Trust that Sub-Adviser has complied with the
requirements of Rule 17j-1 during the previous quarter and that there have been no violations of
Sub-Adviser’s code of ethics or, if such a violation has occurred, that appropriate action has been
Sub-Adviser’s code of ethics or, if such a violation has occurred, that appropriate action has been
5
taken in response to such violation. Upon written request of the Adviser, the Sub-Adviser will
furnish in a timely manner summaries of the reports required to be made to the Sub-Adviser by
Rule 17j-1(c)(1).
10. Compensation of the Sub-Adviser. For the services rendered, the facilities furnished and the
expenses assumed by Sub-Adviser, Adviser shall pay Sub-Adviser at the end of each month a fee
based on the average daily net assets of the Portfolio at the following annual rates:
0.50% on the first $ 1 billion
0.45% on the balance
0.45% on the balance
(a) Sub-Adviser’s
fee shall be accrued daily at 1/365th of the applicable annual rate set
forth above. For the purpose of accruing compensation, the net assets of the Portfolio shall be
determined in the manner and on the dates set forth in the current prospectus of the Trust, and,
on days on which the net assets are not so determined, the net asset value computation to be used
shall be as determined on the immediately preceding day on which the net assets were determined.
(b) In the event of termination of this Agreement, all compensation due through the date of
termination will be calculated on a pro-rated basis through the date of termination and paid
within thirty business days of the date of termination.
(c) During any period when the determination of net asset value is suspended, the net asset
value of the Portfolio as of the last business day prior to such suspension shall for this purpose
be deemed to be the net asset value at the close of each succeeding business day until it is again
determined.
11. Records.
(a) Sub-Adviser hereby undertakes and agrees to maintain, in the form and for the period
required by Rule 31a-2 under the 1940 Act, all records relating to the Portfolio’s investments
that are required to be maintained by the Trust pursuant to the requirements of paragraphs (b)(5),
(b)(6), (b)(7), (b)(9), (b)(10) and (f) of Rule 31a-1 under the 0000 Xxx.
(b) Sub-Adviser agrees that all books and records which it maintains for the Portfolio or
the Trust are the property of the Trust and further agrees to surrender promptly to the Adviser
or the Trust any such books, records or information upon the Adviser’s or the Trust’s request
(provided, however, that Sub-Adviser may retain copies of such records). All such books and
records shall be made available, within five business days of a written request, to the Trust’s
accountants or auditors during regular business hours at Sub-Adviser’s offices. Adviser and the
Trust or either of their authorized representative shall have the right to copy any records in
the possession of Sub-Adviser which pertain to the Portfolio or the Trust. Such books, records,
information or reports shall be made available to properly authorized government representatives
consistent with state and federal law and/or regulations. In the event of the termination of
this
6
Agreement, upon the request of the Adviser or the Trust, all such books, records or other
information shall be returned to Adviser or the Trust.
(c) The Sub-Adviser agrees that the policies and procedures established by the Sub-Adviser
for managing the Portfolio, including, but not limited to, all policies and procedures designed to
ensure compliance with federal and state regulations governing the sub-adviser/client relationship
and management and operation of the Portfolio, shall be made available for inspection by the
Adviser and the Trust or either of their authorized representatives not less frequently than
annually.
12. Confidentiality.
(a) Each party agrees that it will not disclose or use any records or confidential
information obtained pursuant to this Agreement in any manner whatsoever except (i) as authorized
in this Agreement, (ii) as may be necessary in the ordinary course of performing the services and
transactions contemplated by this Agreement; (iii) with the written consent of the other party; or
(iv) as required by federal or state regulatory authorities, law or judicial process.
(b) Confidential information shall not include information a party to this Agreement can
clearly establish was (i) known to the party prior to this Agreement; (ii) rightfully acquired by
the party from third parties whom the party reasonably believes are not under an obligation of
confidentiality to the other party to this Agreement; (iii) placed in public domain without fault
of the party or its affiliates; or (iv) independently developed by the party without reference or
reliance upon any confidential information.
(c) It is specifically agreed by the parties that the Sub-Adviser may disclose the investment
performance of the Portfolio and the Portfolio, provided that such disclosure does not reveal the
identity of the Adviser, the Portfolio or the Trust. Sub-Adviser may, however, disclose that
Adviser, the Trust and the Portfolio are its clients, provided that such disclosure does not
reveal the investment performance or the composition of the Portfolio.
13. Standard of Care. In the absence of willful misfeasance, bad faith or gross negligence on the
part of Sub-Adviser or its officers, trustees or employees, or reckless disregard by Sub-Adviser
of its duties under this Agreement (together, “disabling conduct”), Sub-Adviser shall not be
liable to Adviser, the Portfolio, the Trust or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or for any losses that
may be sustained in the purchase, holding or sale of any security, except to the extent otherwise
provided in Section 36(b) of the 1940 Act concerning loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services. Notwithstanding the foregoing,
breach by the Sub-Adviser of the Section 2(b)(ii) hereof is deemed to be disabling conduct.
