INVESTMENT SUB-ADVISORY AGREEMENT
---------------------------------
This AGREEMENT is effective this 19th day of December, 2011, by and
between CURIAN CAPITAL, LLC, a Michigan limited liability company and registered
investment adviser ("Adviser"), Franklin Advisers, Inc., a California
corporation and registered investment adviser ("Sub-Adviser") and Curian
Variable Series Trust, a Massachusetts business trust ("Trust").
WHEREAS, Adviser is the investment manager for the Trust, an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act");
WHEREAS, the Adviser represents that it has entered into an Investment
Advisory and Management Agreement ("Management Agreement") dated as of December
19, 2011, with the Trust; and
WHEREAS, Adviser desires to retain Sub-Adviser as Adviser's agent to
furnish investment advisory services to the investment portfolios of the Trust
listed on Schedule A hereto (the "Funds" or each a "Fund").
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. APPOINTMENT. Subject to the approval of the Board of Trustees of the Trust
(the "Board of Trustees"), Adviser represents and warrants that it has
full legal power and authority to enter into this Agreement and to
delegate investment advisory services, and hereby appoints Sub-Adviser to
provide certain sub-investment advisory services to the Funds for the
period and on the terms set forth in this Agreement, and the appointment
of Sub-Adviser hereunder is permitted by Trust's and Adviser's governing
documents and has been duly authorized by all necessary corporate or other
action. Adviser represents that this Agreement has been duly authorized
and will be binding upon Adviser.
Sub-Adviser accepts such appointment and agrees to furnish the services
herein set forth for the compensation herein provided.
In the event the Adviser designates one or more funds other than the Funds
with respect to which the Adviser wishes to retain the Sub-Adviser to
render investment advisory services hereunder, it shall notify the
Sub-Adviser in writing. If the Sub-Adviser is willing to render such
services, it shall notify the Adviser in writing, whereupon such fund
shall become a Fund hereunder, and be subject to this Agreement, all
subject to the approval of the Board of Trustees.
2. DELIVERY OF DOCUMENTS. Adviser has furnished, or will furnish, to
Sub-Adviser copies properly certified or authenticated of each of the
following prior to the commencement of the Sub-Adviser's services:
a) the Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of The Commonwealth of Massachusetts on September
7, 2011 and all amendments thereto or restatements thereof (such
Declaration, as presently in effect and as it shall from time to
time be amended or restated, is herein called the "Declaration of
Trust");
PAGE 1 OF 15
b) the Trust's By-Laws and amendments thereto (together with the
Declaration of Trust, the "Trust Documents");
c) resolutions of the Board of Trustees authorizing the appointment of
Sub-Adviser and approving this Agreement;
d) the Trust's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission (the
"SEC");
e) the Trust's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended ("1933 Act") and under the 1940 Act as filed
with the SEC and all amendments thereto insofar as such Registration
Statement and such amendments relate to the Funds; and
f) the Trust's most recent prospectus and Statement of Additional
Information for the Funds (collectively called the "Prospectus").
During the term of this Agreement, the Adviser agrees to furnish the
Sub-Adviser at its principal office all proxy statements, reports to
shareholders, sales literature or other materials prepared for
distribution to shareholders of each Fund, and Prospectus of each Fund,
prior to the use thereof, and the Adviser shall not use any such materials
if the Sub-Adviser reasonably objects in writing within five business days
(or such other period as may be mutually agreed) after receipt thereof.
The Sub-Adviser's right to object to such materials is limited to the
portions of such materials that expressly relate to the Sub-Adviser, its
services and its clients. The Adviser agrees to use its reasonable best
efforts to ensure that materials prepared by its employees or agents or
its affiliates that refer to the Sub-Adviser or its clients in any way are
consistent with those materials previously approved by the Sub-Adviser as
referenced in the first sentence of this paragraph. The materials
referenced in the first sentence of this paragraph will be furnished to
the Sub-Adviser by e-mail, first class or overnight mail, facsimile
transmission equipment or hand delivery.
3. MANAGEMENT. Subject always to the supervision of the Adviser and the Board
of Trustees, Sub-Adviser will furnish an investment program in respect of,
and shall have full investment authority and discretion for, all assets of
the Funds and place all orders for the purchase and sale of securities,
including foreign or domestic securities, and other property (including
financial futures, options of any type, commodities and other derivative
instruments), all on behalf of the Funds as the Sub-Adviser shall
determine in accordance with each Fund's investment restrictions, policies
and Prospectus.
Sub-Adviser is authorized on behalf of the Funds to: (a) enter into
agreements and execute any documents (e.g., any derivatives documentation
such as exchange traded and over-the-counter, as applicable) required to
make investments pursuant to the Prospectus, which shall include any
market and/or industry standard documentation and the standard
representations contained therein as well as account documentation,
agreements, contracts and other documents requested by brokers, dealers,
counterparties and other persons in connection with Sub-Adviser's duties
under this Agreement; and (b) acknowledge the receipt of brokers' risk
disclosure statements, electronic trading disclosure statements and
similar disclosures. In such respect, and only for this limited purpose,
Sub-Adviser shall act as the Adviser's and the Funds' agents. The
Sub-Adviser is authorized, on behalf of the Funds, to enter into futures
account agreements, ISDA master agreements and related
PAGE 2 OF 15
documents, and to open accounts and take other necessary or appropriate
actions related thereto, in accordance with Trust procedures.
