INVESTMENT SUB-ADVISORY AGREEMENT
This Agreement is made and entered into this 30th day of January, 1998, by
and between Composite Research & Management Co. (the "Manager"), a corporation
organized under the laws of the State of Washington and Janus Capital
Corporation (the "Sub-Adviser"), a corporation organized under the laws of the
State of Colorado.
W I T N E S S E T H
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WHEREAS, the Manager is engaged in the business of rendering investment
advisory and management services, is registered as an investment adviser under
the Investment Advisers Act of 1940, (the "Advisers Act"), and is the investment
adviser to the Growth Fund and the Emerging Growth Fund of The Sierra Variable
Trust (the "Trust"), an unincorporated business trust organized under the laws
of the Commonwealth of Massachusetts pursuant to a Management Contract, dated as
of January 30, 1998, between the Manager and the Trust (the "Management
Contract");
WHEREAS, the Trust is engaged in business as an open-end, management
investment company and is so registered under the Investment Company Act of
1940, (the "1940 Act");
WHEREAS, the Trust offers a number of investment portfolios, each with its
own investment objective and strategies, and of which two investment portfolios
are the Growth Fund and the Emerging Growth Fund (each a "Fund" and together,
the "Funds");
WHEREAS, the Sub-Adviser is engaged in the business of rendering investment
advisory and management services and is registered as an investment adviser
under the Advisers Act;
WHEREAS, the Manager is authorized to retain sub-advisers and desires to
retain the Sub-Adviser to furnish investment advisory and management services to
the Funds and the Sub-Adviser is willing to furnish such services;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
it is hereby agreed by and among the parties hereto as follows:
1. Investment Description; Appointment
The Manager, with the approval of the Trust, desires to employ and hereby
appoints the Sub-Adviser to act as investment sub-adviser to the Funds. The
Sub-Adviser accepts the appointment and agrees to furnish the services described
herein for the compensation set forth below.
In performance of its duties, the Sub-Adviser will comply with the
limitations specified in the Trust's Master Trust Agreement, the By-laws of the
Trust and the stated investment objectives, policies and restrictions of each
Fund as set forth in the Trust's Registration Statement
on Form N-1A, File No. 33-57732, as in effect and which may be amended from time
to time (the "Registration Statement"), and in such manner and to such extent as
may from time to time be approved by the Board of Trustees of the Trust. Copies
of the Registration Statement, have been or will be submitted to the Sub-
Adviser. Copies of all amendments or supplements to the Registration Statement
and the Trust's Agreement and Declaration of Trust will be provided to the Sub-
Adviser during the continuance of this Agreement before or at the time such
amendments or supplements become effective.
The Manager agrees to furnish the Sub-Adviser with minutes of meetings of
the Board of Trustees of the Trust to the extent they may affect the duties of
the Sub-Adviser, a certified copy of any financial statements or reports
prepared by certified or independent public accountants for the Trust which
relate to the Funds, and with copies of any financial statements or reports made
by the Trust to its shareholders or to any governmental body or securities
exchange, and any further materials or information which the Sub-Adviser may
reasonably request to enable it to perform its functions under this Agreement.
2. Services as Investment Sub-Adviser
Subject to the supervision of the Board of Trustees of the Trust and of the
Manager, the Sub-Adviser will (a) maintain compliance procedures for the Funds
that the Sub-Adviser believes are adequate to ensure its compliance with the
applicable provisions of the 1940 Act and the Advisers Act, (b) make investment
decisions for the Funds in accordance with each Fund's investment objective(s)
and policies as stated in each Fund's Registration Statement and, after notice
to the Sub-Adviser, as they may be amended from time to time, (c) place purchase
and sale orders on behalf of the Funds to effectuate the investment decisions
made, (d) maintain books and records with respect to the securities transactions
of the Funds in accordance with the 1940 Act and the Advisers Act and the rules
adopted thereunder and will furnish to the Manager quarterly, annual and special
reports as the Manager may reasonably request; and (e) treat confidentially and
as proprietary information of the Trust, all records and other information
relative to the Trust and prior, present or potential shareholders; and will not
knowingly use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Trust, which approval shall not
be unreasonably withheld and such records may not be withheld where the Sub-
Adviser may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust. In providing those services, the
Sub-Adviser will supervise each Fund's investments and conduct a continual
program of investment, evaluation and, if appropriate, sale and reinvestment of
each Fund's assets.
