INVESTMENT SUB-ADVISORY AGREEMENT
Exhibit (d)(17)
THIS INVESTMENT SUB-ADVISORY AGREEMENT (“Agreement”), made this 1st day of May,
2009 by and between Xxxxxx Advisors, LLC, a Delaware limited liability company (the “Adviser”), and
BlackRock Investment Management, LLC, a Delaware limited liability company (the “Sub-Adviser”).
Adviser and Sub-Adviser agree as follows:
1. Adviser hereby engages the services of Sub-Adviser in connection with Adviser’s management of
the Xxxxxx/BlackRock Fixed-Income Portfolio II (the “Portfolio”) of MLIG Variable Insurance Trust
(the “Trust”). Pursuant to this Agreement and subject to the oversight and supervision by Adviser
and the officers and the board of trustees of the Trust, Sub-Adviser shall manage the investment
and reinvestment of that portion of the assets of the Portfolio that the Adviser shall, from time
to time, direct.
2. Sub-Adviser hereby accepts appointment by Adviser in the foregoing capacity and agrees, at its
own expense, to render the services set forth herein and to provide the office space, furnishings,
equipment and personnel required by it to perform such services on the terms and for the
compensation provided in this Agreement.
3. In particular, Sub-Adviser shall furnish continuously an investment program for the Portfolio
and shall determine from time to time in its discretion the securities and other investments to be
purchased or sold or exchanged and what portions of the Portfolio shall be held in various
securities, cash or other investments. In this connection, Sub-Adviser shall provide Adviser and
the officers and trustees of the Trust with such reports and documentation as the latter shall
reasonably request regarding Sub-Adviser’s management of the Portfolio assets.
4. Sub-Adviser shall carry out its responsibilities under this Agreement in compliance with: (a)
the Portfolio’s investment objective, policies and restrictions as set forth in the Trust’s current
registration statement, (b) such policies or directives as the Trust’s trustees may from time to
time establish or issue and communicate to the Sub-Adviser in writing, and (c) applicable law and
related regulations. Adviser shall promptly notify Sub-Adviser in writing of changes to (a) or (b)
above and shall notify Sub-Adviser in writing of changes to (c) above promptly after it becomes
aware of such changes.
In particular, the Sub-Adviser shall be responsible to ensure that the Portfolio:
(a) complies with the diversification requirements of Section 817(h) of the Internal Revenue Code
of 1986, as amended, (the “Code”) and regulations issued thereunder as these apply to separate
accounts through which variable life insurance contracts and variable annuity contracts are issued,
and (b) continuously qualifies as a regulated investment company under Sub-Chapter M of the Code.
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Sub-Advisor
shall not consult with other sub-advisers of the Portfolio, if any, or with sub-advisers
of other investment portfolios of the Trust, concerning transactions in portfolio securities or
other portfolio investments of the Portfolio, except for the purpose
of complying with the conditions of Rule 12d3-1(a) and (b) under the
Investment Company Act of 1940, as amended, (the “1940 Act”) .
5. Sub-Adviser shall take all actions which it considers necessary to implement the investment
policies of the Portfolio as these relate to the Portfolio, and in particular, to place all orders
for the purchase or sale of securities or other investments for the Portfolio with brokers or
dealers selected by it, and to that end, Sub-Adviser is authorized as the agent of the Trust to
give instructions to the Trust’s custodian as to deliveries of securities or other investments and
payments of cash for the account of the Portfolio. In connection with the selection of brokers or
dealers and the placing of purchase and sale orders with respect to investments of the Portfolio,
Sub-Adviser is directed at all times to seek to obtain best execution and price within the policy
guidelines determined by the Trust’s board of trustees and set forth in the Trust’s current
registration statement.
