LIBERTY VARIABLE INVESTMENT TRUST
LIBERTY ALL-STAR EQUITY FUND, VARIABLE SERIES
MANAGEMENT AND SUB-ADVISORY AGREEMENT
MANAGEMENT AND SUB-ADVISORY AGREEMENT ("Agreement"), made this 15th day
of November, 1997, between LIBERTY VARIABLE INVESTMENT TRUST, a business trust
organized under the laws of The Commonwealth of Massachusetts (formerly named
"Keyport Variable Investment Trust") (the "Trust"), on its own behalf and on
behalf of the Liberty All-Star Equity Fund, Variable Series (the "Fund"),
LIBERTY ADVISORY SERVICES CORP., a corporation organized under the laws of The
Commonwealth of Massachusetts (formerly named "Keyport Advisory Services Corp.")
("LASC"), and Liberty Asset Management Company, a corporation organized under
the laws of the State of Delaware ("LAMCO").
WHEREAS, the Trust has been organized as an open-end management
investment company registered as such under the Investment Company Act of 1940,
as amended ("Investment Company Act"), and is authorized to issue shares of
beneficial interest in one or more separate series (each representing interests
in a separate portfolio of securities and other assets), including the Fund,
which shares are to be issued and sold to and held by various separate accounts
of Keyport Life Insurance Company ("Keyport"), or separate accounts of other
insurance companies that are affiliated or are not affiliated with Keyport
(collectively, "Participating Insurance Companies");
WHEREAS, the Trust heretofore has created (i) two other separate funds
which are covered by the Management Agreement dated June 7, 1993 among the
Trust, on its own behalf and on behalf of such other two series funds, and LASC,
(ii) three other separate funds which are covered by the Management Agreement
dated as of May 2, 1994 among the Trust, on its own behalf and on behalf of such
other three series funds, and LASC and, (iii) one other separate fund which is
covered by the Management Agreement dated as of May 1, 1995 among the Trust, on
its own behalf and on behalf of such other series fund, and LASC; and the Trust
may in the future create additional fund(s) that may be covered by other
separate agreements;
WHEREAS, the Trust desires LASC to render certain investment management
and administrative services to the Trust and the Fund, all in the manner and on
the terms and conditions hereinafter set forth;
WHEREAS, the Trust and LASC desire that LAMCO, as sub-adviser to LASC,
provide investment management services to the Fund based on LAMCO's
multi-manager concept, under which LAMCO recommends, over-sees and coordinates,
and allocates the Fund's portfolio assets among, several portfolio managers
("Portfolio Managers"), each having a different investment style, each of which
manages a different portion of the Fund's investment portfolio; and
WHEREAS, each of LASC and LAMCO is registered as an investment adviser
under the Investment Adviser's of 1940 (the "Investment Act Adviser's Act"), and
desires to provide services to the Trust and the Fund, in the manner
contemplated above, in consideration of and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the Trust, on its own behalf and on behalf of the Fund,
LASC and LAMCO hereby agree as follows:
1. Employment of the Investment Adviser.
The Trust hereby employs LASC (i) to provide certain
administrative and limited oversight services and (ii) to provide certain
investment management and related services to the Trust and the Fund, all in the
manner set forth in Section 2 of this Agreement, subject to the direction of the
Trustees, and for the period, in the manner, and on the terms set forth
hereinafter. LASC hereby accepts such employment and agrees during such period
to render the services and to assume the obligations herein set forth. LASC
shall for all purposes herein be deemed to be an independent contractor and,
except as expressly provided or authorized (whether herein or otherwise), shall
have no authority to act for or represent the Trust in any way or otherwise be
deemed an agent of the Trust.
2. Obligations of, and Services to be Provided by, the Manager.
LASC undertakes to provide the services hereinafter set forth
and to assume the following obligations:
A. Administrative Services.
(a) LASC will provide general administrative services as
hereinafter set forth ("Administrative Services"), all subject to the overall
direction and control of the Board of Trustees of the Trust (the "Board").
