EXHIBIT 5(c)
SUB-ADVISORY AGREEMENT
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SUB-ADVISORY AGREEMENT, dated this 16th day of October, 1997, by and
between FOREIGN & COLONIAL MANAGEMENT LTD., a company incorporated under the
laws of England and Wales (the "Sub-Adviser"), and FOREIGN & COLONIAL EMERGING
MARKETS LIMITED, a company incorporated under the laws of England and Wales
("FCEM").
WITNESSETH:
WHEREAS, Massachusetts Financial Services Company (the "Adviser") provides
MFS/Foreign & Colonial Emerging Markets Equity Series (the "Fund"), a series of
MFS Variable Insurance Trust (the "Trust"), an open-end investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), business services pursuant to the terms and conditions of an investment
advisory agreement dated October 16, 1997 (the "Advisory Agreement") between the
Adviser and the Trust, on behalf of the Fund;
WHEREAS, the Sub-Adviser provides services to the Adviser pursuant to the
terms and conditions of a sub-advisory agreement dated October 16, 1997 (the
"FCM Sub-Advisory Agreement") between the Adviser and the Sub-Adviser; and
WHEREAS, FCEM is willing to provide services to the Sub-Adviser on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Duties of FCEM. Subject to the supervision of the Trustees of the
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Trust, the Adviser and the Sub-Adviser, FCEM will: (a) manage such portion of
the Fund's assets as the Adviser, Sub-Adviser and FCEM shall from time to time
mutually designate (the "Designated Assets") on behalf of the Fund in accordance
with the Fund's investment objective, policies and limitations as stated in the
Fund's then current Prospectus (the "Prospectus") and Statement of Additional
Information (the "Statement"), and the Trust's Amended and Restated Declaration
of Trust dated January 24, 1996 and Amended and Restated By-Laws, each as from
time to time in effect (respectively, the "Declaration" and the "By-Laws") and
in compliance with the 1940 Act and the rules, regulations and orders
thereunder; (b) make investment decisions for the Fund with respect to the
Designated Assets; (c) place purchase and sale orders for portfolio transactions
for the Fund with respect to the Designated Assets; (d) manage otherwise
uninvested cash assets of the Fund with respect to the Designated Assets; (e) as
the agent of the Fund, give instructions (including trade tickets) to the
custodian and any sub-custodian of the Fund as to deliveries of securities,
transfers of currencies and payments of cash for the account of the Fund with
respect to the Designated Assets (FCEM shall promptly notify the Adviser and the
Sub-Adviser of such
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instructions); (f) employ professional portfolio managers to provide research
services to the Fund; (g) attend periodic meetings of the Board of Trustees of
the Trust and (h) obtain all the registrations, qualifications and consents, on
behalf of the Fund, which are necessary for the Fund to purchase and sell assets
in each jurisdiction (other than the United States) in which the Designated
Assets are to be invested (FCEM shall promptly provide the Adviser and the Sub-
Adviser with copies of any such registrations, qualifications and consents). In
providing these services, FCEM will furnish continuously an investment program
with respect to the Designated Assets. FCEM shall be responsible for monitoring
the Fund's compliance with the Prospectus, the Statement, the Declaration, the
By-Laws and the 1940 Act and the rules, regulations and orders thereunder and in
monitoring such compliance FCEM shall do so in the functional currency of the
Fund. FCEM shall only be responsible for compliance with the above-mentioned
restrictions in regards to the Designated Assets. The Sub-Adviser agrees to
provide FCEM with such assistance as may be reasonably requested by FCEM in
connection with its activities under this Agreement, including, without
limitation, information concerning the Fund, its funds available, or to become
available, for investment and generally as to the conditions of the Fund's
affairs.
