EXHIBIT 23(D)(4)
FORM OF
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement ("Agreement") executed as of May 1, 2010, is
between LINCOLN INVESTMENT ADVISORS CORPORATION, a Tennessee corporation (the
"Adviser"), and X.X. Xxxxxx Investment Management Inc., a Delaware corporation
(the "Sub-Adviser").
WHEREAS, Lincoln Variable Insurance Products Trust (the "Trust"), on behalf
of the LVIP X.X. Xxxxxx High Yield Fund (the "Fund"), has entered into an
Investment Management Agreement with the Adviser, pursuant to which the Adviser
has agreed to provide certain investment management services to the Fund; and
WHEREAS, the Adviser desires to appoint Sub-Adviser as investment
sub-adviser to provide the investment advisory services to the Fund as specified
herein, and Sub-Adviser is willing to serve the Fund in such capacity.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. SERVICES TO BE RENDERED BY SUB-ADVISER TO THE FUND.
(a) Subject to the direction and control of the Board of Trustees (the
"Trustees") of the Trust, the Sub-Adviser, at its expense, will furnish
continuously an investment program for the Fund which shall meet the
diversification requirements of Subchapters L and M under the Internal Revenue
Code of 1986 (the "Code"). The Sub-Adviser, in its discretion, will make
investment decisions on behalf of the Fund and place all orders for the purchase
and sale of portfolio securities. The Sub-Adviser will be an independent
contractor and will not have authority to act for or represent the Trust or
Adviser in any way or otherwise be deemed an agent of the Trust or Adviser
except as expressly authorized in this Agreement or another writing by the
Trust, Adviser and the Sub-Adviser.
(b) The Sub-Adviser, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel, required
for it to execute its duties faithfully and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment necessary for the
efficient conduct of the investment affairs of the Fund (excluding determination
of net asset value per share, portfolio accounting and shareholder accounting
services). The Sub-Adviser shall be responsible for commercially reasonable
expenses relating to the printing and mailing of required supplements to the
Fund's registration statement, provided that such supplements relate solely to a
change in control of the Sub-Adviser or any change in the portfolio manager or
managers assigned by the Sub-Adviser to manage the Fund.
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(c) The Sub-Adviser shall vote proxies relating to the Fund's investment
securities in accordance with Sub-Adviser's proxy voting guidelines and
procedures in effect from time to time, and shall review its proxy voting
activities on a periodic basis with the Trustees. The Trust or Adviser may
withdraw the authority granted to the Sub-Adviser pursuant to this Section at
any time upon written notice.
(d) The Sub-Adviser will select brokers and dealers to effect all portfolio
transactions subject to the conditions set forth herein. In the selection of
brokers, dealers or futures commission merchants and the placing of orders for
the purchase and sale of portfolio investments for the Fund, the Sub-Adviser
shall use its best efforts to obtain for the Fund the most favorable price and
execution available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services as described below.
The Adviser reserves the right to direct the Sub-Adviser upon written notice not
to execute transactions through any particular broker(s) or dealer(s), and the
Sub-Adviser agrees to comply with such request within ten business days of
receiving written notice. In using its best efforts to obtain for the Fund the
most favorable price and execution available, the Sub-Adviser shall consider all
factors it deems relevant, including by way of illustration: price; the size of
the transaction; the nature of the market for the security; the amount of the
commission; the timing of the transaction taking into account market prices and
trends; the reputation, experience and financial stability of the broker,
dealer, or futures commission merchant involved; and the quality of service
rendered by the broker, dealer or futures commission merchant in other
transactions. Subject to such policies as the Trustees may determine, the
Sub-Adviser 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 futures commission merchant that
provides brokerage and research services to the Sub-Adviser an amount of
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker, dealer or futures commission merchant 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 services provided by such broker, dealer or
futures commission merchant, viewed in terms of either that particular
transaction or the Sub-Adviser's over-all responsibilities with respect to the
Fund and to other clients of the Sub-Adviser or its affiliates as to which the
Sub-Adviser or its affiliates exercises investment discretion. The Sub-Adviser
shall maintain records adequate to demonstrate compliance with this section.