The Sub-Adviser further shall have the authority to instruct the custodian
to: (a) deliver or accept delivery of, upon receipt of payment or payment
upon receipt of, securities, commodities or other property underlying any
futures or options contracts, and other property purchased or sold in the
Funds; and (b) deposit margin or collateral which shall include the
transfer of money, securities, or other property to the extent necessary
to meet the obligations of the Funds with respect to any investments made
pursuant to the Prospectus.
In the performance of its duties, Sub-Adviser will satisfy its fiduciary
duties to the Funds (as set forth below), and will monitor the Funds'
investments, and will comply with the provisions of the Trust's
Declaration of Trust and By-Laws, as amended from time to time, and the
stated investment objectives, policies and restrictions of the Funds to
the extent they are received by Sub-Adviser from the Adviser, which may be
amended from time to time, and applicable tax and regulatory requirements.
Sub-Adviser and Adviser will each make its officers and employees
available to the other from time to time at reasonable times to review
investment policies of the Funds and to consult with each other regarding
the investment affairs of the Funds. Sub-Adviser will report to the Board
of Trustees and to Adviser with respect to the implementation of such
program, as reasonably requested by the Board of Trustees or the Adviser.
Sub-Adviser shall, solely with respect to the assets of the Fund that are
under its management pursuant to this Agreement, and based on information
obtained from the Fund's administrator, custodian and other service
providers, manage the Fund in conformity with the requirements of the
Internal Revenue Code of 1986, as amended (the "Code"), and applicable
regulations relating to Code Sections 817(h), 851(b)(2), 851(b)(3),
851(d), and 851(i). If, and to the extent that, the Adviser apprises
Sub-Adviser at a reasonable time after each quarter end of any
non-compliance with the requirements of Code Sections 817(h), 851(b)(2),
851(b)(3), 851(d), and 851(i), Sub-Adviser will take prompt action, as
directed by the Adviser.
Adviser shall in good faith and in conjunction with Sub-Adviser follow the
procedures specified in Treas. Reg. Section 1.817-5(a)(2) and Revenue
Procedure 2008-41 (or its successor) to request relief from the
Commissioner of Internal Revenue Service. In such an event Adviser and
Sub-Adviser shall work together in the preparation of any request for
relief or closing agreement and, to the extent that Adviser is seeking
indemnification under Section 11 hereof, no filings or agreements shall be
made with the Commissioner of Internal Revenue Service without the prior
written approval of Sub-Adviser.
The Sub-Adviser is expressly authorized to rely upon any and all
instructions, approvals and notices given on behalf of the Adviser by any
one or more of those persons designated as representatives of the Trust
whose names, titles and specimen signatures appear in Schedule C attached
hereto. The Adviser shall provide a Secretary Certificate, Incumbency
Certificate, or similar document indicating that the persons designated as
representatives have the authority to bind the Trust. The Adviser may
amend such Schedule C from time to time by written notice to the
Sub-Adviser. The Sub-Adviser shall continue to rely upon these
instructions until notified by the Adviser to the contrary.
PAGE 3 OF 15
The Adviser agrees that the Sub-Adviser shall not be liable for any
failure to recommend the purchase or sale of any security on behalf of any
Fund on the basis of any information which might, in the Sub-Adviser's
reasonable opinion, constitute a violation of any federal or state laws,
rules or regulations.
The Sub-Adviser further agrees that it:
a) will use the same skill and care in providing such services as it
uses in providing services to its other client mandates for which it
has investment responsibilities;
b) will comply with all applicable Rules and Regulations of the SEC in
all material respects and in addition will conduct its activities
under this Agreement in accordance with any applicable regulations
of any governmental authority pertaining to its investment advisory
activities, including but not limited to compliance with Rule
206(4)-7 under the Investment Advisers Act of 1940, as amended (the
"Advisers Act");
c) will report regularly to Adviser and to the Board of Trustees as
reasonably agreed between the Adviser and Sub-Adviser, or as
reasonably requested by the Board of Trustees, and will make
appropriate persons available for the purpose of reviewing with
representatives of Adviser and the Board of Trustees on a regular
basis at reasonable times agreed to by the Adviser and Sub-Adviser,
or at such times as reasonably requested by the Board of Trustees,
including, without limitation, review of the general investment
strategies of the Funds, the performance of the Funds in relation to
the specified benchmarks and will provide various other reports from
time to time as reasonably requested by Adviser or the Board of
Trustees;
d) will provide to the Adviser (i) a monthly compliance checklist
developed for each Fund by Adviser and Sub-Adviser, (ii) quarterly
reports developed for each Fund by Adviser and Sub-Adviser, and
(iii) other compliance and reporting information as requested by the
Adviser or the Board of Trustees from time-to-time;
e) as a service provider to the Funds, will cooperate fully with the
Chief Compliance Officer of the Trust in the execution of his/her
responsibilities to monitor service providers to the Funds under
Rule 38a-1 under the 1940 Act;
f) will prepare and maintain such books and records with respect to
each Fund's securities transactions in accordance with Section 7
herein, and will furnish Adviser and the Board of Trustees such
periodic and special reports as the Adviser may reasonably request;
g) will prepare and cause to be filed in a timely manner Form 13F and,
if required, Schedule 13G or Schedule 13D, as applicable, with
respect to securities held for the account of the Funds subject to
