SUB-ADVISER AGREEMENT
Sub-Adviser Agreement executed as of January 30, 1998 between Composite
Research & Management Co., a Washington corporation (the "Manager"), and WARBURG
PINCUS ASSET MANAGEMENT, INC., a Delaware corporation (the "Sub-Adviser").
W I T N E S S E T H
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That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. Services to Be Rendered by Sub-adviser to the Sierra Variable Trust.
(a) Subject always to the control of the Trustees of The Sierra
Variable Trust, a Massachusetts business trust (the "Trust") and to the
overall supervision of the Manager, the Sub-Adviser, at its expense as
provided herein, will render the following services to the International
Growth Fund (the "Fund") of the Trust. The Sub-Adviser will furnish
continuously an investment program for the portfolio represented by shares
of the Fund and will make investment decisions on behalf of the Fund with
respect to all of the assets of the Fund, including cash and cash
equivalents and will place all orders for the purchase and sale of
portfolio securities of the Fund and for the investment, reinvestment and
management of cash or cash equivalents of the Fund. The Sub-Adviser is
hereby appointed and shall serve as attorney-in-fact and agent of the Fund
for the limited purposes of executing account documentation, agreements,
contracts and other documents as the Sub-Adviser may be requested by
brokers, dealers, counterparties and other persons in connection with the
Sub-Adviser's management of the assets of the Fund.
(i) In the performance of its duties, the Sub-Adviser will comply
with the provisions of the Agreement and Declaration of Trust, the By-
laws of the Trust and the stated investment objectives, policies and
restrictions of the Fund as set forth in its registration statement on
Form N-1A, File No. 33-57732, and will use its best efforts to
safeguard and promote the welfare of the Fund, and to comply with
other policies which the Trustees or the Manager, as the case may be,
may from time to time determine. Copies of the Trust's Registration
Statement, including exhibits, Agreement and Declaration of Trust and
By-laws, in each case as amended to date, have been or will be
provided to the Sub-Adviser, and the Manager agrees promptly to
provide the Sub-Adviser with all amendments or supplements to the
Registration Statement, Agreement and Declaration of Trust and By-
laws.
(ii) The Sub-Adviser shall make its officers and employees
available to the Manager at reasonable times to review investment
policies of the Fund and to consult with the Manager regarding the
investment affairs of the Fund.
(iii) The Manager agrees, on an ongoing basis, to notify the
Sub-Adviser expressly in writing of each change in the fundamental and
nonfundamental investment policies of the Fund. The Manager desires
to engage and hereby appoints the Sub-Adviser to act as investment
sub-adviser to the Fund to which appointment the Trust agrees. The
Sub-Adviser accepts the appointment and agrees to furnish the services
described herein for the compensation set forth herein.
(b) The Sub-Adviser, at its expense, will furnish all necessary office
space and equipment, bookkeeping and clerical services (excluding
shareholder accounting and transfer agency services) required for it to
perform its duties hereunder and will pay all salaries, fees and expenses
of any officer of the Trust who is an employee of, or otherwise affiliated
with, the Sub-Adviser and is not an employee of, or otherwise affiliated
with, the Manager; provided that no person who is an employee of, or
otherwise affiliated with, the Sub-Adviser shall serve as a Trustee of the
Trust.
(c) The Manager agrees to provide the Sub-Adviser with such assistance
as may be reasonably requested by the Sub-Adviser in connection with its
activities pertaining to the Fund under this Agreement, including, without
limitation, information concerning the Fund, its funds available, or to
become available, for investment and generally as to the condition of the
Fund's affairs.
(d) In fulfilling its obligations hereunder, the Sub-Adviser shall be
entitled to rely on and act in accordance with, and the Manager agrees to
hold the Sub-Adviser harmless for any act or omission taken in good faith
in reliance on, information and instructions, which may be standing
instructions, provided to the Sub-Adviser by the Manager, the Trust's
administrator, or other agent of the Manager designated by the Manager.
Such information and instructions shall be conveyed to the Sub-Adviser in a
timely manner so as to permit the Sub-Adviser to take such action as may be
required in an orderly fashion. The Manager agrees to provide or cause to
be provided to the Sub-Adviser on an ongoing basis, such information as is
reasonably requested by the Sub-Adviser for performance by the Sub-Adviser
of its obligations under this Agreement, and the Sub-Adviser shall not be
in breach of any term of this Agreement or be deemed to have acted
negligently if the Manager fails to provide or cause to be provided such
information and the Sub-Adviser relies on the information most recently
furnished to the Sub-Adviser. The Manager will promptly provide the Sub-
Adviser with any procedures applicable to the Sub-Adviser adopted from time
to time by the Board of Trustees of the Trust and agrees to promptly
provide the Sub-Adviser copies of all amendments thereto.
