Exhibit 23(4)(b)(i)
INVESTMENT SUB-ADVISORY AGREEMENT
X.X Xxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sir or Madam:
This Agreement, executed this ______________ day of September, 1999,
and effective the first day of October, 1999, between X.X. Xxxxxx Investment
Management Inc., a Delaware corporation (the "Adviser") and LSA Asset Management
LLC, a Delaware limited liability company (the "Manager").
WHEREAS, LSA Variable Series Trust, a Delaware business trust (the
"Trust") has entered into an advisory agreement with the Manager (the
"Investment Advisory Agreement"), pursuant to which Manager will act as adviser
to the X.X. Xxxxxx Disciplined Equity Fund (the "Fund"), a series of the Trust.
WHEREAS, The Manager is authorized, with the approval of the Board of
Trustees of the Trust (the "Board" or "Trustees" as the context requires), to
retain the Adviser to provide investment advisory services to the Fund.
WHEREAS, The parties hereto wish to enter into an agreement whereby the
Adviser will provide investment advisory services to the Fund.
NOW THEREFORE, In consideration of the mutual covenants herein
contained, the Manager and the Adviser agree as follows:
1. Appointment
The Manager hereby appoints the Adviser to render certain investment
advisory services to the Fund as set forth herein. The Adviser hereby accepts
such appointment and agrees to perform such services on the terms herein set
forth, and for the compensation herein provided.
2. Services as Investment Adviser
Subject to the supervision of the Manager and the Board, and in
cooperation with any administrator appointed by the Manager (the
"Administrator"), the Adviser shall (a) manage the Fund's assets in accordance
with the investment objectives, restrictions and limitations of the Fund, as set
forth in the Trust's most recent Registration Statement, subject to the
Guidelines (as such term is defined below); (b) make investment decisions for
the Fund; (c) place purchase and sale orders for portfolio transactions for the
Fund; and (d) employ professional portfolio managers and securities analysts to
provide research services to the Fund. In providing these services, the Adviser
will conduct a continual program of investment, evaluation and, if appropriate,
sale and reinvestment of the Fund's assets. The Adviser shall provide the Fund's
custodian (as defined below) on each business day with information relating to
all transactions concerning the Fund's assets and shall provide the Manager with
such information upon request of the Manager. The Adviser shall review all proxy
solicitation materials and be responsible for voting and handling all proxies in
relation to the securities held in the Fund. The Manager shall instruct the
custodian of the Fund and other parties providing services to the Fund to
promptly forward misdirected proxy materials to the Adviser.
The Adviser shall provide to the Manager a copy of its Form ADV as
filed with the Securities and Exchange Commission and as amended from time to
time and a list of the persons whom Adviser wishes to have authorized to give
written and/or oral instructions to the Fund's custodian.
Copies of the Registration Statement of the Trust, as currently in
effect, have been delivered to the Adviser. The Manager agrees, on an ongoing
basis, to provide to the Adviser as promptly as practicable copies of all
amendments and supplements to the Registration Statement.
The Manager shall provide the Adviser with a copy of the Trust's
agreement with the custodian designated to hold the assets of the Fund (the
"Custodian") and any modifications thereto (the "Custody Agreement"), copies of
such modifications to be provided to the Adviser a reasonable time in advance of
the effectiveness of such modifications. The assets of the Fund shall be
maintained in the custody of the Custodian identified in, and in accordance with
the terms and conditions of, the Custody Agreement (or any sub-custodian
properly appointed as provided in the Custody Agreement). The Adviser shall have
no liability for the acts or omissions of the Custodian unless such act or
omission is required by and taken in good faith and without negligence by the
Custodian in reliance upon improper instruction(s) given to the Custodian by a
representative of the Adviser, which improper instruction(s) is due to the gross
negligence or willful misconduct of the Adviser, properly authorized to give
such instruction(s) under the Custody Agreement. Any assets added to the Fund
shall be delivered directly to the Custodian.
The Manager agrees on an on-going basis to provide or cause to be provided
to the Adviser guidelines, to be revised as provided below (the "Guidelines"),
setting forth limitations, by dollar amount or percentage of net assets, on the
types of securities in which the Fund is permitted to invest or investment
activities in which the Fund is permitted to engage. Among other matters, the
Guidelines shall set forth clearly the limitations imposed upon the Fund as a
result of relevant diversification requirements under state and federal law
pertaining to insurance products, including, without limitation, the provisions
of Section 817(h) of the Internal Revenue Code of 1986, as amended (the "Code").
The Guidelines shall remain in effect until 12:00 p.m. on the third business day
following actual receipt by the Adviser of a written notice, denominated clearly
as such, setting forth revised Guidelines. The Adviser shall be permitted to
rely on the most recent Guidelines delivered to it. The Manager agrees that the
Adviser may rely on the Guidelines without independent verification of their
accuracy and that the Adviser will reasonably use its best judgment to interpret
the Guidelines.
The Manager shall perform quarterly and annual tax compliance tests to
ensure that the Fund is in compliance with Subchapter M and Section 817(h) of
the Code. In connection with such compliance tests, the Manager shall prepare
and provide reports to the Adviser within ten (10) business days of a calendar
quarter end relating to the diversification of the Fund under Subchapter M and
Section 817(h) of the Code. The Adviser shall review such reports for purposes
of determining compliance with such diversification requirements. If it is
determined that the Fund is not in compliance with the diversification
requirements noted above, the Adviser, in consultation with the Manager, will
take prompt action to bring the Fund back into compliance within the time
permitted under the Code (the Adviser's "Tax Compliance Responsibilities").
The Adviser shall for all purposes herein be deemed to be an
independent contractor. The Adviser has no authority to act for or represent the
Trust or the Fund in any way except to direct securities transactions pursuant
to its investment advice hereunder. The Adviser is not an agent of the Manager,
the Trust or the Fund.
3. Brokerage.
In selecting brokers or dealers to execute transactions on behalf of
the Fund, the Adviser will seek the best overall terms available. In assessing
the best overall terms available for any transaction, the Adviser will consider
factors it deems relevant, including, without limitation, the breadth of the
market in the security, 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 will continually monitor
such factors. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, the Adviser is
authorized to consider the brokerage and research services (within the meaning
of Section 28(e) of the Securities Exchange Act of 1934, as amended (the "1934
Act")) provided to the Fund and/or other accounts over which the Adviser or its
affiliates exercise investment discretion.
In no instance will the Fund's assets be purchased from or sold to the
Manager, Adviser, the Trust's principal underwriter, or any affiliated person of
such persons, acting as principal in the transaction, except to the extent
permitted by the Securities and Exchange Commission and the 1934 Act.
4. Information Provided to the Manager.
The Adviser will keep the Manager informed of developments materially
affecting the Fund.
5. Standard of Care.
The Adviser shall exercise its best judgment in rendering the services
described in paragraphs 2, 3 and 4 above. The Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
6. Compensation.
In consideration of the services rendered pursuant to this Agreement,
the Manager will pay the Adviser the fee as set forth in Exhibit A. Such fees
will be computed daily and payable no later than the 20th business day following
the end of each month. The fee for the period from the initial capitalization of
the Trust to the end of the month during which such capitalization shall have
occurred shall be prorated according to the proportion that such period bears to
the full monthly period. Upon any termination of this Agreement before the end
of a month, the fee for such part of that month shall be prorated according to
the proportion that such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. For the purpose of
determining fees payable to the Adviser, the value of the Fund's net assets
shall be computed at the times and in the manner specified in the Trust's
Registration Statement.
7. Expenses.
Except for expenses specifically assumed or agreed to be paid by the
Adviser pursuant hereto, the Adviser shall not be liable for any expenses of the
Manager or the Fund including, without limitation, (a) interest and taxes, (b)
brokerage commissions and other costs in connection with the purchase of sale of
securities or other investment instruments with respect to the Fund, and (c)
custodian fees and expenses. The Adviser will pay its own expenses incurred in
furnishing the services to be provided by it pursuant to this Agreement.
8. Services to Other Companies or Accounts.
The Manager understands that the 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 other investment companies, and the
Manager has no objection to the Adviser so acting, provided that whenever the
Trust and one or more other accounts or investment companies advised by the
Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a methodology believed
to be equitable to each entity. The Adviser agrees to allocate similarly
opportunities to sell securities. The Manager recognizes that, in some cases,
this procedure may limit the size of the position that may be acquired or sold
for the Fund. In addition, the Manager understands that the persons employed by
the Adviser to assist in the performance of the 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 Adviser or any affiliate of the
Adviser to engage in and devote time and attention to other business or to
render services of whatever kind or nature.
9. Books and Records.
The Adviser shall maintain in compliance with the Investment Company
Act of 1940 (the "1940 Act") all books and records with respect to transactions
involving the assets of the Fund for which the Adviser has responsibility. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, the Adviser
hereby agrees that all records which it maintains for the Fund are the property
of the Trust and further agrees to surrender promptly to the Manager copies of
any of such records upon the Fund's or the Manager's request. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
Act the records relating to its activities hereunder required to be maintained
by Rule 31a-1 under the Act and to preserve the records relating to its
activities hereunder required by Rule 204-2 under the Investment Advisers Act of
1940, as amended, for the period specified in the rule.
The Adviser shall provide to the Manager or the Board such periodic and
special reports, balance sheets or financial information, and such other
information with regard to its affairs as the Manager or Board may reasonably
request.
10. Termination of Agreement.
This Agreement shall become effective as of the date of its execution
and shall continue in effect for a period more than two years from the date of
execution only so long as such continuance is specifically approved by the
Trustees at the times and in the manner required by Section 15(a) and (c) of the
1940 Act and rules thereunder.
Pursuant to an Order of the Commission, the Manager may engage a
sub-adviser without first obtaining approval of the investment advisory
agreement by a vote of a majority of the outstanding voting securities of the
Fund. This Agreement shall become effective upon its approval by the Board. The
Adviser shall be without the protection accorded by shareholder approval of an
investment adviser=s receipt of compensation under Section 36(b) of the 1940
Act.
This Agreement may be terminated, at any time, without penalty, by the
Manager or Trustees on sixty (60) days= written notice to the Adviser or by the
Adviser on sixty (60) days= written notice to the Manager.
The Agreement will terminate automatically in the event of assignment.
The agreement will terminate automatically upon the termination of the
Investment Advisory Agreement.
11. Indemnification.
(a) The Manager shall indemnify and hold harmless the Adviser, its
officers, directors and affiliates and each person, if any, who controls the
Adviser within the meaning of Section 15 of the Securities Act of 1933 (the
"1933 Act") ("Affiliates") against any loss, liability, claim, damage or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damage or expense and reasonable counsel fees incurred in
connection therewith) ("Liabilities") directly arising out of any service, other
than as provided in paragraph (b) of this Section 11, to be rendered under this
Agreement except Liabilities resulting from willful misfeasance, bad faith or
gross negligence in the performance of Adviser's duties. The Manager shall not
be liable for any consequential or incidental damages. The Adviser's complete
compliance with the Guidelines referenced in Section 2 may serve to mitigate
conduct otherwise considered willful misfeasance, bad faith or gross negligence.
(b) With regard to the Adviser's Tax Compliance Responsibilities as set
forth in Section 2, the Manager shall not indemnify and hold harmless Adviser
for any negligent conduct or for Adviser's not taking any corrective action
required to be taken based on consultations with Manager.
(c) The Adviser shall indemnify and hold harmless the Manager and its
Affiliates and each person, if any, who controls the Manager within the meaning
of Section 15 of the 1933 Act, Allstate Life Insurance Company and its
Affiliates, including their separate accounts, which may invest in the Fund
(collectively, the "Life Company") against any Liabilities directly arising out
of the Adviser=s willful misfeasance, bad faith or gross negligence in the
performance of its duties under this Agreement, and further, with regard to the
Adviser's Tax Compliance Responsibilities, shall indemnify Manager, Affiliates,
and the Life Company for Liabilities directly resulting from Adviser"s negligent
conduct. The Adviser shall not be liable for any consequential or incidental
damages. The Adviser and its Affiliates will not be liable to Manager for any
Liabilities relating to the failure of Manager or its Affiliates to comply with
this Agreement and/or any applicable insurance laws and rules, or as a result of
any error of judgment or mistake of law.
As used herein, "consequential or incidental damages" shall not include
any tax consequence(s) under variable insurance products funded by the Fund
resulting from the Adviser's failure to comply with its Tax Compliance
Responsibilities as defined in Section 2 of this Agreement.
12. Disclosure.
The Manager shall not, without the prior written consent of the
Adviser, make representations regarding or reference to the Adviser or any of
its affiliates in any disclosure document, advertisement, sales literature or
other promotional materials.
13. Reference to Manager or Life Company or Trust.
Any materials utilized by the Adviser which contain any information
relating to the Manager, a life insurance company investing in the Fund
(including any information relating to its separate accounts or variable annuity
or variable life insurance contracts) or the Trust shall be submitted to the
Manager for approval prior to use, not less than five (5) business days before
such approval is needed by the Adviser. No such materials shall be used if the
Adviser or the Manager reasonably objects in writing to such use within five (5)
days after receipt of such material.
14. Computer Systems.
The Adviser hereby warrants and represents to the Manager that it has
or will have on or prior to December 31, 1999, plans, steps and procedures which
are reasonably designed to make its mission critical computers, software,
hardware, processes, and procedures related to the services provided herein that
are date sensitive, Year 2000 Compliant (as defined below), provided that,
Adviser makes no representation or warranty as to the Year 2000 Compliance (as
defined below) of third party products or services and Adviser shall not be
responsible for any failure of its computer, software, hardware, processes or
procedures to the extent such failures arise as a result of or in connection
with external dependencies including energy utilities, telecommunications firms,
clients, counter parties, exchanges, depositories, governments and regulatory
agencies and third party providers of products or services. As used herein, Year
2000 Compliant or Year 2000 Compliance means information and technology that
accurately processes date and time data, including calculating, comparing and
sequencing, from, into and between the twentieth and twenty-first centuries;
and, the years 1999 and 2000; and leap year calculations.
