GENWORTH VARIABLE INSURANCE TRUST SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 19th day of November, 2010, by and between Genworth Financial Wealth Management, Inc., a California corporation (the “Advisor”), and Pyramis Global Advisors, LLC, a Delaware limited liability company (the “Sub-Advisor”).
WHEREAS, the Advisor and the Sub-Advisor are registered investment advisers under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and engage in the business of providing investment management services; and
WHEREAS, the Advisor has been retained to act as investment adviser pursuant to an Investment Advisory Agreement dated August 15, 2008 (the “Advisory Agreement”) with Genworth Variable Insurance Trust (the “Trust”), a Delaware statutory trust registered with the U.S. Securities and Exchange Commission (the “SEC”) as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), currently consisting of several separate series of shares, each having its own investment objectives and policies, and which is authorized to create additional series in the future; and
WHEREAS, the Advisory Agreement permits the Advisor, subject to the supervision and direction of the Trust’s Board of Trustees, to delegate certain of its duties under the Advisory Agreement to other investment advisers, subject to the requirements of the 1940 Act; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to assist the Advisor in the provision of a continuous investment program for that portion of one or more of the Trust’s series’ (each a “Fund”) assets which the Advisor will assign to the Sub-Advisor (the “Sub-Advisor Assets”) shown on attached Exhibit A, and the Sub-Advisor is willing to render such services, subject to the terms and conditions set forth in this Agreement; and
WHEREAS, shares of the Fund will not be sold directly to the general public, but will be sold exclusively to (i) insurance company separate accounts for use with variable contracts, and (ii) retirement plans.
NOW, THEREFORE, in consideration of mutual covenants recited below, the parties agree and promise as follows:
The Sub-Advisor acknowledges that the Advisor is a wholly-owned subsidiary of Genworth Financial, Inc., and the purchase, acquisition, or possession of securities issued by Genworth and/or its affiliated entities (collectively referred to as “Genworth Securities”) by the Fund is therefore prohibited by the 1940 Act. Accordingly, the Sub-Advisor is directed and hereby agrees to refrain from knowingly purchasing, acquiring, or possessing on behalf of the Fund any securities identified by the Advisor to the Sub-Advisor as being Genworth Securities. The Advisor will provide to the Sub-Advisor a list of Genworth Securities and will provide the Sub-Advisor with advance written notice of any change to such list.
The Advisor agrees to provide the Sub-Advisor information concerning: (i) a Fund; (ii) its assets available or to become available for investment; and (iii) the conditions of a Fund’s or the Trust’s affairs as relevant to the Sub-Advisor.
The Sub-Advisor agrees to invest the Sub-Advisor Assets so as to ensure that (i) the Fund qualifies as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder; (ii) the Fund maintains such qualification as a RIC at all times; (iii) the Fund complies with the diversification requirements set forth in Section 817(h) of the Code and Treasury Regulations promulgated thereunder (the “Diversification Requirements”); and (iv) the Fund maintains compliance with the Diversification Requirements at all times. The Sub-Advisor agrees to notify the Advisor immediately upon becoming aware that the Sub-Advisor has failed to satisfy its obligations under this clause. The Advisor will notify the Sub-Advisor in the event that any of the requirements discussed in this paragraph cease to apply to the Trust and in such a case, the Sub-Advisor will not be required to comply with the terms of this paragraph.
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The Advisor will provide the Sub-Advisor with reasonable (30 days) advance notice, in writing, of: (i) any change in a Fund’s investment objectives, policies and restrictions as stated in the Prospectus. The Sub-Advisor, in the performance of its duties and obligations under this Agreement, shall manage the Sub-Advisor Assets consistent with such changes, provided the Sub-Advisor has received such prior notice of the effectiveness of such changes from the Trust or the Advisor and has had sufficient opportunity to implement such instructions. In addition to such notice, the Advisor shall provide to the Sub-Advisor a copy of a modified Prospectus, as applicable, reflecting such changes. The Sub-Advisor hereby agrees to provide to the Advisor in a timely manner, in writing, such information relating to the Sub-Advisor and its relationship to, and actions for, a Fund as may be required to be contained in materials provided to the Board of Trustees of the Trust, the Prospectus or in the Trust’s registration statement on Form N-1A, or otherwise as reasonably requested by the Advisor in order to assist the Advisor or the Board of Trustees of the Trust in complying with applicable laws, rules and regulations.
