SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT ("Agreement") is made this 20
day of May, 2016, by and between EnTrustPermal Management LLC
(the "Manager"), the investment manager to Permal Alternative
Select VIT Portfolio ("Fund"), a series of the Xxxx Xxxxx
Partners Variable Equity Trust (the "Trust"), a Maryland
statutory trust registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940
Act"), and First Quadrant, L.P., a Delaware limited partnership
(the "Subadviser").
WHEREAS, the Manager has been retained by the Trust to
provide trading, investment advisory, management, and
administrative services to the Trust with respect to the Fund,
whether directly or through the services of one or more
subadvisers or commodity trading advisors; and
WHEREAS, the Manager wishes to engage the Subadviser to
provide certain investment advisory services to the Trust with
respect to such portion of the assets of the Fund as shall be
allocated to the Subadviser from time to time (the "Allocated
Portion") and the Subadviser is willing to furnish such services
on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties
hereto as follows:
1. In accordance with and subject to the Management
Agreement between the Trust and the Manager with respect to the
Fund (the "Management Agreement"), the Manager hereby appoints
the Subadviser to act as Subadviser with respect to the
Allocated Portion of the Fund for the period and on the terms
set forth in this Agreement. The Subadviser accepts such
appointment and agrees to render the services herein set forth,
for the compensation herein provided.
2. The Manager shall cause the Subadviser to be kept
fully informed at all times with regard to the securities owned
by the Fund in respect of the Allocated Portion, its funds
available, or to become available, for investment, and generally
as to the condition of the affairs of the Fund in respect of the
Allocated Portion. The Manager shall furnish the Subadviser with
such other documents and information with regard to the Fund's
affairs as the Subadviser may from time to time reasonably
request.
3. The Manager shall have the right at any time to
reallocate any or all of the Fund assets away from the
Subadviser pursuant to this Agreement if the Manager deems such
reallocation appropriate.
4. Duties, Responsibilities and Authorizations of the
Subadviser. (a) Subject to the supervision of the Trust's Board
of Trustees (the "Board") and the Manager, the Subadviser shall
regularly provide the Fund with respect to the Allocated Portion
with investment research, advice, management and supervision and
shall furnish a continuous investment program for the Allocated
Portion consistent with the Fund's investment objectives,
policies and restrictions, as stated in the Fund's current
Prospectus and Statement of Additional Information (the "SAI").
The Subadviser shall, with respect to the Allocated Portion,
determine from time to time what securities and other
investments (including cash) will be purchased (including, as
permitted in accordance with this paragraph, swap agreements,
options, forwards and futures), retained, sold or exchanged by
the Fund and what portion of the Allocated Portion will be held
in the various securities and other investments in which the
Fund invests, and shall implement those decisions (including the
execution of investment documentation), all subject to the
provisions of the Trust's Declaration of Trust and By-Laws
(collectively, the "Governing Documents"), the 1940 Act, the
Commodity Exchange Act ("CEA"), any 1940 Act exemptive order
applicable to the Fund, and the applicable rules and regulations
promulgated thereunder by the Securities and Exchange Commission
(the "SEC") and interpretive guidance issued thereunder by the
SEC staff and any other applicable federal and state law, the
investment objectives, policies and restrictions of the Fund
referred to above, and any other specific policies adopted by
the Board and provided to the Subadviser, as well as the
instructions, directions and policies of the Manager and the
Trust that have been provided to the Subadviser. The Subadviser
is authorized as the agent of the Trust to give instructions
with respect to the Allocated Portion to the Fund's custodian
(the "Custodian") and any sub-custodian or prime broker as to
deliveries of securities and other investments and payments of
cash in respect of transactions. Until such time as notified by
the Manager, the Subadviser is also responsible for any
collateral and margin requirements associated with investments
made for the Allocated Portion, if any, and in doing so will
perform in-house reconciliation procedures on such custodial
accounts with respect to the Allocated Portion in accordance
with its standard practices and provide information regarding
such reconciliations to the Manager upon request in a form to be
agreed between the Manager and the Subadviser. This means the
Subadviser is authorized as agent to the Trust to give
instructions as to cash margin calls for the account of the Fund
with respect to the Allocated Portion. The Subadviser will
place orders on behalf of the Fund pursuant to the Subadviser's
investment determinations for the Fund either directly with the
issuer or with any broker or dealer, foreign currency dealer,
futures commission merchant, counterparty or others selected by
it. The Fund will act as a principal in such transactions. In
connection with the selection of such brokers or dealers and the
placing of such orders, subject to applicable law, brokers or
dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) to the Fund and/or the other accounts over which the
Subadviser or its affiliates exercise investment discretion. The
Subadviser is authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing
a portfolio transaction for the Fund, which is in excess of the
amount of commission another broker or dealer would have charged
for effecting that transaction, if the Subadviser determines in
good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the
overall responsibilities which the Subadviser and its affiliates
have with respect to accounts over which they exercise
investment discretion. The Board may adopt policies and
procedures that modify and restrict the Subadviser's authority
regarding the execution of the Fund's portfolio transactions
provided herein. The Subadviser may execute on behalf of the
Fund certain agreements, instruments and documents in connection
with the services performed by it under this Agreement. These
may include, without limitation, brokerage agreements,
repurchase agreements, reverse repurchase agreements, clearing
agreements, account documentation, futures and options
agreements, swap agreements, limited partnership agreements,
derivative master agreements, other investment-related
agreements, and any other agreements, documents, schedules,
annexes, instruments, releases, consents, elections and
confirmations the Subadviser believes are appropriate or
desirable in performing its duties under this Agreement. The
Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust, the Fund or the
Manager in any way or otherwise be deemed an agent of the Trust,
the Fund or the Manager except as expressly authorized in this
Agreement or another writing by the Trust or the Manager and the
Subadviser.