15. Definitions.
For the purposes of this Agreement, the terms Avote of a majority of
the outstanding voting securities, ""interested person," "affiliated person" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under the 1940 Act.
16. Miscellaneous.
Notices and other writings delivered or mailed postage prepaid to
Manager and the Trust at 0000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxxxx; or to Adviser at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxxxx X. Xxxxx, or to such other address as Manager or
Advisor may hereafter specify by written notice to the most recent address
specified by the other party, will be deemed to have been properly delivered or
given hereunder to the respective addressee.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. This Agreement constitutes the entire agreement among the parties hereto
and supersedes any prior agreement among the parties relating to the subject
matter hereof. The paragraph headings of this Agreement are for convenience of
reference and do not constitute a part hereof. This Agreement shall be governed
in accordance with the laws of the State of Illinois, without giving effect to
principles of conflict of laws.
If the foregoing accurately sets forth our agreement, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
LSA ASSET MANAGEMENT LLC
By: __________________________
Name: _______________________
Title: _________________________
Accepted:
X.X. Xxxxxx Investment Management Inc.
By: ____________________________
Name: __________________________
Title: ___________________________
EXHIBIT A
SUB-ADVISORY AGREEMENT
BETWEEN
LSA ASSET MANAGEMENT LLC
and
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
Portfolio Fee Schedule
X.X. Xxxxxx Disciplined Equity Fund ___% of average daily net
assets of the first $250 million;
and ___% of average daily net
assets in excess of $250 million.
Exhibit 23(4)(b)(ii)
SUB-ADVISORY AGREEMENT
BETWEEN
LSA Asset Management LLC, a
Delaware limited liability company
and
XXXXXXX XXXXX ASSET MANAGEMENT,
a separate operating division of
XXXXXXX, SACHS & CO.
It is hereby agreed by and between LSA Asset Management LLC (the "Manager") and
XXXXXXX XXXXX ASSET MANAGEMENT, a separate operating division of XXXXXXX SACHS &
CO. ( the "Adviser"), as follows:
1.
Engagement of Adviser. LSA Variable Series Trust, a Delaware business trust (the
"Trust") has entered into an Investment Management Agreement with the Manager on
behalf of the Xxxxxxx Xxxxx Growth Equity Fund (the "Fund"). The Manager is
authorized, with the approval of the Board of Trustees of the Trust (the "Board"
or "Trustees" as the context requires), to retain the Adviser to provide
investment advisory services to the Manager in connection with the management of
the Fund. Manager hereby engages the services of Adviser in furtherance of its
Investment Management Agreement with the Trust. Pursuant to this Sub-Advisory
Agreement and subject to the supervision of the Manager and the Board, and in
cooperation with any administrator appointed by the Manager (the
"Administrator"), the Adviser will manage the investment and reinvestment of the
assets of the Fund.
In this regard, Adviser will determine in its discretion the securities
to be purchased or sold, will provide Manager with records concerning its
activities which Manager or the Trust is required to maintain, and will render
regular reports to the Manager, the Trustees and the Board concerning its
discharge of the foregoing responsibilities. Adviser will discharge the
foregoing responsibilities subject to the control of the Board and in compliance
with such policies as the Board may from time to time establish, and in
compliance with the objectives, policies, and limitations for the Fund set forth
in the Fund's then-current prospectus and statement of additional information.
Manager represents that the engagement of Adviser hereunder has been duly
authorized by the Trust in accordance with the Investment Company Act of 1940
(the "1940 Act"). Manager agrees to inform Adviser of any and all applicable
state insurance law restrictions on investments that operate to limit or
restrict the investments the Fund may otherwise make, and to inform Adviser
promptly of any changes in such requirements.
Adviser accepts its engagement under this Section 1 and agrees, at its
own expense, to render the services set forth herein and to provide the office
space, furnishings, equipment and personnel required by it to perform such
services on the terms and for the compensation provided in this Agreement;
provided, however, that Adviser will not be required to pay the cost (including
taxes, brokerage commissions and other transaction costs, if any) of securities
and other investments purchased or sold for the Fund.
The Manager shall perform quarterly and annual tax compliance tests to
ensure that the Fund is in compliance with Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code") and Section 817(h) of the Code. In
connection with such compliance tests, the Manager shall prepare and provide
reports to the Adviser within ten (10) business days of a calendar quarter end
relating to the diversification of the Fund under Subchapter M and Section
817(h) of the Code (Manager's "Tax Compliance Reports"). The Adviser shall
review such reports for purposes of determining compliance with such
diversification requirements. If it is determined that the Fund is not in
compliance with the requirements noted above, the Adviser, in consultation with
the Manager, will take prompt action to bring the Fund back into compliance
within the time permitted under the Code (the Adviser's ATax Remediation
Responsibilities@).
The Manager shall provide the Adviser with a copy of the Trust's
agreement with the custodian designated to hold the assets of the Fund (the
"Custodian") and any modifications thereto (the "Custody Agreement"), copies of
such modifications to be provided to the Adviser a reasonable time in advance of
the effectiveness of such modifications. The assets of the Fund shall be
maintained in the custody of the Custodian identified in, and in accordance with
the terms and conditions of, the Custody Agreement (or any sub-custodian
properly appointed as provided in the Custody Agreement). The Adviser shall have
no liability for the acts or omissions of the Custodian unless such act or
omission is required by and taken in reliance upon instruction given to the
Custodian by a representative of the Adviser properly authorized to give such
instruction under the Custody Agreement. Any assets added to the Fund shall be
delivered directly to the Custodian.
The Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the securities
held in the Fund. The Manager shall instruct the Custodian of the Fund and other
parties providing services to the Fund to promptly forward misdirected proxy
materials to the Adviser.
2.
Fund Transactions. In connection with purchases or sales of portfolio securities
for the account of the Fund, neither Adviser nor any of its partners, officers,
employees or affiliates will act as a principal, except as otherwise permitted
by the 1940 Act and the rules thereunder. Adviser or its agents will arrange for
the placing of orders for the purchase and sale of portfolio securities for the
Fund's account with brokers or dealers (including Xxxxxxx, Sachs & Co.) selected
by Adviser. In the selection of such brokers or dealers (including Xxxxxxx,
Xxxxx & Co.) and the placing of such orders Adviser is directed at all times to
seek for the Fund the most favorable execution and net price available. It is
also understood that it is desirable for the Fund that Adviser have access to
supplemental investment and market research and security and economic analyses
provided by brokers who may execute brokerage transactions at a higher cost to
the Fund than may result when allocating brokerage to other brokers on the basis
of seeking the most favorable price and efficient execution. Therefore, Adviser
is authorized to consider such services provided to the Fund and other accounts
over which Adviser or any of its affiliates exercises investment discretion and
to place orders for the purchase and sale of securities for the Fund with such
brokers, subject to review by the Board from time to time with respect to the
extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful to Adviser in connection with its
services to other clients. Adviser may, on occasions when it deems the purchase
or sale of a security to be in the best interests of the Fund as well as its
other clients, aggregate, to the extent permitted by applicable laws and rules,
the securities to be sold or purchased in order to obtain the most favorable
execution and net price. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction will be
made by Adviser in the manner it considers to be the most equitable and
consistent with its obligations to the Fund and to such other clients. Adviser
is not, however, required to aggregate securities orders.
3.
Compensation of Adviser. As its compensation hereunder, Manager will pay to
Adviser, within twenty (20) business days after the end of each month, a fee
calculated daily as a percentage of the average daily net assets of the Fund
during that month at the following annual rate: ___% of the first $50 million;
___% up to the next $200 million; ___% up to the next $250 million; and ___% in
excess of $500 million.
For the purpose of accruing compensation, the net assets of the Fund
will be determined in the manner provided for in the then-current prospectus of
the Fund.
In the event of termination of this Agreement, all compensation due to
Adviser through the date of termination will be calculated on a pro-rated basis
through the date of termination and paid within fifteen (15) business days of
the date of termination.
4.
Delivery of Information and Reports. Manager agrees to furnish to Adviser
current prospectuses, statements of additional information, proxy statements,
reports of shareholders, certified copies of financial statements, charter
documents and such other information with regard to the affairs of the Fund as
Adviser may reasonably request. Adviser agrees to render to Manager such
periodic and special reports regarding its activities under this Agreement as
Manager may reasonably request. Manager represents that it and the Trust have
received Parts I and II of Adviser's Form ADV. The Adviser shall provide the
Manager with a copy of amendments to its Form ADV and a list of the persons whom
the Adviser wishes to have authorized to give written and/or oral instructions
to the Custodian of the assets of the Fund.
5.
Status of Adviser. The services of Adviser to Manager and the Fund are not to be
deemed exclusive, and Adviser is free to render similar services to others so
long as its services to the Fund are not impaired thereby. Adviser will be
deemed to be an independent contractor and will, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Fund in
any way or otherwise be deemed an agent of the Fund.
Without limiting the foregoing, Manager represents that it understands
that the Adviser now acts, will continue to act, or may act in the future, as
investment adviser or investment sub-adviser to fiduciary and other managed
accounts, including other investment companies and that Manager has no objection
to Adviser so acting, provided that Adviser duly performs all obligations under
this Agreement. Manager also understands that Adviser may give advice and take
action with respect to any of its other clients or for its own account which may
differ from the timing or nature of action taken by Adviser with respect to the
Fund. Nothing in this Agreement imposes upon Adviser any obligation to purchase
or sell or to recommend for purchase or sale, with respect to the Fund, any
security which Adviser or its partners, officers, employees or affiliates may
purchase or sell for its or their own account(s) or for the account(s) of any
other client.
6.
Certain Records. Adviser agrees to maintain, in the form and for the period
required by Rule 31a-2 under the 1940 Act, all records relating to the Fund's
investments made by Adviser that are required to be maintained by the Fund
pursuant to the requirements of Rule 31 a-1 (b)(5), (6), (7), (9) and (10) under
the 1940 Act. Any records required to be maintained and preserved pursuant to
the provisions of Rule 31 a-1 and Rule 31 a-2 promulgated under the 1940 Act
which are prepared or maintained by Adviser on behalf of the Fund are the
property of the Fund and will be surrendered promptly to the Fund or Manager on
request.
Adviser agrees that all accounts, books and other records maintained
and preserved by it as required hereby will be subject at any time, and from
time to time, to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Fund's auditors, the Fund or any
representative of the Fund, the Manager, or any governmental agency or other
instrumentality having regulatory authority over the Fund.
7.
Reference to Adviser. The Manager shall not publish or distribute any
information, including but not limited to registration statements, advertising
or promotional material, regarding the provision of investment advisory services
by Adviser pursuant to this Agreement, or use in advertising, publicity or
otherwise the name of Adviser or any of its affiliates, or any trade name,
trademark, trade device, service xxxx, symbol or any abbreviation, contraction
or simulation thereof of Adviser or its affiliates, without the prior written
consent of Adviser. Any materials utilized by the Manager which contain any
information relating to the Adviser shall be submitted to the Adviser for
approval prior to use, not less than five (5) business days before such approval
is needed by Manager.
Notwithstanding the foregoing, Manager may distribute information
regarding the provision of investment advisory services by Adviser to the Board
(the "Board Materials") without the prior written consent of Adviser. Manager
will provide copies of the Board Materials to Adviser within a reasonable time
following distribution to the Board.
Reference to Manager or Life Company or Trust. Any materials utilized by the
Adviser which contain any information relating to the Manager, a life insurance
company investing in the Fund (including any information relating to its
separate accounts or variable annuity or variable life insurance contracts) or
the Trust shall be submitted to the Manager for approval prior to use, not less
than five (5) business days before such approval is needed by the Adviser. No
such materials shall be used if the Adviser or the Manager reasonably objects in
writing to such use within five (5) days after receipt of such material.
8.
Liability of Manager and Adviser.
(a) The Manager shall indemnify and hold harmless the Adviser, its
officers and directors and each person, if any, who controls the Adviser within
the meaning of Section 15 of the Securities Act of 1933 (the "1933 Act")
("Affiliates") against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expense and reasonable counsel fees incurred in connection
therewith) ("Liabilities") arising out of any service, other than as provided in
paragraph (b) of this Section 8, to be rendered under this Agreement except by
reason of willful misfeasance, bad faith or gross negligence in the performance
of Adviser's duties.
(b) With regard to the Adviser's Tax Remediation Responsibilities as
set forth in Section 1, the Manager shall not indemnify and hold harmless
Adviser for Adviser's not taking any corrective action required to be taken
based on consultations with Manager; however, if any Tax Compliance Report is
not properly prepared by Manager which gives rise to the liabilities, Manager
shall indemnify Adviser with respect to such liabilities.
(c) The Adviser shall indemnify and hold harmless the Manager and its
Affiliates and each person, if any, who controls the Manager within the meaning
of Section 15 of the 1933 Act, Allstate Life Insurance Company and its
Affiliates (collectively, the "Life Company") against any Liabilities arising
out of any service to be rendered under this Agreement with respect to the
Adviser's willful misfeasance, bad faith or gross negligence in the performance
of its duties under this Agreement, and further, with regard to the Adviser's
Tax Remediation Responsibilities, shall indemnify Manager, Affiliates, and the
Life Company for any Liabilities resulting from Adviser's not taking any
appropriate corrective action required to be taken based on Adviser's
consultations with Manager. The Adviser and its Affiliates will not be liable to
Manager for any Liabilities relating to the failure of Manager or its Affiliates
to comply with this Agreement and/or any applicable insurance laws and rules
(including the failure of Manager to advise Adviser of any insurance related
restrictions as described in paragraph 1 hereof), or as a result of any error of
judgment or mistake of law, except to the extent specified in Section 36(b) of
the 1940 Act concerning loss resulting from a breach of fiduciary duty with
respect to receipt of compensation for services.
9.