On occasions when the Sub-Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients of the
Sub-Adviser, the Sub-Adviser to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be purchased or sold to attempt to obtain a more favorable overall 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 the Sub-Adviser in
compliance with Section 17(d) of the Investment Company Act of 1940 and the
rules established thereunder, Section 206 of the Investment Advisers Act of 1940
and any rules established thereunder, and pursuant to policies adopted by the
Sub-Adviser.
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(e) The Sub-Adviser will provide advice and assistance to the Adviser as to
the determination of the fair value of certain investments where market
quotations are not readily available for purposes of calculating net asset value
of the Fund in accordance with valuation procedures and methods established by
the Trustees.
(f) The Sub-Adviser shall furnish the Adviser and the Board of Trustees
with such information and reports regarding the Fund's investments as the
Adviser deems appropriate or as the Board of Trustees shall reasonably request.
The Sub-Adviser shall make its officers and employees available from time to
time, including attendance at Board of Trustees Meetings, at such reasonable
times as the parties may agree to review investment policies of the Fund and to
consult with the Adviser or the Board of Trustees regarding the investment
affairs of the Fund.
(g) The Sub-Adviser shall not consult with any other sub-adviser to the
Fund or a sub-adviser to a portfolio that is under common control with the Fund
concerning the assets of the Fund, except as permitted by the policies and
procedures of the Fund.
(h) In the performance of its duties, the Sub-Adviser shall be subject to,
and shall perform in accordance with, the following: (i) provisions of the
organizational documents of the Trust that are applicable to the Fund; (ii) the
investment objectives, policies and restrictions of the Fund as stated in the
Fund's currently effective Prospectus and Statement of Additional Information
("SAI") as amended from time to time; (iii) the Investment Company Act of 1940
(the "1940 Act") and the Investment Advisers Act of 1940 (the "Advisers Act");
(iv) any written instructions and directions of the Trustees, the Adviser or
Fund management; and (v) its general fiduciary responsibility to the Fund.
(i) The Sub-Adviser shall assist the Fund in the preparation of its
registration statement, prospectus, shareholder reports, marketing materials and
other regulatory filings, or any amendment or supplement thereto (collectively,
"Regulatory Filings") and shall provide the Fund with disclosure for use in the
Fund's Regulatory Filings, including, without limitation, any requested
disclosure related to the Sub-Adviser's investment management personnel,
portfolio manager compensation, Codes of Ethics, firm description, investment
management strategies and techniques, and proxy voting policies.
(j) The Sub-Adviser shall furnish the Adviser, the Board of Trustees and/or
the Chief Compliance Officer of the Trust and/or the Adviser with such
information, certifications and reports as such persons may reasonably deem
appropriate or may request from the Sub-Adviser regarding the Sub-Adviser's
compliance with Rule 206(4)-7 of the Advisers Act and the Federal Securities
Laws, as defined in Rule 38a-1 under the 1940 Act. Such information,
certifications and reports shall include, without limitation, those regarding
the Sub-Adviser's compliance with the Xxxxxxxx-Xxxxx Act of 2002, Title V of the
Xxxxx-Xxxxx-Xxxxxx Act, the Code of Ethics of the Sub-Adviser and certifications
as to the validity of certain information included in the Fund's Regulatory
Filings. The Sub-Adviser shall make its officers and employees (including its
Chief Compliance Officer) available to the Adviser and/or the Chief Compliance
Officer of the Trust and/or the Adviser from time to time to review the
Sub-Adviser's compliance program and its adherence thereto.
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2. OTHER AGREEMENTS.
The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive, and the Sub-Adviser shall be free to
render similar or different services to others. The Adviser agrees that
Sub-Adviser may give advice, make investment decisions and take action with
respect to any of its other clients or for its own account which may differ from
advice given or the timing or nature of action taken with respect to the Fund.