Should the Trustees of the Trust or the Adviser and the Sub-Adviser at
any time make any determination as to investment policy and notify FCEM thereof
in writing, FCEM shall be bound by such determination for the period, if any,
specified in such notice or until notified that such determination has been
revoked. Further, the Adviser and the Sub-Adviser or the Trustees of the Trust
may at any time, upon written notice to FCEM, suspend or restrict the right of
FCEM to determine what assets of the Fund shall be purchased or sold and what
portion, if any, of the Fund's assets shall be held uninvested. It is understood
that the Adviser and the Sub-Adviser undertake to discuss with FCEM any such
determinations of investment policy and any such suspensions or restrictions on
the right of FCEM to determine what assets of the Fund shall be purchased or
sold or held uninvested, prior to the implementation thereof.
2. Execution of Certain Documents. Subject to any other written
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instructions of the Adviser, the Sub-Adviser and the Trustees of the Trust, FCEM
is hereby appointed the Sub-Adviser's and the Trust's agent and attorney-in-fact
to execute account documentation, agreements, contracts and other documents as
FCEM shall be requested by brokers, dealers, counterparties and other persons in
connection with its management of the Designated Assets.
3. Brokerage. In connection with the selections of brokers, dealers
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or other entities and the placing of orders for the purchase and sale of
portfolio investments for the Fund with respect to the Designated Assets, FCEM
is directed to seek for the Fund execution at the most favorable price by
responsible brokerage firms at reasonably competitive commission rates. In
fulfilling this requirement, FCEM shall not be deemed to have acted unlawfully
or to have breached any duty, created by this Agreement or otherwise, solely by
reason of its having caused the Fund to pay a broker, dealer or other entity an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker, dealer or other entity would have charged
for effecting that transaction, if FCEM determined in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services (within the meaning of Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided by such broker, dealer or other
entity, viewed in terms of either that
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particular transaction or FCEM's overall responsibilities with respect to the
Fund and to other clients of FCEM as to which FCEM exercises investment
discretion.
4. Reports. FCEM shall furnish to the Trustees of the Trust, the Adviser
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or the Sub-Adviser, or all of them, as may be appropriate, quarterly reports of
its activities on behalf of the Fund, as required by applicable law or as
otherwise requested from time to time by the Trustees of the Trust, the Adviser
or the Sub-Adviser, and such additional information, reports, evaluations,
analyses and opinions as the Trustees of the Trust, the Adviser or the Sub-
Adviser, as appropriate, may request from time to time.
5. Services to Other Companies or Accounts. On occasions when FCEM deems
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the purchase or sale of a security to be in the best interest of the Fund as
well as other clients, FCEM, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be so purchased or sold in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction will be made by FCEM in the manner it considers to be the most
equitable. FCEM agrees to allocate similarly opportunities to sell or otherwise
dispose of securities among the Fund and other clients of FCEM.
6. Compensation of FCEM. For the services to be rendered by FCEM under
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this Agreement, the Sub-Adviser shall pay to FCEM compensation, computed and
paid monthly in arrears, at a rate of 1.00% of the average daily net asset value
of the Designated Assets on an annualized basis. If FCEM shall serve for less
than the whole of any month, the compensation payable to FCEM with respect to
the Fund will be prorated. FCEM will pay its expenses incurred in performing
its duties under this Agreement. Neither the Trust, the Adviser nor the Fund
shall be liable to FCEM for the compensation of FCEM. For the purpose of
determining fees payable to FCEM, the value of the Fund's net assets shall be
computed at the times and in the manner specified in the Prospectus and/or
Statement. In the event that the Sub-Adviser reduces its management fee payable
under the FCM Sub-Advisory Agreement in order to comply with the expense
limitations of a State securities commission or otherwise (but not a voluntary
reduction), FCEM agrees to reduce its fee payable under this Agreement by a pro
rata amount.
7. Limitation of Liability of FCEM. FCEM shall not be liable for any
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error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution and management of the
Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties and obligations hereunder. The Trust, on behalf of
the Fund, may enforce any obligations of FCEM under this Agreement and may
recover directly from FCEM for any liability it may have to the Fund.