In order to assist the Trust and the Trust’s Chief Compliance Officer (the “Trust CCO”) to satisfy the requirements contained in Rule 38a-1 under the 1940 Act, the Sub-Advisor shall provide to the Trust CCO: (i) direct access to the Sub-Advisor’s chief compliance officer (the “Sub-Advisor CCO”), as reasonably requested by the Trust CCO; (ii) a completed quarterly informational questionnaire regarding the Sub-Advisor’s compliance program; (iii) quarterly reports confirming that the Sub-Advisor has complied with the Rule 206(4)-7 in managing the Sub-Advisor Assets.
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In evaluating the best overall terms available, and in selecting the broker or dealer to execute a particular transaction, the Sub-Advisor may also consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) provided to a Fund and/or other accounts over which the Sub-Advisor may exercise investment discretion. The parties hereto acknowledge that it is desirable for the Trust and the Fund that the Sub-Advisor have access to supplemental investment and market research and security and economic analysis provided by broker-dealers who may execute brokerage transactions at a higher cost to the Fund than may result when allocating brokerage to other brokers on the basis of seeking the most favorable price and efficient execution. Therefore, the Sub-Advisor is authorized to pay to a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for any of the Funds that is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if, but only if, the Sub-Advisor determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of that particular transaction or in terms of the overall responsibilities of the Sub-Advisor to a Fund. Such authorization is subject to termination at any time by the Advisor or by the Board of Trustees of the Trust for any reason.
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Under no circumstances will the Sub-Advisor compensate a broker or dealer for any promotion or sale of Fund shares, or the promotion of Genworth variable annuity products, by directing to the broker or dealer: (i) portfolio securities transactions on behalf of the Fund; or (ii) any remuneration, including but not limited to any commission, xxxx-up, xxxx-down, or other fee (or portion thereof) received or to be received from such portfolio transactions effected through any other broker (including a government securities broker) or dealer (including a municipal securities dealer or a government securities dealer).
The Sub-Advisor may direct the Fund’s portfolio securities transactions to a broker or dealer that promotes or sells Fund shares only as is permitted by the provisions of the 1940 Act (and the rules thereunder) and the policies and procedures adopted by the Trust, as amended from time to time. The Advisor will provide the Sub-Advisor with a copy of such policies and procedures and any amendments thereto.
In addition, the Sub-Advisor is authorized to allocate purchase and sale orders for portfolio securities to brokers or dealers that are affiliated with the Advisor, the Sub-Advisor, the Trust’s principal underwriter, or other sub-advisors (if applicable) if the Sub-Advisor believes that the quality of the transaction and the commission are comparable to what they would be with other qualified firms and provided that the transactions are consistent with the Trust’s Rule 17e-1 and/or Rule 10f-3 procedures (as applicable). The Advisor will identify in writing all brokers and dealers affiliated with the Trust, the Advisor, the Trust’s principal underwriter and the other sub-advisors of the Fund, to the extent such information is necessary for the Sub-Advisor to comply with applicable federal securities laws, other than those whose sole business is the distribution of mutual fund shares, who effect securities transactions for customers. The Advisor shall promptly furnish a written notice to the Sub-Advisor if the information so provided is no longer accurate.
In connection with its management of the Sub-Advisor Assets and consistent with its fiduciary obligation to the Trust and other clients, the Sub-Advisor, to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities or futures contracts to be sold or purchased in order to obtain the most favorable terms or lower brokerage commissions and efficient execution. In such event, allocation of the securities or futures contracts so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Sub-Advisor in the manner the Sub-Advisor considers to be, over time, the most equitable and consistent with its fiduciary obligations to the Sub-Advisor Assets and to such other clients.
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The Sub-Advisor hereby agrees that it shall not consult with any other sub-advisor to the Trust with respect to transactions in securities for the Sub-Advisor Assets or any other transactions of Trust assets.
The Sub-Advisor hereby represents that it has implemented policies and procedures that will prevent the disclosure by it, its employees or its agents of the Trust’s portfolio holdings to any person or entity other than the Advisor, the Trust’s custodian, or other persons expressly designated by the Advisor.