(b) Such Administrative Services shall not include investment
advisory, custodian, underwriting and distribution, transfer agency or pricing
and bookkeeping services, but shall include: (i) provision of office space,
equipment and facilities necessary in connection with the services to be
performed hereunder and the maintenance of the headquarters of the Trust; (ii)
maintenance of the corporate books and records of the Trust (other than those of
its records maintained by LAMCO or the Portfolio Managers, the transfer agent,
the custodian and the pricing and bookkeeping agent); (iii) administration of
all dealings and relationships with the Trustees for meetings of the Board, the
scheduling of such meetings and the conduct thereof; (iv) preparation and filing
of proxy materials and administration of arrangements for meetings of
shareholders or beneficial owners of the Funds; (v) preparation and filing of
all required reports and all updating and other amendments to the Trust's
Registration Statement under the Investment Company Act, the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
thereunder; (vi) calculation of distributions required or advisable under the
Investment Company Act and the Internal Revenue Code of 1986, as amended (the
"Code"); (vii) periodic computation and reporting to the Trustees of each Fund's
compliance with diversification and other portfolio requirements of the
Investment Company Act and the Code; (viii) development and implementation of
general shareholder and beneficial owner correspondence and communications
relating to the Funds, including the preparation and filing of shareholder and
beneficial owner reports as are required or deemed advisable; and (ix) general
oversight of the custodial, net asset value computation, portfolio accounting,
financial statement preparation, legal, tax and accounting services performed
for the Trust or the Fund by others.
It is understood that LASC may, in its discretion and at its expense,
delegate some or all of its administrative duties and responsibilities under
this subsection 2A to its affiliate, Liberty Financial Companies, Inc. ("LFC"),
or any majority or greater owned subsidiaries of LFC.
B. Investment Advisory Services.
(a) LASC shall have overall supervisory responsibility for the
management and investment of the assets of the Fund, subject to and in
accordance with the investment objectives, policies and limitations of the Fund,
as provided in the Trust's Prospectus and Statement of Additional Information
and governing instruments, as amended from time to time, and any directions and
policies which the Trustees may issue to LASC from time to time (collectively,
"Investment Policies").
(b) With the consent of the Trust, on behalf of the Fund, LASC
hereby delegates to LAMCO the obligation to provide the Fund, as sub-advisor to
LASC, an overall investment program and strategy, in accordance with LAMCO's
multi-manager concept. LASC shall be solely responsible for paying the fees of
LAMCO from the fees it collects from the Trust as provided in paragraph 5 below.
(c) In accordance with LAMCO's multi-manager concept, LAMCO
will recommend to the Trustees one or more persons or companies registered as
investment advisers under the Investment Adviser's Act or qualifying as a "bank"
within the meaning of the Investment Adviser's Act and thereby exempted from the
requirement to be so registered ("Portfolio Managers"), pursuant to a portfolio
management agreement among the Trust, on behalf of the Fund, each Portfolio
Manager and LAMCO. Each Portfolio Manager shall have full investment discretion
and authority to make all determinations with respect to the investment and
reinvestment of the portion of the Fund's assets assigned to that Portfolio
Manager by LAMCO from time to time and the purchase and sale of portfolio
securities with those assets, all within the Fund's Investment Policies. Subject
to Section 6, LAMCO shall not be responsible or liable for the investment merits
of any decision by a Portfolio Manager to purchase hold or sell a security for
the Fund's portfolio. LAMCO shall advise the Trustees as to which persons or
companies LAMCO believes are best suited for appointment as Portfolio Managers;
shall monitor and evaluate the investment performance of each Portfolio Manager,
shall allocate and reallocate from time to time, in its sole discretion, the
respective portions of the Fund's assets to be managed by the Portfolio
Managers; shall recommend to the Trustees changes of, additions to or
terminations of Portfolio Managers when it believes such changes, additions or
terminations are appropriate; and shall coordinate the investment activities of
the Portfolio Managers with a view to ensuring their compliance with the Fund's
Investment Policies and applicable laws.
(d) LAMCO shall be solely responsible for paying the fees of
each Portfolio Manager from the fees it collects from LASC as provided in
paragraph 5 below.
