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EXHIBIT 5(b)-7
SUB-ADVISER AGREEMENT
Sub-Adviser Agreement executed as of January 1, 1994 between SIERRA
INVESTMENT ADVISORS CORPORATION, a California corporation (the "Manager"), and
X.X. XXXXXX INVESTMENT MANAGEMENT, INC., a Delaware corporation (the
"Sub-Adviser").
Witnesseth:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY SUB-ADVISER TO THE TRUST.
(a) Subject always to the control of the Trustees of The Sierra
Variable Trust, a Massachusetts business trust (the "Trust") and to the overall
supervision of the Manager, the Sub-Adviser, at its expense, will furnish
continuously an investment program for the portfolio represented by shares of
The Growth and Income Fund series (the "Fund"). The Sub-Adviser will make
investment decisions on behalf of the Fund and place all orders for the
purchase and sale of portfolio securities. In the performance of its duties,
the Sub-Adviser will comply with the provisions of the Agreement and
Declaration of Trust, the By-laws of the Trust and the stated investment
objectives, policies and restrictions of the Fund as set forth in its
registration statement on Form N-1A, File No. 33-57732, and will use its best
efforts to safeguard and promote the welfare of the Fund, and to comply with
other policies which the Trustees or the Manager, as the case may be, may from
time to time determine and provide to the Sub-Adviser in writing (including any
additional requirements with respect to applicable insurance laws or
regulations). The Manager represents that all such copies of the Trust's
Registration Statement, including exhibits, have been or will be provided to
the Sub-Adviser, and the Manager agrees promptly to provide the Sub-Adviser
with all amendments or supplements to the Registration Statement. The
Sub-Adviser shall make its officers and employees available to the Manager at
reasonable times to review investment policies of the Fund and to consult with
the Manager regarding the investment affairs of the Fund.
(b) The Sub-Adviser, at its expense, will furnish all
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necessary office space and equipment, bookkeeping and clerical services
(excluding shareholder accounting and transfer agency services) required for it
to perform its duties hereunder and will pay all salaries, fees and expenses of
officers and Trustees of the Trust who are affiliated with the Sub-Adviser and
not otherwise affiliated with the Manager.
(c) In the selection of brokers, dealers, futures commissions
merchants or any other sources of portfolio investments for the Fund
(hereafter, "brokers or dealers") and the placing of orders for the purchase
and sale of portfolio investments for the Fund, the Sub-Adviser shall use its
best efforts to obtain the most favorable price and execution available, except
to the extent it may be permitted to pay higher brokerage commissions for
brokerage and research services as described below. In using its best efforts
to obtain the most favorable price and execution available, the Sub-Adviser,
bearing in mind the Fund's best interests at all times, shall consider all
factors it deems relevant, including by way of illustration, price, the size of
the transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the broker or
dealer involved and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Trustees of the Trust may
determine, the Sub-Adviser shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by reason
of its having caused the Trust to pay, on behalf of the Fund, a broker or
dealer that provides brokerage and research services to the Sub-Adviser an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the Trust and to other clients of the
Sub-Adviser as to which the Sub-Adviser exercises investment discretion. As
provided in the Management Contract between the Trust and the Manager with
respect to the Fund, dated as of April 8, 1993 (the "Management Contract"), the
Trust agrees that any entity or person associated with the Manager or
Sub-Adviser which is a member of a national securities exchange is authorized
to effect any transaction on
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such exchange for the account of the Fund which is permitted by Section 11(a)
of the Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the
Trust has consented to the retention of compensation for such transactions in
accordance with Rule 11a2-2(T)(2)(iv).
(d) The Sub-Adviser shall not be obligated to pay any expenses of
or for the Fund not expressly assumed by the Sub-Adviser pursuant to this
Section 1.
(e) The Sub-Adviser shall maintain all books and records with respect
to the Fund's portfolio transactions required by subparagraphs (b)(5) - (b)(11)
and paragraph (f) of Rule 31a-1 under the Investment Company Act of 1940, as
amended, and shall render to the Board of Trustees of the Trust such periodic
and special reports as the Board may reasonably request.
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2. OTHER AGREEMENTS, ETC.
The Trust understands that the Sub-Adviser now acts, will continue to
act and may act in the future as investment adviser to fiduciary and other
managed accounts and as investment adviser to one or more other investment
companies or series of investment companies, and the Trust has no objection to
the Sub-Adviser so acting, PROVIDED THAT whenever the Fund and one or more
other accounts or investment companies advised by the Sub-Adviser have
available funds for investment, investments suitable and appropriate for each
will be allocated in accordance with procedures believed to be equitable to
each entity. Similarly, opportunities to sell securities will be allocated in
an equitable manner. The Trust recognizes that in some cases this procedure
may adversely affect the size of the position that may be acquired or disposed
of for the Fund. In addition, the Trust understands that the persons employed
by the Sub-Adviser to assist the performance of the Sub-Adviser's duties
hereunder will not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict the right of the Sub-Adviser or any
affiliate of the Sub-Adviser to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
3. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUB-ADVISER.
The Manager will pay to the Sub-Adviser as compensation for the
Sub-Adviser's services rendered and for the expenses borne by the Sub-Adviser
pursuant to Section 1, a fee, computed and paid monthly at the annual rate of
0.45% of the value of the Fund's average daily net assets up to $100 million,
0.40% of the value of the Fund's average daily net assets between $100 million
and $200 million, 0.35% of the value of the Fund's average daily net assets
between $200 million and $400 million, and 0.30% of the value of the Fund's
daily net assets over $400 million. Such average daily net asset value of the
Fund shall be determined by taking an average of all of the determinations of
such net asset value during such month at the close of business on each
business day during such month while this contract is in effect. Such fee
shall be payable for each month within 10 business days after the end of such
month.