Duration and Termination. This Agreement shall become effective as of October 1,
1999, and shall continue in effect for a period more than two years from the
date of execution only so long as such continuance is specifically approved by
the Trustees at the times and in the manner required by Section 15(a) and (c) of
the 1940 Act and the rules thereunder.
Pursuant to an Order of the Commission, the Manager may engage an
adviser without first obtaining approval of the investment advisory agreement by
a majority of the outstanding voting securities of the Fund. This Agreement
shall become effective upon its approval by the Board. The Adviser shall be
without the protection accorded by shareholder approval of an investment
adviser's receipt of compensation under Section 36(b) of the Act.
This Agreement may be terminated at any time, without the payment of
any penalty, by the Manager or Trustees on sixty (60) days' written notice to
the Adviser, or by the Adviser on sixty (60) days' written notice to the Manager
and the Trust.
This Agreement will automatically terminate in the event of its
assignment. This Agreement will automatically terminate in the event that the
Investment Management Agreement by and between the Trust and the Manager on
behalf of the Fund, referred to in Section 1, is terminated.
Notices and other writings delivered or mailed postage prepaid to
Manager and the Trust at 0000 Xxxxxxx Xxxx, Xxxxx X0X, Xxxxxxxxxx, Xxxxxxxx,
00000 Attention: Xxxxxxx X. Xxxxxxx, or to Adviser at Xxx Xxx Xxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Grip (42nd Floor), or to such other
address as Manager or Adviser may hereafter specify by written notice to the
most recent address specified by the other party, will be deemed to have been
properly delivered or given hereunder to the respective addressee.
As used in this Section 9, the terms "assignment," "interested persons"
and a "vote of a majority of the outstanding voting securities" will have the
respective meanings set forth in the 1940 Act and the rules thereunder.
10.
Confidentiality. All information and advice by Adviser for the Fund will be
treated as confidential by Manager and will not be disclosed to third parties
without Adviser's prior written consent except as required by law.
11.
Computer. Adviser and its affiliates, on the one hand, and Manager and its
affiliates on the other hand, represent and warrant to each other that they will
use reasonable commercial efforts to (a) review all of their respective hardware
and/or software comprising computer systems which will be used in connection
with this Agreement (individually, the "Computer System" and collectively, the
"Computer Systems") to determine if such Computer Systems are Year 2000
Compliant (as defined below), (b) render such Computer Systems Year 2000
Compliant prior to any part of such Computer Systems suffering a material
malfunction due to its not being made Year 2000 Compliant on a timely basis, and
(c) jointly test any interfaces between Adviser and its affiliates' Computer
System and Manager and its affiliates' Computer System so as to determine that
they are capable of interfacing without material malfunctions. In the event that
any portion of such Computer System materially malfunctions due to the failure
to be made Year 2000 Compliant on a timely basis, the party responsible for
operating and/or maintaining such Computer System shall use good faith efforts
to correct the malfunction and render the relevant portion of the Computer
System Year 2000 Compliant in order to mitigate the damages from such
malfunction and to avoid any further material malfunction. Adviser and its
affiliates and manager and its affiliates represent and warrant to each other
that they have devoted sufficient resources in terms of funding personnel and
project time to satisfy their respective obligations under this warranty.
For the purpose of this Section 11, "Year 2000 Compliant" shall mean
that the referenced Computer System will correctly differentiate between years,
in different centuries, that end in the same two digits, and will accurately
process date/time data (including, but not limited to, calculating, comparing
and sequencing) from, into, and between the centuries including leap year
calculations, provided that any hardware or software not being operated and/or
maintained as part of the referenced Computer System, is itself Year 2000
Compliant.
12.
Severability. If any provision of this Agreement is held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby.
Amendments. This Agreement may not be amended, altered or modified in any way
except by an addendum in writing duly executed by the proper officials of the
parties hereto.
Survival. Sections 7, 8 and 10 will survive the termination of this Agreement.
Governing Law. This Agreement will be construed in accordance with the laws of
the State of Illinois and the applicable provisions of the 1940 Act and the
rules thereunder. To the extent that the applicable laws of the State of
Illinois or any provisions herein conflict with the applicable provisions of the
1940 Act, the latter will control.
IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement this __________ day of September,
1999, to be effective October 1, 1999.
LSA ASSET MANAGEMENT LLC XXXXXXX, SACHS & CO.
By: _______________________________ By:___________________________
Name: _____________________________ Name:________________________
Title: ______________________________ Title: ________________________
XXXXXXX XXXXX ASSET MANAGEMENT, a separate operating division of XXXXXXX, SACHS
& CO.
By: _______________________________
Name: _____________________________
Title: ______________________________
Exhibit 23(4)(b)(iii)
SUB-ADVISORY AGREEMENT
BETWEEN LSA Asset Management LLC
a Delaware limited liability company
and
SALOMON BROTHERS ASSET MANAGEMENT INC.
a Delaware Corporation
It is hereby agreed by and between LSA Asset Management LLC (the "Manager") and
SALOMON BROTHERS ASSET MANAGEMENT INC., (the "Adviser"), as follows:
1.
Engagement of Adviser. LSA Variable Series Trust, a Delaware business trust (the
"Trust") has entered into an Investment Management Agreement with the Manager
effective October 1, 1999, on behalf of the Salomon Brothers Value Equity Fund
(the "Fund"). The Manager is authorized, with the approval of the Board of
Trustees of the Trust (the "Board" or "Trustees" as the context requires), to
retain the Adviser to provide investment advisory services to the Manager in
connection with the management of the Fund. Manager hereby engages the services
of Adviser in furtherance of its Investment Management Agreement with the Trust.
Pursuant to this Sub-Advisory Agreement and subject to the supervision of the
Manager and the Board, and in cooperation with any administrator appointed by
the Manager (the "Administrator"), the Adviser will manage the investment and
reinvestment of the assets of the Fund.
In this regard, Adviser will determine in its discretion the securities
to be purchased or sold, will provide Manager with records concerning its
activities which Manager or the Trust is required to maintain, and will render
regular reports to Manager, Trustees and the Board concerning its discharge of
the foregoing responsibilities. Adviser will discharge the foregoing
responsibilities subject to the control of the Board and in compliance with such
policies as the Board may from time to time establish, and in compliance with
the objectives, policies, and limitations for the Fund set forth in the Fund=s
then-current prospectus and statement of additional information. Manager
represents that the engagement of Adviser hereunder has been duly authorized by
the Trust in accordance with the Investment Company Act of 1940 (the "1940
Act"). Manager agrees to inform Adviser of any and all applicable state
insurance law restrictions on investments that operate to limit or restrict the
investments the Fund may otherwise make, and to inform Adviser promptly of any
changes in such requirements.
Adviser accepts its engagement under this Section 1 and agrees, at its
own expense, to render the services set forth herein and to provide the office
space, furnishings, equipment and personnel required by it to perform such
services on the terms and for the compensation provided in this Agreement;
provided, however, that Adviser will not be required to pay the cost (including
taxes, brokerage commissions and other transaction costs, if any) of securities
and other investments purchased or sold for the Fund.
The Manager shall perform quarterly and annual tax compliance tests to
ensure that the Fund is in compliance with Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code") and Section 817(h) of the Code. In
connection with such compliance tests, the Manager shall prepare and provide
reports to the Adviser within ten (10) business days of a calendar quarter end
relating to the diversification of the Fund under Subchapter M and Section
817(h) of the Code. The Adviser shall review such reports for purposes of
determining compliance with such diversification requirements. If it is
determined that the Fund is not in compliance with the requirements noted above,
the Adviser, in consultation with the Manager, will take prompt action to bring
the Fund back into compliance within the time permitted under the Code (the
Adviser's "Tax Compliance Responsibilities").
Custodian. The Manager shall provide the Adviser with a copy of the Trust's
agreement with the custodian designated to hold the assets of the Fund (the
"Custodian") and any modifications thereto (the "Custody Agreement"), copies of
such modifications to be provided to the Adviser a reasonable time in advance of
the effectiveness of such modifications. The assets of the Fund shall be
maintained in the custody of the Custodian identified in, and in accordance with
the terms and conditions of, the Custody Agreement (or any sub-custodian
properly appointed as provided in the Custody Agreement). The Adviser shall have
no liability for the acts or omissions of the Custodian unless such act or
omission is required by and taken in reliance upon instruction given to the
Custodian by a representative of the Adviser properly authorized to give such
instruction under the Custody Agreement. Any assets added to the Fund shall be
delivered directly to the Custodian.
The Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the securities
held in the Fund. The Manager shall instruct the Custodian of the Fund and other
parties providing services to the Fund to promptly forward misdirected proxy
materials to the Adviser.
2.
Fund Transactions. In connection with purchases or sales of portfolio securities
for the accounts of the Fund, neither Adviser nor any of its partners, officers,
employees or affiliates will act as a principal, except as otherwise permitted
by the 1940 Act and the rules thereunder. Adviser or its agents will arrange for
the placing of orders for the purchase and sale of portfolio securities for the
Fund=s account with brokers or dealers selected by Adviser. In the selection of
such brokers or dealers and the placing of such orders Adviser is directed at
all times to seek for the Fund the most favorable execution and net price
available. It is also understood that it is desirable for the Fund that Adviser
have access to supplemental investment and market research and security and
economic analyses provided by brokers who may execute brokerage transactions at
a higher cost to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, Adviser is authorized to consider such services provided
to the Fund and other accounts over which Adviser or any of its affiliates
exercises investment discretion and to place orders for the purchase and sale of
securities for the Fund with such brokers, subject to review by the Board from
time to time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to Adviser
in connection with its services to other clients. Adviser may, on occasions when
it deems the purchase or sale of a security to be in the best interests of the
Fund as well as its other clients, aggregate, to the extent permitted by
applicable laws and rules, the securities to be sold or purchased in order to
obtain the most favorable execution and net price. In such event, allocation of
the securities so purchased or sold, as well as the expenses incurred in the
transaction will be made by Adviser in the manner it considers to be the most
equitable and consistent with its obligations to the Fund and to such other
clients. Adviser is not, however, required to aggregate securities orders.
3.
Compensation of Adviser. As its compensation hereunder, Manager will pay to
Adviser, within twenty (20) business days after the end of each month, a fee
calculated daily as a percentage of the average daily net assets of the Fund
during that month at the annual rate of ____% of the first $250 million; ____%
up to the next $250 million; and ____% in excess of $500 million.
For the purpose of accruing compensation, the net assets of the Fund
will be determined in the manner provided in the then-current prospectus of the
Fund.
The fee for the period from the initial capitalization of the Trust to
the end of the month during which such capitalization shall have occurred shall
be prorated according to the proportion that such period bears to the full
monthly period. In the event of termination of this Agreement, all compensation
due to Adviser through the date of termination will be calculated on a pro-rated
basis through the date of termination and paid within fifteen (15) business days
of the date of termination.
4.
Delivery of Information and Reports. Manager agrees to furnish to Adviser
current prospectuses, statements of additional information, proxy statements,
reports of shareholders, certified copies of financial statements, charter
documents and such other information with regard to the affairs of the Fund as
Adviser may reasonably request. Adviser agrees to render to Manager such
periodic and special reports regarding its activities under this Agreement as
Manager may reasonably request. Manager represents that it and the Trust have
received Parts I and II of Adviser's Form ADV. The Adviser shall provide the
Manager with a copy of amendments to its Form ADV and a list of the persons whom
the Adviser wishes to have authorized to give written and/or oral instructions
to the Custodian of the assets of the Fund.
5.
Status of Adviser. The services of Adviser to Manager and the Fund are not to be
deemed exclusive, and Adviser is free to render similar services to others so
long as its services to the Fund are not impaired thereby. Adviser will be
deemed to be an independent contractor and will, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Fund in
any way or otherwise be deemed an agent of the Fund.
Without limiting the foregoing, Manager represents that it understands
that the Adviser now acts, will continue to act, or may act in the future, as
investment adviser or investment sub-adviser to fiduciary and other managed
accounts, including other investment companies and that Manager has no objection
to Adviser so acting, provided that Adviser duly performs all obligations under
this Agreement. Manager also understands that Adviser may give advice and take
action with respect to any of its other clients or for its own account which may
differ from the timing or nature of action taken by Adviser with respect to the
Fund. Nothing in this Agreement imposes upon Adviser any obligation to purchase
or sell or to recommend for purchase or sale, with respect to the Fund, any
security which Adviser or its partners, officers, employees or affiliates may
purchase or sell for its or their own account(s) or for the account of any other
client.
6.
Certain Records. Adviser agrees to maintain, in the form and for the period
required by Rule 31a-2 under the 1940 Act, all records relating to the Fund's
investments made by Adviser that are required to be maintained by the Fund
pursuant to the requirements of Rule 31 a-1 (b)(5), (6), (7), (9) and (10) under
that Act. Any records required to be maintained and preserved pursuant to the
provisions of Rule 31 a-1 and Rule 31 a-2 promulgated under the 1940 Act which
are prepared or maintained by Adviser on behalf of the Fund are the property of
the Fund and will be surrendered promptly to the Fund or Manager on request.
Adviser agrees that all accounts, books and other records maintained and
preserved by it as required hereby will be subject at any time, and from time to
time, to such reasonable periodic, special and other examinations by the
Securities and Exchange Commission, the Fund's auditors, the Fund or any
representative of the Fund, the Manager, or any governmental agency or other
instrumentality having regulatory authority over the Fund.
7.
Reference to Adviser. The Manager shall not publish or distribute any
information, including but not limited to registration statements, advertising
or promotional material, regarding the provision of investment advisory services
by Adviser pursuant to this Agreement, or use in advertising, publicity or
otherwise the name of Adviser or any of its affiliates, or any trade name,
trademark, trade device, service xxxx, symbol or any abbreviation, contraction
or simulation thereof of Adviser or its affiliates, without the prior written
consent of Adviser. Any materials utilized by the Manager which contain any
information relating to the Adviser shall be submitted to the Adviser for
approval prior to use, not less than five (5) business days before such approval
is needed by Manager.