the Sub-Adviser's supervision and reporting obligations;
h) will act upon reasonable instructions from Adviser not inconsistent
with the fiduciary duties and investment objectives hereunder;
i) will treat confidentially and as proprietary information of the
Trust all such records and other information relative to the Trust
maintained by the Sub-Adviser, and will not use such records and
information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior
PAGE 4 OF 15
notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the
Sub-Adviser may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by Trust,
provided, however, that notwithstanding the foregoing, Sub-Adviser
may disclose such information as required by applicable law,
regulation or upon request by a regulator or auditor of Sub-Adviser
without seeking advance consent from the Trust;
j) will have the sole authority and responsibility to exercise whatever
powers the Adviser may possess with respect to any of its assets
held in the Funds, including, but not limited to, the right to vote
proxies, the power to exercise rights, options, warrants, conversion
privileges, and redemption privileges, and to tender securities
pursuant to a tender offer, consistent with the Sub-Adviser's
fiduciary duties hereunder;
k) may not consult with any other sub-adviser of the Trust, if any, or
the sub-adviser to any other investment company (or separate series
of an investment company) managed by the Adviser concerning the
Trust's transactions in securities or other assets for any
investment portfolio of the Trusts, including the Funds, except for
the purpose of complying with the conditions of Rule 12d3-1 (a) and
(b) under the 1940 Act, and except that such consultations are
permitted between the current and successor sub-advisers of the
Funds in order to effect an orderly transition of sub-advisory
duties so long as such consultations are not concerning transactions
prohibited by Section 17(a) of the 1940 Act;
l) will provide reasonable assistance to the Adviser or the Trust's
custodian, as the case may be, in determining the value of any
portfolio security provided, however, that Adviser shall retain
responsibility for valuation of portfolio securities. In addition,
the Sub-Adviser shall provide the Trust's custodian on each business
day with information relating to all transactions concerning each
Fund's assets under Sub-Adviser's supervision, and shall provide
Adviser with such information upon the reasonable request of the
Adviser;
m) promptly notify the Adviser and the Trust to the extent required by
applicable law in the event that the Sub-Adviser or any of its
affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Sub-Adviser from serving as an
investment adviser pursuant to this Agreement; or (2) becomes aware
that it is the subject of an administrative proceeding or
enforcement action by the SEC or other regulatory authority. The
Sub-Adviser further agrees to notify the Trust and the Adviser
immediately of any material fact known to the Sub-Adviser respecting
or relating to the Sub-Adviser that would make any written
information previously provided to the Adviser or the Trust
materially inaccurate or incomplete or if any such written
information becomes untrue in any material respect; and
n) immediately notify the Adviser and the Trust if the Sub-Adviser
suffers a material adverse change in its business that would
materially impair its ability to perform its relevant duties for a
Fund. For the purposes of this paragraph, a "material adverse
change" shall include, but is not limited to, a material loss of
assets or accounts under management or the departure of senior
investment professionals to the extent such professionals are not
replaced promptly with professionals of comparable experience and
quality.
PAGE 5 OF 15
4. CUSTODY OF ASSETS. Title to all investments shall be held in the name of
the Funds, provided that for convenience in buying, selling and exchanging
securities (stocks, bonds, commercial paper, etc.), title to such
securities may be held in the name of the Trust's custodian bank, or its
nominee. All cash and the indicia of ownership of all other investments
shall be held by the Trust's custodian bank. Sub-Adviser shall not act as
custodian of the assets held in the Funds and shall at no time have the
right to physically possess the assets of the Funds or have the assets
registered in its own name or the name of its nominee, nor shall
Sub-Adviser in any manner acquire or become possessed of any income,
whether in kind or cash, or proceeds, whether in kind or cash,
distributable by reason of selling, holding or controlling such assets of
the Funds. In accordance with the preceding sentence, Sub-Adviser shall
have no responsibility with respect to the collection of income, physical
acquisition or the safekeeping of the assets of the Funds. All such duties
of collection, physical acquisition and safekeeping shall be the sole
obligation of the custodian. The Sub-Adviser shall not be liable for any
act or omission of such custodian, except by reason of the Sub-Adviser's
willful misfeasance, bad faith, gross negligence, fraud, reckless
disregard or willful misconduct in connection with any actions that
Sub-Adviser has taken or should have taken with respect to the custodian.
5. BROKERAGE. The Sub-Adviser will place orders pursuant to the Sub-Adviser's
investment determinations for a Fund either directly with an issuer or
with any broker or dealer selected by the Sub-Adviser. Nothing herein
shall preclude the aggregation or "bunching" of orders for the sale or
purchase of portfolio securities in a Fund with other funds, separate
accounts or other investment vehicles ("accounts") managed, advised or
sub-advised by Sub-Adviser. With respect to the allocation of trades,
Sub-Adviser shall not favor any account over any other and purchase or
sale orders executed contemporaneously shall be allocated in a manner it
deems equitable among the accounts involved. The Sub-Adviser is
responsible for decisions to buy and sell securities for each Fund,
broker-dealer selection, and negotiation of brokerage commission rates.