(e) In the selection of brokers, dealers, futures commissions
merchants or any other sources of portfolio investments for the Fund
(hereafter, "brokers or dealers") 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 the most favorable price and execution
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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 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 or dealer involved and the
quality of service rendered by the broker or dealer in other transactions.
Subject to such policies as the Trustees of the Trust may determine that
are communicated in writing to the Sub-Adviser as provided in Section
1(a)(iii) hereof, 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 Trust to pay, on behalf
of the Fund, a broker or dealer 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 or dealer 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 or dealer, viewed in terms of either that
particular transaction or the Sub-Adviser's overall responsibilities over
time with respect to the Trust and to other clients of the Sub-Adviser as
to which the Sub-Adviser exercises investment discretion. As provided in
the Management Contract referred to in Section 3 below, the Trust agrees
that any entity or person associated with the Manager or Sub-Adviser that
is a member of a national securities exchange is authorized to effect any
transaction on such exchange for the account of the Fund that is permitted
by Section 11(a) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or Rule 11a2-2(T) thereunder, and the Trust has consented to
the retention of compensation for such transactions in accordance with
Section 11(a) or Rule 11a2-2(T)(2)(iv) under the 1934 Act.
(f) In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best price and execution available, the
Sub-Adviser is authorized to consider the brokerage and research services
(within the meaning of Section 28(e) of the 0000 Xxx) provided to the Sub-
Adviser or any affiliated person of the Sub-Adviser. Subject to the
requirements of Section 17(e) of the Investment Company Act of 1940, as
amended (the "1940 Act"), the Sub-Adviser is specifically authorized to
select an affiliated person of the Sub-Adviser to execute brokerage, but in
no event principal, transactions for the Fund. 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, 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 in order to
obtain the most favorable execution and/or lower brokerage commissions, if
any, and efficient execution. In such event, allocation of securities so
sold or purchased, as well as the expenses incurred in the transaction,
will be made by the Sub-Adviser in the manner the
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Sub-Adviser considers to be the most equitable and consistent with its
fiduciary obligation over time to the Fund and to such other clients.
Furthermore, the Trust and the Manager recognize that the Sub-Adviser may
give advice, and take action, with respect to its other clients that may
differ from the advice given, or the time or nature of action taken, with
respect to the Fund.
(g) The Sub-Adviser shall not be obligated to pay any expenses of or
for the Fund not expressly assumed by the Sub-Adviser pursuant to this
Section 1 other than as provided in Section 3.
(h) The Sub-Adviser shall maintain all books and records with respect
to the Fund's portfolio transactions required by subparagraphs (b)(5) -
(b)(11) and paragraph (f) of Rule 31a-1 under the 1940 Act, and shall
render to the Board of Trustees of the Trust such periodic and special
reports as the Board may reasonably request.
2. Other Agreements, Etc.
The Manager understands that the Sub-Adviser now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts and as investment adviser to one or more other investment companies or
series of investment companies, and the Manager has no objection to the Sub-
Adviser so acting, provided that whenever the Fund and one or more other
accounts or investment companies advised by the Sub-Adviser have available funds
for investment, investments suitable and appropriate for each will be allocated
in accordance with procedures believed to be equitable to each entity over time.
Similarly, opportunities to sell securities will be allocated in an equitable
manner over time. The Manager recognizes that in some cases this procedure may
adversely affect the size of the position that may be acquired or disposed of
for the Fund. In addition, the Manager understands that the persons employed by
the Sub-Adviser to assist the performance of the Sub-Adviser's duties hereunder
will not devote their full time to such service and nothing contained herein
shall be deemed to limit or restrict the right of the Sub-Adviser or any
affiliate of the Sub-Adviser to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
3. Compensation to Be Paid by the Manager to the Sub-adviser.
The Manager will pay to the Sub-Adviser as compensation for the Sub-
Adviser's services rendered and for the expenses borne by the Sub-Adviser
pursuant to Section 1, a fee, computed and paid monthly at the annual rate of
0.50% of the Fund's average daily net assets. Such average daily net asset
value of the Fund shall be determined by taking an average of all of the
determinations of such net asset value during such month at the close of
business on each business day during such month while this contract is in
effect. For the purposes of determining fees payable to the Sub-Adviser, the
value of the net assets of the Fund shall be computed at the times and in the
manner specified in the Prospectus or Statement of Additional Information
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relating to the Fund as from time to time in effect. Such fee shall be payable
for each month within 10 business days after the end of such month.
Notwithstanding the foregoing, in the event that any reduction in the fees
paid to the Manager under the investment advisory agreement between the Trust
and the Manager and relating to the Fund (the "Management Contract") shall be
required as a result of any statutory or regulatory limitation on investment
company expenses, there shall be a proportionate reduction in the fee payable to
the Sub-Adviser hereunder; provided that the Sub-Adviser will never be required
to pay more than the amount of fees it receives.