Notwithstanding the foregoing, Manager may distribute information
regarding the provision of investment advisory services by Adviser to the Board
(the "Board Materials") without the prior written consent of Adviser. Manager
will provide copies of the Board Materials to Adviser within a reasonable time
following distribution to the Board.
Reference to Manager or Life Company or the Trust. Any materials utilized by the
Adviser which contain any information relating to the Manager, a life insurance
company investing in the Fund (including any information relating to its
separate accounts or variable annuity or variable life insurance contracts) or
the Trust shall be submitted to the Manager for approval prior to use, not less
than five (5) business days before such approval is needed by the Adviser. No
such materials shall be used if the Adviser or the Manager reasonably objects in
writing to such use within five (5) days after receipt of such material.
8.
Liability of Manager and Adviser.
(a) The Manager shall indemnify and hold harmless the Adviser against
any loss, liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith) ("Liabilities")
arising out of any service, other than as provided in paragraph (b) of this
Section 8, to be rendered under this Agreement except by reason of willful
misfeasance, bad faith or gross negligence in the performance of Adviser's
duties.
(b) With regard to the Adviser's Tax Compliance Responsibilities as set
forth in Section 1, the Manager shall not indemnify and hold harmless Adviser
for any negligent conduct or conduct that is not at the level at which a prudent
person would conduct its own affairs.
(c) The Adviser shall indemnify and hold harmless the Manager against
any loss, liability, claim, damage or expense, including but not limited to
those incurred by life insurance companies and their separate accounts that
invest in the Fund and for which the Manager or the Fund is liable
("Liabilities") arising out of any service to be rendered under this Agreement
with respect to the Adviser's willful misfeasance, bad faith or gross negligence
in the performance of its duties under this Agreement, and further, with regard
to the Adviser's Tax Compliance Responsibilities, shall indemnify Manager for
any Liabilities resulting from Adviser's negligent conduct. The Adviser will not
be liable to Manager for any Liabilities relating to the failure of Manager to
comply with this Agreement and/or any applicable insurance laws and rules, or as
a result of any error of judgment or mistake of law, except to the extent
specified in Section 36(b) of the 1940 Act concerning loss resulting from a
breach of fiduciary duty with respect to receipt of compensation for services.
9.
Duration and Termination. This Agreement shall become effective as of the date
of its execution and shall continue in effect for a period more than two years
from the date of execution only so long as such continuance is specifically
approved by the Trustees at the times and in the manner required by Section
15(a) and (c) of the 1940 Act and the rules thereunder.
Pursuant to an Order of the Commission, the Manager may engage an
Adviser without first obtaining approval of the investment advisory agreement by
a majority of the outstanding voting securities of the Fund. This Agreement
shall become effective upon its approval by the Board.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Manager or Trustees on sixty (60) days' written notice to the
Adviser, or by the Adviser on sixty (60) days' written notice to the Manager.
This Agreement will automatically terminate in the event of its
assignment. This Agreement will automatically terminate in the event that the
Investment Management Agreement by and between the Trust and the Manager on
behalf of the Fund, referred to in Section 1, is terminated.
Notices and other writings delivered or mailed postage prepaid to Manager
and the Trust at 0000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attn: Xxxxxxx X.
Xxxxxxx, Esq., or to Adviser at Salomon Brothers Asset Management Inc., Seven
World Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxx X.
Xxxxxxxxx, Esq., or to such other address as Manager or Adviser may hereafter
specify by written notice to the most recent address specified by the other
party, will be deemed to have been properly delivered or given hereunder to the
respective addressee.
As used in this Section 9, the terms "assignment," "interested persons"
and a "vote of a majority of the outstanding voting securities" will have the
respective meanings set forth in the 1940 Act and the rules thereunder.
10.
Confidentiality. All information and advice by Adviser for the Fund will be
treated as confidential by Manager and will not be disclosed to third parties
without Adviser's prior written consent, except as required by law.
11.
Computer. The Adviser warrants that, to the best of its knowledge, the computer
systems, software, hardware or equipment under its sole control and maintained
in the course of performing its services under this Agreement, shall operate,
without error, and as necessary shall accurately process all data which involve,
in any way or manner, calendar year date dependencies or considerations. The
parties agree that if any clause in this Agreement or any agreement of which
this is a part attempts to limit the Adviser's liability to the Manager in any
way or which disclaims any warranties then such clause or agreement shall not be
effective with regard to any breach of the foregoing warranty. The parties
further agree that the Federal "Year 2000 Information and Readiness Disclosure
Act" and any Year 2000 Statement and Year 2000 Disclosure (as such terms are
defined under the Act referenced) whether made or issued before, contemporaneous
with or after this Agreement shall not operate or be deemed to limit, diminish,
modify or otherwise affect the foregoing warranty the making of which Adviser
acknowledges and agrees is material to the Manager=s Agreement hereunder.
The Adviser represents and warrants that to the best of its knowledge the
software utilized in the course of performing its services under this Agreement
("Software") (a) contains no hidden files, viruses or contaminants, (b) will not
replicate, transmit, or activate itself without control of a person operating
the computing equipment on which it resides, (c) will not access, alter, damage,
erase, or otherwise interfere with, the Software, including, any data or
computer programs without control of a person operating the computing equipment
on which it resides, (d) contains no key, node lock, time-out or other function,
whether implemented by electronic, mechanical or other means, which restricts or
may restrict use or access to the Software without the consent of the computer
user.
12.
Severability. If any provision of this Agreement is held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby.
Amendments. This Agreement may not be amended, altered or modified in any way
except by an addendum in writing duly executed by the proper officials of the
parties hereto.
Survival. Sections 7, 8 and 10 will survive the termination of this Agreement.
Governing Law. This Agreement will be construed in accordance with the laws of
the State of Illinois and the applicable provisions of the 1940 Act and the
rules thereunder. To the extent that the applicable laws of the State of
Illinois or any provisions herein conflict with the applicable provisions of the
1940 Act, the latter will control.
IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement on the ___ day of September, 1999,
to be effective as of the 1st day of October, 1999.
By:__________________________
Name:________________________
Title:_________________________
Authorized Officer
SALOMON BROTHERS ASSET MANAGEMENT INC.
By:__________________________
Name:________________________
Title:_________________________
Authorized Officer
LSA ASSET MANAGEMENT LLC
Exhibit 23(4)(b)(iv)
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement (the "Agreement") executed this ___________
day of September, 1999 and effective October 1, 1999, by and between LSA Asset
Management LLC, a Delaware limited liability company (the "Manager"), and Xxxxxx
Xxxxxxx Xxxx Xxxxxx Investment Management Inc., a Delaware corporation (the
"Adviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated
_________, (the "Advisory Agreement") with LSA Variable Series Trust (the
"Trust"), pursuant to which the Manager provides portfolio management and
administrative services to the Xxxxxx Xxxxxxx Asset Management Focused Equity
Fund (the AFund@).
WHEREAS, the Manager is authorized, with the approval of the Board of
Trustees of the Trust (the "Board" or "Trustees" as the context requires), to
retain the Adviser to provide portfolio management and administrative services
to the Manager in connection with the management of the Fund.
WHEREAS, the Manager desires to retain the Adviser to render portfolio
management and administrative services in the manner and on the terms set forth
in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Manager and the Adviser agree as follows:
1. Sub-Advisory Services.
a. The Adviser shall, subject to the supervision of the Manager
and the Board, and in cooperation with any administrator appointed by the
Manager (the "Administrator"), manage the investment and reinvestment of the
assets of the Fund. The Adviser shall manage the Fund in conformity with: (1)
the investment objective, policies and restrictions of the Fund set forth in the
Trust's then-current prospectus and statement of additional information relating
to the Fund, (2) any additional policies or guidelines established by the
Manager or by the Board that have been furnished in writing to the Adviser and
(3) the provisions of the Internal Revenue Code of 1986, as amended (the "Code")
applicable to "regulated investment companies" (as defined in Section 851 of the
Code), all as from time to time in effect (collectively, the "Policies"), and
with all applicable provisions of law, including without limitation all
applicable provisions of the Investment Company Act of 1940, as amended (the
"1940 Act") and the rules and regulations thereunder. Subject to the foregoing,
the Adviser is authorized, in its discretion and without prior consultation with
the Manager, to buy, sell, lend and otherwise trade in any stocks, bonds and
other securities and investment instruments on behalf of the Fund, without
regard to the length of time the securities have been held and the resulting
rate of portfolio turnover or any tax considerations, and the majority or the
whole of the Fund may be invested in such proportions of stocks, bonds, other
securities or investment instruments, or cash, as the Adviser shall, in its best
judgment, determine. Notwithstanding the foregoing provisions of this Section
1.a., however, the Adviser shall, upon written instructions from the Manager,
effect such portfolio transactions for the Fund as the Manager shall determine
are necessary in order for the Fund to comply with the Policies.
b. The Adviser shall furnish the Manager and the Administrator
with monthly, quarterly and annual reports concerning transactions and
performance of the Fund in such form as may be mutually agreed upon, and agrees
to review the Fund and discuss the management of the Fund with representatives
or agents of the Manager, the Administrator or the Fund at their reasonable
request. The Adviser shall permit all books and records with respect to the Fund
to be inspected and audited by the Manager and the Administrator at all
reasonable times during normal business hours, on reasonable notice. The Adviser
shall also provide the Manager, the Administrator or the Fund with such other
information and reports as may reasonably be requested by the Manager, the
Administrator or the Fund from time to time, including without limitation all
material as reasonably may be requested by the Board pursuant to Section 15(c)
of the 1940 Act.
c. Adviser agrees to maintain, in the form and for the period
required by Rule 31a-2 under the 1940 Act, all records relating to the Fund's
investments made by Adviser that are required to be maintained by the Fund
pursuant to the requirements of Rule 31 a-1 (b)(5), (6), (7), (9) and (10) under
the 1940 Act. Any records required to be maintained and preserved pursuant to
the provisions of Rule 31 a-1 and Rule 31 a-2 promulgated under the 1940 Act
which are prepared or maintained by Adviser on behalf of the Fund are the
property of the Fund and will be surrendered promptly to the Fund or Manager
upon request.
d. The Adviser shall provide to the Manager a copy of its Form
ADV as filed with the Securities and Exchange Commission and as amended from
time to time and a list of the persons whom the Adviser wishes to have
authorized to give written and/ or oral instructions to custodians of assets of
the Fund.
e. The Adviser shall provide the Fund's Custodian (as defined
below) on each business day with information relating to all transactions
concerning the Fund's assets and shall provide the Manager with such information
upon request of the Manager. The Adviser shall review all proxy solicitation
materials and be responsible for voting and handling all proxies in relation to
the securities held in the Fund. The Adviser shall instruct the Custodian of the
Fund and other parties providing services to the Fund to promptly forward
misdirected proxy materials to the Adviser.
2. Obligations of the Manager.
a. The Manager shall provide (or cause the Fund's custodian, as
defined below, to provide) timely information to the Adviser regarding such
matters as the composition of assets of the Fund, cash requirements and cash
available for investment in the Fund, and all other information as may be
reasonably necessary for the Adviser to perform its responsibilities hereunder.
b. The Manager has furnished the Adviser a copy of the prospectus
and statement of additional information of the Trust and agrees during the
continuance of this Agreement to furnish the Adviser copies of any revisions or
supplements thereto at, or, if practicable, before the time the revisions or
supplements become effective. No revisions shall be made nor supplements issued
regarding the Fund or the Adviser without the prior review and approval of the
Adviser. No written materials naming or relating to the Adviser, its employees
or its affiliated companies, other than materials provided or approved by the
Adviser, shall be used by the Manager, the Fund or their affiliates in offering
or marketing shares of the Fund. The Manager agrees to furnish the Adviser with
minutes of meetings of the Trustees applicable to the Fund to the extent they
may affect the duties of the Adviser, and with copies of any financial
statements or reports made by the Fund to its shareholders, and any further
materials or information which the Adviser may reasonably request to enable it
to perform its functions under this Agreement.
The Manager shall provide the Adviser with a copy of the Trust's
agreement with the Custodian designated to hold the assets of the Fund (the
"Custodian") and any modifications thereto (the "Custody Agreement"), copies of
such modifications to be provided to the Adviser a reasonable time in advance of
the effectiveness of such modifications. The assets of the Fund shall be
maintained in the custody of the Custodian identified in, and in accordance with
the terms and conditions of, the Custody Agreement (or any sub-custodian
properly appointed as provided in the Custody Agreement). The Adviser shall have
no liability for the acts or omissions of the Custodian unless such act or
omission is required by and taken in reliance upon instruction given to the
Custodian by a representative of the Adviser properly authorized to give such
instruction under the Custody Agreement. Any assets added to the Fund shall be
delivered directly to the Custodian.
The Manager shall perform quarterly and annual tax compliance
tests to ensure that the Fund is in compliance with Subchapter M and Section
817(h) of the Code. In connection with such compliance tests, the Manager shall
prepare and provide reports to the Adviser within ten (10) business days of a
calendar quarter end relating to the diversification of the Fund under
Subchapter M and Section 817(h) of the Code. The Adviser shall review such
reports for purposes of determining compliance with such diversification
requirements. If it is determined that the Fund is not in compliance with the
requirements noted above, the Adviser, in consultation with the Manager, will
take prompt action to bring the Fund back into compliance within the time
permitted under the Code (the Adviser's "Tax Compliance Responsibilities").
3. Expenses.
Except for expenses specifically assumed or agreed to be paid by
the Adviser pursuant hereto, the Adviser shall not be liable for any expenses of
the Manager or the Fund including, without limitation, (a) interest and taxes,
(b) brokerage commissions and other costs in connection with the purchase or
sale of securities or other investment instruments with respect to the Fund, and
(c) custodian fees and expenses. The Adviser will pay its own expenses incurred
in furnishing the services to be provided by it pursuant to this Agreement.