To the extent permitted by the policy guidelines set forth in the Trust’s current registration
statement, Sub-Adviser is authorized to consider, in the selection of brokers and dealers to
execute portfolio transactions, not only the available prices and rates of brokerage commissions,
but also other relevant factors which may include, without limitation: (a) the execution
capabilities of such brokers and dealers, (b) research, custody and other services provided by such
brokers and dealers which the Sub-Adviser believes will enhance its general portfolio management
capabilities, (c) the size of the transaction, (d) the difficulty of execution, (e) the operational
facilities of such brokers and dealers, (f) the risk to such a broker or dealer of positioning a
block of securities, and (g) the overall quality of brokerage and research services provided by
such brokers and dealers. In connection with the foregoing, Sub-Adviser is specifically authorized
to pay those brokers and dealers who provide brokerage and research services to it a higher
commission than that charged by other brokers and dealers if the Sub-Adviser determines in good
faith that the amount of such commission is reasonable in relation to the value of such services in
terms of either the particular transaction or in terms of Sub-Adviser’s overall responsibilities
with respect to the Portfolio and to any other client accounts or portfolios which Sub-Adviser
advises. The execution of such transactions shall not be considered to represent an unlawful
breach of any duty created by this Agreement or otherwise.
In connection with the selection of brokers or dealers and the placing of purchase and sale
orders with respect to investments of the Portfolio, when instructed to do so by either the Trust
or the Adviser, Sub-Adviser agrees and is authorized to place orders with one or more brokers or
dealers identified by the Trust or Adviser (including brokers or dealers who are affiliated persons
of the Trust or Adviser). The execution of such transactions shall not be considered to represent
an unlawful breach of any duty created by this Agreement or otherwise.
Sub-Adviser also is authorized to aggregate purchase and sale orders for securities held (or
to be held) in the Portfolio with similar orders being made on the same day for other client
accounts or portfolios managed by Sub-Adviser. When an order is so aggregated: (a) the actual
prices applicable to the aggregated transaction will be averaged and the Portfolio and each other
account or portfolio participating in the aggregated transaction shall be treated as having
purchased or sold its portion of the securities at such average price, and (b) all transaction
costs incurred in effecting the aggregated transaction shall be shared on a pro-rata basis among
the accounts or portfolios (including the Portfolio) participating in the transaction. Adviser
recognizes that in some cases this procedure may adversely affect the size of the position
obtainable for the Portfolio.
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When recommending or effecting a transaction in a particular security or investment for more
than one client account or portfolio (including the Portfolio), Sub-Adviser may allocate such
recommendations or transactions among all accounts and portfolios for whom the recommendation is
made or transaction is effected on a basis that Sub-Adviser considers equitable.
6. Sub-Adviser’s services under this Agreement are not exclusive. Sub-Adviser may provide the same
or similar services to other clients. Adviser acknowledges that, except when transactions for
multiple clients are aggregated, transactions in a specific security or other investment may not be
recommended or executed at the same time or price for all client accounts or portfolios (including
the Portfolio) for which that security or investment is recommended or executed. This Agreement
does not require Sub-Adviser to give priority to the Portfolio over other client accounts or
portfolios.
7. Sub-Adviser shall for all purposes herein be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no authority to act for or represent the
Adviser, the Trust or the Portfolio or otherwise be deemed agents of the Adviser, the Trust or the
Portfolio.
8. Sub-Adviser or an affiliated person of Sub-Adviser may act as broker for the Portfolio in
connection with the purchase or sale of securities or other investments for the Portfolio, subject
to: (a) the requirement that Sub-Adviser seek to obtain best execution and price within the policy
guidelines determined by the Trust’s board of trustees and set forth in the Trust’s current
registration statement; (b) the provisions of the Investment Advisers Act of 1940, as amended (the
“Advisers Act”); (c) the provisions of the Securities Exchange Act of 1934, as amended; and (d)
other applicable provisions of law. Such brokerage services are not within the scope of the duties
of Sub-Adviser under this Agreement. Subject to the requirements of applicable law and any
procedures adopted by Trust’s board of trustees, Sub-Adviser or its affiliated persons may receive
brokerage commissions, fees or other remuneration from the Portfolio or the Trust for such services
in addition to Sub-Adviser’s fees for services under this Agreement.
