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EXHIBIT 5.C
SUB-ADVISORY AGREEMENT
BETWEEN
SECURITY FIRST INVESTMENT MANAGEMENT CORPORATION
AND
PROVIDENT CAPITAL MANAGEMENT, INC.
SUB-ADVISORY AGREEMENT ("Agreement"), made this 27th day of March, 1998, by
and between SECURITY FIRST INVESTMENT MANAGEMENT CORPORATION, a corporation
organized and existing under the laws of the State of Delaware (the "Adviser"),
and PROVIDENT CAPITAL MANAGEMENT, INC. (the "Subadviser"), a Pennsylvania
Corporation.
WITNESSETH:
WHEREAS, Security First Trust (the "Trust"), is an open-end, diversified,
management investment company registered as such under the Investment Company
Act of 1940 ("Act") consisting of multiple investment series; and
WHEREAS, shares of the Trust are made available to fund variable contracts
offered by life insurance companies; and
WHEREAS, at present the Trust is comprised of four investment series, one
of which, the Equity Series (the "Series"), is the subject of this Agreement;
and
WHEREAS, the Trust has contracted with the Adviser for the Adviser to
provide investment advisory, business management and administrative services to
the Trust on behalf of the Series pursuant to a Master Investment Management and
Advisory Agreement (the "Advisory Agreement"); and
WHEREAS, the Adviser is authorized by the terms of the Advisory Agreement
to enter into subadvisory agreements with third parties; and
WHEREAS, the Subadviser is engaged in the business of rendering investment
management services and desires to serve as subadviser for the Series;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. The Adviser shall act as investment adviser and manager for the Series
pursuant to the Advisory Agreement, and as such has authority and responsibility
for supervising and directing the investments of the Series in accordance with
their investment objectives and policies, programs and restrictions as stated in
the Trust's registration statement and its current prospectus and statement of
additional information, and such other limitations as are imposed upon the Trust
pursuant to section 817(h) of the Internal Revenue Code. Pursuant to its
agreement with the Trust, the Adviser, as agent and attorney-in-fact for the
Trust on behalf of the Series may, when it deems appropriate, (a) buy, sell,
exchange, convert and otherwise trade in any stocks, bonds or other securities,
and (b) place orders for the execution of such security transactions with or
through such brokers, dealers or issuers as the Adviser may select subject,
however, at all times to the supervision of the Board of Trustees of the Trust.
The Adviser may delegate any of the foregoing authority to Subadviser; provided,
however, that nothing in this Agreement shall be interpreted to derogate the
responsibilities of the Adviser to the Trust or the Series under the
aforementioned Advisory Agreement.
2. The Adviser hereby employs Subadviser to render the advisory services
set forth herein for the fee specified herein.
3. During the term of this Agreement, or any extension thereof, and unless
otherwise limited by the Adviser as hereinafter provided, the Subadviser will,
to the best of its ability, exercise investment discretion on behalf of the
Series with respect to the purchase, holding or sale of securities in accordance
with the stated
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investment objectives and policies of the Series as communicated to the
Subadviser by the Adviser and as is required to comply with the terms of the
Advisory Agreement, the diversification requirements of the Act and section
817(h) of the Internal Revenue Code. The Subadviser shall not be required to
respond to inquiries from the Adviser with regard to specific securities other
than securities which are or have been held by the Series during the time this
Agreement is in effect. The Adviser reserves the right, subject to shareholder
approval as required by law, to limit the authority of the Subadviser herein
solely in its discretion. The Subadviser shall, for all purposes stated herein,
be deemed an independent contractor and shall not have custody of any of the
assets of the Trust nor authority to act for or represent the Series except as
expressly provided herein.
4. The Subadviser may employ, retain or otherwise avail itself of the
services or facilities of other persons or organizations for the purposes of
obtaining such statistical and other factual information, such advice regarding
economic factors and trends, such advice as to occasional transactions in
specific securities or such other information, advice or assistance as the
Subadviser may deem necessary, appropriate or convenient for the discharge of
its obligations hereunder or otherwise helpful to the Series, or in the
discharge of Subadviser's overall responsibilities with respect to the other
accounts which it serves as investment adviser or subadviser. The Subadviser is
authorized to allocate brokerage and principal business to firms that provide
such services or facilities and to cause the Series to pay a member of a
securities exchange or any other securities broker or dealer, an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of an exchange, broker or dealer would have charged
for effecting that transaction, if the Subadviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services (as such services are defined in Section 28(e)
of the Securities Exchange Act of 1934) provided by such member, broker or
dealer, viewed in terms of either that particular transaction or the overall
responsibilities of the Subadviser with respect to the accounts as to which the
Subadviser exercises investment discretion (as that term is defined in Section
3(a)(35) of the Securities Exchange Act of 1934).
5. The Subadviser shall obtain and evaluate such information relating to
the economy, industries, businesses, securities markets and securities as it may
deem necessary or useful in the discharge of its obligations hereunder and shall
formulate and implement a continuing program for performance of its services
pursuant to this Agreement.