(e) LASC and/or LAMCO shall render regular reports to the
Board relating to the performance of their duties specified in paragraphs 2B(a),
(b) and (c).
C. Expenses Borne By Manager.
To the extent necessary to perform its obligations under this
Agreement, LASC and/or LAMCO, at their own expense, shall furnish executive and
other personnel and office space, equipment and facilities, and shall pay any
other expenses incurred by them, in connection with the performance of their
duties hereunder, except that the Trust or the Fund, as appropriate, shall
reimburse LASC and/or LAMCO (as appropriate) for its out-of-pocket costs,
including telephone, postage and supplies, incurred by it in connection with
communications with shareholders and beneficial owners of the Fund. LASC and/or
LAMCO shall pay all salaries, fees and expenses of Trustees or officers of the
Trust who are their employees. LASC and LAMCO shall not be obligated to bear any
other expenses incidental to the operations and business of the Trust. LASC and
LAMCO shall not be required to pay or provide any credit for services provided
by the Trust's custodian, transfer agent or other agents.
D. Provision of Information Necessary for Preparation of
Registration Statement Amendments and Other Materials.
LASC will make available and provide such information as the
Trust may reasonably request for use in the preparation of its Registration
Statement, reports and other documents required by federal laws and any
securities and insurance laws of the other states and other jurisdictions in
which the Trust's shares are sold.
E. Code of Ethics.
Each of LASC and LAMCO has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the Investment Company Act
and has provided the Trust with a copy of such code of ethics and evidence of
its adoption. On or before June 1 in each year, an executive officer of each of
LASC and LAMCO shall verify to the Trustees that it has complied with the
requirements of Rule 17j-1 during the previous year and that there has been no
material violation of its code of ethics or, if such a violation has occurred,
that appropriate action was taken in response to such violation. Upon the
written request of the Trust, each of LASC and LAMCO shall permit the Trust to
examine the reports required to be made to it by Rule 17j-1(c)(1).
F. Disqualification.
Each of LASC and LAMCO shall immediately notify the Trustees
of the occurrence of any event which would disqualify it from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the
Investment Company Act or any other applicable statute or regulation.
G. Other Obligations and Service.
Each of LASC and LAMCO shall make its officers and employees
available to the Trustees and officers of the Trust for consulting and
discussions regarding the management of the Trust and its investment activities.
3. Expenses of the Trust.
It is understood that the Trust (or each of its funds
(including the Fund), where applicable) will pay, or will enter into
arrangements that require third parties to pay, all of the expenses of the
Trust or such funds, other than those expressly assumed by LASC and LAMCO
herein, including without limitation:
A. Advisory, sub-advisory and administrative fees;
B. Fees for services of independent public accountants;
C. Legal and consulting fees;
D. Transfer agent, custodian and portfolio pricing,
recordkeeping and tax information services;
E. Expenses of periodic calculations of the funds' net
asset values and of equipment for communication among
the funds' custodian, transfer agent and others;
F. Taxes and the preparation of the funds' tax returns;
G. Brokerage fees and commissions;
H. Interest;
I. Costs of Board of Trustees and shareholder meetings;
J. Updates and printing of prospectuses, proxy
statements and reports to shareholders;
K. Fees for filing reports with regulatory bodies and
the maintenance of the Trust's existence;
L. Membership dues for industry trade associations;
M. Fees to federal authorities for the registration of
the shares of the funds;
N. Fees and expenses of Trustees who are not directors,
officers, employees or stockholders of LASC, LAMCO or
any of their respective affiliates;
O. Insurance and fidelity bond premiums; and
P. Litigation and other extraordinary expenses of a
non-recurring nature.
4. Activities and Affiliates of the Manager.
A. The Trust acknowledges that each of LASC and LAMCO or one
or more of its affiliates may have investment or administrative responsibilities
or render investment advice to or perform other investment advisory services for
other individuals or entities, and that each of LASC and LAMCO, its affiliates
or any of its or their directors, officers, agents or employees may buy, sell or
trade in securities for its or their respective accounts ("Affiliated
Accounts"). The Trust agrees that each of LASC and LAMCO or its affiliates may
give advice or exercise investment responsibility and take such other action
with respect to Affiliated Accounts which may differ from the advice given or
the timing or nature of action with respect to the Fund, provided that it acts
in good faith. The Trust acknowledges that one or more of the Affiliated
Accounts may at any time hold, acquire, increase, decrease, dispose of or
otherwise deal with positions in investments in which the Fund may have an
interest.