9. The Adviser delegates the Adviser’s discretionary authority to exercise voting rights with
respect to the securities and other investments in the Portfolio to the Sub-Adviser. The
Sub-Adviser shall exercise these voting rights unless and until the Adviser revokes this
delegation. The Adviser may revoke this delegation at any time without cause. The Sub-Adviser
shall maintain and preserve a record, in an easily-accessible place for a period of not less than
three years, of the Sub-Adviser’s voting procedures, and of the Sub-Adviser’s actual votes, and
shall supply this record to the Adviser, or any authorized representative of the Adviser, upon the
written request of the Adviser or the Adviser’s authorized representative, as appropriate.
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The Sub-Adviser shall have no power, authority, responsibility, or obligation hereunder to
take any action with regard to any claim or potential claim in any bankruptcy proceedings, class
action securities, litigation, or other litigation or proceeding affecting securities held at any
time in the Fund, including, without limitation, to file proofs of claim or other documents related
to such proceedings (the “Litigation”), or to investigate, initiate, supervise, or monitor the
Litigation involving Fund assets, and the Adviser acknowledges and agrees that no such power,
authority, responsibility or obligation is delegated hereunder. Nevertheless, the Sub-Adviser
agrees that it shall provide the Adviser with any and all documentation or information relating to
the Litigation as may reasonably be requested by the Adviser.
10. Nothing in this Agreement shall require Sub-Adviser to take or receive physical possession of
cash, securities or other investments of the Portfolio.
11. Sub-Adviser is registered with the U.S. Securities and Exchange Commission under the Advisers
Act. Sub-Adviser shall remain so registered throughout the term of this Agreement and shall notify
Adviser immediately if Sub-Adviser ceases to be so registered as an investment adviser.
12. Sub-Adviser: (a) is duly organized and validly existing under the laws of the State of
Delaware with the power to own and possess its assets and carry on its business as it is now being
conducted, (b) has the authority to enter into and perform the services contemplated by this
Agreement, (c) is not prohibited by the 1940
Act or the Advisers Act from performing the services contemplated by this Agreement, (d) has met,
and will continue to seek to meet for the duration of this Agreement, any other applicable federal
or state requirements, or the applicable requirements of any regulatory or industry self-regulatory
agency, necessary to be met in order to perform the services described in this Agreement, and (e)
will promptly notify Adviser of the occurrence of any event that would disqualify it from serving
as an investment adviser to an investment company pursuant to Section 9(a) of the 1940 Act.
13. Adviser: (a) is duly organized and validly existing under the laws of the State of Delaware
with the power to own and possess its assets and carry on its business as it is now being
conducted, (b) has the authority to enter into and perform the services contemplated by this
Agreement, (c) is not prohibited by the 1940 Act or the Advisers Act from performing the services
contemplated by this Agreement, (d) has met, and will continue to seek to meet for the duration of
this Agreement, any other applicable federal or state requirements, or the applicable requirements
of any regulatory or industry self-regulatory agency, necessary to be met in order to perform the
services described in this Agreement, and (e) will promptly notify Sub-Adviser of the occurrence of
any event that would disqualify it from serving as an investment adviser to an investment company
pursuant to Section 9(a) of the 1940 Act. Adviser represents that the Trust is (and during the
term of this Agreement, will remain) registered as an open-end management investment company under
the 1940 Act and that the shares of the Trust representing an interest in the Portfolio are (and
during the term of this Agreement will remain) registered under the Securities Act of 1933 and
under any applicable state securities laws.
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14. Sub-Adviser has adopted a written code of ethics complying with the requirements of Rule 17j-1
under the 1940 Act and will provide Adviser and the Trust with a copy of that code, together with
evidence of its adoption. Within 20 days of the end of each calendar quarter during which this
Agreement remains in effect, the president or a vice president or a Managing Director of
Sub-Adviser shall certify to Adviser or the Trust that Sub-Adviser has complied with the
requirements of Rule 17j-1 during the previous quarter and that there have been no violations of
Sub-Adviser’s code of ethics or, if such a violation has occurred, that appropriate action has been
taken in response to such violation. Upon written request of Adviser or the Trust, Sub-Adviser
shall permit representatives of Adviser or the Trust to examine the reports (or summaries of the
reports) required to be made to Sub-Adviser by Rule 17j-1(c)(1) and other records evidencing
enforcement of the code of ethics.