If the Sub-Adviser shall serve for less than the whole of a
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month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS CONTRACT.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment or in the event that the Management
Contract shall have terminated for any reason and the Manager shall have
provided prior notice of any such termination of the Management Contract; and
this Agreement shall not be amended unless such amendment be approved at a
meeting by the affirmative vote of a majority of the outstanding shares of the
Fund, and by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trustees of the Trust who are not
interested persons of the Trust or of the Manager or of the Sub-Adviser.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective upon its execution, and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:
(a) The Trust may at any time terminate this Agreement by
not more than sixty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager and the Sub-Adviser,
or
(b) If (i) the Trustees of the Trust or the shareholders
by the affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Trustees of the Trust who are not
interested persons of the Trust or of the Manager or of the
Sub-Adviser, by vote cast in person at a meeting called for the
purpose of voting on such approval, do not specifically approve at
least annually the continuance of this Agreement, then this Agreement
shall automatically terminate as at the close of business on the
second anniversary of its execution, or upon the expiration of one
year from the effective date of the last such continuance, whichever
is later; provided, however, that if the continuance of this Agreement
is submitted to the shareholders of the Fund for their approval and
such
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shareholders fail to approve such continuance of this Agreement as
provided herein, the Sub-Adviser may continue to serve hereunder in a
manner consistent with the Investment Company Act of 1940 and the
Rules and Regulations thereunder, or
(c) The Manager may at any time terminate this Agreement
by not less than sixty days' written notice delivered or mailed by
registered mail, postage prepaid, to the Sub-Adviser, and the
Sub-Adviser may at any time terminate this Agreement by not less than
90 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Manager.
Action by the Trust under (a) above may be taken either (i) by vote of
a majority of its Trustees, or (ii) by the affirmative vote of a majority of
the outstanding shares of the Fund.
Termination of this Agreement pursuant to this Section 5 shall be
without the payment of any penalty.
6. CERTAIN INFORMATION.
The Sub-Adviser shall promptly notify the Manager in writing of the
occurrence of any of the following events: (a) the Sub-Adviser shall fail to
be registered as an investment adviser under the Investment Advisers Act of
1940, as amended from time to time, and under the laws of any jurisdiction in
which the Sub-Adviser is required to be registered as an investment adviser in
order to perform its obligations under this Agreement, (b) the Sub-Adviser
shall have been served or otherwise have notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, involving the affairs of the Trust and (c) there
shall be any change in the control of the Sub-Adviser.
7. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the "affirmative vote of a
majority of the outstanding shares" of the Fund means the affirmative vote, at
a duly called and held meeting of shareholders, (a) of the holders of 67% or
more of the shares of the Fund present (in person or by proxy) and entitled to
vote at
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such meeting, if the holders of more than 50% of the outstanding shares of or
the Fund entitled to vote at such meeting are present in person or by proxy, or
(b) of the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting, whichever is less.
For the purposes of this Agreement, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the Investment Company Act of 1940 and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act; the term
"specifically approve at least annually" shall be construed in a manner
consistent with the Investment Company Act of 1940 and the Rules and
Regulations thereunder; and the term "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934 and the Rules and
Regulations thereunder.
8. STATEMENTS AND REPRESENTATIONS OF THE MANAGER
The Manager believes, to the best of its knowledge after reasonable
inquiry, that the Trust's investment objectives, policies and guidelines will
be in conformity in all material respects with applicable insurance laws and
regulations.
The Manager represents that (i) the appointment of the Sub-Adviser has
been duly authorized and (ii) it has acted and will continue to act, and that
the Trust's investment objectives, policies and guidelines will be, in
conformity in all material respects with other applicable laws in connection
with this Agreement and the transactions contemplated hereunder.
9. NONLIABILITY OF SUB-ADVISER.
The Sub-Adviser shall exercise its best judgment in rendering its
services under this agreement. 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 ("Disqualifying Conduct"), the
Sub-Adviser shall not be subject to any liability to the Trust or the Fund, or
to any shareholder of the Fund, for any act or omission in the course of, or
connected with, rendering services hereunder.
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The Manager shall indemnify and hold harmless the Sub-Adviser from and
against all claims, losses, liabilities or damages (including reasonable
attorneys' fees and other related expenses) (collectively, "Losses"), howsoever
arising under this Agreement or the performance by the Sub-Adviser of its
duties hereunder; provided, however, that nothing contained herein shall
require that the Sub-Adviser be indemnified for Losses resulting from
Disqualifying Conduct.
10. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property of the Fund.
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IN WITNESS WHEREOF, SIERRA INVESTMENT ADVISORS CORPORATION and X.X.
XXXXXX INVESTMENT MANAGEMENT, INC. have each caused this instrument to be
signed in duplicate on its behalf by its duly authorized representative, all as
of the day and year first above written.
SIERRA INVESTMENT ADVISORS CORPORATION
By \s\ Xxxxxxx X. Goth
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Name: Xxxxxxx X. Goth
Title: Chief Operating Officer
X.X. XXXXXX INVESTMENT MANAGEMENT, INC.
By \s\ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Vice President
Accepted and agreed to
as of the day and year
first above written:
THE SIERRA VARIABLE TRUST
By: \s\ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: Director, Executive Vice President
& Secretary
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