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The Sub-Advisor also will provide such information or perform such additional acts as are customarily performed by a Sub-Advisor and may be required for a Fund or the Advisor to comply with their respective obligations under applicable federal securities laws, including, without limitation, the 1940 Act, the Advisers Act, the 1934 Act, the Securities Act of 1933, as amended (the “1933 Act”) and any rule or regulation thereunder.
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If this Agreement is terminated prior to the end of any calendar month, the fee shall be prorated for the portion of any month in which this Agreement is in effect according to the proportion which the number of calendar days, during which this Agreement is in effect, bears to the number of calendar days in the month, and shall be payable within ten (10) days after the date of termination.
(a) The Sub-Advisor is registered as an investment adviser under the Advisers Act;
(b) The Sub-Advisor is a limited liability company duly organized and validly existing under the laws of the state of Delaware with the power to own and possess its assets and carry on its business as it is now being conducted;
(c) The execution, delivery and performance by the Sub-Advisor of this Agreement are within the Sub-Advisor’s powers and have been duly authorized by all necessary action and no action by or in respect of, or filing with, any governmental body, agency or official is required on the part of the Sub-Advisor for the execution, delivery and performance by the Sub-Advisor of this Agreement, and the execution, delivery and performance by the Sub-Advisor of this Agreement do not contravene or constitute a default under: (i) any provision of applicable law, rule or regulation; (ii) the Sub-Advisor’s governing instruments; or (iii) any agreement, judgment, injunction, order, decree or other instrument binding upon the Sub-Advisor; and
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(d) The Form ADV of the Sub-Advisor previously provided to the Advisor is a true and complete copy of the form as currently filed with the SEC. The Sub-Advisor will provide as soon as reasonably practicable the Advisor and the Trust with a complete copy of all subsequent amendments to its Form ADV in accordance with its obligations under the Advisers Act.
(e) In performing its obligations under this Agreement, the Sub-Advisor may rely upon information concerning the Fund’s books and records provided to it by the Adviser, the custodian(s) or other agent(s) designated by the Adviser, and will not independently verify the accuracy or completeness of such information. The Sub-Advisor (and its officers, directors/trustees, agents, employees, controlling persons, shareholders and any other person or entity affiliated with the Sub-Advisor) shall not be liable for any loss, claim or damages related to such reliance.
(f) The Sub-Advisor makes no representation or warranty, express or implied, that any level of performance or investment results will be achieved by the Fund, whether on a relative or absolute basis. The Adviser understands that investment decisions made for the Fund by the Sub-Advisor are subject to various market, currency, economic, political, business and structure risks and that those investment decisions will not always be profitable.
(a) The Advisor is registered as an investment adviser under the Advisers Act;
(b) The Advisor is a corporation duly organized and validly existing under the laws of the State of California with the power to own and possess its assets and carry on its business as it is now being conducted;
(c) The execution, delivery and performance by the Advisor of this Agreement are within the Advisor’s powers and have been duly authorized by all necessary action on the part of its Board of Directors, and no action by or in respect of, or filing with, any governmental body, agency or official is required on the part of the Advisor for the execution, delivery and performance by the Advisor of this Agreement, and the execution, delivery and performance by the Advisor of this Agreement do not contravene or constitute a default under: (i) any provision of applicable law, rule or regulation; (ii) the Advisor’s governing instruments; or (iii) any agreement, judgment, injunction, order, decree or other instrument binding upon the Advisor;
(d) The Advisor acknowledges that it received a copy of the Sub-Advisor’s Form ADV (a copy of which is attached as Exhibit B) prior to the execution of this Agreement; and
(e) The Advisor and the Trust have duly entered into the Advisory Agreement pursuant to which the Trust authorized the Advisor to enter into this Agreement.
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The Advisor shall indemnify the Sub-Advisor and its affiliates providing services under this agreement (the “Advisor Indemnified Persons”), for any liability and expenses, including reasonable attorneys’ fees, howsoever arising from, or in connection with, the Advisor’s breach of this Agreement, or its representations and warranties herein, or as a result of the Advisor’s willful misfeasance, bad faith, gross negligence, reckless disregard of its duties hereunder, or violation of applicable law; provided, however, that the Advisor Indemnified Persons shall not be indemnified for any liability or expenses which may be sustained as a result of the Sub-Advisor’s willful misfeasance, bad faith, gross negligence, or reckless disregard of its duties hereunder.