Subject to the supervision of the Manager and in accordance with the
investment objective and policies as stated in the Trust's Registration
Statement, the Sub-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
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behalf of each 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 so long as consistent with the foregoing, the majority or
the whole of each Fund may be invested in such proportions of stocks, bonds,
other securities or investment instruments, or cash as the Sub-Adviser shall
determine. In addition, the Sub-Adviser will furnish the Funds or the Manager
with whatever statistical information the Company or the Manager may reasonably
request with respect to the instruments that a Fund may hold or contemplate
purchasing.
3. Brokerage
Subject to (i) the over-riding objective of obtaining the best possible
execution of orders; and (ii) review and approval of the Board of Trustees of
the Trust, which may be conducted as often as quarterly, the Sub-Adviser shall
place all orders for the purchase and sale of investments for the Funds with
brokers, dealers, futures commissions merchants, or other sources (hereafter,
"brokers or dealers") selected by the Sub-Adviser, which may include brokers or
dealers affiliated with the Sub-Adviser. All transactions with any affiliated
person of the Trust, or where any such affiliated person acts as broker or agent
in connection with any such transaction, shall be accomplished in compliance
with the 1940 Act, the Advisers Act, the Securities Exchange Act of 1934, as
amended, the rules adopted thereunder and the procedures adopted thereunder by
the Trust. As provided in the Management Contract, any entity or person
associated with the Manager or Sub-Adviser which is a member of a national
securities exchange is authorized to effect any transaction on such exchange for
the account of a Fund which is permitted by Section 11(a) of the Securities
Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Trust has consented
to the retention of compensation for the transactions in accordance with Rule
11a2-2(T)(2)(iv). Purchase or sell orders for the Funds may be aggregated with
contemporaneous purchase or sell orders of other clients of the Sub-Adviser;
provided that (i) no advisory account will be favored by the Sub-Adviser over
any other account; (ii) each client of the Sub-Adviser who participates in such
an aggregated order will participate at the average share price, with all
transaction costs shared on a pro rata basis; (iii) only advisory clients'
transactions will be aggregated for such an aggregated order; and (iv) the
accounts of clients whose orders are aggregated will be segregated on the Sub-
Adviser's books and records so as to identify the particular client who has the
beneficial interest therein. The Sub-Adviser shall use its best efforts to
obtain execution of Fund transactions at prices which are advantageous to such
Fund and at commission rates that are reasonable in relation to the benefits
received. However, the Sub-Adviser may select brokers or dealers on the basis
that they provide brokerage, research, or other services or products to a Fund
and/or other accounts serviced by the Sub-Adviser. The Sub-Adviser may pay a
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission or dealer spread another broker or dealer
would have charged for effecting that transaction if the Sub-Adviser determines
in good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research products and/or services provided by such
broker or dealer. This determination, with respect to brokerage and research
services or products, may be viewed in terms of either that particular
transaction or the overall responsibilities which the Sub-Adviser and its
affiliates have with
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respect to a Fund and to accounts over which they exercise investment
discretion, and not all such services or products may be used by the Sub-Adviser
in managing a Fund; provided that with respect to such transaction and such
determination the affiliates of the Sub-Adviser shall have the same
responsibilities to the Funds as the Sub-Adviser has under this Agreement.
4. Information Provided to the Trust
The Sub-Adviser will keep the Trust and the Manager informed of
developments materially affecting each Fund of which the Sub-Adviser becomes
aware and will, on its own initiative, furnish the Trust and the Manager on at
least a quarterly basis with whatever information the Sub-Adviser believes is
appropriate for this purpose.
5. Standard of Care
The Sub-Adviser shall exercise its best judgment in rendering the services
described in paragraphs 2 and 3 above. Except as may otherwise be provided by
federal or state securities laws, the Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by a 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 (the conduct excepted in this
sentence shall be referred to as "Disqualifying Conduct").
6. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Manager will pay the Sub-Adviser on the first business day of each month a fee
for the previous month at the annual rate of .55% of each Fund's average daily
net assets up to $25 million and .50% of each Fund's average daily net assets in
excess of $25 million. The fee for the first month shall be prorated based upon
the number of days the account was open in that month. 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 Sub-Adviser, the
value of each Fund's net assets shall be computed at the times and in the manner
specified in the Registration Statement.
7. Expenses
The Sub-Adviser will bear all of its expenses in performing its services
under this Agreement, which expenses shall not include brokerage fees or
commissions in connection with the effectuation of securities transactions. The
Sub-Adviser shall bear no expenses of the Trust, a Fund or the Manager. The
Trust bears the expenses described in its Registration Statement. Any
reimbursement of advisory fees required by the Management Contract between the
Trust
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and the Manager or any voluntary or statutory expense limitation provision shall
be the sole responsibility of the Manager.
8. Services to Other Companies or Accounts
The Manager understands that the Sub-Adviser now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts and as investment adviser to one or more other investment companies or
series of investment companies, and the Manager has no objection to the Sub-
Adviser so acting, provided that whenever a Fund and one or more other accounts
or investment companies advised by the Sub-Adviser have available funds for
investment, investments suitable and appropriate for each will be allocated in a
manner reasonably equitable to each entity. Similarly, opportunities to sell
securities will be allocated in such an equitable manner. The Manager
recognizes that in some cases this procedure may limit the size of the position
that may be acquired or disposed of for a Fund. In addition, the Manager
understands that the persons employed by the Sub-Adviser to assist in the
performance of the Sub-Adviser's duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict the right of the Sub-Adviser or any affiliate of the Sub-Adviser to
engage in and devote time and attention to other business or to render services
of whatever kind or nature. The Manager recognizes and agrees that the Sub-
Adviser may provide advice to other clients which may differ from or be
identical to advice given with respect to a Fund.
9. Term of Agreement
This Agreement shall become effective upon its execution, shall continue
for a one year term and shall continue thereafter, with respect to a Fund, so
long as such continuance is specifically approved at least annually by (i) the
Board of Trustees of the Trust or (ii) a vote of a "majority" (as defined in the
0000 Xxx) of the Fund's outstanding voting securities, provided that in either
event the continuance is also approved by a majority of the Board of Trustees
who are not "interested persons" (as defined in the 0000 Xxx) of any party to
this Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable, with respect to a Fund,
without penalty, on 60 days written notice by the Manager, the Board of Trustees
of the Trust or by vote of holders of a majority of the Fund's shares, or upon
60 days written notice, by the Sub-Adviser and will terminate automatically upon
any termination of the Management Contract. In addition, this Agreement will
also terminate automatically in the event of its assignment (as defined in the
1940 Act). The Sub-Adviser agrees to notify the Manager of any circumstances
that to its best knowledge and belief might result in this Agreement being
deemed to be assigned.
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10. Representations of the Manager and the Sub-Adviser
The Manager represents that (i) a copy of the Trust's Agreement and
Declaration of Trust, dated January 27, 1993, together with all amendments
thereto, is on file in the office of the Secretary of the Commonwealth of
Massachusetts, (ii) the appointment of the Sub-Adviser has been duly authorized;
(iii) it has acted and will continue to act in conformity with the 1940 Act and
other applicable laws; and (iv) it is authorized to perform the services herein.
The Sub-Adviser represents that it is authorized to perform the services
described herein.
11. Indemnification
The Manager shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including reasonable
attorneys' fees and other related expenses), howsoever arising from or in
connection with this Agreement or the performance by the Sub-Adviser of its
duties hereunder; provided, however, that nothing contained herein shall require
that the Sub-Adviser be indemnified for Disqualifying Conduct.
12. Amendment of this Agreement
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. No amendment of this Agreement shall be effective with respect to a
Fund until approved by vote of a majority of the outstanding voting securities
of the Fund, and by the vote, cast in person at a meeting called for the purpose
of voting on such approval, of a majority of the Trustees of the Trust who are
not interested persons of the Trust or of the Manager or of the Sub-Adviser.
13. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto.
14. Governing Law
This Agreement shall be governed in accordance with the laws of the
Commonwealth of Massachusetts.