If the Sub-Adviser shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. Assignment Terminates this Agreement; Amendments of this Contract.
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Management
Contract shall have terminated for any reason; and this Agreement shall not be
amended unless such amendment be approved at a meeting by the affirmative vote
of a majority of the outstanding shares of the Fund, and by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager or of the Sub-Adviser.
5. Indemnifications.
(a) The Manager shall indemnify the Sub-Adviser and its controlling
persons, officers, directors, employees, agents, legal representatives and
persons controlled by it (collectively, "Sub-Adviser Related Persons") to
the fullest extent permitted by law against any and all loss, damage,
judgements, fines, amounts paid in settlement and reasonable expenses,
including attorneys' fees (collectively "Losses"), incurred by the Sub-
Adviser or Sub-Adviser Related Persons arising from or in connection with
this Agreement or the performance by the Sub-Adviser or Sub-Adviser Related
Persons of its or their duties hereunder, including, without limitation,
such Losses arising under any applicable law or that may be based upon any
untrue statement of a material fact contained in the Trust's registration
statement, or any amendment thereof or any supplement thereto, or the
omission to state therein a material fact known or which should have been
known and was required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was
made in reliance upon written information furnished to the Manager by the
Sub-Adviser or a Sub-Adviser Related Person; except to the extent any such
Losses result from willful misfeasance, bad faith, gross negligence or
reckless disregard on the part of the Sub-Adviser or a Sub-Adviser Related
Person in the performance of any of its duties under, or in connection
with, this Agreement.
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(b) The Sub-Adviser shall indemnify the Manager and its controlling
persons, officers, directors, employees, agents, legal representatives and
persons controlled by it (collectively, "Manager Related Persons") to the
fullest extent permitted by law against any and all Losses incurred by the
Manager or Manager Related Persons arising from or in connection with this
Agreement or the performance by the Manager or Manager Related Persons of
its or their duties hereunder so long as such Losses arise out of the Sub-
Adviser's failure to perform its responsibilities to the Manager, the Fund
or the Trust hereunder, including, without limitation, such Losses arising
under any applicable law or that may be based upon any untrue statement of
a material fact contained in the Trust's registration statement, or any
amendment thereof or any supplement thereto, or the omission to state
therein a material fact known or which should have been known and was
required to be stated therein or necessary to make the statements therein
not misleading, to the extent that such statement or omission was based on
information provided by the Sub-Adviser or a Sub-Adviser Related Person
unless such statement or omission was made in reliance upon written
information furnished to the Sub-Adviser or Sub-Adviser Related Person by
the Manager or a Manager Related Person; and except to the extent any such
Losses result from willful misfeasance, bad faith, gross negligence or
reckless disregard on the part of the Manager or a Manager Related Person
in the performance of any of its duties under, or in connection with, this
Agreement.
(c) The indemnifications provided in this Section 5 shall survive the
termination of this Agreement.
6. Effective Period and Termination of this Agreement.
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 follows:
(a) The Trust may at any time terminate this Agreement by not more
than sixty (60) days written notice delivered or mailed by registered mail,
postage prepaid, to the Manager and the Sub-Adviser, or
(b) If (i) the Trustees of the Trust or the shareholders by the
affirmative vote of a majority of the outstanding shares of the Fund, and
(ii) a majority of the Trustees of the Trust who are not interested persons
of the Trust or of the Manager or of the Sub-Adviser, by vote cast in
person at a meeting called for the purpose of voting on such approval, do
not specifically approve at least annually the continuance of this
Agreement, then this Agreement shall automatically terminate as at the
close of business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the continuance
of this Agreement is submitted to the shareholders of the Fund for their
approval and such shareholders fail to approve such continuance of this
Agreement as
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provided herein, the Sub-Adviser may continue to serve hereunder in a
manner consistent with the 1940 Act and the Rules and Regulations
thereunder, or
(c) The Manager may at any time terminate this Agreement by not less
than sixty (60) days written notice delivered or mailed by registered mail,
postage prepaid, to the Sub-Adviser, and the Sub-Adviser may at any time
terminate this Agreement by not less than ninety (90) days written notice
delivered or mailed by registered mail, postage prepaid, to the Manager.
Action by the Trust under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Agreement pursuant to this Section 6 shall be without
the payment of any penalty.
7. Certain Information.
The Sub-Adviser shall promptly notify the Manager 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 Investment Advisers Act of 1940,
as amended from time to time, or 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 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 Trust and (c) there shall be any change in
the control of the Sub-Adviser.
8. Certain Definitions.
(a) For the purposes of this Agreement, the "affirmative vote of a
majority of the outstanding shares" of the Fund means the affirmative vote,
at a duly called and held meeting of shareholders, (i) of the holders of
67% or more of the shares of the Fund present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of or the Fund entitled to vote at such meeting are
present in person or by proxy, or (ii) of the holders of more than 50% of
the outstanding shares of the Fund entitled to vote at such meeting,
whichever is less.