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This Agreement shall not be assigned and shall terminate automatically in the event of its assignment, except as provided otherwise by any rule, exemptive order issued by the SEC, or No Action Letter provided or pursuant to the 1940 Act, or upon the termination of the Advisory Agreement.
In the event that there is an actual change in control of the Sub-Advisor that would constitute an assignment and resulting termination of this Agreement, the Sub-Advisor agrees to assume all reasonable costs and expenses (including the costs of mailing and filing) associated with the preparation of an information statement (the “Information Statement”), as may be required by the exemptive relief obtained by the Advisor that permits the approval of the sub-advisory agreements without shareholder approval in certain circumstances.
In the event that there is an actual change in control of the Sub-Advisor that would constitute an assignment and resulting termination of this Agreement, and a vote of shareholders to approve continuation of this Agreement is at that time deemed by counsel to the Trust and the Sub-Advisor to be required by the 1940 Act or any rule or regulation thereunder, the Sub-Advisor agrees to assume all reasonable costs associated with soliciting shareholders of the appropriate Fund(s) of the Trust, to approve continuation of this Agreement. Such expenses include the reasonable costs of preparation and mailing of a proxy statement, and of soliciting proxies.
This Agreement shall extend to and bind the successors of the parties hereto. The obligations set forth in Sections 6 and 13 shall survive any termination of this Agreement.
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Without limiting the foregoing, the Advisor, the Trust and the Fund acknowledge that the securities holdings of the Sub-Advisor Assets constitute information of value to the Sub-Advisor, and agree to (i) not to use for any purpose, other than for the Advisor or the Trust, or their agents, to supervise or monitor the Sub-Advisor, the holdings or trade-related information of the Sub-Advisor Assets; and (ii) not disclose the holdings of the Sub-Advisor Assets, except: (a) as required by applicable law or regulation; (b) as required by state or federal regulatory authorities; (c ) to the Board of Trustees of the Trust, counsel to the Board of Trustees of the Trust; (d) duly appointed agents or delegates of the Advisor, the Trust, or the Fund provided that such agents or delegates are subject to confidentiality obligations that provide substantially similar protections as those contained herein; or (e) as otherwise agreed to by the parties in writing. Further, the Advisor, the Trust and the Fund agree that information supplied by the Sub-Advisor, including approved lists, internal procedures, compliance procedures and any board materials is valuable to the Sub-Advisor, and the Advisor, the Trust and the Fund agree not to disclose any of the information contained in such materials, except: (a) as required by applicable law or regulation; (b) as required by state or federal regulatory authorities; (c ) to the Board of Trustees of the Trust, counsel to the Board of Trustees of the Trust, the administrator or any sub-administrator, the independent accountants and any other agent of the Trust or the Fund; or (d) as otherwise agreed to by the parties in writing.
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Nothing in this Agreement shall be construed to prevent the Sub-Advisor from giving other entities investment advice about, or trading on their behalf, in the securities of a Fund or the Advisor.
(a) If to the Advisor:
Genworth Financial Wealth Management, Inc.
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx
(b) If to the Sub-Advisor:
Pyramis Global Advisors, LLC
000 Xxxxx Xx. XX0X0
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
With a copy to:
Pyramis Global Advisors, LLC
00 Xxxxxxxxxx Xx. X00X
Xxxxxx, XX 00000
Attn: General Counsel
16. Governing Law. This Agreement shall be governed by the internal 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. 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.
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ADVISOR:
Genworth Financial Wealth Management, Inc.
By: /s/ Xxxxxxxx Xxxxxxxxx
Name: Xxxxxxxx Xxxxxxxxx
Title: President and Chief Executive Officer
SUB-ADVISOR:
Pyramis Global Advisors, LLC
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Director, Chief Financial Officer and Treasurer
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EXHIBIT A
SUBADVISORY AGREEMENT
BETWEEN GENWORTH FINANCIAL WEALTH MANAGEMENT, INC.
AND PYRAMIS GLOBAL ADVISORS, LLC
[Name of Fund]
FEE SCHEDULE
|
EXHIBIT B
FORM ADV
of
Pyramis Global Advisors, LLC