(b) The Subadviser shall act upon all proxies
solicited by or with respect to the issuers of securities in
which the assets of the Allocated Portion may be invested in
accordance with the Subadviser's proxy voting policies and
procedures, as presented to the Fund, and in a manner that the
Subadviser reasonably believes best serves the interests of the
Fund's shareholders and that complies with applicable law. The
Subadviser shall maintain records of all proxies voted on behalf
of the Fund in respect of the Allocated Portion; and provide
information to the Fund, the Manager or their designated agent
in a manner that is sufficiently complete and timely to enable
the Fund's compliance with its filing obligations under Rule
30b1-4 of the 1940 Act.
(c) On behalf of the Fund, the Manager hereby
authorizes any entity or person associated with the Subadviser
which is a member of a national securities exchange to effect
any transaction on the exchange for the account of the Fund
which is permitted by Section 11(a) of the Exchange Act and Rule
11a2-2(T) thereunder, and on behalf of the Fund, the Manager
hereby consents to the retention of compensation for such
transactions in accordance with Rule 11a2-2(T)(a)(2)(iv).
Notwithstanding the foregoing, the Subadviser agrees that it
will not deal with itself, or with members of the Board or any
principal underwriter of the Fund, as principals or agents in
making purchases or sales of securities or other property for
the account of the Fund, nor will the Subadviser purchase any
securities from an underwriting or selling group in which the
Subadviser or its affiliates is participating, or arrange for
purchases and sales of securities between the Fund and another
account advised by the Subadviser or its affiliates, except in
each case as permitted by the 1940 Act and in accordance with
such policies and procedures as may be adopted by the Fund from
time to time and disclosed to the Subadviser, and will comply
with all other provisions of the Governing Documents and the
Fund's then-current Prospectus and SAI relative to the
Subadviser and its directors, officers and employees.
(d) On occasions when the Subadviser deems the
purchase or sale of a security to be in the best interest of the
Allocated Portion, the Subadviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities to be purchased or sold
to attempt to obtain a more favorable price or lower brokerage
commissions and efficient execution. Allocation of the
securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Subadviser in
the manner that the Subadviser considers to be the most
equitable and consistent with its fiduciary obligations to the
Allocated Portion over time.
(e) The Fund may establish one or more wholly-owned
subsidiaries of the Fund through which it may conduct a
significant portion of its commodities investing activities or
for other investment purposes.
(f) When the Manager provides policies, procedures,
restrictions, executed trading agreements (including any ISDA
agreements) or Governing Documents, or amendments or revisions
thereto, to the Subadviser that relate to the Subadviser's
management of the Allocated Portion, the Manager will provide
the documents in advance of their implementation as to the
Allocated Portion
(g) Notwithstanding any other provision of this
Agreement, it is agreed that the Subadviser shall have no
responsibility for: (i) monitoring any limitations or
restrictions in respect of the Fund as a whole (it being agreed
that all such monitoring shall be the responsibility of the
Manager); or (ii) the segregation requirement of the 1940 Act or
other applicable law of the Fund as a whole (it being agreed
that all such segregation shall be the responsibility of the
Manager); provided that, in respect of the Allocated Portion
only, the Subadviser shall (A) conduct its trading activities in
a manner consistent with the segregation and coverage
requirements of the 1940 Act or any instructions, restrictions
or policies of the Manager in relation thereto (as described
above) and (B) share with the Manager, upon request, such
information as the Manager shall require to demonstrate
compliance with item (A) above and shall provide assistance upon
request to the Manager in identifying assets to address
segregation requirements. Unless the Fund is required by law or
regulation, the Subadviser shall not be required to provide
instructions of physical segregation of assets to the Custodian.
5. Delegation. The Subadviser may delegate some or all
of its duties under this Agreement to affiliated investment
subadvisers (each a "Subadviser-Delegatee"); provided, however,
that (i) the Subadviser provides written notice to the Manager
and the Manager consents in writing, (ii) any delegation of
advisory duties is subject to and conditioned on the Fund
Boards' and/or Fund shareholder's approval as may be required
pursuant to Xxxxxxx 00 xx xxx 0000 Xxx, (xxx) no additional
charges, fees or other compensation will be paid for such
services, (iv) the Subadviser hereby agrees to advise the
Manager of any changes required to be made to the disclosure in
the Fund's registration statement relating to the Fund's
portfolio managers provided by the Subadviser or any Subadviser-
Delegatee, and (v) the Subadviser at all times remains liable to
the Manager and the Fund for its obligations hereunder
regardless of whether services hereunder are provided by the
Subadviser or any Subadviser-Delegatee. To the extent that such
delegation occurs, references to the Subadviser herein also
shall be deemed to include reference to any Subadviser-
Delegatee, as the context may require.
