Exhibit 23D7
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement ("Agreement") executed as of May 1, 2005, is by
and among Lincoln Variable Insurance Products Trust (the "Trust"), on behalf of
the Growth Fund, a series of the Trust, Delaware Management Company, a series
of Delaware Management Business Trust, a Delaware statutory trust (the
"Adviser"), and Fund Asset Management L.P. (doing business as Mercury
Advisors), a Delaware limited liability company (the "Sub-Adviser").
WHEREAS, the Trust, on behalf of the Growth Fund (the "Fund"), has entered
into an Investment Management Agreement, effective May 1, 2005, 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 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 at all times meet
the diversification requirements of Section 817(h) of the Internal Revenue Code
of 1986 (the "Code"). The Sub-Adviser will make investment decisions on behalf
of the Fund and place all orders for the purchase and sale of portfolio
securities.
(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 not be responsible for
other expenses of the Fund, including, without limitation, fees of the Fund's
independent public accountants, transfer agent, custodian and other service
providers who are not employees of the Sub-Adviser; brokerage commissions and
other transaction-related expenses; tax reporting; taxes levied against the
Fund or any of its assets; and interest expenses of the Fund.
(c) The Sub-Adviser shall vote proxies relating to the Fund's investment
securities in the manner in which the Sub-Adviser believes to be in the best
interests of the Fund, and shall review its proxy voting activities on a
periodic basis with the Trustees. Upon sixty (60) days'
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written notice to the Sub-Adviser, the Trustees may withdraw the authority
granted to the Sub-Adviser pursuant to this Section.
(d) The Sub-Adviser will consult with the Adviser, at Adviser's request,
regarding conversion or subscription rights, tender offers, or other consent
solicitations ("Corporate Actions") with respect to the issuers of securities
held in the Fund. The Sub-Adviser will also consult with the Adviser, at
Adviser's request, regarding any claim or potential claim in any bankruptcy
proceedings, class action securities litigation, or other litigation or
proceedings affecting securities held at any time in the Fund ("Litigation").
The Sub-Adviser agrees that it shall provide the Adviser with any documentation
relating to the Corporate Actions or Litigation as the Adviser may reasonably
request.
(e) 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. In using its best efforts to obtain for the Fund
the most favorable price and execution available, the Sub-Adviser, bearing in
mind the Fund's best interests at all times, 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 as to which the
Sub-Adviser exercises investment discretion.
To the extent consistent with applicable law, the Sub-Adviser may aggregate
purchase or sell orders for the Fund with contemporaneous purchase and sell
orders of other clients of the Sub-Adviser or its affiliated persons. 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 the
manner the Sub-Adviser determines to be equitable and consistent with its and
its affiliates' fiduciary obligations to the Fund and to such other clients.
The Adviser hereby acknowledges that such aggregation of orders may not result
in more favorable pricing or lower brokerage commissions in all instances.
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(f) The Sub-Adviser will provide advice and assistance to the Investment
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.
(g) 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 to the Adviser from
time to time at such reasonable times as the parties may agree to review
investment policies of the Fund and to consult with the Adviser regarding the
investment affairs of the Fund.
(h) 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.
(i) 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
stated investment objectives, policies and restrictions of the Fund; (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. Adviser agrees to provide to the Sub-Adviser on an
on-going basis copies of all amendments and supplements to the Fund's current
Prospectus and the Statement of Additional Information, and copies of any
procedures adopted by the Board of Trustees that are applicable to the
Sub-Adviser and the Fund and any amendments thereto. Until the Adviser delivers
to the Sub-Adviser any supplements or amendments to the documents described in
the foregoing sentence, the Sub-Adviser shall be fully protected in relying on
the most recent versions of such documents previously furnished to the
Sub-Adviser. In addition, Adviser shall furnish the Sub-Adviser with copies of
any financial statements or reports that the Trust files with the Securities
and Exchange Commission and provides to shareholders. Adviser further agrees to
furnish the Sub-Adviser with any materials or information that the Sub-Adviser
may reasonably request to enable it to perform its obligations under this
Agreement.