15. For the services rendered, the facilities furnished and the expenses assumed by Sub-Adviser,
Adviser shall pay Sub-Adviser at the end of each month a fee based on the average daily net assets
of the Portfolio at the following annual rate:
0.20% of average daily net assets.
Sub-Adviser’s fee shall be accrued daily at 1/365th of the applicable annual rate set forth above.
For the purpose of accruing compensation, the net assets of the Portfolio shall be determined in
the manner and on the dates set forth in the current prospectus of the Trust, and, on days on which
the net assets are not so determined, the net asset value computation to be used shall be as
determined on the immediately preceding day on which the net assets were determined. In the event
of termination of this Agreement, all compensation due through the date of termination will be
calculated on a pro-rated basis through the date of termination and paid within thirty business
days of the date of termination.
During any period when the determination of net asset value is suspended, the net asset value
of the Portfolio as of the last business day prior to such suspension shall for this purpose be
deemed to be the net asset value at the close of each succeeding business day until it is again
determined.
16. Sub-Adviser hereby undertakes and agrees to maintain, in the form and for the period required
by Rule 31a-2 under the 1940 Act, all records relating to the Portfolio’s investments that are
required to be maintained by the Trust pursuant to the requirements of paragraphs (b)(5), (b)(6),
(b)(7), (b)(9), (b)(10) and (f) of Rule 31a-1 under the 1940 Act.
Sub-Adviser agrees that all books and records which it maintains for the Portfolio or the
Trust are the property of the Trust and further agrees to surrender promptly to the Adviser or the
Trust any such books, records or information upon the Adviser’s or the Trust’s request (provided,
however, that Sub-Adviser may retain copies of such records). All such books and records shall be
made available, within five business days of a written request, to the Trust’s accountants or
auditors during regular business hours at Sub-Adviser’s offices. Adviser and the Trust or either
of their authorized representative shall have the right to copy any records in the possession of
Sub-Adviser which pertain to the Portfolio or the Trust. Such books, records, information or
reports shall be made available to properly authorized government representatives consistent with
state and federal law and/or regulations.
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In the event of the termination of this Agreement, all
such books, records or other information shall be returned to Adviser or the Trust.
The Sub-Adviser agrees that the policies and procedures established by the Sub-Adviser for managing
the Portfolio, including, but not limited to, all policies and procedures designed to ensure
compliance with federal and state regulations governing the sub-adviser/client relationship and
management and operation of the Portfolio, shall be made available for inspection by the Adviser
and the Trust or either of their authorized representatives not less frequently than annually.
17. Sub-Adviser agrees that it will not disclose or use any records or confidential information
obtained pursuant to this Agreement in any manner whatsoever except as authorized in this Agreement
or specifically by Adviser or the Trust, or if such disclosure is required by federal or state
regulatory authorities.
Sub-Adviser may disclose the investment performance of the Portfolio, provided that such
disclosure does not reveal the identity of the Adviser, the Portfolio or the Trust. Sub-Adviser
may, however, disclose that Adviser, the Trust and the Portfolio are its clients, provided that
such disclosure does not reveal the investment performance or the composition of the Portfolio.
18. In the absence of willful misfeasance, bad faith or gross negligence on the part of Sub-Adviser
or its officers, trustees or employees, or reckless disregard by Sub-Adviser of its duties under
this Agreement (together, “disabling conduct”), Sub-Adviser shall not be liable to Adviser, the
Portfolio, the Trust or to any shareholder of the Portfolio for any act or omission in the course
of, or connected with, rendering services hereunder including without limitation, any error of
judgment or mistake of law or for any losses that may be sustained in the purchase, holding or sale
of any security, except to the extent otherwise provided in Section 36(b) of the 1940 Act
concerning loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services. Notwithstanding the foregoing, breach by the Sub-Adviser of the second
paragraph of section 4 hereof is deemed to be disabling conduct.
19. Sub-Adviser agrees to indemnify and defend Adviser, its officers, trustees, partners, employees
and any person who controls Adviser for any loss or expense (including attorneys’ fees) arising out
of any claim, demand, action, suit or proceeding related to any actual or alleged material
misstatement or omission in the Trust’s registration statement, any proxy statement, or
communication to current or prospective investors in the Portfolio relating to disclosure about
Sub-Adviser provided to Adviser by Sub-Adviser.
