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"), AQR Capital Management, LLC, a Delaware limited
liability company 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:
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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");
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")
and all amendments thereto;
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 or potential 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.
Adviser will furnish the Sub-Adviser with copies of all amendments or
supplements to the foregoing that relate specifically to the Sub-Adviser
or a Fund that it provides sub-advisory services to, within a reasonable
time before they become effective. Any amendments or supplements that
impact the management of the Funds or Sub-Adviser's duties and obligations
hereunder will not be deemed effective with respect to the Sub-Adviser
until the Sub-Adviser's approval thereof, which approval shall not be
unreasonably withheld, and the Sub-Adviser agrees to consider any such
amendment or supplement provided to it as soon as possible.
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 invest and reinvest and have full investment authority and
discretion for, all assets of the Funds
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and place all orders for the purchase and sale of securities and other
financial instruments, including foreign or domestic securities, and other
financial instruments or property (including, without limitation,
currencies, financial futures, options of any type, commodities and other
derivative instruments of any type), 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 (including the investment in derivative instruments)
pursuant to the Prospectus, which shall include any market and/or industry
standard documentation, as well as any representations on behalf of the
Funds and (b) acknowledge the Funds' receipt of brokers' risk disclosure
statements, electronic trading disclosure statements and similar
disclosures.
The Sub-Adviser further shall have the authority to instruct the custodian
with respect to the assets of the Funds in order to carry out its duties
under the terms of this Agreement, including, 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 as
set forth in the Prospectus, which may be amended from time to time, and
applicable tax and regulatory requirements, provided Sub-Adviser has been
provided with such amended Declaration of Trust and Bylaws and Prospectus
and has received prior notice of any changes made to the investment
objective, policies and restrictions of the Funds and has been given a
reasonable amount of time to implement any changes or amendments to such
documentation, investment objectives, policies or restrictions.
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, including, but not limited to,
compliance with the provisions of Subchapter M and Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "IRC"), and the regulations
thereunder, including, but not limited to, Treas. Reg. Section 1.817-5, as
applicable to the Funds (the "Diversification Requirements"). In
connection therewith, Sub-Adviser shall promptly consult with Adviser in
respect of any issues or questions relating to a Fund's compliance with
the Diversification Requirements and Sub-Adviser shall promptly make such
changes to a Fund's portfolio as requested by Adviser to ensure the Fund's
compliance with the Diversification Requirements. 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.
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Neither Adviser, nor Sub-Adviser will knowingly act in a manner that would
result in a Fund failing to comply with the Diversification Requirements,
and if the Fund's failure to diversify is inadvertent, Xxxxxxx National
Life Insurance Company and any of its affiliates investing in the Fund, as
owner of the assets in the Fund, shall in good faith and in conjunction
with Adviser and 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, and that in such an event Adviser shall work in conjunction with
Sub-Adviser in the preparation of any request for relief or closing
agreement. To the extent that Adviser or Sub-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 the Indemnifying Party.
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.
Notwithstanding any other provision of this Agreement, the Adviser agrees
that the Sub-Adviser shall not be liable for any failure to recommend the
purchase or sale of any security, or to take any other action on behalf of
any Fund or follow any instruction by the Adviser or the Board of Trustees
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 provided hereunder, 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, provided Sub-Adviser is given a reasonable amount of time
to compile and report on the requested information;
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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 reasonably
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,
provided Sub-Adviser is given a reasonable amount of time to compile
and report on the information reasonably requested by the Adviser;
g) will prepare and cause to be filed in a timely manner Form 13F and,
if required, Schedule 13G with respect to securities held for the
account of the Funds subject to Sub-Adviser's supervision;
h) will act upon reasonable instructions from Adviser not inconsistent
with the fiduciary duties and investment objectives hereunder and in
the Prospectus or any federal or state laws, rules or regulations;
i) as further described in section 15 of this Agreement, 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 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;
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 Trust, 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-
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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. 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
relating to each Fund's transactions upon the reasonable request of
the Adviser;
m) as soon as practicable, will notify the Adviser and the Trust 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 that would materially affect the
performance of its duties and obligations under this Agreement,
provided Sub-Adviser is legally able to disclose such information.