(j) The Sub-Adviser shall provide reasonable assistance to 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 upon reasonable
request 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.
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(k) 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 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 the Trust 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 examine and review
the Sub-Adviser's compliance program and its adherence thereto.
(l) Except as expressly provided under this Agreement, neither the
Sub-Adviser nor any of its officers or employees shall act upon or disclose to
any person any material non-public information with respect to the Fund, the
Trust or the Adviser, including, without limitation, the portfolio holdings of
the Fund.
(m) Each of the Adviser and the Sub-Adviser will provide the other party
with a list, to the best of each party's respective knowledge, of each
affiliated person (and any affiliated person of such an affiliated person) of
Adviser or the Sub-Adviser, as the case may be, and each of the Adviser and the
Sub-Adviser agrees to promptly update such list whenever the Adviser or the
Sub-Adviser becomes aware of any changes that should be added to or deleted
from the list of affiliated persons.
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 so long as its ability to render
the services provided for in this Agreement shall not be impaired thereby.
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.
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.
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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 upon its execution, 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.
Termination of this Agreement pursuant to this Section 5 shall be without the
payment of any penalty.
(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 in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated at any time:
(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) No amendment to this Agreement shall be effective unless (i) there is
written consent of the parties to this Agreement and (ii) the amendment is
approved in a manner consistent with the 1940 Act as interpreted or permitted
by the U.S. Securities and Exchange Commission ("SEC") and/or its staff.
6. CERTAIN INFORMATION.
(a) The Sub-Adviser shall promptly notify the Adviser in writing of the
occurrence of any of the following events: (i) 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;
(ii) the Sub-Adviser has a reasonable basis for believing that the Fund has
ceased to qualify or might not qualify as a regulated investment company under
Subchapter M of the Code; (iii) 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 (iv) the principal officers of the
Sub-Adviser or any portfolio manager of the Fund shall have changed.
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(b) The Adviser shall promptly notify the Sub-Adviser in writing of the
occurrence of any of the following events: (i) the Adviser shall fail to be
registered as an investment adviser under the Advisers Act and under the laws
of any jurisdiction in which the Adviser is required to be registered as an
investment adviser in order to perform its obligations under this Agreement;
and (ii) the Adviser has a reasonable basis for believing that the Fund has
ceased to qualify or might not qualify as a regulated investment company under
Subchapter M of the Code.
7. NONLIABILITY OF SUB-ADVISER.
(a) In the absence of willful misfeasance, bad faith or gross negligence on
the part of the Sub-Adviser (and its officers, directors, agents and
employees), or reckless disregard of its obligations and duties hereunder, the
Sub-Adviser shall not 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) Failure by the Sub-Adviser to assure that the investment program for the
Fund meets the diversification requirements of Section 817(h) of the Code, as
required by Section 1 of this Agreement, shall constitute gross negligence per
se under sub-paragraph 7(a) above.
(c) Failure by the Sub-Adviser to assure that any disclosure provided by the
Sub-Adviser for inclusion in the Fund's Regulatory Filings does not (i) contain
any untrue statement of a material fact or (ii) omit to state a material fact
required to be stated necessary to make such disclosure not misleading, shall
constitute gross negligence per se under sub-paragraph 7(a) above.
8. INDEMNIFICATION.
The Sub-Adviser agrees to indemnify the Adviser and the Fund for, and hold
them harmless against, any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Sub-Adviser) or litigation (including legal and other expenses) to which the
Adviser or the Fund may become subject as a result of:
(a) any failure by the Sub-Adviser, whether unintentional or in good faith
or otherwise, to adequately diversify the investment program of the Fund
pursuant to the requirements of Section 817(h) of the Code, and the regulations
issued thereunder; or
(b) any untrue statement of a material fact contained in disclosure provided
by the Sub-Adviser for inclusion in the Fund's Regulatory Filings or any
omission of a material fact required to be stated necessary to make such
disclosure not misleading;
provided that the Sub-Adviser shall have been given written notice concerning
any matter for which indemnification is claimed under this Section.