Sub-Adviser shall have the express authority to negotiate, open, continue
and terminate brokerage accounts and other brokerage arrangements with
respect to all portfolio transactions entered into by Sub-Adviser on
behalf of the Funds. Adviser shall provide such assistance to the
Sub-Adviser in setting up and maintaining brokerage accounts and other
accounts as the Sub-Adviser shall reasonably request to allow for the
purchase or sale of various forms of securities and instruments pursuant
to this Agreement. Sub-Adviser will provide copies of all such agreements
to the Adviser upon the Adviser's reasonable request. It is the
Sub-Adviser's general policy in selecting a broker to effect a particular
transaction to seek to obtain "best execution," which means prompt and
efficient execution of the transaction at the best obtainable price and
taking into account all relevant factors and considerations of the
specific transaction, with payment of commissions which are reasonable in
relation to the value of the brokerage services provided by the broker.
Consistent with this policy, and when selecting a broker the Sub-Adviser
will take relevant factors into consideration, including (as applicable),
but not limited to: the best price available; the reliability, integrity
and financial condition of the broker-dealer; the size of and difficulty
in executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the applicable Fund on a
continuing basis. Subject to such policies and procedures as the Board of
Trustees may determine, the Sub-Adviser shall have discretion to effect
investment transactions for each Fund through broker-dealers (including,
to the extent
PAGE 6 OF 15
permissible under applicable law, broker-dealer affiliates) who provide
brokerage and/or research services, as such services are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and as interpreted by the SEC, and to cause such Fund to pay
any such broker-dealers an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Sub-Adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage or research services
provided by such broker-dealer, viewed in terms of either that particular
investment transaction or the Sub-Adviser's overall responsibilities with
respect to such Fund and other accounts to which the Sub-Adviser exercises
investment discretion (as such term is defined in Section 3(a)(35) of the
1934 Act). Allocation of orders placed by the Sub-Adviser on behalf of a
Fund to such broker-dealers shall be in such amounts and proportions as
the Sub-Adviser shall determine in good faith in conformity with its
responsibilities under applicable laws, rules and regulations. The
Sub-Adviser will submit reports on such allocations to the Adviser as
reasonably requested by the Adviser, in such form as may be mutually
agreed to by the parties hereto, indicating the broker-dealers to whom
such allocations have been made and the basis therefore. The Sub-Adviser
shall not be liable for any act or omission of any brokerage firm or firms
or counterparties designated by the Adviser or chosen by the Sub-Adviser
with reasonable care except by reason of the Sub-Adviser's willful
misfeasance, bad faith, gross negligence, fraud, reckless disregard or
willful misconduct in connection with selecting such brokerage firms or
firms or counterparties.
6. EXPENSES. The Sub-Adviser shall bear all expenses incurred by it in
connection with the performance of its services under this Agreement. Each
Fund or the Adviser will bear certain other expenses to be incurred in its
operation, including, but not limited to, investment advisory fees, and
administration fees; fees for necessary professional and brokerage
services; costs relating to local administration of securities; and fees
for any pricing services. All other expenses not specifically assumed by
the Sub-Adviser hereunder or by the Adviser under the Management Agreement
are borne by the applicable Fund or the Trust.
7. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees
to surrender promptly to the Trust any of such records upon the Trust's
request, copies of which may be retained by the Sub-Adviser. Sub-Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act related to each Fund's portfolio transactions. The Adviser shall
maintain all books and records not related to the Fund's portfolio
transactions.
8. COMPENSATION. For the services provided and the expenses assumed pursuant
to this Agreement, the Adviser will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefore, a
sub-advisory fee accrued daily and payable monthly on the average daily
net assets in the Funds in accordance with Schedule B hereto.
9. SERVICES TO OTHERS. Adviser understands, and has advised the Board of
Trustees, that Sub-Adviser now acts, or may in the future act, as an
investment adviser to fiduciary and other managed accounts, and as
investment adviser or sub-investment adviser to other investment companies
or accounts. Adviser has no objection to Sub-Adviser acting in
PAGE 7 OF 15
such capacities, provided that whenever the Fund and one or more other
investment advisory clients of Sub-Adviser have available funds for
investment, investments suitable and appropriate for each will be
allocated in a manner reasonably believed by Sub-Adviser to be fair and
equitable to each. Sub-Adviser may group orders for a Fund with orders for
other funds and accounts to obtain the efficiencies that may be available
on larger transactions when it reasonably determines that investment
decisions are appropriate for each participating account. Sub-Adviser
cannot assure that such policy will not adversely affect the price paid or
received by a Fund. Adviser recognizes, and has advised the Board of
Trustees, that in some cases this procedure may adversely affect the size
and the opportunities of the position that the participating Fund may
obtain in a particular security. In addition, Adviser understands, and has
advised the Board of Trustees, that the persons employed by Sub-Adviser to
assist in Sub-Adviser's duties under this Agreement will not devote their
full time to such service, and nothing contained in this Agreement will be
deemed to limit or restrict the right of Sub-Adviser or any of its
affiliates to engage in and devote time and attention to other businesses
or to render services of whatever kind or nature.
Notwithstanding any other provision to the contrary, the Sub-Adviser shall
have no obligation to perform the following services or to have employees
of the Sub-Adviser perform the following roles, as applicable: a)
shareholder services or support functions, such as responding to
shareholders' questions about a Fund or its investments or strategies; b)
providing employees of the Sub-Adviser to serve as officers of a Fund; or
c) providing employees of the Sub-Adviser to serve as the Fund's Chief
Compliance Officer and associated staff.