To the extent it is legally able to do so, the Sub-Adviser further
agrees to notify the Trust and the Adviser as soon as practicable 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) as soon as reasonably practicable, but in no event earlier than
Sub-Adviser is legally able to disclose such information, will
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 more than 35% of
the assets under management across Sub-Adviser in any calendar
quarter or the departure of more than two portfolio managers named
in the Prospectus that are responsible for the management of the
Funds' assets to the extent such professionals are not replaced
promptly with professionals of comparable experience and quality.
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. However, Sub-Adviser is authorized, as agent
of the Funds, to give instructions to the Funds' custodian with respect to
the assets of the Funds in order to carry out its duties
PAGE 6 OF 15
under the terms of this Agreement, including with respect to delivery of
securities and other investments and payments of cash for the account of
the Funds. Notwithstanding any provision to the contrary contained herein,
the Sub-Adviser shall not be liable for any act or omission of any
custodian of the Funds' assets, 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
in accordance with its duties and obligations under this Agreement. The
Sub-Adviser shall have no responsibility for the segregation requirement
of the 1940 Act or other applicable law other than to notify the Funds'
custodian of investments that require segregation and appropriate assets
for segregation.
5. BROKERAGE. (a) Sub-Adviser is responsible for and is hereby appointed as
the Funds' agent with the authority to act in regard to making 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 (i) place orders for the execution of such securities
transactions, including any derivative transactions, with or through such
brokers, dealers, foreign currency dealers, futures commission merchants
("FCM") or issuers as Sub-Adviser may reasonably select; (ii) negotiate,
execute and enter into brokerage contracts and other trading agreements,
including but not limited to, futures account agreements, ISDA Master
Agreements and other trading documents related thereto, on behalf of the
Funds, and (iii), 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. In order to meet
margin or collateral requirements for futures, forwards and other
derivative instruments, the Sub-Adviser may direct payments of cash, cash
equivalents, and securities and other property into segregated accounts or
FCM accounts established hereunder as the Sub-Adviser deems desirable or
appropriate, provided that Sub-Adviser's actions are in accordance with
the terms of this Agreement, the 1940 Act and the rules and regulations
thereunder. 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.
(b) 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 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
PAGE 7 OF 15
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 other
than the cost (including brokerage commissions, transactional fees and
taxes, if any) incurred in connection with purchases and sales of each
Fund's portfolio securities. 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. Such fee
shall be paid as soon as practicable, but in no event later than 30
calendar days, after each month-end. If the Sub-Adviser shall serve for
less than the whole of any month, the foregoing compensation shall be pro
rated.
PAGE 8 OF 15
9. SERVICES TO OTHERS. Adviser understands, and has advised the Board of
Trustees, that Sub-Adviser, its affiliates, principals, members,
directors, officers and employees now, or may in the future, render the
same, similar or dissimilar services, including investment advisory and
management services, to others, including investment companies, funds,
firms, individuals, associations or accounts. Adviser has no objection to
Sub-Adviser acting in such capacities and Sub-Adviser, its affiliates,
principals, members, directors, officers and employees shall not be
limited or restricted from providing such services, 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
under this Agreement 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
PAGE 9 OF 15
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
written instruction or certified copy of any resolution of the
Board; 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.
(d) Without limiting the provisions of Section 11 below, 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.
(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 agrees 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 by a court of competent jurisdiction to constitute
willful misfeasance or gross negligence on the part of the indemnifying
party with respect to its duties and obligations hereunder.
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
PAGE 10 OF 15
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:
(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")
PAGE 11 OF 15
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 or
information received from the Funds, the Adviser or the Trust's
administrator or custodian, and (without limiting the provisions of
Section 10 hereto) shall not be held responsible under this
Agreement so long as it performs such services in accordance with
the terms of this Agreement based upon such books and records and
such reasonable instructions or information provided by the Funds,
the Adviser or the Trust's administrator or custodian. The
Sub-Adviser shall be afforded a reasonable amount of time to
implement any such instructions or changes or amendments to the
Charter Requirements (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).
