EXHIBIT 28(d)(3)
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement ("Agreement") executed as of June 5, 2007,
is between LINCOLN INVESTMENT ADVISORS CORPORATION, a Tennessee corporation (the
"Adviser"), and BAMCO, INC., a New York corporation (the "Sub-Adviser").
WHEREAS, Lincoln Variable Insurance Products Trust (the "Trust"), on
behalf of the LVIP Baron Growth Opportunities Fund (the "Fund") has entered into
an Investment Management Agreement, effective June 5, 2007, with the Adviser
(the "Investment Management Agreement"), 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 with respect to the Managed Assets (as defined below), 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. MANAGED ASSETS; EXCLUSIVE MANAGER.
(a) The Sub-Adviser shall maintain the capacity to provide sub-advisory
services pursuant to this Agreement with respect to all of the investable assets
of the Fund to the extent the net asset value of the Fund (the "Fund NAV") is
less than or equal to $750,000,000 (such amount, the "Base NAV").
(b) If the Fund NAV exceeds $750,000,000 or if the Adviser or the Trust
intends for it to exceed such amount (such excess or intended excess, the
"Excess NAV"), the Adviser and the Trust shall, pursuant to a written notice,
provide the Sub-Adviser with the first option to provide sub-advisory services
under the terms of this Agreement with respect to all of or such portion of such
Excess NAV as the Sub-Adviser may determine. Within 30 days of receipt of such
written notice, the Sub-Adviser shall notify the Trust and the Adviser in
writing as to whether it will exercise such option and, if so, with respect to
what portion (including all) of such Excess NAV (such amount, the "Optioned
NAV"). If Sub-Adviser declines to exercise such option (or fails to exercise
such option within the foregoing 30-day period) with respect to all or a portion
of such Excess NAV (such amount, the "Declined NAV"), the Trustee and the
Adviser may appoint another sub-adviser for, or the Adviser may assume sole
responsibility for, the Declined NAV.
(c) The term "MANAGED ASSETS" means all of the investable assets of the
Fund attributable to the Base NAV and any Optioned NAV, including cash in the
Fund (including short-term, cash-equivalent investments in which cash in the
Fund is invested).
(d) During the term of this Agreement and subject to the rights of the
Adviser and the Trustees under this Agreement, the Managed Assets shall be
managed exclusively by the Sub-Adviser pursuant to the terms of this Agreement.
2. 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 with respect to the Managed
Assets which program shall 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 with respect to the Managed
Assets and place all orders for the purchase and sale of portfolio securities in
that respect. With respect to the Managed Assets and subject to the provisions
of this Agreement, the Sub-Adviser, as the Adviser's agent and attorney in fact,
is duly authorized without further approval, except as otherwise required by
law: (i) to make all investment decisions; (ii) to buy, sell and otherwise trade
in securities; and (iii) in furtherance of the foregoing, to do anything which
Sub-Adviser shall deem requisite, appropriate or advisable, including, without
limitation, the submission of instructions to the custodian of the Fund, and the
selection of such brokers or dealers as the Sub-Adviser shall determine.
(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 hereunder.
(c) The Sub-Adviser shall vote proxies relating to the investment
securities in which the Managed Assets are invested 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' written notice to the Sub-Adviser, the Trustees may withdraw the
authority granted to the Sub-Adviser pursuant to this Section 2(c).
(d) 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 reasonable 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 reasonable 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 and deliver
in writing to the Sub-Adviser, 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
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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.
(e) The Sub-Adviser will provide advice and assistance to the Adviser
as to the determination of the fair value of certain investments in which the
Managed Assets are invested 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 investments in which the Managed
Assets are invested as the Board of Trustees or Adviser shall reasonably
request. The Sub-Adviser shall make its officers and employees available to the
Adviser from time to time upon reasonable notice at such reasonable times as the
parties may agree to review investment policies of the Fund with respect to the
Managed Assets and to consult with the Adviser regarding the investment affairs
of the Fund with respect to the Managed Assets.