4. Purchase and Sale of Assets.
Absent instructions from the Manager to the contrary, the Adviser
shall place all orders for the purchase and sale of securities for the Fund with
brokers or dealers selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser, provided such orders comply with Rule 17e-1 under
the 1940 Act. To the extent consistent with applicable law, purchase or sell
orders for the Fund may be aggregated with contemporaneous purchase or sell
orders of other clients of the Adviser. The Adviser shall use its best efforts
to obtain execution of transactions for the Fund at prices which are
advantageous to the Fund and at commission rates that are reasonable in relation
to the benefits received.
5. Compensation of the Adviser.
As its compensation hereunder, Manager will pay to Adviser,
within twenty (20) business days after the end of each month, a fee calculated
daily as a percentage of the average daily net assets of the Fund during that
month at the following annual rate: ___% on the first $150 million; ___% on the
next $100 million; ___% up to the next $250 million; and ___% in excess of $500
million.
For the purpose of accruing compensation, the net assets of the
Fund will be determined in the manner provided in the then-current prospectus of
the Fund.
The fee for any period less than one month shall be prorated
according to the proportion that such period bears to the full monthly period.
In the event of termination of this Agreement, all compensation due to the
Adviser through the date of termination will be calculated on a pro-rated basis
through the date of termination and paid within fifteen (15) business days of
the date of termination.
6. Non-Exclusivity.
The Manager agrees that the services of the Adviser are not to be
deemed exclusive and that the Adviser and its affiliates are free to act as
investment manager and provide other services to various investment companies
and other managed accounts and clients, except as the Adviser and the Manager
may otherwise agree from time to time in writing before or after the date
hereof. This Agreement shall not in any way limit or restrict the Adviser or any
of its directors, officers, employees or agents from buying, selling or trading
any securities or other investment instruments for its or their own account or
for the account of others for whom it or they may be acting, provided that such
activities do not adversely affect or otherwise impair the performance by the
Adviser of its duties and obligations under this Agreement. The Manager
recognizes and agrees that the Adviser may provide advice to or take action with
respect to other clients, which advice or action, including the timing and
nature of such action, may differ from or be identical to advice given or action
taken with respect to the Fund. The Adviser shall for all purposes hereof be
deemed to be an independent contractor and shall, unless otherwise provided or
authorized, have no authority to act for or represent the Fund or the Manager in
any way or otherwise be deemed an agent of the Fund or the Manager.
7. Reference to Manager or Life Company or Trust.
Any materials utilized by the Adviser which contain any
information relating to the Manager, a life insurance company investing in the
Fund (including any information relating to its separate accounts or variable
annuity or variable life insurance contracts) or the Trust shall be submitted to
the Manager for approval prior to use, not less than five (5) business days
before such approval is needed by the Adviser. No such materials shall be used
if the Adviser or the Manager reasonably objects in writing to such use within
five (5) business days after receipt of such material.
8. Reference to Adviser or Fund.
Any materials utilized by the Manager which contain any
information relating to the Adviser or the Fund 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 Adviser. No such materials shall be used if the
Adviser or the Manager reasonably objects in writing to such use within five (5)
business days after receipt of such material.
9. Computer Systems.
The Adviser warrants that it will use its reasonable efforts to
ensure that the computer systems, software, hardware or equipment supplied or
maintained in the course of performing its services under this Agreement, shall
operate, without error, and as necessary shall accurately process all data which
involve, in any way or manner, calendar year date dependencies or
considerations. The parties agree that the Federal "Year 2000 Information and
Readiness Disclosure Act" shall not operate or be deemed to limit, diminish,
modify or otherwise affect the foregoing warranty the making of which Adviser
acknowledges and agrees is material to the Manager's Agreement hereunder.
10. Indemnification.
a. The Manager shall indemnify and hold harmless the Adviser, its
officers and directors and each person, if any, who controls, is controlled by
or is under common control, with the Adviser within the meaning of Section 15 of
the Securities Act of 1933 (the "1933 Act") ("Affiliates") against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith) ("Liabilities")
arising out of any service, other than as provided in paragraph (b) of this
Section 10, to be rendered under this Agreement except by reason of willful
misfeasance, bad faith or gross negligence in the performance of Adviser"s
duties.
b. With regard to the Adviser's Tax Compliance Responsibilities
as set forth in Section 2, the Manager shall not indemnify and hold harmless
Adviser for any negligent conduct or conduct that is not at the level at which a
prudent person would conduct its own affairs.
c. The Adviser shall indemnify and hold harmless the Manager and
its Affiliates and each person, if any, who controls, is controlled by or is
under common control, with the Manager within the meaning of Section 15 of the
1933 Act, Allstate Life Insurance Company and its Affiliates, including their
separate accounts, which may invest in the Fund (collectively, the "Life
Company") against any Liabilities arising out of any service to be rendered
under this Agreement with respect to the Adviser's willful misfeasance, bad
faith or gross negligence in the performance of its duties under this Agreement,
and further, with regard to the Adviser's Tax Compliance Responsibilities, shall
indemnify Manager, Affiliates, and the Life Company for any Liabilities
resulting from Adviser's negligent conduct or conduct that is not at the level
at which a prudent person would conduct its own affairs. The Adviser and its
Affiliates will not be liable to Manager for any Liabilities relating to the
failure of Manager or its Affiliates to comply with this Agreement and/or any
applicable insurance laws and rules, or as a result of any error of judgment or
mistake of law, except to the extent specified in Section 36(b) of the 1940 Act
concerning loss resulting from a breach of fiduciary duty with respect to
receipt of compensation for services.
11. Effective Date and Termination.
a. This Agreement shall become effective as of the date of its
execution and shall continue in effect for a period more than two years from the
date of execution only so long as such continuance is specifically approved by
the Trustees at the times and in the manner required by Section 15(a) and (c) of
the 1940 Act and the rules thereunder.
b. This Agreement may, at any time, be terminated on sixty (60)
days' written notice to the Adviser by the Manager or Trustees. Pursuant to an
Order of the Commission, the Manager may engage an Adviser without first
obtaining approval of the investment advisory agreement by a majority of the
outstanding voting securities of the Fund. This Agreement shall become effective
upon its approval by the Board. The Adviser shall be without the protection
accorded by shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
c. This Agreement shall automatically terminate in the event of
its assignment or upon the termination of the Advisory Agreement.
d. This Agreement may be terminated by the Adviser on sixty (60)
days' written notice to the Manager.
Termination of this Agreement pursuant to this Section 11 shall
be without the payment of any penalty.
12. Amendment.
This Agreement may be amended at any time by mutual consent of
the parties, provided that, if required by law, such amendment shall also have
been approved by vote of a majority of the outstanding voting securities of the
Fund and by vote of a majority of the Trustees who are not interested persons of
the Fund, the Manager or the Adviser, cast in person at a meeting called for the
purpose of voting on such approval.
13. Definitions.
For the purpose of this Agreement, the terms "vote of a majority
of the outstanding voting securities," "interested person," "affiliated company"
and "assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under the 1940 Act.
14. General.
a. The Adviser may perform its services through an affiliated
company, employee, officer or agent, and the Manager shall not be entitled to
the advice, recommendation or judgment of any specific person; provided,
however, that the persons identified in the then-current prospectus of the Fund
shall perform the Fund management duties described therein until the Adviser
notifies the Manager that one or more other affiliates, employees, officers or
agents identified in such notice shall assume such duties as of a specific date.
b. If any term or provision of this Agreement or the application
thereof to any person or circumstances is held to be invalid or unenforceable to
any extent, the remainder of this Agreement or the application of such provision
to other persons or circumstances shall not be affected thereby and shall be
enforced to the fullest extent permitted by law.
c. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Illinois.
15. Confidentiality.
All information and advice by Adviser for the Fund will be
treated as confidential by Manager and will not be disclosed to third parties
without Adviser"s prior written consent except as required by law.
16. Use of Adviser Name.
The Manager agrees that if this Agreement is terminated and the Adviser
or an affiliate thereof shall no longer be the Adviser to the Fund, the Manager
will change the name of the Fund to delete any reference to "Xxxxxx Xxxxxxx Xxxx
Xxxxxx Investment Management Inc." or "Xxxxxx Xxxxxxx Asset Management."
LSA ASSET MANAGEMENT LLC
By: _____________________________________
Name: ___________________________________
Title: _____________________________________
XXXXXX XXXXXXX XXXX XXXXXX
INVESTMENT MANAGEMENT INC.
By: _____________________________________
Name: ___________________________________
Title: _____________________________________
Exhibit 23(4)(b)(v)
SUB-ADVISORY AGREEMENT
THIS AGREEMENT, executed this __________ day of September, 1999, and
effective the 1st day of October 1999, among OpCap Advisors, a Delaware general
partnership (the "Adviser"), and LSA Asset Management LLC, a Delaware limited
liability company (the "Manager").
WHEREAS, LSA Variable Series Trust, a Delaware business trust (the
"Trust") has entered into an advisory agreement with the "Manager", a copy of
which agreement is attached hereto as Exhibit A (the "Investment Advisory
Agreement"), pursuant to which it will act as adviser to the OpCap Advisors
Balanced Fund (the "Fund"), a series of the Trust. The Manager is authorized,
with the approval of the Board of Trustees of the Trust (the "Board" or
"Trustees" as the context requires), to retain the Adviser to provide investment
advisory services to the Manager in connection with the management of the Fund.
WHEREAS, The parties hereto wish to enter into an agreement whereby the
Adviser will provide to the Manager, in connection with the management of the
Fund, securities investment advisory services.
NOW THEREFORE, In consideration of the mutual covenants herein
contained, the Manager and the Adviser agree as follows:
Appointment
(1) The Manager hereby employs the Adviser to render certain investment advisory
services to the Fund as set forth herein. The Adviser hereby accepts such
employment and agrees to perform such services on the terms herein set forth,
and for the compensation herein provided.
Services as Investment Adviser
(2) Subject to the supervision of the Manager and the Board, and in cooperation
with any administrator appointed by the Manager (the "Administrator"), the
Adviser shall furnish the Fund advice with respect to the investment and
reinvestment of the assets of the Fund in accordance with the investment
objectives, restrictions and limitations of the Fund, as set forth in the
Trust's most recent Registration Statement.
(3) The Adviser shall provide to the Manager a copy of its Form ADV as filed
with the Securities and Exchange Commission (the "Commission") and as amended
from time to time and a list of the persons whom the Adviser wishes to have
authorized to give written and/or oral instructions to the custodians of the
assets of the Fund.
Custodian The Manager shall provide the Adviser with a copy of the Trust's
agreement with the custodian designated to hold the assets of the Fund (the
"Custodian") and any modifications thereto (the "Custody Agreement"), copies of
such modifications to be provided to the Adviser a reasonable time in advance of
the effectiveness of such modifications. The assets of the Fund shall be
maintained in the custody of the Custodian identified in, and in accordance with
the terms and conditions of, the Custody Agreement (or any sub-custodian
properly appointed as provided in the Custody Agreement). Where the Custodian's
act(s) or omission(s) is required by, and taken in reliance upon, improper
instructions given to the Custodian by a properly authorized representative of
the Adviser, then the Adviser shall be liable for the act(s) or omission(s) of
the Custodian. "Properly authorized" shall mean those representatives of the
Adviser who are authorized, pursuant to the Custody Agreement, to give
instructions to the Custodian under the Custodian Agreement. Any assets added to
the Fund shall be delivered directly to the Custodian.
(4) The Adviser shall perform a monthly reconciliation of the Fund to the
holdings report provided by the Trust's Custodian and bring any material or
significant variances regarding holding or valuation to the attention of the
Manager. The Adviser shall provide the Trust's Custodian on each business day
with information relating to all transactions concerning the Trust's assets and
shall provide the Manager with such information upon request of the Manager.
(5) The Adviser shall manage the Fund in compliance with Subchapter M and
Section 817(h) of the Internal Revenue Code of 1986, as amended (the "Code") and
regulations thereunder.
(6) The Manager shall perform quarterly and annual tax compliance tests to
ensure that the Fund is in compliance with Subchapter M of the Code and Section
817(h) of the Code. In connection with such compliance tests, the Manager shall
prepare and provide reports to the Adviser within ten (10) business days of a
calendar quarter end relating to the diversification of the Fund under
Subchapter M and Section 817(h). The Adviser shall review such reports for
purposes of determining compliance with such diversification requirements. If it
is determined that the Fund is not in compliance with the requirements noted
above, the Adviser, in consultation with the Manager, will take prompt action to
bring the Fund back into compliance within the time permitted under the Code
(the Adviser's "Tax Compliance Responsibilities").
(7) The Adviser shall for all purposes herein be deemed to be an independent
contractor. The Adviser has no authority to act for or represent the Trust or
the Fund in any way except to direct securities transactions pursuant to its
investment advice hereunder. The Adviser is not an agent of the Manager, the
Trust or the Fund.
(8) The Adviser shall bear all of its expenses in connection with the
performance of its services under this Agreement. All other expenses to be
incurred in the operation of the Fund will be borne by the Trust or the Fund.
(9) The Adviser shall review all proxy solicitation materials and be responsible
for voting and handling all proxies in relation to the securities held in the
Fund. The Manager shall instruct the Custodian of the Fund and other parties
providing services to the Fund to promptly forward misdirected proxy materials
to the Adviser.
Maintenance of Books and Records
(10) The Adviser shall maintain, in compliance with the Investment Company Act
of 1940, as amended (the "1940 Act"), all books and records with respect to
transactions involving the assets of the Fund for which the Adviser has
responsibility. In compliance with the requirements of Rule 3la-3 under the 1940
Act, the Adviser hereby agrees that all records which it maintains for the Fund
are the property of the Trust and further agrees to surrender promptly to the
Manager copies of any of such records upon the Fund's or the Manager's request.