8. Activities of FCEM. The services of FCEM to the Fund are not deemed to
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be exclusive, FCEM being free to render investment advisory and/or other
services to others. It is understood that the Trustees, officers and
shareholders of the Trust, the Fund, the Adviser or the Sub-Adviser are or may
become interested in FCEM or any person controlling, controlled by or under
common control with FCEM, as trustees, officers, employees or otherwise and that
trustees, officers and employees of FCEM or any person controlling, controlled
by or under
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common control with FCEM may become similarly interested in the Trust, the Fund,
the Adviser or the Sub-Adviser and that FCEM may be or become interested in the
Fund as a shareholder or otherwise.
9. Covenants of FCEM. FCEM agrees that it (a) will not deal with itself,
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"affiliated persons" of FCEM, the Sub-Adviser, the Trustees of the Trust or the
Fund's distributor, as principals, agents, brokers or dealers in making
purchases or sales of securities or other property for the account of the Fund,
except as permitted by the 1940 Act and the rules, regulations and orders
thereunder and subject to the prior written approval of the Adviser, (b) will
not take a long or short position in the shares of the Fund except as permitted
by the Declaration and (c) will comply with all other provisions of the
Declaration and the By-Laws and the then-current Prospectus and Statement
relative to FCEM and its trustees, officers, employees and affiliates.
10. Representations, Warranties and Additional Agreements of FCEM. FCEM
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represents, warrants and agrees that:
(a) It: (i) is registered as an investment adviser under the U.S.
Investment Advisers Act of 1940 (the "Advisers Act"), is authorized to
undertake investment business in the United Kingdom by virtue of its
membership in the Investment Management Regulatory Organisation
("IMRO") and is registered under the laws of any jurisdiction in which
FCEM is required to be registered as an investment adviser in order to
perform its obligations under this Agreement, and will continue to be
so registered for so long as this Agreement remains in effect; (ii) is
not prohibited by the 1940 Act or the Advisers Act from performing the
services contemplated by this Agreement; (iii) has met, and will
continue to meet for so long as this Agreement remains in effect, any
other applicable Federal or State requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency,
necessary to be met in order to perform the services contemplated by
this Agreement; (iv) has the authority to enter into and perform the
services contemplated by this Agreement; (v) will immediately notify
the Adviser and the Sub-Adviser in writing of the occurrence of any
event that would disqualify FCEM from serving as an investment adviser
of an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise; and (vi) will immediately notify the Adviser and the Sub-
Adviser in writing of any change of control of FCEM or any parent of
FCEM resulting in an "assignment" of this Agreement.
(b) It will maintain, keep current and preserve on behalf of the Fund, in
the manner and for the periods of time required or permitted by the
1940 Act and the rules, regulations and orders thereunder and the
Advisers Act and the rules, regulations and orders thereunder, records
relating to investment transactions made by FCEM for the Fund as may be
reasonably requested by the Adviser or the Fund from time to time.
FCEM agrees that such records are the property of the Fund, and will be
surrendered to the Fund promptly upon request; provided, however, that
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FCEM may retain copies of such records for archival purposes as
required by IMRO.
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(c) FCEM has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and, if it has not
already done so, will provide the Adviser, the Sub-Adviser and the
Trust with a copy of such code of ethics, and upon any amendment to
such code of ethics, promptly provide such amendment. At least
annually FCEM will provide the Trust, the Sub-Adviser and the Adviser
with a certificate signed by the chief compliance officer (or the
person performing such function) of FCEM certifying, to the best of his
or her knowledge, compliance with the code of ethics during the
immediately preceding twelve (12) month period, including any material
violations of or amendments to the code of ethics or the administration
thereof.
(d) It has provided the Adviser, the Sub-Adviser and the Trust with a copy
of its Form ADV as most recently filed with the Securities and Exchange
Commission (the "SEC") and will, promptly after filing any amendment to
its Form ADV with the SEC, furnish a copy of such amendment to the
Adviser, the Sub-Adviser and the Trust.