10. LIMITATION OF LIABILITY.
-----------------------
(a) Sub-Adviser, its officers, directors, employees, agents or
affiliates will not be subject to any liability to the Adviser or
the Funds or their directors, officers, employees, agents or
affiliates for any act, omission, error of judgment or mistake of
law or for any loss suffered by the Funds, any shareholder of the
Funds or the Adviser either in connection with the performance of
Sub-Adviser's duties under this Agreement or its failure to perform
due to events beyond the reasonable control of the Sub-Adviser or
its agents, except for a loss resulting from Sub-Adviser's willful
misfeasance, or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties
under this Agreement;
(b) The Sub-Adviser makes no representation or warranty, express or
implied, that any level of performance or investment results will be
achieved by the Funds or that a Fund will perform comparably with
any standard or index, including other clients of the Sub-Adviser,
whether public or private. The Sub-Adviser shall not be deemed to
have breached this Agreement or any investment restrictions or
policies applicable to a Fund in connection with fluctuations
arising from market movements and other events outside the control
of the Sub-Adviser;
(c) The Sub-Adviser shall not be liable to the Adviser, the Funds or
their shareholders, or the Trust for any action taken or failure to
act in good faith reliance upon: (i) information, instructions or
requests, whether oral or written, with respect to the Funds made to
the Sub-Adviser by a duly authorized officer of the Adviser or the
Trust; (ii) the advice of counsel to the Trust; and (iii) any
PAGE 8 OF 15
written instruction or certified copy of any resolution of the
Board; all except by reason of the Sub-Adviser's willful
misfeasance, bad faith, gross negligence, fraud, reckless disregard
or willful misconduct in connection with performing its
responsibilities hereunder;
(d) In any action in which the Sub-Adviser or any of its controlling
persons, or any shareholders, partners, directors, officers and/or
employees of any of the foregoing, are parties, the Adviser agrees
to indemnify and hold harmless the foregoing persons against any
losses to which such persons may become subject, insofar as such
losses arise out of or are based upon the Adviser's willful
misfeasance, bad faith, gross negligence, fraud, reckless disregard
or willful misconduct in performing its responsibilities hereunder,
including without limitation the operation of a Fund, the contents
of the Funds' Prospectus, or the wrongful conduct of persons with
respect to the sale of interests in a Fund, provided that the loss,
claim, settlement, damage, charge, liability, cost or expense did
not relate to, was not based upon, or did not arise out of an act or
omission of the Sub-Adviser or any of its controlling persons, or
any shareholders, partners, directors, officers and/or employees
constituting reckless disregard, willful misfeasance, bad faith,
gross negligence, fraud or willful misconduct; and
(e) Without limiting the generality of the foregoing, neither the
Adviser nor the Sub-Adviser will be liable for any indirect,
special, incidental or consequential damages.
11. INDEMNIFICATION. Adviser and the Sub-Adviser each agree to indemnify the
other party (and each such party's affiliates, employees, directors and
officers), and Sub-Adviser further agrees to indemnify the Funds, against
any claim, damages, loss or liability (including reasonable attorneys'
fees) arising out of any third party claims brought against an indemnified
party that are found to constitute willful misfeasance or gross negligence
on the part of the indemnifying party.
12. DURATION AND TERMINATION. This Agreement will become effective as to a
Fund upon execution or, if later, on the date that initial capital for
such Fund is first provided to it and, unless sooner terminated as
provided herein, will continue in effect for two years from the date of
its execution. Thereafter, if not terminated as to a Fund, this Agreement
will continue in effect as to a Fund for successive periods of 12 months,
PROVIDED that such continuation is specifically approved at least annually
by the Board of Trustees or by vote of a majority of the outstanding
voting securities of such Fund, and in either event approved also by a
majority of the Trustees of the Trust who are not interested persons of
the Trust, or of the Adviser, or of the Sub-Adviser. Notwithstanding the
foregoing, this Agreement may be terminated as to a Fund at any time,
without the payment of any penalty, on sixty days' written notice by the
Trust or Adviser, or on sixty days' written notice by the Sub-Adviser.
This Agreement will immediately terminate in the event of its assignment.
(As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" have the same meaning
of such terms as in the 1940 Act.) Sections 10 and 11 herein shall survive
the termination of this Agreement.