B. Subject to and in accordance with the Declaration of Trust
and By-Laws of the Trust as currently in effect and the Investment Company Act
and the rules thereunder, it is understood that Trustees, officers and agents of
the Trust and shareholders of the Trust are or may be interested persons as
defined by the Investment Company Act of LASC and/or LAMCO or of their
respective affiliates as directors, officers, agents and shareholders thereof;
that directors, officers, agents and shareholders of LASC and/or LAMCO or of
their respective affiliates are or may be interested persons of the Trust as
Trustees, officers, agents, shareholders or otherwise; that LASC and/or LAMCO or
their respective affiliates may be interested persons of the Trust as
shareholders or otherwise; and that the effect of any such interests shall be
governed by said Declaration of Trust and By-Laws and the Investment Company Act
and the rules thereunder.
5. Compensation of LASC and LAMCO.
For all services to be rendered and payments made pursuant to this
Agreement, (a) the Trust, on its own behalf and on behalf of Fund, will pay LASC
monthly in arrears a fee at an annual rate equal to 0.80% of the net asset value
of the Fund, and (b) LASC, on its own behalf, will pay LAMCO monthly in arrears
a fee at an annual rate equal to 0.60% of such net asset value. LAMCO
acknowledges and agrees that the Trust shall have no obligation to LAMCO to pay
any portion of such fee, which shall be solely the responsibility of LASC. Each
such fee shall be accrued for each calendar day and the sum of the daily fee
accruals shall be paid monthly on or before the tenth day of the following
calendar month. The daily accruals of the fee will be computed by (i)
multiplying the annual percentage rate referred to above by the fraction the
numerator of which is one and the denominator of which is the number of calendar
days in the year, and (ii) multiplying the product obtained pursuant to clause
(i) above by the net asset value of the Fund as determined in accordance with
the Trust's Prospectus as of the previous business day on which the Fund was
open for business. The foregoing fee shall be prorated for any month during
which this Agreement is in effect for only a portion of the month.
6. Liabilities of LASC and LAMCO.
A. Except as provided below, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of LASC or LAMCO, as the case may be, LASC or
LAMCO shall not be subject to liability to the Trust or to any shareholder of
the Trust 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. LAMCO shall indemnify and hold harmless the Trust from any
loss, cost, expense or damage resulting from the failure of any Portfolio
Manager to comply with (i) any statement included in the Prospectus and
Statement of Additional Information of the Trust, or (ii) instructions given by
LAMCO to any Portfolio Manager for the purpose of ensuring the Trust's
compliance with securities, tax and other requirements applicable to the Trust's
business and the investment activities of its Funds; provided, however, that the
indemnification provided in this paragraph 6B shall apply only to the extent
that a Portfolio Manager is liable to the Trust and, after demand by the Trust,
is unable or refuses to discharge its obligations to the Trust.
C. No provision of this Agreement shall be construed to
protect any Trustee or officer of the Trust, or the LASC or LAMCO, as the case
may be, from liability in violation of Sections 17(h) and (i) of the Investment
Company Act.
7. Effective Date: Term.
This Agreement shall become effective on the later of (i) the date
first written above or (ii) the date on which the offer and sale of shares of
the Fund has been registered under the Securities Act and the Investment Company
Act pursuant to an effective Registration Statement of the Trust on Form N-1A
and shall continue until June 7, 1999, and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually by a
vote of the Trustees, including the vote of a majority of the Trustees who are
not interested persons of the Trust, cast in person at a meeting called for the
purpose of voting on such approval, or by vote of a majority of the outstanding
voting securities. The aforesaid provision shall be construed in a manner
consistent with the Investment Company Act and the rules and regulations
thereunder.