3. COMPENSATION TO BE PAID BY THE ADVISER TO THE SUB-ADVISER.
(a) As compensation for the services to be rendered by the Sub-Adviser
under the provisions of this Agreement, the Adviser will pay to the Sub-Adviser
a fee each month based on the average daily net assets of the Fund during the
month. Solely for the purpose of determining the promptness of payments,
payments shall be considered made upon mailing or wiring pursuant to wiring
instructions provided by the Sub-Adviser. Such fee shall be calculated in
accordance with the fee schedule applicable to the Fund as set forth in Schedule
A attached hereto.
(b) The fee shall be paid by the Adviser, and not by the Fund, and without
regard to any reduction in the fees paid by the Fund to the Adviser under its
management contract as a result of any statutory or regulatory limitation on
investment company expenses or voluntary fee reduction assumed by the Adviser.
Such fee to the Sub-Adviser shall be payable for each month within 10 business
days after the end of such month. If the Sub-Adviser shall serve for less than
the whole of a month, the foregoing compensation shall be prorated.
4. AUTOMATIC TERMINATION.
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the investment
advisory contract between the Adviser and the Fund shall have terminated for any
reason.
5. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT OF THIS AGREEMENT.
(a) This Agreement shall become effective as of the date first written
above, and shall remain in full force and effect continuously thereafter (unless
terminated automatically as set forth in Section 4) until terminated as set
forth below. This Agreement shall automatically terminate in the event of its
assignment or in the event of termination of the Investment Management
Agreement.
(b) This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as continuance is specifically approved
at least annually by the Board of Trustees or by the vote of a majority of the
outstanding voting securities of the Fund
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as required by the 1940 Act; provided, however, that this Agreement may be
terminated at any time without the payment of any penalty:
(i) by the Board of Trustees of the Trust or by the vote of a majority
of the outstanding voting securities of the Fund;
(ii) by the Adviser on 60 days' written notice to the Sub-Adviser; or
(iii) by the Sub-Adviser on 60 days' written notice to the Adviser.
(c) Except to the extent permitted by the 1940 Act or the rules or
regulations thereunder or pursuant to any exemptive relief granted by the
Securities and Exchange Commission ("SEC"), this Agreement may be amended by the
parties only if such amendment, if material, is specifically approved by the
vote of a majority of the outstanding voting securities of the Fund (unless such
approval is not required by Section 15 of the 1940 Act as interpreted by the SEC
or its staff) and by the vote of a majority of the Independent Trustees.
6. CERTAIN INFORMATION.
The Sub-Adviser shall promptly notify the Adviser in writing of the
occurrence of any of the following events: (a) the Sub-Adviser shall fail to be
registered as an investment adviser under the Advisers Act and under the laws of
any jurisdiction in which the Sub-Adviser is required to be registered as an
investment adviser in order to perform its obligations under this Agreement, (b)
the Sub-Adviser has a reasonable basis for believing that the Fund has failed to
satisfy the diversification requirements under Subchapter L or M under the Code
(c) the Sub-Adviser shall have been served or otherwise have 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 Fund, and
(d) the principal officers of the Sub-Adviser or any portfolio manager of the
Fund shall have changed.
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7. NONLIABILITY OF SUB-ADVISER.
(a) Except as may otherwise be provided by the 1940 Act or the Advisers
Act, in the absence of willful misfeasance, bad faith or gross negligence on the
part of the Sub-Adviser, or reckless disregard of its obligations and duties
hereunder, neither the Sub-Adviser nor its officers, directors, employees or
agents shall be subject to any liability to the Fund or to any shareholder of
the Fund, for any act or omission in the course of, or connected with, rendering
services hereunder.