(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
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"); and (iv) its general fiduciary responsibility to
the Fund. Subject to the foregoing, the Sub-Adviser shall also perform its
duties hereunder subject to any written instructions of the Trustees, the
Adviser or an officer of the Fund.
(i) The Sub-Adviser shall provide the Fund with disclosure regarding
the Sub-Adviser and (to the extent described in the following sentence) the
Fund, for use in the Fund's registration statement, prospectus, shareholder
reports, marketing materials and other regulatory filings, or any amendment or
supplement thereto (collectively, "Regulatory Filings"), including, without
limitation, 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.
Notwithstanding the foregoing, with respect to disclosure regarding the Fund,
the Sub-Adviser shall only be required to provide disclosure regarding the Fund
to the extent such
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information is (i) related to the performance of the Sub-Adviser's duties under
this Agreement, (ii) reasonably available to the Sub-Adviser and (iii) not
otherwise reasonably available to the Adviser, the Trust or the Fund.
(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 reasonably 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 upon
reasonable notice and at reasonable times to discuss and review the
Sub-Adviser's compliance program.
(k) 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.
3. OTHER AGREEMENTS.
(a) The investment management services provided by the Sub-Adviser
under this Agreement are not to be deemed exclusive to the Fund, and the
Sub-Adviser (and any of its directors, officers, or employees) 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 materially impaired
thereby.
(b) The Adviser understands and agrees that: (a) the Sub-Adviser is
affiliated with Baron Capital Management, Inc., a registered investment adviser;
(b) the Sub-Adviser and/or its affiliates will manage accounts and perform
advisory services for others; (c) depending upon investment objectives and cash
availability and requirements, the Sub-Adviser and/or its affiliates may direct
the sale of a particular security for certain accounts and direct the purchase
of such security for other accounts, and, accordingly, transactions in
particular accounts may not be consistent with transactions in other accounts;
(d) where there is a limited supply of a security, the Sub-Adviser in
conjunction with its affiliates will allocate investment opportunities in a
manner deemed equitable by the Sub-Adviser; (e) the Sub-Adviser and/or its
affiliates, principals and employees may from time to time have an interest,
direct or indirect, in a security which is purchased, sold or otherwise traded
for the Fund, and the Sub-Adviser and/or its affiliates may effect transactions
in such security for the Fund, which may be the same as or different from the
action which the Sub-Adviser, its affiliates or such other persons may take with
respect thereto for its or their accounts.
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4. 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 asset value of the Managed
Assets 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.
5. 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.
6. 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 5) until terminated as set forth below.
Termination of this Agreement pursuant to this Section 6 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 Fund upon 30 days' notice by the vote of a majority 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 SEC and/or its staff.
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7. CERTAIN INFORMATION.
(a) The Adviser, on behalf of the Fund, acknowledges receipt of Part II
of the Sub-Adviser's Form ADV, Part I of which is filed with the U.S. Securities
and Exchange Commission (the "SEC"), and which contains information concerning
the Sub-Adviser's services and fees.
(b) 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 investment officers of the
Sub-Adviser or any portfolio manager of the Fund employed or supervised by the
Sub-Adviser shall have changed.
(c) The Fund has delivered to the Sub-Adviser copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(i) Declaration of Trust of the Trust, as in effect on the date
hereof and as amended from time to time;
(ii) By-laws of the Trust, as in effect on the date hereof and as
amended from time to time;
(iii) Certified resolutions of the Trustees authorizing the
appointment of the Adviser and approving the form of the Investment
Management Agreement;
(iv) Certified resolutions of the Trustees authorizing the
appointment of the Sub-Adviser and approving the form of this
Agreement;
(v) Registration statement under the 1940 Act and the Securities
Act of 1933, as amended, as filed with the SEC relating to the Fund and
Fund's shares and all amendments thereto;
(vi) Notification of registration of the Fund under the 1940 Act on
Form N-8A as filed with the SEC and all amendments thereto; and
(vii) Prospectus and statement of additional information of the
Trust, as currently in effect and as amended or supplemented from time
to time.