6. The Subadviser, its directors, officers and employees, shall make
available and provide such information relating to itself, its organization, its
personnel, and its activities as may be required by the Trust in the preparation
of registration statements, prospectuses, proxy materials, reports and other
documents required by federal and state securities laws. In addition, the
Subadviser, its directors, officers and employees shall provide such information
to the Board of Trustees of the Trust as said Board shall request and which may
be reasonably necessary for the Board to evaluate the terms of this Agreement in
accordance with the requirements of the Act.
7. The Subadviser agrees to maintain and preserve for such period or
periods as the Securities and Exchange Commission may prescribe by rules and
regulations, such accounts, books, and other documents relating to the Series as
constitute the records forming the basis for all reports, including financial
statements required to be filed pursuant to the Act and for the Trust's
auditor's certification. The Subadviser agrees that all accounts, books and
other records maintained and preserved as required hereby shall 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 Trust's auditors,
the Trust or any representative of the Trust, or any governmental agency or
other instrumentality having regulatory authority over the Trust. It is
expressly understood and agreed that any books and records maintained by the
Subadviser on behalf of the Trust shall at all times remain the property of the
Trust. Moreover, the Adviser agrees to supply the Subadviser with copies of all
documents filed by the Trust with the Securities and Exchange Commission and
with such other information relating to the Trust's affairs as the Subadviser
may reasonably request.
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8. The Adviser shall pay the Subadviser a fee, based on the value of the
net assets of each of the Series as determined in accordance with the Trust's
current prospectus and statement of additional information, and computed as
follows:
(a) The fees shall be at the annual rate of 0.55 of 1% of the average
daily net assets of the Equity Series;
(b) The fees shall be accrued for each calendar day and the sum of the
daily fee accruals shall be paid monthly to the Subadviser as soon as is
practicable after the end of each month and, in any event, by the tenth day
of each succeeding calendar month. The daily fee accruals will be computed
by multiplying the fraction of one over the number of calendar days in the
year by the annual rates described in subparagraph (a) of this Paragraph 8,
and multiplying these products by the net assets of the Series as
determined in accordance with the procedures set forth in the Trust's
current prospectus and statement of additional information as of the close
of business on the previous business day.
9. The Adviser agrees to furnish the Subadviser at its principal office all
post-effective amendments to the Trust's registration statement and all
prospectuses, statements of additional information, proxy materials, reports to
shareholders, sales literature, and other material prepared for distribution to
persons having a beneficial interest in shares of the Series, or to the public,
which refer in any way to the Subadviser ten (10) days prior to use thereof and
not to use such material if the Subadviser shall object thereto in writing
within seven (7) days after receipt of such material. In the event of
termination of this Agreement, the Adviser shall ensure that the Trust will, on
written request of the Subadviser, forthwith delete any reference to the
Subadviser from any materials described in the preceding sentence. The Adviser
shall furnish or otherwise make available to the Subadviser such other
information relating to the business affairs of the Trust and the Series as the
Subadviser at any time, or from time to time, reasonably requires in order to
discharge its obligations hereunder.
10. Nothing herein contained shall limit the freedom of the Subadviser or
any affiliated person of the Subadviser to render investment supervisory and
management administrative services to other investment companies, to act as
investment adviser or investment counselor to other persons, firms, or
corporations, or to engage in other business activities. The Adviser understands
and agrees that the Subadviser may give advice and take action with respect to
any of its other clients which may differ from action taken under this Agreement
so long as it is the Subadviser's policy, to the extent practical, to allocate
investment opportunities to the Series over a period of time on a fair and
equitable basis relative to other clients. It is understood that the Subadviser
shall not have any obligation to purchase or sell for the Series any security
which the Subadviser, its principals, affiliated persons or employees may
purchase or sell for its or their own accounts or for the account of any other
client, if in the opinion of the Subadviser such transaction or investment
appears unsuitable, impractical or undesirable for the Series. In discharging
its duties hereunder, Subadviser shall be governed by the requirements of the
Act, including, but not limited to, Section 17 thereof.
11. The Subadviser shall not purchase or sell, or recommend the purchase or
sale of the securities of any issuer for the Series on the basis of any material
non-public ("inside") information.
12. (a) This Agreement shall take effect as to the Series at the close of
business on March 27, 1998 (the "Effective Date") and shall continue in effect
for a period of two years provided that prior to the Effective Date the terms of
this Agreement have been approved by a vote of (a) a majority of the members of
the Board of Trustees of the Trust, including a majority of the Trustees who are
not parties to this Agreement or "interested persons" (as defined in the Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, and (b) a majority of the outstanding "voting securities" (as
defined in the Act) of the Series.