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. All information and advice furnished by one party
to the other party (including their respective agents, employees and
representatives) hereunder shall be treated as proprietary and
confidential and shall not be disclosed to third parties (other than the
receiving party's agents, representatives or service providers
(collectively, "Representatives") that need to know such information in
connection with the party's performance of its duties hereunder), except
as may be necessary to comply with applicable laws, rules and regulations,
subpoenas or court orders. It is understood that any information or
recommendation supplied by, or produced by, Sub-Adviser in connection with
the performance of its obligations hereunder is to be regarded as
proprietary and confidential and for use only by the Adviser and the
Trust, on behalf of the Fund, for the purpose in which its disclosure was
intended. Without limiting the foregoing, the Adviser and the Trust will
only disclose portfolio information in accordance with the Trust's
portfolio information policy as adopted by the Board of Trustees. If
disclosing information to Representatives in accordance with this Section
15, each party agrees to inform such Representatives of the confidential
nature of such information and the disclosing party shall be responsible
for any damages or losses arising from or in connection with the
unauthorized disclosure of confidential information by its
Representatives.
PAGE 12 OF 15
16. USE OF NAME: If the Sub-Adviser shall cease to furnish services to any
Fund under this Agreement or similar contractual arrangement, for any
reason whatsoever, such Fund or the Adviser, at its expense:
(a) as promptly as practicable, shall take all necessary action to cause
the Prospectus, Statement of Additional Information, Declaration of Trust,
Bylaws and any other relevant documentation to be amended to accomplish a
change of name to eliminate any reference to "AQR Capital Management, LLC"
or "AQR"; and
(b) within 60 days after the termination of this Agreement or such similar
contractual arrangement, shall cease to use in any other manner,
including, but not limited to, use in any sales literature or promotional
material, the name "AQR Capital Management, LLC" or any name, xxxx or logo
type derived from it or similar to it or indicating that the Fund is
managed by or otherwise associated with the Sub-Adviser or misleadingly
implying a continuing relationship between the Fund and the Sub-Adviser or
any of its affiliates, unless such use is with respect to reporting
historical performance or related information of the Fund during a period
when such use of name was authorized or as agreed upon by both parties.
17. 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.
18. NOTICE. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed (postage prepaid) or sent via electronic mail or
facsimile 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:
AQR Capital Management, Inc.
Two Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx, 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 13 OF 15
19. 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 "AQR Capital
Management, LLC" and "AQR" and certain logos associated with such names
(the "AQR Marks"). The Trust and Adviser agree that the AQR 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 AQR Marks 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
and such requested use is in connection with the services provided by
Sub-Adviser under the terms of this Agreement. Sub-Adviser agrees that the
Trust and the Adviser have the right to use "AQR" 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.
20. 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 14 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, Parts 1 and 2 as filed with the Securities and Exchange Commission.
The Sub-Adviser further represents that it has reviewed the initial filing
of the Registration Statement for the Funds provided by the Adviser to the
Sub-Adviser for review prior to its filing 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 initial
Registration Statement provided by the Adviser to the Sub-Adviser for
review 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.
21. APPLICABLE LAW. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of Michigan.
22. 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 AQR CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------- ------------------------------
Name: Xxxxxxx X. Xxxx Name: Xxxxxxx X. Xxxxxx
------------------------------------ ----------------------------
Title: President and Chief Executive Title: Principal & Chief Legal
Officer 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/AQR Risk Parity Fund
--------------------------------------------------------------------------------
A-1
SCHEDULE B
DATED DECEMBER 19, 2011
(Compensation)
--------------------------------------------------------------------------------
CURIAN/AQR RISK PARITY FUND
--------------------------------------------------------------------------------
AVERAGE DAILY NET ASSETS ANNUAL RATE
--------------------------------------------------------------------------------
$0 to $850 Million 0.49%
--------------------------------------------------------------------------------
$850 Million to $1 Billion 0.45%
--------------------------------------------------------------------------------
Over $1 Billion 0.40%
--------------------------------------------------------------------------------
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