The Adviser further agrees to preserve, for the periods prescribed by Rule 31a-2
under the 1940 Act, the records relating to its activities hereunder required to
be maintained by Rule 31a-1 under the 1940 Act and to preserve the records
relating to its activities hereunder required by Rule 204-2 under the Investment
Advisers Act of 1940, as amended, for the period specified in said rule. The
Adviser shall provide to the Manager or the Board such periodic and special
reports, balance sheets or financial information, and such other information
with regard to its affairs as the Manager or Board may reasonably request. Any
records required to be maintained and preserved pursuant to the provisions of
Rule 31a-1 and Rule 31a-2 promulgated under the 1940 Act which are prepared or
maintained by Adviser on behalf of the Fund are the property of the Fund and
will be surrendered promptly to the Fund or Manager on request.
Compensation
(11)(a) The Manager agrees to pay the Adviser for its services to be furnished
under this Agreement the fees set forth in Exhibit B attached hereto. Such fees,
with respect to each calendar month after the effective date of this Agreement,
shall be paid on the 20th business day after the close of each calendar month.
(11)(b) The fee for the period from the initial capitalization of the Trust to
the end of the month during which such capitalization accrued shall be prorated
according to the proportion that such period bears to the full monthly period.
(11)(c) In the event of termination of this Agreement on a day that is not the
end of a calendar month, the payment of all fees provided for hereunder shall be
prorated and reduced for sums payable for a period less than a full month.
(11)(d) For the purposes of this Section 11, the daily closing net asset values
of the Fund shall be computed in the manner specified in the Trust's
Registration Statement for the computation of the value of such net assets in
connection with the determination of the net asset value of the Fund's shares.
Services to Other Companies or Accounts
(12) The services of the Adviser hereunder are not to be deemed to be exclusive,
and the Adviser is free to render services to others and to engage in other
activities so long as its services hereunder are not impaired thereby. The
Manager has no objection to the Adviser rendering such services, provided that
whenever the Trust and one or more other accounts or investment companies
advised by the Adviser have available funds for investment, that suitable and
appropriate investments for each will be allocated in a manner believed to be
equitable to each entity. The Adviser agrees to similarly allocate opportunities
to sell securities.
Without in any way relieving the Adviser of its responsibilities
hereunder, it is agreed that the Adviser may employ others to furnish factual
information, economic advice and/or research, and investment recommendations,
upon which its investment advice and service is furnished hereunder. Without the
prior written consent of the Board and the Manager, the Adviser shall not
perform its services under this Agreement through affiliated companies other
than Xxxxxxxxxxx Capital. The Board and the Manager recognize and agree that all
services to be performed by the Adviser for the Fund may be performed by
employees of Xxxxxxxxxxx Capital, the parent company of the Adviser.
Brokerage
(13) In connection with the management of the investment and reinvestment of the
assets of the Fund, the Adviser is authorized to select the brokers or dealers
which will execute purchase and sale transactions for the Fund. In its selection
of brokers and dealers, the Adviser is directed to use its best efforts to
obtain the best available price and most favorable execution with respect to
such purchases and sales of Fund securities for the Trust. Subject to this
primary requirement, and maintaining as its first consideration the benefits for
the Fund, and its shareholders, the Adviser shall have the right, subject to the
approval of the Board and the Manager, to follow a policy of selecting brokers
and dealers to furnish statistical research and other services to the Fund, the
Manager, or the Adviser and, subject to the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., to take into account the sale
of variable contracts which are invested in Trust shares in allocating to
brokers and dealers purchase and sale orders for Fund securities, provided the
Adviser believes that the quality of the transaction and commission are
comparable to what they would be with other qualified firms.
Termination of Agreement
(14) The Manager or Trustees may terminate this Agreement by sixty (60) days'
written notice to the Adviser and the Adviser may terminate this Agreement by
sixty (60) days' written notice to the Manager, without the payment of any
penalty. Pursuant to an Order of the Commission, the Manager may engage an
adviser without first obtaining approval of the investment advisory agreement by
a majority of the outstanding voting securities of the Fund. This Agreement
shall become effective upon its approval by the Board. The Adviser shall be
without the protection accorded by shareholder approval of an investment
adviser's receipt of compensation under Section 36(b) of the 1940 Act.
This Agreement will terminate automatically upon the termination of the
Investment Advisory Agreement. This Agreement will terminate automatically in
the event of its assignment.
(15) This Agreement shall become effective as of the date of its execution and
shall continue in effect for a period more than two years from the date of
execution only so long as such continuance is specifically approved by the
Trustees at the times and in the manner required by Section 15(a) and (c) of the
1940 Act and the rules thereunder.
Indemnification
(16)(a) The Manager shall indemnify and hold harmless the Adviser, its officers
and directors and each person, if any, who controls the Adviser within the
meaning of Section 15 of the Securities Act of 1933 (the "1933 Act")
("Affiliates") against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
claim, damage or expense and reasonable counsel fees incurred in connection
therewith) ("Liabilities") arising out of any service, other than as provided in
paragraph (b) of this Section 16, to be rendered under this Agreement except by
reason of willful misfeasance, bad faith or gross negligence in the performance
of Adviser's duties.
(16)(b) With regard to the Adviser's Tax Compliance Responsibilities as set
forth in Section 6, the Manager shall not indemnify and hold harmless Adviser
for any negligent conduct or for Adviser's not taking any corrective action
required to be taken based on consultations with Manager.
(16)(c) The Adviser shall indemnify and hold harmless the Manager and its
Affiliates and each person, if any, who controls the Manager within the meaning
of Section 15 of the 1933 Act, Allstate Life Insurance Company and its
Affiliates, including their separate accounts, which may invest in the Fund
(collectively, the "Life Company") against any Liabilities arising out of any
service to be rendered under this Agreement with respect to the Adviser's
willful misfeasance, bad faith or gross negligence in the performance of its
duties under this Agreement, and further, with regard to the Adviser's Tax
Compliance Responsibilities, shall indemnify Manager, Affiliates, and the Life
Company for Liabilities resulting from Adviser's negligent conduct. The Adviser
and its Affiliates will not be liable to Manager for any Liabilities relating to
the failure of Manager or its Affiliates to comply with this Agreement and/or
any applicable insurance laws and rules, or as a result of any error of judgment
or mistake of law, except to the extent specified in Section 36(b) of the 1940
Act concerning loss resulting from a breach of fiduciary duty with respect to
receipt of compensation for services.
Marketing Support
(17) The Adviser or an affiliate shall provide marketing support to the Manager
in connection with the sale of Trust shares and/or the sale of variable annuity
and variable life insurance contracts issued by the Life Company as reasonably
requested by the Manager. Such support shall include, but not necessarily be
limited to, presentations by representatives of the Adviser at investment
seminars, conferences and other industry meetings. Any materials utilized by the
Manager which contain any information relating to the Adviser 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 Manager. No such materials shall be used
if the Adviser or the Manager reasonably objects in writing to such use within
five (5) days after receipt of such material.
Reference to Manager or Life Company or Trust
(18) Any materials utilized by the Adviser or an affiliate which contain any
information relating to the Manager, Life Company (including any information
relating to its separate accounts or variable annuity or variable life insurance
contracts) or the Trust shall be submitted to the Manager for approval prior to
use, not less than five (5) business days before such approval is needed by the
Adviser. No such materials shall be used if the Adviser or the Manager
reasonably objects in writing to such use within five (5) days after receipt of
such material.
Year 2000 Representations
(19) Adviser agrees to take steps consistent with the standard of care it is
required to exercise under the Sub-Advisory Agreement with respect to assuring
that its computer systems are Year 2000 compliant. Although the Adviser agrees
to be bound to exercise this standard of care, the Adviser cannot guarantee that
the Fund will not suffer from disruptions or adverse results arising as a
consequence of entering the Year 2000.
Computer Software Representations
(20) The Adviser represents and warrants that to the best of its knowledge, the
software utilized in the course of performing its services under this Agreement
("Software") (a) contains no hidden files, viruses or contaminants, (b) will not
replicate, transmit, or activate itself without control of a person operating
the computing equipment on which it resides, (c) will not access, alter, damage,
erase, or otherwise interfere with, the Software, including, any data or
computer programs without control of a person operating the computing equipment
on which it resides, (d) contains no key, node lock, time-out or other function,
whether implemented by electronic, mechanical or other means, which restricts or
may restrict use or access to the Software without the consent of the computer
user.
Definitions
(21) For the purposes of this Agreement, the terms "vote of a majority of the
outstanding voting securities," "affiliated companies" and "interested persons,"
when used herein, shall have the meanings defined in the 1940 Act, subject,
however, to such exemptions as may be granted by the Commission under the 1940
Act.
General
(22) This Agreement shall be governed by the laws of Illinois.
(23) The Adviser agrees to notify the parties within a reasonable period of time
regarding a material change in the membership of the Adviser.
(24) This Agreement will become binding on the parties hereto upon their
execution of the Agreement.
(25) Any notice hereunder shall be deemed duly given if sent by hand, evidenced
by written receipt or by certified mail, return receipt requested, to the
parties at the addresses set forth below:
If to the Adviser: If to the Manager or the Trust:
OpCap Advisors LSA Asset Management LLC
1345 Avenue of the Americas 0000 Xxxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000 Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx, Esq. Attn: Xxxxxxx X. Xxxxxxx, Esq.
(26) This Agreement may be amended at any time by mutual consent of the parties,
provided that, if required by law, such amendment shall also have been approved
by a vote of a majority of the outstanding securities of the Fund and by a vote
of a majority of Trustees who are not interested persons of the Fund, the
Manager or the Adviser, and in person at a meeting called for the purpose of
voting on such approval.
(27) If any term or provision of this Agreement or the application thereof to
any person or circumstances is held to be invalid or unenforceable to any
extent, the remainder of this Agreement or the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the fullest extent permitted by law.
(28) All information and advice by the Adviser for the Fund will be treated as
confidential by Manager and will not be disclosed without Adviser's prior
written consent to third parties except as required by law.
LSA ASSET MANAGEMENT LLC
By: _____________________________________
Name: ___________________________________
Title: _____________________________________
OPCAP ADVISORS
By: _____________________________________
Name: ___________________________________
Title: _____________________________________
EXHIBIT A
MANAGEMENT AGREEMENT
Management Agreement dated , between LSA Variable Series Trust, a Delaware
business trust (the "Trust") and LSA Asset Management LLC, a Delaware limited
liability Company, (the "Manager"). In consideration of the mutual covenants
contained herein, the parties agree as follows:
1. APPOINTMENT OF MANAGER
The Trust hereby appoints the Manager, subject to the supervision of the
Trustees of the Trust and the terms of this Agreement, as the investment manager
for each of the Funds of the Trust (the "Funds") specified in Schedule 1 to this
Agreement as it shall be amended by the Manager and the Trust from time to time.
The Manager accepts such appointment and agrees to render the services and to
assume the obligations set forth in this Agreement commencing on its effective
date. The Manager will be an independent contractor and will have no authority
to act for or represent the Trust in any way or otherwise be deemed an agent
unless expressly authorized in this Agreement or another writing by the Trust
and the Manager.
2. DUTIES OF THE MANAGER
a. Subject to the general supervision of the Trustees of the Trust and
the terms of this Agreement, the Manager will at its own expense,
select and contract with investment advisers ("Advisers") to manage
the investments and determine the composition of the assets of the
Funds; provided, that any contract with an Adviser (an "Advisory
Agreement") shall be in compliance with and approved as required by
the Investment Company Act of 1940 ("Investment Company Act") and the
performance thereunder consistent with terms of an exemptive order
granted by the Securities and Exchange Commission ("SEC") permitting
the Manager to employ a manager-of-managers strategy. Subject always
to the direction and control of the Trustees of the Trust, the Manager
will monitor compliance of each Adviser with the investment objectives
and related investment policies, as set forth in the Trust's
registration statement filed with the SEC, of any Fund or Funds under
the management of such Adviser, and review and report to the Trustees
of the Trust on the performance of such Adviser.
b. The Manager will furnish to the Trust the following:
i. necessary office space in the offices of the Manager or in such
other place as may be agreed upon by the parties hereto from time
to time, and all necessary office facilities and equipment;
ii. necessary office personnel, including personnel for the
performance of clerical, accounting and other office functions,
exclusive of those functions (a) related to the investment
subadvisory services to be provided by any Adviser pursuant to an
Advisory Agreement and (b) relating to other services for which
the Trust has contracted with a third party;
iii. accounting, bookkeeping, recordkeeping and related services other
than services in respect of the records relating to any other
services for which the Trust has contracted with a third party
(including any Adviser); and
iv. all other information and services, (other than services of
counsel or independent accountants or investment subadvisory
services to be provided by any Adviser under an Advisory
Agreement), required in connection with the preparation of all
registration statements and prospectuses, all annual, semiannual
and periodic reports to shareholders of the Trust, regulatory
authorities or others, all notices and proxy solicitation
materials furnished to shareholders of the Trust or regulatory
authorities and all tax returns.
c. In addition to negotiating and contracting with Advisers as set forth
in section (2)(a) of this Agreement and providing facilities,
personnel and services as set forth in section (2)(b) at its own
expense, the Manager will pay or cause to be paid:
i. the cost of any advertising or sales literature relating solely
to the Trust;
ii. the cost of printing and mailing prospectuses to persons other
than current holders of Trust shares or variable contracts funded
by Trust shares; and
iii. the compensation of all officers and Trustees of the Trust who
are also directors, officers or employees of the Manager or its
affiliates.