11. Duration and Termination of this Agreement. This Agreement shall become
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effective on the date first above written and shall govern the relations between
the parties hereto thereafter, and shall remain in force until August 1, 1999
and each year thereafter but only so long as its continuance is "specifically
approved at least annually" (a) by the vote of a majority of the Trustees of the
Trust who are not "interested persons" of the Trust, the Adviser, the Sub-
Adviser or FCEM at a meeting specifically called for the purpose of voting on
such approval, and (b) by the Board of Trustees of the Trust, or by "vote of a
majority of the outstanding voting securities" of the Fund. This Agreement may
be terminated at any time without the payment of any penalty by the Trustees of
the Trust, by "vote of a majority of the outstanding voting securities" of the
Fund or by the Adviser or the Sub-Adviser, on not more than sixty days nor less
than thirty days written notice, or by FCEM on not more than ninety days nor
less than sixty days written notice. This Agreement shall automatically
terminate in the event of its "assignment" or in the event that the FCM Sub-
Advisory Agreement or the Advisory Agreement shall have terminated for any
reason.
12. Amendments to this Agreement. This Agreement may be amended only if
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such amendment is approved by "vote of a majority of the outstanding voting
securities" of the Fund, by the Adviser, by the Sub-Adviser and by FCEM.
13. Certain Definitions. The terms "specifically approved at least
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annually", "vote of a majority of the outstanding voting securities",
"assignment", "control", "affiliated person" and "interested person", when used
in this Agreement, shall have the respective meanings specified, and shall be
construed in a manner consistent with, the 1940 Act and the rules, regulations
and orders thereunder, subject, however, to such exemptions as may be granted by
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the SEC under the 1940 Act.
14. Survival of Representations and Warranties; Duty to Update
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Information. All representations and warranties made by FCEM pursuant to
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Section 9 hereof shall survive for the duration of this Agreement and FCEM shall
immediately notify, but in no event later than five
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(5) business days, the Adviser and the Sub-Adviser in writing upon becoming
aware that any of the foregoing representations and warranties are no longer
true.
15. Miscellaneous. This Agreement shall be governed by and construed in
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accordance with the internal laws of The Commonwealth of Massachusetts. All
notices provided for by this Agreement shall be in writing and shall be deemed
given when received, against appropriate receipt, by the Sub-Adviser's Secretary
in the case of the Sub-Adviser, by the Adviser's General Counsel in the case of
the Adviser, by FCEM's Secretary in the case of FCEM and by the Trust's
Secretary in the case of the Fund, or such other person as a party shall
designate by notice to the other parties. 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 section headings of this
Agreement are for convenience of reference and do not constitute a part hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered in their names and on their behalf by the undersigned, thereunto
duly authorized, and their respective seals to be hereto affixed, all as of the
day and year first written above.
FOREIGN & COLONIAL
MANAGEMENT LTD.
By:
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Xxxxx Xxxxxx
By:
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Xxxxxxxx Xxxxxx
FOREIGN & COLONIAL EMERGING
MARKETS LIMITED
By:
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Audley Twiston Davies
By:
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Xxxxx Xxxxxx
The foregoing is hereby agreed to:
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. The parties hereto
acknowledge that the obligations of or arising out of this instrument are not
binding upon any of the Trust's trustees, officers, employees, agents or
shareholders individually, but are binding solely upon the assets and property
of the Trust in accordance with its proportionate interest hereunder. If this
instrument is executed by the Trust on behalf of one or more series of the
Trust, the parties hereto acknowledge that the assets and liabilities of each
series of the Trust are separate and distinct and that the obligations of or
arising out of this instrument are binding solely upon the assets or property of
the series on whose behalf the Trust has executed this instrument. If the Trust
has executed this instrument on behalf of more than one series of the Trust, the
parties hereto also agree that the obligations of each series hereunder shall be
several and not joint, in accordance with its proportionate interest hereunder,
and the parties hereto agree not to proceed against any series for the
obligations of another series.
MFS VARIABLE INSURANCE TRUST
on behalf of MFS/FOREIGN & COLONIAL EMERGING MARKETS EQUITY SERIES
By:
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A. Xxxxx Xxxxxxx
Chairman
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MASSACHUSETTS FINANCIAL
SERVICES COMPANY
By:
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Xxxxxxx X. Xxxxxx
President
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