13. REPRESENTATIONS AND AGREEMENTS OF THE ADVISER. Adviser acknowledges,
represents and warrants that:
PAGE 9 OF 15
(a) The Trust intends to be a "qualified eligible person" ("QEP") as
defined in Commodity Futures Trading Commission Rule 4.7 ("CFTC Rule
4.7") and the Adviser will promptly notify the Sub-Adviser once the
Trust meets the QEP definition. Following the Trust's qualification
as a QEP, the Trust consents to be treated as an "exempt account"
under CFTC Rule 4.7 and the Adviser will promptly notify the
Sub-Adviser if the Trust ceases to be a QEP. After qualifying as a
QEP, the assets of a Fund may be invested in futures contracts and
the Adviser consents to the Sub-Adviser's use of the alternate
disclosure and recordkeeping standards under Commodity Futures
Trading Commission Rule 4.7 with respect to such futures trading;
(b) It is excluded from the definition of a commodity pool operator
under CFTC Rule 4.5, and in connection with such exemption has filed
a notice of eligibility and will provide the Sub-Adviser with a copy
of such notice of eligibility before the execution of this
Agreement;
(c) The Adviser hereby acknowledges that not less than forty-eight (48)
hours before the date it has executed this Agreement, it received
from the Sub-Adviser a copy of the Sub-Adviser's most recent Form
ADV, Parts 1 and 2 as filed with the Securities and Exchange
Commission;
(d) The Trust is a "qualified institutional buyer" ("QIB") as defined in
Rule 144A under the Securities Act of 1933, as amended, and the
Adviser will promptly notify the Sub-Adviser if the Trust ceases to
be a QIB;
(e) The assets in the Funds are free from all liens and charges and
undertakes that no liens or charges will arise from the acts or
omissions of the Adviser and the Trust which may prevent the
Sub-Adviser from giving a first priority lien or charge on the
assets solely in connection with the Sub-Adviser's authority to
direct the deposit of margin or collateral to the extent necessary
to meet the obligations of the Funds with respect to any investments
made pursuant to the Prospectus; and
(f) The Adviser acknowledges that the Sub-Adviser is not the compliance
agent for the Funds or for the Adviser, and does not have access to
all of the Funds' books and records necessary to perform certain
compliance testing. To the extent that the Sub-Adviser has agreed to
perform the services specified in Section 3 hereof in accordance
with applicable law (including Section 851 of the IRC, the Act and
the Advisers Act ("Applicable Law")) and in accordance with the
Trust Documents, policies and determinations of the Board of
Trustees of the Trust and the Adviser, and the Funds' Prospectus
(collectively the "Charter Requirements") the Sub-Adviser shall
perform such services based upon its books and records with respect
to the Funds, which comprise a portion of the Trust's books and
records, and upon written instructions received from the Funds, the
Adviser or the Trust's administrator, and shall not be held
responsible under this Agreement so long as it performs such
services in accordance with this Agreement, the Charter Requirements
and Applicable Law based upon such books and records and such
instructions provided by the Funds, the Adviser or the Trust's
administrator. The Sub-Adviser shall be afforded a reasonable amount
of time to implement any such instructions (for example, if
instructed not to trade on behalf of securities of certain specified
Adviser or the Trust's affiliates, the Sub-Adviser shall be notified
and afforded five business days after receipt of such instruction to
implement this trading restriction).
PAGE 10 OF 15
14. OBLIGATIONS OF ADVISER. The Adviser agrees to provide or complete, as the
case may be, the following prior to the commencement of the Sub-Adviser's
investment advisory services as specified under this Agreement:
(a) A list of first tier affiliates and second tier affiliates (i.e.,
affiliates of affiliates) of the Fund;
(b) A list of restricted securities for each Fund (including CUSIP,
Sedol or other appropriate security identification);
(c) A copy of the current compliance procedures for each Fund; and
(d) A list of legal and compliance contacts.
The Adviser also agrees to promptly update the above referenced items in
order to ensure their accuracy, completeness and/or effectiveness.
15. CONFIDENTIAL TREATMENT. It is understood and agreed that information,
including, but not limited to, securities selection or recommendations
supplied by, or produced by, Sub-Adviser in connection with the
performance of its obligations hereunder, the identity of the portfolio
holdings of the Fund, systems and processes utilized by the Adviser and
the Trust, and nonpublic information related to the Trust and its
shareholders (collectively, "Confidential Information") are to be regarded
as confidential and for use only as required for the provision of
investment management and related services to the Fund. Each party hereto
agrees that:
(i) they each are subject to a duty of confidentiality with respect
to the Confidential Information;
(ii) they each will use the same degree of care to protect the
confidentiality of all Confidential Information they receive as they
use to protect their own confidential and proprietary information
which they do not wish to have published or disseminated, provided,
however, in no event will any party use less than a reasonable
degree of care to protect any Confidential Information received;
(iii) except for the purposes of the Fund's investments, they will
not trade on Confidential Information received and recognize that
adverse consequences may result if the Confidential Information is
used for other trading practices;
(iv) they will not disclose or cause to be disclosed any
Confidential Information to any person and unless otherwise provided
by this Section or otherwise required to provide services to the
Fund; and
(v) except as required by law (including, but not limited to
semi-annual, annual or other filings made under the 0000 Xxx) or as
agreed to by the Adviser and Sub-Adviser, the Adviser and the Trust
will not disclose the identity of the portfolio holdings of the Fund
until it is either filed with the Securities and Exchange Commission
or mailed out to shareholders, which filing or mailing shall not be
made sooner than 30 days after quarter end in any manner whatsoever
except as expressly authorized in this Agreement, except that the
top 10 holdings may be disclosed 15 days after month end. In
addition, at the end of each quarter, the Adviser may disclose to
certain third party data or service providers to the Fund, who have
entered into a confidentiality agreement with the Adviser, a list of
securities purchased or sold by the Fund during the quarter. Also,
the Sub-
PAGE 11 OF 15
Adviser may report the identity of the portfolio holdings of the
Fund to certain entities that provide services to the Sub-Adviser,
provided that there is a confidentiality agreement between the
Sub-Adviser and any such entity.
Unless prohibited by law or regulator, each party agrees to immediately
notify the other party if they learn of any use of the Confidential
Information by the other party's employees, agents or clients for
purpose(s) other than as provided in this Section or as required for
investment advisory services or administrative services to the Fund, or
that would otherwise violate this Section. In the event that a party
receives a request, demand, order or requisition requiring the disclosure
of Confidential Information from any judicial, governmental or regulatory
body, they shall promptly (and, to the extent possible, prior to
disclosing any Confidential Information) notify the other party of such
request, demand, order or requisition, unless prohibited by law or
regulator from doing so. In the event that a party is unable to obtain a
protective order or other remedy to prevent the disclosure of any or all
of the Confidential Information, the other party agrees to furnish only
that portion of the Confidential Information which they are legally
required to provide. Each party acknowledges that damages alone would not
be an adequate remedy of any breach of the provisions in this Section and,
accordingly, without prejudice to any and all other rights or remedies,
each party acknowledges that the other party and its affiliates or any
other entity to which the Confidential Information pertains shall be
entitled to the remedies of injunction, specific performance and other
equitable relief for any threatened or actual breach of the provisions of
this Section.