14. Indemnification by Sub-Adviser.
(a) Sub-Adviser agrees to indemnify and defend Adviser, its officers, trustees, partners,
employees and any person who controls Adviser for any loss or expense (including attorneys’ fees)
arising out of any claim, demand, action, suit or proceeding arising out of any
7
actual or alleged material misstatement or omission in the Trust’s registration statement, any
proxy statement, or communication to current or prospective investors in the Portfolio relating to
disclosure about Sub-Adviser provided to Adviser by Sub-Adviser.
(b) Sub-Adviser agrees to indemnify and defend Adviser, its officers, trustees, partners,
employees and any person who controls Adviser for any loss or expense (including attorneys’ fees)
arising out of any claim, demand, action, suit or proceeding arising out of any action or omission
of the Sub-Adviser that causes the portion or portions of the assets of the Portfolio managed by
the Sub-Adviser not to: (a) comply with the diversification requirements of Section 817(h) of the
Code and regulations issued thereunder as these apply to separate accounts through which variable
life insurance contracts and variable annuity contracts are issued, and (b) continuously satisfy
the requirements of Section 851(b)(2) and 851(b)(3) of the Code.
15. Indemnification
by Advisor. Adviser agrees to indemnify and defend Sub-Adviser, its officers,
trustees, partners, employees and any person who controls Adviser for any loss or expense
(including attorneys’ fees) arising out of any claim, demand, action, suit or proceeding arising
out of any actual or alleged material misstatement or omission in the Trust’s registration
statement, any proxy statement, or other communication to current or prospective investors in the
Portfolio (other than a misstatement or omission relating to disclosure about
Sub-Adviser approved by the Sub-Adviser or provided to Adviser or the Trust by Sub-Adviser).
Sub-Adviser approved by the Sub-Adviser or provided to Adviser or the Trust by Sub-Adviser).
16. Use
of Name. The Sub-Adviser agrees to permit the Adviser and the Trust to use its name, along
side the Adviser’s name, in the Portfolio’s name and in descriptions of the Portfolio, as these
appear in the Trust’s prospectus(es) and/or sales literature related to the Portfolio, provided,
however, that the Adviser and the Trust shall cease such use of the Sub-Adviser’s name in the
event that this Agreement is terminated. Neither the Trust nor the Adviser shall, without the
prior written consent of the Sub-adviser make any other representations regarding the Sub-Adviser
or reference to the Sub-Adviser or any affiliates of the Sub-Adviser in any disclosure document,
advertisement, sales literature or other promotional materials without the prior approval of the
Sub-Adviser. If Sub-Adviser does not respond within five business days regarding materials
submitted to it for approval, such material shall be deemed to have been approved by the
Sub-Adviser.
17. Term and Duration of the Agreement.
(a) This Agreement shall not become effective unless and until it is approved by the board
of trustees of the Trust, including a majority of trustees who are not parties to this Agreement
or interested persons of any such party to this Agreement, and, to the extent required by law, a
majority of the outstanding shares of the class of the Trust’s stock representing an interest in
the Portfolio. This Agreement shall come into full force and effect on the date which it is so
approved.
(b) This Agreement shall continue in effect for two years and shall thereafter continue in
effect from year to year so long as such continuance is specifically approved at least annually
by (1) the board of trustees of the Trust, or by the vote of a majority of the outstanding shares
of
8
the class of stock representing an interest in the Portfolio, and (2) a majority of those trustees
who are not parties to this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
18. Termination. Notwithstanding any other provision of this Agreement, this Agreement may be
terminated at any time without the payment of any penalty, by the Trust’s board of trustees, or by
vote of a majority of the outstanding shares of the class of stock representing an interest in the
Portfolio on sixty days written notice to the Adviser and Sub-Adviser, or by the Adviser, or by the
Sub-Adviser, on sixty days written notice to the other. This Agreement shall automatically
terminate in the event of its assignment or in the event of the termination of the investment
advisory agreement between the Adviser and the Trust regarding the Adviser’s management of the
Portfolio.
19. Amendments to the Agreement. This Agreement may be amended by the parties only if such
amendment is specifically approved by (a) a majority of those trustees who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval, and, if required by applicable law, (b) a majority of votes
attributable to the outstanding Trust shares of the class representing an interest in the
Portfolio.
20. Use of Terms. The terms “assignment”, “affiliated person” and “interested person”, when used
in this Agreement, shall have the respective meanings specified in the 1940 Act. The term
“majority of the outstanding shares of the class” means the lesser of (a) 67% or more of the votes
attributable to shares of such class present at a meeting if more than 50% of the votes
attributable to such shares are present or represented by proxy or (b) more than 50% of the votes
attributable to shares of such class.
21. Governing Law. This Agreement shall be construed in accordance with laws of the State of
Delaware, and applicable provisions of the Advisers Act and 1940 Act.
22. Severability. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected
thereby.
9
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
Xxxxxx Advisers LLC | ||||||
By: | /s/ Xxxx Xxxxxxx
|
|||||
Name: | Xxxx Xxxxxxx | |||||
Title: | President and CIO | |||||
ATTEST: |
||||||
/s/
Xxxxxxx Xxxxxxx |
||||||
JPMorgan Investment Management Inc. | ||||||
By: Name: |
/s/ Xxxxx Xxxxxx
|
|||||
Title: | Vice President | |||||
ATTEST: |
||||||
/s/
Xxxxxx Xxxxxxx |
10