(b) This Agreement shall continue in effect as to the Series from year to
year after the initial two year period described above so long as such
continuance is specifically approved at least annually by the Board of Trustees
of the Trust, or by vote of a majority of the outstanding voting securities of
the Series, and, concurrently with such approval by the Board of Trustees or
prior to such approval by the holders of the outstanding voting securities of
the Series, as the case may be, by the vote, cast in person at a meeting called
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for the purpose of voting on such approval, of a majority of Trustees of the
Trust who are not parties to this Agreement or "interested persons" (as defined
in the Act) of any such party; and the Subadviser shall not have notified the
Adviser nor shall the Adviser have notified the Subadviser in writing that it
does not desire such continuation at least sixty (60) days prior to the
termination date of this Agreement.
(c) This Agreement may be terminated by either party hereto, without the
payment of any penalty, upon sixty (60) days' notice in writing to the other
party, or by the Series upon sixty (60) days' prior written notice to both
parties hereto, provided, that in the case of termination by the Series, such
actions shall have been authorized by resolution of the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
Series.
(d) This Agreement may not be amended without the written consent of the
Adviser and Subadviser, and affirmative vote of a majority of the outstanding
voting securities of the Series and by a vote of a majority of the Board of
Trustees of the Trust including a majority of the Trustees who are not parties
to this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such amendment.
13. This Agreement shall terminate automatically in the event of its
assignment by either party. For the purpose of this paragraph, the term
"assignment" shall have the meaning set forth in Section 2(a)(4) of the Act.
14. If the aggregate expenses of the Series exceed any applicable state
expense limitations and the Adviser waives all or a portion of its fees
attributable to the Series pursuant to Paragraph 10 of the Advisory Agreement
dated October 30, 1997, the Subadviser agrees to waive such portion of its fee
under this Agreement attributable to the Series as may be necessary to provide
for any such excess expenses, but such waiver shall not exceed the full amount
of the fee for such year except as may be elected by the Subadviser in its
discretion or as provided hereinbelow. For this purpose, aggregate expenses of
the Series shall include the compensation of the Adviser, but shall exclude
interest, taxes, brokerage fees on portfolio transactions, commissions paid on
the distribution of shares, and certain extraordinary expenses including
litigation expenses. For the purposes of this paragraph the term "fiscal year"
shall be prorated in the event of a period of less than a full fiscal year. The
expense limitation shall be that part of the applicable annual expense
limitation proportional to the portion of a full fiscal year elapsed.
Notwithstanding the foregoing, the Adviser and Subadviser may voluntarily agree
to waive their respective fees, or to make contributions to the Series, so as to
reduce the expenses of the Series below that required by law.
15. The Adviser shall indemnify and hold harmless the Subadviser from and
against any and all claims, losses, liabilities or damages (including reasonable
attorneys' fees and other related expenses) arising from or in connection with
this Agreement or the performance by the Subadviser of its duties hereunder;
provided, however that nothing contained herein shall require that the
Subadviser be indemnified for any claim, loss, liability or damage (including
reasonable attorneys' fees and other related expenses) resulting from the
willful misfeasance, bad faith or gross negligence in the performance by the
Subadviser or by its officers, directors and employees of the duties of the
Subadviser or from the reckless disregard by the Subadviser or such person of
the duties of the Subadviser under this Agreement.
16. Neither the Subadviser nor any of its officers, directors, or employees
performing services under this Agreement shall be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust or the Adviser
in connection with the matters to which this Agreement relates, except for loss
resulting from willful misfeasance, bad faith, or gross negligence in the
performance by the Subadviser or such person of the duties of the Subadviser or
from reckless disregard by the Subadviser or such person of the duties of the
Subadviser under this Agreement.
17. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of that Act
and to interpretations thereof, if any, by the United States Courts, and by
rules, regulations or orders of the Securities and Exchange Commission validly
issued pursuant to the Act. Specifically, the terms "affiliated person," as used
in paragraph 10, and "vote of a majority of the outstanding voting securities,"
and
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"interested person," as used in paragraph 12 hereof, shall have the meanings
assigned to them by Section 2(a) of the Act. In addition, where the effect of a
requirement of the Act reflected in any provision of this Agreement is relaxed
by a rule, regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
18. Unless otherwise specified herein, all notices, instructions and advice
with respect to securities transactions or other matters contemplated by this
Agreement shall be deemed duly given to Subadviser when received in writing by
Subadviser at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, to the Trust at 00000 Xxxx
Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 and to the Adviser at 00000
Xxxx Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000. The Subadviser may rely
upon any notice (written or oral) from any person which the Subadviser
reasonably believes to be genuine and authorized.
19. Nothing herein contained shall be deemed to prevent the Adviser from
contracting with investment advisory organizations other than Subadviser to
provide investment advisory services on a subadvisory basis to one or more
investment series of the Trust other than the Series.
20. This writing constitutes the entire agreement between the parties and
no conditions or warranties shall be implied herefrom unless expressly set forth
herein.
21. This Agreement shall be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and the year first above
written.
SECURITY FIRST INVESTMENT
MANAGEMENT CORPORATION
Attest:
/s/ By: /s/
--------------------------------------------- -----------------------------------------
Secretary
PROVIDENT CAPITAL MANAGEMENT, INC.
Attest:
/s/ By: /s/
--------------------------------------------- -----------------------------------------
Secretary
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