(b) Sub-Adviser does not guarantee the future performance of the Fund or
any specific level of performance, the success of any investment decision or
strategy that Sub-Adviser may use, or the success of Sub-Adviser's overall
management of the Fund. The Adviser understands that investment decisions made
for the Fund by Sub-Adviser are subject to various market, currency, economic,
political and business risks, and that those investment decisions will not
always be profitable. Sub-Adviser will manage only the securities, cash and
other investments held in the portion of the Fund it manages and in making
investment decisions for the Fund, Sub-Adviser will not consider any other
securities, cash or other investments owned by the Fund.
(c) Under no circumstances shall the Adviser or the Sub-Adviser be liable
for any special, consequential or indirect damages.
8. INDEMNIFICATION.
Notwithstanding Section 7, the Advisor and the Sub-Adviser each agree to
indemnify the other party (and each such party's affiliates, employees,
directors and officers) against any claim, damages, loss or liability (including
reasonable attorneys' fees) arising out of any third party claims brought
against an indemnified party that are found to constitute willful misfeasance,
bad faith or gross negligence on the part of the indemnifying party, provided
that the party seeking indemnification has not also engaged in willful
misfeasance, bad faith or gross negligence relating to the claim.
9. RECORDS; RIGHT TO AUDIT.
(a) The Sub-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 the Sub-Adviser that are required to be maintained by the
Fund pursuant to the requirements of Rule 31a-1 under the 1940 Act. The
Sub-Adviser agrees that all records that it maintains on behalf of the Fund are
the property of the Fund, and the Sub-Adviser will surrender promptly to the
Fund any such records upon the Fund's request; provided, however, that the
Sub-Adviser may retain a copy of such records. The Sub-Adviser will use records
or information obtained under this Agreement only for the purposes contemplated
hereby, and will not disclose such records or information in any manner other
than expressly authorized by the Fund, or if disclosure is expressly required by
applicable federal or state regulatory authorities or by this Agreement. In
addition, for the duration of this Agreement, the Sub-Adviser shall
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preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such
records as are required to be maintained by it pursuant to this Agreement and
shall transfer all such records to any entity designated by the Adviser upon the
termination of this Agreement.
(b) The Sub-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 SEC, the Fund's auditors, any representative of the Fund,
the Adviser, or any governmental agency or other instrumentality having
regulatory authority over the Fund.
10. CONFIDENTIAL INFORMATION
(a) Each party will use non-public records or information obtained under
this Agreement only for the purposes contemplated hereby, and will not disclose
such records or information to any unaffiliated third party in any manner other
than expressly authorized by the Fund, or if disclosure is expressly required by
applicable federal or state regulatory authorities (including a party's
regulatory examiners) or by this Agreement. Notwithstanding the foregoing, to
the extent that any market counterparty with whom the Sub-Adviser deals requires
information relating to the Fund (including but not limited to the identity of
the Fund and the market value of the Fund), the Sub-Adviser shall be permitted
to disclose such information to the extent necessary to effect transactions on
behalf of the Fund in accordance with the terms of this Agreement.
(b) Notwithstanding the foregoing, the Sub-Adviser shall not disclose to
any unaffiliated third party the "non-public portfolio holdings" of the Fund in
a manner that identifies such non-public portfolio holdings as holdings of the
Fund, unless (1) there is a legitimate business purpose for such disclosure, and
(2) such third party agrees in writing with Sub-Adviser to keep such information
confidential and to not engage in trading based upon such information.
"Non-public portfolio holdings" means holdings which have not first been made
public by making a filing with the Securities and Exchange Commission which is
required to include such portfolio holdings information.
(c) It is understood that any information or recommendation supplied by, or
produced by, Sub-Adviser in connection with the performance of its obligations
hereunder or any investment transaction undertaken by Sub-Adviser for the Fund
(collectively, "Transaction Information") is to be regarded by the Fund and the
Adviser as confidential and for use only by the Adviser and the Fund.
11. MARKETING MATERIALS.
(a) The Fund shall furnish to the Sub-Adviser, prior to its use, each piece
of advertising, supplemental sales literature or other promotional material in
which the Sub-Adviser or any of its affiliates is named. No such material shall
be used except with prior written permission of the Sub-Adviser or its delegate.