Sub-Adviser agrees to indemnify and defend Adviser, its officers, trustees, partners,
employees and any person who controls Adviser for any loss or expense (including attorneys’ fees)
arising out of any claim, demand, action, suit or proceeding related to the Sub-Adviser’s failure
to ensure that the Portfolio: (a) complies with the diversification requirements of Section 817(h)
of the Code and regulations issued thereunder as these apply to separate accounts through which
variable life insurance contracts and variable annuity contracts are issued, and (b) continuously
qualifies as a regulated investment company under Sub-Chapter M of the Code.
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20. Adviser agrees to indemnify and defend Sub-Adviser, its officers, trustees, partners, employees
and any person who controls Sub-Adviser for any loss or expense (including attorneys’ fees) arising
out of any claim, demand, action, suit or proceeding related to any actual or alleged material
misstatement or omission in the Trust’s registration statement, any proxy statement, or other
communication to current or prospective investors in the Portfolio (other than a misstatement or
omission relating to disclosure about Sub-Adviser approved by the Sub-Adviser or provided to
Adviser or the Trust by Sub-Adviser).
21. The Sub-Adviser agrees to permit the Adviser and the Trust to use its name, along side the
Adviser’s name, in the Portfolio’s name and in descriptions of the Portfolio, as these appear in
the Trust’s prospectus(es) and/or sales literature related to the Portfolio, provided, however,
that the Adviser and the Trust shall cease such use of the Sub-Adviser’s name in the event that
this Agreement is terminated.
22. This Agreement shall not become effective unless and until it is approved by the board of
trustees of the Trust, including a majority of trustees who are not parties to this Agreement or
interested persons of any such party to this Agreement, and, to the extent required by law, a
majority of the outstanding shares of the class of the Trust’s stock representing an interest in
the Portfolio. This Agreement shall come into full force and effect on the date which it is so
approved. This Agreement shall continue in effect for two years and shall thereafter continue in
effect from year to year so long as such continuance is specifically approved at least annually by
(a) the board of trustees of the Trust, or by the vote of a majority of the outstanding shares of
the class of stock representing an interest in the Portfolio, and (b) a majority of those trustees
who are not parties to this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
23. Notwithstanding any other provision of this Agreement, this Agreement may be terminated at any
time without the payment of any penalty, by the Trust’s board of trustees, or by vote of a majority
of the outstanding shares of the class of stock representing an interest in the Portfolio on sixty
days written notice to the Adviser and Sub-Adviser, or by the Adviser, or by the Sub-Adviser, on
sixty days written notice to the other. This Agreement shall automatically terminate in the event
of its assignment or in the event of the termination of the investment advisory agreement between
the Adviser and the Trust regarding the Adviser’s management of the Portfolio.
24. This Agreement may be amended by the parties only if such amendment is specifically approved by
(a) a majority of those trustees who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such approval, and, if
required by applicable law, (b) a majority of votes attributable to the outstanding Trust shares of
the class representing an interest in the Portfolio.
25. The terms “assignment”, “affiliated person” and “interested person”, when used in this
Agreement, shall have the respective meanings specified in the 1940 Act. The term “majority of the
outstanding shares of the class” means the lesser of (a) 67% or more of the votes attributable to
shares of such class present at a meeting if more than 50% of the votes attributable to such shares
are present or represented by proxy or (b) more than 50% of the votes attributable to shares of
such class.
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26. This Agreement shall be construed in accordance with laws of the State of Delaware, and
applicable provisions of the Advisers Act and 1940 Act.
27. If any provision of this Agreement shall be held or made invalid by a court decision, statute,
rule or otherwise, the remainder of this Agreement shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the
date first above written.
| Xxxxxx Advisors, LLC |
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| By: | Xxxx Xxxxxxx | |||
| Title: | President | |||
ATTEST:
| BlackRock Investment Management, LLC |
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| By: | ||||
| Title: | ||||
ATTEST:
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