15. Miscellaneous
(a) Unless the Manager gives the Sub-Adviser written instructions to the
contrary, the Sub-Adviser shall vote all proxies solicited by or with respect to
the issuers of securities in which assets of a Fund may be invested. The Sub-
Adviser shall use its best good faith judgment to vote such proxies in a manner
which best serves the interests of such Fund's shareholders.
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(b) The Manager shall provide the Sub-Adviser with a copy of each Fund's
agreement (the "Custody Agreement") with the Custodian (the "Custodian")
designated to hold the assets of the Fund and any modification thereto in
advance. Each Fund's assets shall be maintained in the custody of the Custodian
identified in, and in accordance with the terms and conditions of, the Custody
Agreement. The Sub-Adviser shall have no liability for the acts or omissions of
the Custodian. Any assets added to a Fund shall be delivered directly to the
Custodian.
(c) The Manager agrees and acknowledges that the Sub-Adviser is the sole
owner of the name and xxxx "Xxxxx" and that all use of any designation comprised
in whole or part of Janus (a "Xxxxx Xxxx") under this Agreement shall inure to
the benefit of the Sub-Adviser. The use by the Trust on its own behalf or on
behalf of a Fund of any Xxxxx Xxxx in any advertisement or sales literature or
other materials promoting a Fund shall be with the consent of the Sub-Adviser.
The Trust and the Manager shall not, without the consent of the Sub-Adviser,
make representations regarding the Sub-Adviser intended to be disseminated to
the investing public in any disclosure document, advertisement or sales
literature or other materials promoting a Fund. Such consent shall not be
required for any documents or other materials intended for broker-dealer use
only, for use by the Trust's trustees and for internal use by the Trust and the
Manager. Consent by the Sub-Adviser to such use of any Xxxxx Xxxx and any such
representation shall not be unreasonably withheld and shall be deemed to be
given if no written objection is received by the Trust, such Fund or the Manager
within 3 business days after the request is made by the Trust, a Fund or the
Manager for such use of any Xxxxx Xxxx or any such representation. Upon
termination of this Agreement for any reason, the Trust and the Manager shall
cease all use of any Xxxxx Xxxx(s) as soon as reasonably practicable.
(d) The Sub-Adviser agrees and acknowledges that the Trust is the sole
owner of the name and xxxx "The Sierra Variable Trust" and the Manager is the
sole owner of the name and xxxx "Composite Research & Management Co." and that
any and all use of any designation comprised in whole or in part of "The Sierra
Variable Trust" or "Composite Research & Management Co." (a "Composite Xxxx")
under this Agreement shall inure to the benefit of the Trust or the Manager,
respectively. The use by the Sub-Adviser on its own behalf of any Composite
Xxxx in any advertisement or sales literature or other materials promoting the
Sub-Adviser shall be with the consent of the Trust or the Manager, respectively.
The Sub-Adviser shall not, without the consent of the Trust or the Manager, as
applicable, make representations regarding the Trust, a Fund or the Manager in
any disclosure document, advertisement or sales literature or other materials
promoting the Sub-Adviser. Consent by the Trust and the Manager to such use of
any Composite Xxxx and any such representations shall not be unreasonably
withheld and shall be deemed to be given if no written objection is received by
the Sub-Adviser within 5 business days after the request by the Sub-Adviser is
made for such use of any Composite Xxxx or any such representations. Upon
termination of this Agreement for any reason, the Sub-Adviser shall cease any
and all use of any Composite Xxxx as soon as reasonably practicable.
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(e) The Sub-Adviser may perform its services through any employee, officer
or agent of the Sub-Adviser, and the Trust and the Funds shall not be entitled
to the advice, recommendation, or judgment of any specific person.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
ATTEST: COMPOSITE RESEARCH &
MANAGEMENT CO.
/s/ XXXXXX X. XXXXXXX By: /s/ XXXXXXX X. PADESH
----------------------- -----------------------------------
Name: XXXXXX X. XXXXXXX Name: XXXXXXX X. PADESH
Title: SECRETARY Title: PRESIDENT
ATTEST: JANUS CAPITAL CORPORATION
/s/ XXXXX XXXXXX By: /s/ XXXXXX X. XXXX
----------------------- ------------------------------------
Name: XXXXX XXXXXX Name: XXXXXX X. XXXX
Title: SECRETARY Title: ASSISTANT VICE PRESIDENT
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