3. EXPENSES ASSUMED BY THE TRUST
The Trust will pay all expenses of its organization, operations and
business not specifically assumed or agreed to be paid by the Manager as
provided in this Agreement or by an Adviser as provided in an Advisory
Agreement. Without limiting the generality of the foregoing, the Trust shall pay
or arrange for the payment of the following:
a. any of the costs of printing and mailing all registration
statements and prospectuses, all annual, semiannual and periodic
reports to shareholders of the Trust, regulatory authorities or
others, all notices and proxy solicitation materials furnished to
shareholders of the Trust or regulatory authorities and all tax
returns;
b. compensation of the officers and Trustees of the Trust other than
those enumerated in (2.)(c.)(iii.);
c. registration, filing and other fees in connection with
requirements of applicable state and federal regulatory
authorities;
d. the charges and expenses of the custodian appointed by the Trust
for custodial services;
e. the charges and expenses of the independent accountants retained
by the Trust;
f. the charges and expenses of any administrative, transfer,
bookkeeping, fund accounting, and compliance testing services,
and dividend disbursing agents appointed by the Trust;
g. broker's commissions and issue and transfer taxes chargeable to
the Trust in connection with securities transactions to which the
Trust is a party;
h. taxes and corporate fees payable by the Trust to federal, state
or other governmental agencies;
i. the cost of stock certificates, if any, representing shares of
the Trust;
j. legal fees and expenses in connection with the affairs of the
Trust, including registering and qualifying its shares with
regulatory authorities;
k. association membership dues if any;
l. insurance premiums for fidelity and other coverage;
m. expenses of shareholders and Trustees' meetings;
n. pricing shares of the Trust's Funds;
o. interest on borrowings; and
p. litigation expenses.
4. COMPENSATION OF MANAGER
As compensation for the services rendered and obligations assumed hereunder
by the Manager, the Trust shall pay to the Manager monthly a fee that is equal
on an annual basis to that percentage of the average daily net assets of each
Fund set forth on Schedule 1 attached hereto, which is incorporated by reference
herein (and with respect to any future Fund, such percentage as the Trust and
the Manager may agree to from time to time in writing by a signed Amendment of
Schedule 1 subject to Section 13 herein). Such fee shall be computed and accrued
daily. If the Manager serves as Manager for less than the whole of any period
specified in this Section 4, the compensation to the Manager shall be prorated.
For purposes of calculating the Manager's fee, the daily value of each Fund's
net assets shall be computed by the same method as the Trust uses to compute the
net asset value of that Fund. The Manager will pay all fees owing to each
Adviser, and the Trust shall not be obligated to the Advisers in any manner with
respect to the compensation of such Advisers. The Manager reserves the right to
waive all or a part of its fee.
5. NON-EXCLUSIVITY
The services of the Manager to the Trust are not to be deemed to be
exclusive, and the Manager shall be free to render investment management or
other services to others (including other investment companies) and to engage in
other activities. It is understood and agreed that the directors, officers and
employees of the Manager are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from serving as
partners, officers, directors, trustees or employees of any other firm or
corporation, including other investment companies.
6. SUPPLEMENTAL ARRANGEMENTS
The Manager may enter into arrangements with other persons affiliated with
the Manager to better enable it to fulfill its obligations under this Agreement
for the provision of certain personnel and facilities to the Manager.
7. LIMITATION OF LIABILITY OF THE MANAGER
a. Absent willful misfeasance, bad faith, gross negligence, or reckless
disregard of obligations or duties hereunder on the part of the Manager, the
Manager and/or any of its affiliates and the directors, officers and employees
of the Manager and/or of its affiliates shall not be subject to liability to the
Trust or to any holder of an interest in any Fund 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.
b. The Trust will indemnify the Manager against, and hold it harmless from,
any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from acts or omissions of the
Trust. Indemnification shall be made only after: (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
Trust was liable for the damages claimed or (ii) in the absence of such a
decision, a reasonable determination based upon a review of the facts, that the
Trust was liable for the damages claimed, which determination shall be made by
either (a) the vote of a majority of a quorum of Trustees of the Trust who are
neither "interested persons" of the Trust nor parties to the proceeding
("disinterested non-party Trustees") or (b) an independent legal counsel
satisfactory to the parties hereto, whose determination shall be set forth in a
written opinion. The Manager shall be entitled to advances from the Trust for
payment of the reasonable expenses incurred by it in connection with the matter
as to which it is seeking indemnification in the manner and to the fullest
extent that would be permissible under the applicable provisions of Delaware law
and the Investment Company Act. The Manager shall provide to the Trust a written
affirmation of its good faith belief that the standard of conduct necessary for
indemnification under such law has been met and a written undertaking to repay
any such advance if it should ultimately be determined that the standard of
conduct has not been met. In addition, at least one of the following additional
conditions shall be met: (a) the Manager shall provide security in form and
amount acceptable to the Trust for its undertaking; (b) the Trust is insured
against losses arising by reason of the advance; or (c) a majority of the
independent Trustees of the Trust, or independent legal counsel in a written
opinion, shall have determined, based on a review of facts readily available to
the Trust at the time the advance is proposed to be made, that there is reason
to believe that the Manager will ultimately be found to be entitled to
indemnification.
8. LIMITATION OF TRUST'S LIABILITY.
The Manager acknowledges that it has received notice of and accepts the
limitations upon the Trust's liability set forth in its Declaration of Trust.
The Manager agrees that the Trust's obligations hereunder in any case shall be
limited to the Trust and to its assets and that the Manager shall not seek
satisfaction of any such obligation from the holders of the interests in any
Fund nor from any Trustee, officer, employee or agent of the Trust.
9. CONFLICTS OF INTEREST
It is understood that Trustees, officers, agents and shareholders of the
Trust are or may be interested in the Manager as directors, officers,
stockholders, or otherwise; that directors, officers, agents and stockholders of
the Manager are or may be interested in the Trust as Trustees, officers,
shareholders or otherwise; that the Manager may be interested in the Trust; and
that the existence of any such dual interest shall not affect the validity
hereof or of any transactions hereunder except as otherwise provided in the
Agreement and Declaration of Trust of the Trust and the Articles of
Incorporation of the Manager, respectively, or by specific provision of
applicable law.
10. REGULATION
The Manager shall submit to all regulatory and administrative bodies having
jurisdiction over the services provided pursuant to this Agreement any
information, reports or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
11. DURATION AND TERMINATION OF AGREEMENT
This Agreement shall become effective on the later of its execution or the
date that it has been approved by shareholders of the Trust and/or the Board of
Trustees of the Trust in the manner required by the Investment Company Act. The
Agreement will continue in effect for a period of more than two years from the
date of its execution only so long as such continuance is specifically approved
at least annually either by the Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Trust, provided that in
either such event the continuance shall also be approved by the vote of a
majority of the Trustees of the Trust who are not interested persons (as defined
in the Investment Company Act) of any party to this Agreement cast in person at
a meeting called for the purpose of voting on such approval. The required
shareholder approval of the Agreement or any continuance of the Agreement shall
be effective with respect to any Fund if a majority of the outstanding voting
securities of the series (as defined in Rule 18f-2(h) under the Investment
Company Act) of shares of that Fund votes to approve the Agreement or its
continuance, notwithstanding that the Agreement or its continuance may not have
been approved by a majority of the outstanding voting securities of (a) any
other Fund affected by the Agreement or (b) all the Funds of the Trust.
If the shareholders of a series of any Fund fail to approve the Agreement
or any continuance of the Agreement, the Manager will continue to act as
investment Manager with respect to such Fund pending the required approval of
the Agreement or its continuance or of a new contract with the Manager or a
different Manager or other definitive action; provided, that the compensation
received by the Manager in respect of such Fund during such period will be no
more than its actual costs incurred in furnishing investment advisory and
management services to such Fund or the amount it would have received under the
Agreement in respect of such Fund, whichever is less.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Trustees of the Trust, by the vote of a majority of the
outstanding voting securities of the Trust, or with respect to any Fund by the
vote of a majority of the outstanding voting securities of the shares of such
Fund, on sixty days written notice to the Manager, or by the Manager on sixty
days' written notice to the Trust. This Agreement will automatically terminate,
without payment of any penalty, in the event if its assignment (as defined in
the Investment Company Act).
12. PROVISION OF CERTAIN INFORMATION BY MANAGER
The Manager will promptly notify the Trust in writing of the occurrence of
any of the following events:
a. the Manager fails to be registered as an investment adviser under the
Investment Advisers Act of 1940 or under the laws of any jurisdiction
in which the Manager is required to be registered as an investment
adviser in order to perform its obligations under this Agreement;
b. the Manager is served or otherwise receives notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, public board or body, involving the affairs of
the Trust; and
c. the chief executive officer or controlling stockholder of the Manager
or the Fund manager of any Fund changes.
13. AMENDMENTS TO THE AGREEMENT
This Agreement may be materially amended by the parties only if such
amendment is specifically approved by the vote of a majority of the outstanding
voting securities of each of the Funds affected by the amendment and by the vote
of a majority of the Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval. The required shareholder approval shall be effective
with respect to any Fund if a majority of the outstanding voting securities of
the shares of that Fund vote to approve the amendment, notwithstanding that the
amendment may not have been approved by a majority of the outstanding voting
securities of (a) any other Fund affected by the amendment or (b) all the Funds
of the Trust.
14. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties.
15. HEADINGS
The headings in the sections of this Agreement are inserted for convenience
of reference only and shall not constitute a part thereof.
16. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of the Trust to the
attention of its Secretary or Manager to the attention of its Secretary, in
person or by registered mail or a private mail or delivery service providing the
sender with notice of receipt. Notice shall be deemed given on the date
delivered or mailed in accordance with this section.
17. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void in
law or in equity, the Agreement shall be construed, insofar as is possible, as
if such portion had never been contained herein.
18. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of Delaware, or any of the applicable provisions of the
Investment Company Act. To the extent that the laws of Delaware, or any of the
provisions in this Agreement, conflict with applicable provisions of the
Investment Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as of the date first
mentioned above.
[SEAL] LSA VARIABLE SERIES TRUST
By:
[NAME, TITLE]
LSA ASSET MANAGEMENT LLC
[SEAL]
By:
[NAME, TITLE]
SCHEDULE 1
1. Focused Equity Fund: ____ of the current net assets of the Fund.
2. Growth Equity Fund: ____ of the current net assets of the Fund.
3. Disciplined Equity Fund: ____ of the current net assets of the Fund.
4. Value Equity Fund: ____ of the current net assets of the Fund.
5. Balanced Fund: ____ of the current net assets of the Fund.
6. Emerging Growth Domesitic Equity Fund: ____ of the current net assets of
the Fund.
The Percentage Fee for each Fund shall be accrued for each calendar day
and the sum of the daily fee accruals shall be payable monthly to the Manager.
The daily fee accruals will be computed by multiplying the fraction of one over
the number of calendar days in the year by the applicable annual rate described
in the preceding paragraph, and multiplying this product by the net assets of
the Fund as determined in accordance with the Trust's prospectus and statement
of additional information as of the close of business on the previous business
day on which the Trust was open for business.
If this Agreement becomes effective or terminates before the end of any
month, the fee for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.
EXHIBIT B
SUB-ADVISORY COMPENSATION
OpCap Advisors Balanced Fund
For all services rendered by Adviser hereunder, Manager shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, monthly a fee, on an annualized basis of net assets under
management, of ____% of the first $250 million and ___% in excess of $250
million.
Exhibit 23(4)(b)(vi)
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement (the "Agreement") is entered into by and
between LSA Asset Management LLC, a Delaware limited liability company (the
"Manager"), and RS Investment Management, L.P. a California limited partnership
(the "Adviser").
WHEREAS, the Manager has entered into an Advisory Agreement, effective
October 1, 1999, (the "Advisory Agreement") and attached as Exhibit A to this
Agreement, with LSA Variable Series Trust (the "Trust"), pursuant to which the
Manager provides portfolio management and administrative services to the RS
Investment Management Emerging Growth Domestic Equity Fund (the "Fund").
WHEREAS, the Manager is authorized, with the approval of the Board of
Trustees of the Trust (the "Board" or "Trustees" as the context requires), to
retain the Adviser to provide portfolio management and administrative services
to the Manager in connection with the management of the Fund.
WHEREAS, the Manager desires to retain the Adviser to render portfolio
management and administrative services in the manner and on the terms set forth
in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Manager and the Adviser agree as follows:
1. Sub-Advisory Services.
a. The Adviser shall, subject to the supervision of the Manager and
the Board, and in cooperation with any administrator appointed by the
Manager (the "Administrator"), manage the investment and reinvestment of
the assets of the Fund. The Adviser shall manage the Fund in conformity
with: (1) the investment objective, policies and restrictions of the Fund
set forth in the Trust's then-current prospectus and statement of
additional information relating to the Fund in the form previously provided
by the Manager to the Adviser, (2) any additional policies or guidelines
established by the Manager or by the Board that have been furnished in
writing to the Adviser and (3) the provisions of the Internal Revenue Code
of 1986, as amended (the "Code") applicable to "regulated investment
companies" (as defined in Section 851 of the Code), all as from time to
time in effect (collectively, the "Policies"), and with all applicable
provisions of law, including without limitation all applicable provisions
of the Investment Company Act of 1940, as amended (the "1940 Act") and the
rules and regulations thereunder. Subject to the foregoing, the Adviser is
authorized, in its discretion and without prior consultation with the
Manager, to buy, sell, lend and otherwise trade in any stocks, bonds and
other securities and investment instruments on behalf of the Fund, without
regard to the length of time the securities have been held and the
resulting rate of portfolio turnover or any tax considerations, and the
majority or the whole of the Fund may be invested in such proportions of
stocks, bonds, other securities or investment instruments, or cash, as the
Adviser shall, in its best judgment, determine. Notwithstanding the
foregoing provisions of this Section 1.a., however, the Adviser shall, upon
written instructions from the Manager, effect such portfolio transactions
for the Fund as the Manager shall determine are necessary in order for the
Fund to comply with the Policies.
b. The Adviser shall furnish the Manager and the Administrator with
monthly, quarterly and annual reports concerning transactions and
performance of the Fund in such form as may be mutually agreed upon, and
agrees to review the Fund and discuss the management of the Fund with
representatives or agents of the Manager, the Administrator or the Fund at
their reasonable request. The Adviser shall permit all books and records
with respect to the Fund to be inspected and audited by the Manager and the
Administrator at all reasonable times during normal business hours, on
reasonable notice. The Adviser shall also provide the Manager, the
Administrator or the Fund with such other information and reports as may
reasonably be requested by the Manager, the Administrator or the Fund from
time to time, including without limitation all material as reasonably may
be requested by the Board pursuant to Section 15(c) of the 1940 Act.
c. Adviser agrees to maintain, in the form and for the period required
by Rule 31a-2 under the 1940 Act, all records relating to the Fund's
investments made by Adviser that are required to be maintained by the Fund
pursuant to the requirements of Rule 31 a-1 (b)(5), (6), (7), (9) and (10)
under the 1940 Act. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31 a-1 and Rule 31 a-2 promulgated under
the 1940 Act which are prepared or maintained by Adviser on behalf of the
Fund are the property of the Fund and will be surrendered promptly to the
Fund or Manager upon request.
d. The Adviser shall provide to the Manager a copy of its Form ADV as
filed with the Securities and Exchange Commission and as amended from time
to time and a list of the persons whom the Adviser wishes to have
authorized to give written and/ or oral instructions to custodians of
assets of the Fund.
e. The Adviser shall provide the Fund's Custodian (as defined below)
on each business day with information relating to all transactions
concerning the Fund's assets and shall provide the Manager with such
information upon request of the Manager. The Adviser shall review all proxy
solicitation materials and be responsible for voting and handling all
proxies in relation to the securities held in the Fund. The Adviser shall
instruct the Custodian of the Fund and other parties providing services to
the Fund to promptly forward misdirected proxy materials to the Adviser.