16. ENTIRE AGREEMENT; AMENDMENT OF THIS AGREEMENT. This Agreement constitutes
the entire agreement between the parties with respect to the Funds. No
provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or
termination is sought.
17. NOTICE. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed (postage prepaid) to the other party at such address
as designated herein.
a) TO ADVISER:
Curian Capital LLC
0000 Xxxxxxxxxx Xxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
E-mail: xxxxxxx.xxxx@xxxxxx.xxx
-----------------------
b) TO SUB-ADVISER:
Franklin Advisers, Inc.
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
c) TO THE TRUST:
Curian Variable Series Trust
0000 Xxxxxxxxxx Xxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
E-mail: xxxxxxx.xxxx@xxxxxx.xxx
-----------------------
PAGE 12 OF 15
18. MISCELLANEOUS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect. If any provision
of this Agreement is held or made invalid by a court decision, statute,
rule or otherwise, the remainder of this Agreement will be binding upon
and shall inure to the benefit of the parties hereto.
Sub-Adviser represents, and the Trust and the Adviser acknowledge and
agree, that Sub-Adviser is the sole owner of the names "Franklin,"
"Xxxxxxxxx," and "Franklin Xxxxxxxxx" and certain logos associated with
such names (the "Sub-Adviser Marks"). The Trust and Adviser agree that the
Sub-Adviser Marks are the valuable property of the Sub-Adviser and
Sub-Adviser's affiliates. The Trust and Adviser shall have the right to
use the Sub-Adviser Marks to identify the Sub-Adviser as necessary to
carry out the services contemplated in this Agreement but only with the
prior written approval of the Sub-Adviser, which approval shall not be
unreasonably withheld or delayed so long as this Agreement is in effect.
Sub-Adviser agrees that the Trust and the Adviser have the right to use
"Franklin Xxxxxxxxx" in the names of the Funds as set forth in Schedule A
to this Agreement.
The Sub-Adviser acknowledges and agrees that the names "Curian Variable
Series Trust" and Curian Capital, LLC, and abbreviations or logos
associated with those names, are the valuable property of the Adviser and
its affiliates; that the Trust, has the right to use such names,
abbreviations and logos; and that the Sub-Adviser shall use the names
"Curian Variable Series Trust", Curian Capital, LLC, and associated
abbreviations and logos, only in connection with the Sub-Adviser's
performance of its duties hereunder. Further, in any communication with
the public and in any marketing communications of any sort, the
Sub-Adviser agrees to obtain prior written approval from the Adviser
before using or referring to "Curian Variable Series Trust" and the
Adviser, or the Funds or any abbreviations or logos associated with those
names; provided that nothing herein shall be deemed to prohibit the
Sub-Adviser from referring to the performance of the Funds in the
Sub-Adviser's marketing material as long as such marketing material does
not constitute "sales literature" or "advertising" for the Funds, as those
terms are used in the rules, regulations and guidelines of the SEC and
FINRA.
The name "Curian Variable Series Trust" and "Trustees of Curian Variable
Series Trust" refer respectively to the Trust created by, and the
Trustees, as trustees but not individually or personally, acting from time
to time under, the Declaration of Trust, to which reference is hereby made
and a copy of which is on file at the office of the Secretary of State of
the Commonwealth of Massachusetts and elsewhere as required by law, and to
any and all amendments thereto so filed or hereafter filed. The
obligations of the "Curian Variable Series Trust" entered in the name or
on behalf thereof by any of the Trustees, representatives or agents are
made not individually but only in such capacities and are not binding upon
any of the Trustees, Shareholders or representatives or agents of Trust
personally, but bind only the assets of Trust, and persons dealing with
the Funds must look solely to the assets of Trust belonging to such Fund
for the enforcement of any claims against the Trust.
19. REPRESENTATIONS AND WARRANTIES OF THE SUB-ADVISER. The Sub-Adviser hereby
represents that this Agreement does not violate any existing agreements
between the Sub-Adviser and any other party, it has all requisite
authority to enter into, execute, deliver
PAGE 13 OF 15
and perform its obligations under this Agreement and the performance of
the Sub-Adviser's obligations under this Agreement does not conflict with
any law, regulation or order to which the Sub-Adviser is subject.
The Sub-Adviser further represents and warrants that it is a duly
registered investment adviser under the Investment Advisers Act of 1940,
as amended and has provided to the Adviser a copy of its most recent Form
ADV, Part 1 as filed with the Securities and Exchange Commission, as well
as a copy of its current Part II of Form ADV.
The Sub-Adviser further represents that it has reviewed the initial, pre-
and/or post effective amendment(s) to the Registration Statement for the
Funds filed with the Securities and Exchange Commission that contains
disclosure about the Sub-Adviser, and represents and warrants that, with
respect to the disclosure about the Sub-Adviser or information relating to
the Sub-Adviser, such Registration Statement contains, as of the date
hereof, no untrue statement of any material fact and does not omit any
statement of a material fact necessary to make the statements contained
therein not misleading.