8. Assignment.
No assignment of this Agreement shall be made by LASC or LAMCO, and
this Agreement shall terminate automatically in the event of any such
assignment. Each of LASC and LAMCO shall notify the Trust in writing in advance
of any proposed change of control with respect to it to enable the Trust to take
the steps necessary to enter into a new advisory contract.
9. Amendment
This Agreement may be amended at any time, but only by written
agreement between LASC, LAMCO and the Trust, which is subject to the approval of
the Trustees of the Trust and the shareholders of any affected Fund in the
manner required by the Investment Company Act and the rules thereunder.
10. Termination.
This Agreement:
(a) may at any time be terminated without payment of any
penalty, by the Trust (by the Board of Trustees of
the Trust or by the vote of a majority of the
outstanding voting securities of the Fund) on sixty
(60) days' written notice to LASC and LAMCO;
(b) shall immediately terminate in the event of its
assignment; and
(c) may be terminated by LASC or LAMCO on sixty (60) days
written notice to the other parties hereto.
11. Definitions.
As used in this Agreement, the terms "affiliated person," "assignment,"
"control," "interested person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act and
the rules and regulations thereunder, subject to any applicable orders of
exemption issued by the Securities and Exchange Commission.
12. Notice.
Any notice under this Agreement shall be given in writing addressed and
delivered or mailed postpaid to the other party to this Agreement at its
principal place of business.
13. Severability.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
14. Shareholder Liability.
Each of LASC and LAMCO is hereby expressly put on notice of the
limitation of shareholder liability as set forth in the Declaration of Trust of
the Trust and agrees that obligations assumed by the Trust pursuant to this
Agreement shall be limited in all cases to the Trust and its assets, and if the
liability relates to one or more Funds, the obligations thereunder shall be
limited to the respective assets of such Funds. Each of LASC and LAMCO further
agrees that it shall not seek satisfaction of any such obligation from the
shareholders of the Funds, nor from the Trustees or any individual Trustee of
the Trust.
15. Governing Law.
This Agreement shall be interpreted under, and the performance of each
of LASC and LAMCO under this Agreement shall be consistent with, the provisions
of the Agreement and Declaration of Trust and By-Laws of the Trust, the terms of
the Investment Company Act, applicable rules and regulations thereunder, the
Code and regulations thereunder, and the Trust's Prospectus and Statement of
Additional Information, in each case as from time to time in effect. The
provisions of this Agreement shall be construed and interpreted in accordance
with the domestic substantive laws of The Commonwealth of Massachusetts without
giving effect to any choice or conflict of laws rules or provisions that would
result in the application of the domestic substantive laws of any other
jurisdiction; provided, however, that if such law or any of the provisions of
this Agreement conflict with the applicable provisions of the Investment Company
Act, the latter shall control.
16. Use of Manager's Name.
The Trust may use the names "Liberty" and "All-Star" or any other name
derived from such names only for so long as this Agreement (or another similar
management agreement with LFC or a majority or greater owned subsidiary thereof
pertaining to other series funds of the Trust) or any extension, renewal, or
amendment hereof (or thereof) remains in effect. At such time as this Agreement
(and each such other similar agreement pertaining to such other series funds) or
any extension, renewal or amendment hereof (or thereof), or each such other
similar successor organization agreement shall no longer be in effect, the Trust
will cease to use any name derived from any such names similar thereto, or any
other name indicating that it is managed by or otherwise connected with the
Manager, or with any organization which shall have succeeded to Manager's
business as investment advisor or manager.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement on the date first above written.
LIBERTY VARIABLE INVESTMENT TRUST,
on its own behalf and on behalf of The
Liberty All-Star Fund, Variable Series.
By: Xxxxxxx X. Xxxxxxxxxxx
Title: President
LIBERTY ADVISORY SERVICES CORP.
By: Xxxxxxx X. Xxxxxxxx
Title: Chief Investment Officer
LIBERTY ASSET MANAGEMENT COMPANY
By: Xxxxxxx X. Xxxxxxxxxxx
Title: Chairman of the Board