The Sub-Adviser agrees to respond to
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any request for approval on a prompt and timely basis. Failure by the
Sub-Adviser to respond within ten (10) calendar days to the Fund shall relieve
the Fund of the obligation to obtain the prior written permission of the
Sub-Adviser.
(b) The Sub-Adviser shall furnish to the Fund, prior to its use, each piece
of advertising, supplemental sales literature or other promotional material in
which the Fund, the Adviser or any of the Adviser's affiliates is named. No such
material shall be used except with prior written permission of the Fund or its
delegate. The Fund agrees to respond to any request for approval on a prompt and
timely basis. Failure by the Fund to respond within ten (10) calendar days to
the Sub-Adviser shall relieve the Sub-Adviser of the obligation to obtain the
prior written permission of the Fund.
(c) Sub-Adviser agrees that, for so long as Sub-Adviser is the sole
sub-adviser of the Fund, the Sub-Adviser grants the Fund and the Adviser a
non-exclusive, non-assignable, non-sublicensable royalty-free right to use the
name "X.X. Xxxxxx" in the name of the Fund and that such use of the name "X.X.
Xxxxxx" may include use of the name in prospectuses, reports, and sales
materials. The Adviser and the Fund shall include appropriate trademark credit
lines and notice symbols as reasonably directed by the Sub-Adviser. All use of
the name X. X. Xxxxxx shall inure to the benefit of its owner, JPMorgan Chase &
Co. Upon termination of this Agreement, the Adviser and the Fund shall forthwith
cease to use the name of X.X. Xxxxxx (or any derivative or logo) as appropriate
and to the extent that continued use is not required by applicable laws, rules
and regulations.
12. DELEGATION TO THIRD PARTIES.
Sub-Adviser may employ an affiliate or a third party to perform any
accounting, administrative, reporting and ancillary services required to enable
Sub-Adviser to perform its functions under this Agreement. Notwithstanding any
other provision of the Agreement, Sub- Adviser may provide information about the
Fund to any such affiliate or other third party for the purpose of providing the
services contemplated under this clause. Sub-Adviser will act in good faith in
the selection, use and monitoring of affiliates and other third parties, and any
delegation or appointment hereunder shall not relieve Sub-Adviser of any of its
obligations under this Agreement.
13. GOVERNING LAW.
This Agreement shall be construed and interpreted in accordance with the
laws of the State of Delaware without regard to conflict of law principles, and
the applicable provisions of the 940 Act or other federal laws and regulations
which may be applicable. To the extent that the applicable law of the State of
Delaware or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act or other federal laws and regulations which may be
applicable, the latter shall control.
14. SEVERABILITY/INTERPRETATION.
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If any provision of this Agreement is held invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. Where the effect
of a requirement of the 1940 Act reflected in any provision of this Agreement is
altered by a rule, regulation or order of the SEC, whether of special or general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
15. NOTICES.
Any notice that is required to be given by the parties to each other under
the terms of this Agreement shall be given in writing, delivered, or mailed to
the other party, or transmitted by facsimile to the parties at the following
addresses or facsimile numbers, which may from time to time be changed by the
parties by notice to the other party:
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(a) If to the Sub-Adviser:
X.X. Xxxxxx Investment Management Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention:
(b) If to the Adviser:
Lincoln Investment Advisors Corporation
Xxx Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Facsimile (000) 000-0000
16. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the terms "vote of a majority of the
outstanding voting securities," "interested persons," and "assignment" shall
have the meaning defined in the 1940 Act, and subject to such orders or
no-action letters as may be granted by the SEC and/or its staff.
IN WITNESS WHEREOF, the parties have caused this instrument to be signed by
their duly authorized representatives, all as of the day and year first above
written.
LINCOLN INVESTMENT ADVISORS CORPORATION
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Name:
Title:
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
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Name:
Title:
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Accepted and agreed to
as of the day and year
first above written:
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST,
on behalf of the ______________ Fund
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Name:
Title:
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