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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. In addition, for the duration of
this Agreement, the Sub-Adviser shall 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.
00.XXXXXXXXX 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 any request for approval on a
prompt and timely basis. Failure by the Sub-Adviser to respond within ten
(10) calendar days of receipt of such promotional material to the Fund shall
relieve the Fund of the obligation to obtain the prior written permission of
the Sub-Adviser. Notwithstanding the foregoing, the parties agree that the
names "Xxxxxxx Xxxxx" and "Mercury" are the names of the Sub-Adviser's
affiliates within Xxxxxxx Xxxxx & Co. Inc., and any derivative or logo or
trademark or service xxxx or trade name (including, but not limited to,
depictions of bulls) (collectivity, "Merrill Name") are the valuable property
of the Sub-Adviser and its affiliates and may not be used by the Fund or the
Adviser without the Sub-Adviser's prior written approval. Failure by the
Sub-Adviser to respond within three (3) business days of receipt of a request
to use the Merrill Name shall relieve the Fund or the Adviser 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 of receipt of such promotional material to the Sub-Adviser
shall relieve the Sub-Adviser of the obligation to obtain the prior written
permission of the Fund.
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11.REPRESENTATIONS AND ACKNOWLEDGEMENTS.
(a) The Adviser hereby represents and warrants to the Sub-Adviser that
(i) this Agreement has been duly and validly authorized, executed and delivered
on behalf of the Adviser and is a valid and binding agreement of the Adviser
enforceable in accordance with its terms; and (ii) it has received a copy of
the Sub-Adviser's Form ADV at least 48 hours prior to the execution of this
Agreement and has delivered a copy of the same to the Fund.
(b) The Sub-Adviser hereby represents and warrants to the Adviser that this
Agreement has been duly and validly authorized, executed and delivered on
behalf of the Sub-Adviser and is a valid and binding agreement of the
Sub-Adviser enforceable in accordance with its terms.
12.GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware,
without regard to conflict of law principles; provided, however, that nothing
herein shall be construed as being inconsistent with the 1940 Act.
13.SEVERABILITY/INTERPRETATION.
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.
14.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.
15.NOTICES.
All notices required to be given pursuant to Section 5 of this Agreement
shall be (i) delivered or mailed to the business address of the applicable
party as set forth below in person or by registered mail or a private mail or
delivery service providing the sender with notice of receipt or (ii) sent by
facsimile transmission to the other party at the following facsimile numbers
and followed by written confirmation of such notice delivered in accordance
with clause (i) of this section. Notice shall be deemed given on the date
delivered, mailed or sent by facsimile transmission in accordance with this
paragraph.
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If to Adviser:
Delaware Management Company, a series of
Delaware Management Business Trust
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: General Counsel
If to Sub-Adviser:
Fund Asset Management, L.P.
000 Xxxxxxxx Xxxx Xxxx (0X)
Xxxxxxxxxx, XX 00000
Attn: General Counsel
16.COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original and, all of which, when taken together, shall
consist of one and the same instrument.
[The remainder of this page intentionally left blank.]
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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.
DELAWARE MANAGEMENT COMPANY, a
series of Delaware Management
Business Trust
/s/ See Xxxx Xxxx
------------------------------
Name: See Xxxx Xxxx
Title: Executive Vice
President
FUND ASSET MANAGEMENT, L.P.
/s/ Xxxxxx X. Xxxx
------------------------------
Name: Xxxxxx X. Xxxx
Title: Managing Director
GROWTH FUND, a series of
Lincoln Variable Insurance
Products Trust
/s/ Rise X. X. Xxxxxx
------------------------------
Name: Rise X. X. Xxxxxx
Title: Vice President
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SCHEDULE A
Fee Schedule
The Adviser shall pay to the Sub-Adviser compensation at an annual rate as
follows:
.40% of the first $500 million
.35% of the excess over $500 million
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