2. Obligations of the Manager.
a. The Manager shall provide (or cause the Fund's Custodian, as
defined below, to provide) timely information to the Adviser regarding such
matters as the composition of assets of the Fund, cash requirements and
cash available for investment in the Fund, and all other information as may
be reasonably necessary for the Adviser to perform its responsibilities
hereunder.
b. The Manager has furnished the Adviser a copy of the prospectus and
statement of additional information of the Trust and agrees during the
continuance of this Agreement to furnish the Adviser copies of any
revisions or supplements thereto at, or, if practicable, before the time
the revisions or supplements become effective. No revisions shall be made
nor supplements issued regarding the Fund or the Adviser without the prior
review and approval of the Adviser. No written materials naming or relating
to the Adviser, its employees or its affiliated companies, other than
materials provided or approved by the Adviser, shall be used by the
Manager, the Fund or their affiliates in offering or marketing shares of
the Fund. The Manager agrees to furnish the Adviser with minutes of
meetings of the Trustees applicable to the Fund to the extent they may
affect the duties of the Adviser, and with copies of any financial
statements or reports made by the Fund to its shareholders, and any further
materials or information which the Adviser may reasonably request to enable
it to perform its functions under this Agreement.
The Manager shall provide the Adviser with a copy of the Trust's agreement
with the Custodian designated to hold the assets of the Fund (the "Custodian")
and any modifications thereto (the "Custody Agreement"), copies of such
modifications to be provided to the Adviser a reasonable time in advance of the
effectiveness of such modifications. The assets of the Fund shall be maintained
in the custody of the Custodian identified in, and in accordance with the terms
and conditions of, the Custody Agreement (or any sub-custodian properly
appointed as provided in the Custody Agreement). The Adviser shall have no
liability for the acts or omissions of the Custodian unless such act or omission
is required by and taken in reliance upon instruction given to the Custodian by
a representative of the Adviser properly authorized to give such instruction
under the Custody Agreement. Any assets added to the Fund shall be delivered
directly to the Custodian.
The Manager shall perform quarterly and annual tax compliance tests to
ensure that the Fund is in compliance with Subchapter M and Section 817(h) of
the Code. In connection with such compliance tests, the Manager shall prepare
and provide reports to the Adviser within ten (10) business days of a calendar
quarter end relating to the diversification of the Fund under Subchapter M and
Section 817(h) of the Code. The Adviser shall review such reports for purposes
of determining compliance with such diversification requirements. If it is
determined that the Fund is not in compliance with the requirements noted above,
the Adviser, in consultation with the Manager, will take prompt action to bring
the Fund back into compliance within the time permitted under the Code (the
Adviser's "Tax Compliance Responsibilities).
3. Expenses.
Except for expenses specifically assumed or agreed to be paid by the
Adviser pursuant hereto, the Adviser shall not be liable for any expenses of the
Manager or the Fund including, without limitation, (a) interest and taxes, (b)
brokerage commissions and other costs in connection with the purchase or sale of
securities or other investment instruments with respect to the Fund, and (c)
custodian fees and expenses. The Adviser will pay its own expenses incurred in
furnishing the services to be provided by it pursuant to this Agreement.
4. Purchase and Sale of Assets.
Absent instructions from the Manager to the contrary, the Adviser shall
place all orders for the purchase and sale of securities for the Fund with
brokers or dealers selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser, provided such orders comply with Rule 17e-1 under
the 1940 Act. To the extent consistent with applicable law, purchase or sell
orders for the Fund may be aggregated with contemporaneous purchase or sell
orders of other clients of the Adviser. The Adviser shall use its best efforts
to obtain execution of transactions for the Fund at prices which are
advantageous to the Fund and at commission rates that are reasonable in relation
to the benefits received.
5. Compensation of the Adviser.
As its compensation hereunder, Manager will pay to Adviser, within twenty
(20) business days after the end of each month, a fee calculated daily as a
percentage of the average daily net assets of the Fund during that month at an
annual rate of ___% on the first $100 million of assets; ___% on assets in
excess of $100 million and below $200 million; and ___% on assets in excess of
$200 million.
For the purpose of accruing compensation, the net assets of the Fund will
be determined in the manner provided in the then-current prospectus of the Fund.
The fee for any period less than one month shall be prorated according to
the proportion that such period bears to the full monthly period. In the event
of termination of this Agreement, all compensation due to the Adviser through
the date of termination will be calculated on a pro-rated basis through the date
of termination and paid within fifteen (15) business days of the date of
termination.
6. Non-Exclusivity.
The Manager agrees that the services of the Adviser are not to be deemed
exclusive and that the Adviser and its affiliates are free to act as investment
manager and provide other services to various investment companies and other
managed accounts and clients, except as the Adviser and the Manager may
otherwise agree from time to time in writing after the date hereof. This
Agreement shall not in any way limit or restrict the Adviser or any of its
directors, officers, employees or agents from buying, selling or trading any
securities or other investment instruments for its or their own account or for
the account of others for whom it or they may be acting, provided that such
activities do not adversely affect or otherwise impair the performance by the
Adviser of its duties and obligations under this Agreement. The Manager
recognizes and agrees that the Adviser may provide advice to or take action with
respect to other clients, which advice or action, including the timing and
nature of such action, may differ from or be identical to advice given or action
taken with respect to the Fund. The Adviser shall for all purposes hereof be
deemed to be an independent contractor and shall, unless otherwise provided or
authorized, have no authority to act for or represent the Fund or the Manager in
any way or otherwise be deemed an agent of the Fund or the Manager.
7. Reference to Manager or Life Company or Trust.
Any materials utilized by the Adviser which contain any information
relating to the Manager, a life insurance company investing in the Fund
(including any information relating to its separate accounts or variable annuity
or variable life insurance contracts) or the Trust shall be submitted to the
Manager for approval prior to use, not less than five (5) business days before
such approval is needed by the Adviser. No such materials shall be used if the
Manager reasonably objects in writing to such use within five (5) business days
after receipt of such material.
8. Reference to Adviser or Fund.
Any materials utilized by the Manager which contain any information
relating to the Adviser or the Fund 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 Manager. No such materials shall be used if the Adviser
reasonably objects in writing to such use within five (5) business days after
receipt of such material.
9. Computer Systems.
Adviser and its affiliates, on the one hand, and Manager and its affiliates
on the other hand, represent and warrant to each other that they will use
reasonable commercial efforts to (a) review all of their respective hardware
and/or software comprising computer systems which will be used in connection
with this Agreement (individually, the "Computer System" and collectively, the
"Computer Systems") to determine if such Computer Systems are Year 2000
Compliant (as defined below), (b) render such Computer Systems Year 2000
Compliant prior to any part of such Computer Systems suffering a material
malfunction due to its not being made Year 2000 Compliant on a timely basis, and
(c) jointly test any interfaces between Adviser and its affiliates' Computer
System and Manager and its affiliates' Computer System so as to determine that
they are capable of interfacing without material malfunctions. In the event that
any portion of such Computer System materially malfunctions due to the failure
to be made Year 2000 Compliant on a timely basis, the party responsible for
operating and/or maintaining such Computer System shall use good faith efforts
to correct the malfunction and render the relevant portion of the Computer
System Year 2000 Compliant in order to mitigate the damages from such
malfunction and to avoid any further material malfunction. Adviser and its
affiliates and manager and its affiliates represent and warrant to each other
that they have devoted sufficient resources in terms of funding personnel and
project time to satisfy their respective obligations under this warranty.
For the purpose of this Section 9, "Year 2000 Compliant" shall mean that
the referenced Computer System will correctly differentiate between years, in
different centuries, that end in the same two digits, and will accurately
process date/time data (including, but not limited to, calculating, comparing
and sequencing) from, into, and between the centuries including leap year
calculations, provided that any hardware or software not being operated and/or
maintained as part of the referenced Computer System, is itself Year 2000
Compliant.
10. Indemnification.
a. The Manager shall indemnify and hold harmless the Adviser, its officers
and directors and each person, if any, who controls, is controlled by or is
under common control, with the Adviser within the meaning of Section 15 of the
Securities Act of 1933 (the "1933 Act') ("Affiliates") against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith) ("Liabilities")
arising out of any service, other than as provided in paragraph (b) of this
Section 10, to be rendered under this Agreement except by reason of willful
misfeasance, bad faith or gross negligence in the performance of Adviser's
duties.
b. With regard to the Adviser's Tax Compliance Responsibilities as set
forth in Section 2, the Manager shall not indemnify and hold harmless Adviser
for any negligent conduct or conduct that is not at the level at which a prudent
person would conduct its own affairs.
c. The Adviser shall indemnify and hold harmless the Manager and its
Affiliates and each person, if any, who controls, is controlled by or is under
common control, with the Manager within the meaning of Section 15 of the 1933
Act, Allstate Life Insurance Company and its Affiliates, including their
separate accounts, which may invest in the Fund (collectively, the "Life
Company") against any Liabilities arising out of any service to be rendered
under this Agreement with respect to the Adviser's willful misfeasance, bad
faith or gross negligence in the performance of its duties under this Agreement,
and further, with regard to the Adviser's Tax Compliance Responsibilities, shall
indemnify Manager, Affiliates, and the Life Company for any Liabilities
resulting from Adviser's negligent conduct or conduct that is not at the level
at which a prudent person would conduct its own affairs. The Adviser and its
Affiliates will not be liable to Manager for any Liabilities relating to the
failure of Manager or its Affiliates to comply with this Agreement and/or any
applicable insurance laws and rules, or as a result of any error of judgment or
mistake of law, except to the extent specified in Section 36(b) of the 1940 Act
concerning loss resulting from a breach of fiduciary duty with respect to
receipt of compensation for services.
11. Effective Date and Termination.
a. This Agreement shall become effective as of October 1, 1999, and shall
continue in effect for a period more than two years from the date of execution
only so long as such continuance is specifically approved by the Trustees at the
times and in the manner required by Section 15(a) and (c) of the 1940 Act and
the rules thereunder.
b. This Agreement may, at any time, be terminated on sixty (60) days'
written notice to the Adviser by the Manager or Trustees. Pursuant to an Order
of the Commission, the Manager may engage an Adviser without first obtaining
approval of the investment advisory agreement by a majority of the outstanding
voting securities of the Fund. This Agreement shall become effective upon its
approval by the Board. The Adviser shall be without any benefit accruing as a
result of shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
c. This Agreement shall automatically terminate in the event of its
assignment or upon the termination of the Advisory Agreement.
d. This Agreement may be terminated by the Adviser on sixty (60) days'
written notice to the Manager.
Termination of this Agreement pursuant to this Section 11 shall be without
the payment of any penalty.
12. Amendment.
This Agreement may be amended at any time by mutual consent of the parties,
provided that, if required by law, such amendment shall also have been approved
by vote of a majority of the outstanding voting securities of the Fund and by
vote of a majority of the Trustees who are not interested persons of the Fund,
the Manager or the Adviser, cast in person at a meeting called for the purpose
of voting on such approval.
13. Definitions.
For the purpose of this Agreement, the terms "vote of a majority of the
outstanding voting securities," "interested person," "affiliated company" and
"assignment" shall have their respective meanings defined in the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under the 1940 Act.
14. General.
a. The Adviser may perform its services through an affiliated company,
employee, officer or agent, and the Manager shall not be entitled to the advice,
recommendation or judgment of any specific person; provided, however, that the
persons identified in the then-current prospectus of the Fund shall perform the
Fund management duties described therein until the Adviser notifies the Manager
that one or more other affiliates, employees, officers or agents identified in
such notice shall assume such duties as of a specific date.
b. If any term or provision of this Agreement or the application thereof to
any person or circumstances is held to be invalid or unenforceable to any
extent, the remainder of this Agreement or the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the fullest extent permitted by law.
c. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Illinois.
15. Confidentiality.
All information and advice by Adviser for the Fund will be treated as
confidential by Manager and will not be disclosed to third parties without
Adviser's prior written consent except as required by law.
16. Use of Adviser Name.
The Manager agrees that if this Agreement is terminated and the Adviser or
an affiliate thereof shall no longer be the Adviser to the Fund, the Manager
will change the name of the Fund to delete any reference to "RS Investment
Management."
IN WITNESS WHEREOF, the parties have caused their respective duly authorized
officers to execute this Agreement on this ___________ day of September, 1999,
effective October 1, 1999.
LSA ASSET MANAGEMENT LLC
By: _____________________________________
Name: ___________________________________
Title: _____________________________________
RS INVESTMENT MANAGEMENT, L.P.
By: _____________________________________
Name: ___________________________________
Title: _____________________________________
EXHIBIT A
INVESTMENT MANAGEMENT AGREEMENT