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8. NONLIABILITY OF SUB-ADVISER.
Except as provided in Section 9(a), 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, the Sub-Adviser
shall not be subject to any liability to the Adviser, the Trust, the Fund or to
any shareholder of the Fund, for any act or omission in the course of, or
connected with, rendering services hereunder.
9. INDEMNIFICATION.
(a) 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:
(i) any failure by the Sub-Adviser, whether unintentional or
in good faith or otherwise, to adequately diversify the investment
program of the Fund with respect to the Managed Assets pursuant to the
requirements of Section 817(h) of the Code, and the regulations issued
thereunder; unless the failure has been corrected within the 30-day
period provided in U.S. Treasury Regulation 1.817-5(c)(1) (or within
any other applicable grace period provided in the Code or the
regulations issued thereunder); or
(ii) 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 and necessary to make such disclosure not misleading;
provided that, in either case the Sub-Adviser shall have promptly been given
written notice concerning any matter for which indemnification is claimed under
this Section 9(a).
(b) The Adviser agrees to indemnify the Sub-Adviser for, and hold it
harmless against, any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Adviser) or
litigation (including legal and other expenses) to which the Sub-Adviser may
become subject as a result of:
(i) any untrue statement of a material fact contained in the
Fund's Regulatory Filings or any omission of a material fact required
to be stated and necessary to make such Regulatory Filings not
misleading (except for such misstatements and omissions contained, or
required to be contained, in disclosure provided by the Sub-Adviser for
inclusion in the Fund's Regulatory Filings);
provided that the Adviser shall have promptly been given written notice
concerning any matter for which indemnification is claimed under this Section
9(b).
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10. 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 with respect to the Managed Assets made by the Sub-Adviser that are
required to be maintained by the Fund pursuant to the requirements of Rule
31a-1(b)(5), (6), (7), (9) and (10) and 31a-1(f) under the 1940 Act. The
Sub-Adviser agrees that such 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;
provided, however, that the Sub-Adviser may retain a copy of such records.
(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. Any such examination conducted by the Fund's
auditors, a Fund representative or the Adviser shall be preceded by reasonable
notice to the Sub-Adviser.
11. MARKETING MATERIALS.
(a) The Fund shall furnish to the Sub-Adviser (at its principal
office), prior to its use, all prospectuses, proxy statements, reports to
shareholders, sales literature or other material prepared for distribution to
shareholders of the Fund or to the public, in which the Sub-Adviser or any of
its affiliates is named. No such material relating to the Sub-Adviser or its
affiliates 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 to any request by the Fund to approve any materials shall be
deemed to constitute the consent of the Sub-Adviser to such materials. In the
event of termination of this Agreement, the Fund will continue to furnish to the
Sub-Adviser copies of any of the above-mentioned materials which refer in any
way to 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 material prepared
by the Sub-Adviser or its affiliates for distribution to third parties or to the
public in which the Fund, the Adviser or any of the Adviser's affiliates is
named. No such material relating to the Fund, the Adviser or any of the
Adviser's affiliates 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 any request to approve any materials shall be deemed to
constitute the consent of the Fund to such materials.
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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. NOTICES.
Any notice or other communication required to be given pursuant to this
Agreement shall be deemed duly given if delivered by courier service or
overnight mail or mailed by registered mail, postage prepaid, to the following:
The Sub-Adviser:
BAMCO, Inc.
Attn: Xxxxx X. Xxxxxxxxx, Esq.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
To the Adviser:
Lincoln Investment Advisors Corporation
Attn: President
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
15. 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.
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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.
LINCOLN INVESTMENT ADVISORS
CORPORATION
/s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Second Vice President
BAMCO, INC.
/s/ Xxxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chief Operating Officer
and General Counsel
Accepted and agreed to
as of the day and year
first above written:
LVIP BARON GROWTH OPPORTUNITIES FUND, a series of
Lincoln Variable Insurance Products Trust
/s/ Xxxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
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