(b) For the purposes of this Agreement, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the 1940 Act and the Rules and Regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities
and Exchange Commission under the 1940 Act; the term "specifically approve
at least annually" shall be construed in a manner consistent with the 1940
Act and the Rules and Regulations thereunder; and the
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term "brokerage and research services" shall have the meaning given in the
1934 Act and the Rules and Regulations thereunder.
9. Nonliability of Sub-adviser.
The Sub-Adviser shall exercise its best judgment in rendering its services
under this agreement. Except as may otherwise be provided by federal or state
securities laws and in Section 5 hereof, 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 Trust or the Fund, or to any shareholder of the
Fund, for any act or omission in the course of, or connected with, rendering
services hereunder.
10. Limitation of Liability of the Trustees and Shareholders.
A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is reviewed and approved on behalf of the Trust by
the Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets and property of
the Fund.
11. Use of Names.
(a) It is understood that the name "Warburg Pincus Asset Management,
Inc." or any derivative thereof or logo associated with that name is the
valuable property of the Sub-Adviser and its affiliates and that the Trust
and/or the Fund have the right to use such name (or derivative or logo) in
offering materials of the Trust and/or Fund only with the prior written
approval of the Sub-Adviser and for so long as the Sub-Adviser is an
investment sub-adviser to the Trust and/or the Fund; provided that the
Trust and the Fund may use such name (or derivative or logo) without such
prior written approval in offering materials of the Trust to the extent
that (i) such materials simply list the Sub-Adviser as the Sub-Adviser to
the Fund as part of a listing of the investment sub-advisers to the series
or portfolios of the Trust with a brief description of the Sub-Adviser's
experience and duties hereunder; (ii) such materials include such name (or
derivative or logo) and any related information that has been previously
approved by the Sub-Adviser or that is required to be disclosed by
applicable law or regulation, such as information disclosed in the Trust's
registration statement; or (iii) such materials are intended for broker-
dealer use only, for use by the Trust's Trustees, or for internal use by
the Trust and the Manager. Such prior written approval of the Sub-Adviser
shall not be unreasonably withheld and shall be deemed to be given if no
written objection is received by the Trust, the Fund or the Manager within
three business days after the request is made by the Trust, the Fund or the
Manager for such use. Upon termination of this Agreement, the Trust and the
Fund
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shall forthwith cease to use such name (or derivative or logo) as soon as
reasonably practicable.
(b) It is understood that the names "The Sierra Variable Trust," and
"Composite Research & Management Co." or any derivatives thereof or logos
associated with such names is the valuable property of the Trust and/or the
Manager and their affiliates and that the Sub-Adviser or its affiliates
have the right to use such names (or derivatives or logos) in marketing
materials of the Sub-Adviser or its affiliates only with the prior written
approval of the Manager or the Trust, as applicable, and for so long as the
Sub-Adviser is an investment sub-adviser to the Trust and/or the Fund;
provided that the Sub-Adviser or its affiliates may use such names (or
derivatives or logos) without such prior written approval in marketing
materials of the Sub-Adviser or its affiliates to the extent that (i) such
materials simply list the Trust or the Fund as part of a listing of the
investment companies advised by the Sub-Adviser or its affiliates with a
brief description of the Trust or the Fund; or (ii) such materials include
such names (or derivatives or logos) and any related information that has
been previously approved by the Trust or the Manager, as applicable, or
that is required to be disclosed by applicable law or regulation, such as
information disclosed in the Form ADV or Form BD of the Sub-Adviser or its
affiliates; or (iii) such materials are intended for broker-dealer use only
or for internal use by the Sub-Adviser. Such prior written approval of the
Manager or the Trust, as applicable, shall not be unreasonably withheld and
shall be deemed to be given if no written objection is received by the Sub-
Adviser within three business days after the request is made by the Sub-
Adviser for such use. Upon termination of this Agreement, the Sub-Adviser
and its affiliates shall forthwith cease to use such names (or derivatives
or logos) as soon as reasonably practicable.
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IN WITNESS WHEREOF, the Manager and the Sub-Adviser have each caused this
instrument to be signed below in duplicate on its behalf by its duly authorized
representative, all as of the day and year first above written.
COMPOSITE RESEARCH & MANAGEMENT CO.
By /s/ XXXXXXX X. XXXXXX
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Name: XXXXXXX X. XXXXXX
Title: PRESIDENT
WARBURG PINCUS ASSET MANAGEMENT, INC.
By /s/ XXXXXX X. XXXXX
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Name: XXXXXX X. XXXXX
Title: SENIOR VICE PRESIDENT
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