20. PERFORMANCE DIFFERENCES. Adviser understands, consents and agrees that
performance of any Fund will not be the same as, and may differ
significantly from, the performance of any mutual fund for which the
Sub-Adviser or its affiliates serves as investment adviser ("Franklin
Xxxxxxxxx Fund"), including any Franklin Xxxxxxxxx Fund that may have
investment goals and strategies that are substantially similar to that of
a Fund, based on, but not limited to, the following factors: (i)
differences in: inception dates, cash flows, asset allocation, security
selection, liquidity, income distribution or income retention, fees, fair
value pricing procedures, and diversification methodology; (ii) use of
different foreign exchange rates and different pricing vendors; (iii)
ability to access certain markets due to country registration
requirements; (iv) legal restrictions or custodial issues, (v) legacy
holdings in the fund; (vi) availability of applicable trading agreements
such as ISDAs, futures agreements or other trading documentation, (vii)
restrictions placed on the account (including country, industry or
environmental and social governance restrictions); and (viii) other
operational issues that impact the ability of a fund to trade in certain
instruments or markets. Adviser further understands, consents and agrees
that any similarity of investment goals and strategies between a Fund and
any Franklin Xxxxxxxxx Fund is subject to, among other things, the
discretion and decisions of the Board of Trustees of the respective funds.
21. PERFORMANCE INFORMATION. Notwithstanding any other provision of this
Agreement, the Sub-Adviser may include the performance of the Funds
attributable to the time period Sub-Adviser provided services under this
Agreement as part of any composite performance information of the
Sub-Adviser. The Sub-Adviser acknowledges that the Adviser is not
responsible for ensuring or verifying the accuracy of any performance of
the Funds used by the Sub-Adviser in developing any composite performance
information of the Sub-Adviser.
22. APPLICABLE LAW. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of Michigan.
23. NO CLAIMS FILING. Sub-Adviser shall not be expected or required to take
any action with respect to legal proceedings (including, without
limitation, class action lawsuits,
PAGE 14 OF 15
governmental or regulatory victim funds, and bankruptcy proceedings)
involving securities presently or formerly held in a Fund, or the issuers
of such securities or related parties.
24. COUNTERPART SIGNATURES. This Agreement may be executed in several
counterparts, including via facsimile, each of which shall be deemed an
original for all purposes, including judicial proof of the terms hereof,
and all of which together shall constitute and be deemed one and the same
agreement.
IN WITNESS WHEREOF, the Adviser, the Sub-Adviser and Trust have caused this
Agreement to be executed as of this 19th day of December, 2011.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION
("COMMISSION") IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS
ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE
COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE
MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF
COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES
TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS
ACCOUNT DOCUMENT.
CURIAN CAPITAL, LLC FRANKLIN ADVISERS, INC.
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------- -----------------------------------
Name: Xxxxxxx X. Xxxx Name: Xxxxxx X. Xxxxxxxx
-------------------------------- --------------------------------
Title: President and Chief Executive Title: President
Officer --------------------------------
-------------------------------
CURIAN VARIABLE SERIES TRUST
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxx
--------------------------------
Title: Assistant Secretary
-------------------------------
PAGE 15 OF 15
LIST OF SCHEDULES
-----------------
Schedule A Funds
Schedule B Compensation
Schedule C Designated Representatives
SCHEDULE A
DATED DECEMBER 19, 2011
(Funds)
--------------------------------------------------------------------------------
Curian/Franklin Xxxxxxxxx Natural Resources Fund
--------------------------------------------------------------------------------
A-1
SCHEDULE B
DATED DECEMBER 19, 2011
(Compensation)
--------------------------------------------------------------------------------
CURIAN/FRANKLIN XXXXXXXXX NATURAL RESOURCES FUND
--------------------------------------------------------------------------------
AVERAGE DAILY NET ASSETS ANNUAL RATE*
--------------------------------------------------------------------------------
$0 to $100 Million 0.46%
--------------------------------------------------------------------------------
$100 Million to $250 Million 0.43%
--------------------------------------------------------------------------------
$250 Million to $500 Million 0.40%
--------------------------------------------------------------------------------
$500 Million to $750 Million 0.39%
--------------------------------------------------------------------------------
Amounts over $750 Million 0.38%
--------------------------------------------------------------------------------
* For purposes of determining the monthly sub-advisory fee rate pursuant to this
Schedule B, the assets of the Curian/Franklin Xxxxxxxxx Natural Resources Fund
shall be aggregated with the assets of the JNL/Franklin Xxxxxxxxx Income Fund.
Such aggregated assets will be applied to the above schedule and the resulting
effective rate shall be applied to the actual assets of the Curian/Franklin
Xxxxxxxxx Natural Resources Fund to determine the monthly sub-advisory fee. Such
aggregation of assets shall NOT be applied to the actual assets of the
JNL/Franklin Xxxxxxxxx Income Fund to determine the monthly sub-advisory fee
rate for that fund, which is governed by the Investment Sub-Advisory Agreement
for that Fund.
B-1
SCHEDULE C
DATED DECEMBER 19, 2011
(Designated Representatives of the Trust)
Name/Title Signature
* *
-------------------------------------- --------------------------------------
*See the attached List of Authorized Persons
C-1