6. Records. The Subadviser agrees that it will keep
records relating to its services hereunder in accordance with
all applicable laws, and in compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Subadviser hereby agrees that
any records that it maintains for the Fund are the property of
the Fund, and further agrees to surrender promptly to the Fund
any of such records upon the Fund's request; provided that the
Subadviser may retain copies of such records at its own expense.
The Subadviser further agrees to arrange for the preservation of
the records required to be maintained by Rule 31a-1 under the
1940 Act for the periods prescribed by Rule 31a-2 under the 1940
Act.
7. Valuation. The Subadviser shall, in accordance with
procedures established by the Board, which may be amended from
time to time, provide assistance to the Trust, Manager or the
Custodian in determining or confirming the value of any
portfolio securities or other assets of the Allocated Portion
for which the Trust, Manager or Custodian seeks assistance from
the Subadviser or identifies for review by the Subadviser. This
assistance includes (but is not limited to): (i) designating and
providing access to one or more employees of the Subadviser who
are knowledgeable about the security/issuer, its financial
condition, trading and/or other relevant factors for valuation,
which employees shall be available for consultation when the
Manager's Valuation Committee convenes; (ii) assisting the
Trust, the Manager or the Custodian in obtaining bids and offers
or quotes from broker/dealers or market-makers independent of
the Subadviser with respect to securities held by the Allocated
Portion, upon the reasonable request of the Manager or the
Custodian; (iii) upon the request of the Trust, Manager or the
Custodian, confirming pricing and providing recommendations for
fair valuations; and (iv) maintaining adequate records and
written backup information with respect to the securities
valuation assistance provided hereunder, and providing such
information to the Trust, the Manager or the Fund upon request,
with such records being deemed Fund records; provided that the
Subadviser may retain copies of such records at its own
expense. The parties acknowledge that the Subadviser, on the
one hand, and the Custodian or recordkeeping agent of the Fund,
on the other hand, may use different pricing vendors, which may
result in valuation discrepancies.
8. Additional Responsibilities of the Subadviser. (a)
The Subadviser shall, as reasonably requested by the Trust or
the Manager and in accordance with the scope of the Subadviser's
obligations and responsibilities contained in this Agreement
(i.e., with respect to the Allocated Portion of the Fund and the
Subadviser's provision of portfolio management services
hereunder), provide reasonable assistance to the Trust and the
Manager in connection with the Trust's compliance with the
Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated by
the SEC thereunder, and Rule 38a-1 under the 1940 Act.
Specifically, the Subadviser agrees to: (i) certify
periodically, upon the reasonable request of the Trust, that
with respect to the Allocated Portion and the Subadviser's
provision of portfolio management services hereunder, it is in
compliance with all applicable "federal securities laws," as
required by Rule 38a-l under the 1940 Act, and Rule 206(4)-7
under the Investment Advisers Act of 1940, as amended ("Advisers
Act"); (ii) as requested by the Manager: (a) review draft
reports to shareholders, proxy statements, marketing materials,
Board materials, registration statements or portions thereof and
other documents provided to the Subadviser, which relate to, or
include, the Allocated Portion or the Subadviser, (b) provide
comments on such drafts on a timely basis, and (c) provide
certifications or sub-certifications on a timely basis as to the
accuracy of the information pertaining to the Subadviser or the
Allocated Portion contained in such reports or other documents;
(iii) with respect to the Subadviser or the Allocated Portion,
provide reasonable assistance as needed in the preparation of
all periodic reports by the Trust or the Fund to shareholders of
the Fund and all reports and filings required to maintain the
registration and qualification of the Fund, or to meet other
regulatory or tax requirements applicable to the Fund, under
federal and state securities and tax laws; (iv) upon request and
reasonable prior notice, cooperate with audits (including
compliance audits) conducted by the Manager, its affiliates or
the Fund's independent auditors or any of such auditors'
overseas affiliates; (v) upon request and reasonable prior
notice, provide the Trust's chief compliance officer with direct
access to its chief compliance officer (or his/her designee);
(vi) upon request, provide the Trust's chief compliance officer
with periodic reports pertaining to the Subadviser's services
hereunder; (vii) promptly provide notice of any material
compliance matters; and (viii) if required, prepare and cause to
be filed in a timely manner Forms 13F and Schedules 13G with
respect to securities held in the Allocated Portion. Except as
may be limited by paragraph 8(d), the Subadviser, at its
expense, shall supply the Board, the officers of the Trust and
the Manager with all information and reports reasonably required
by them and reasonably available to the Subadviser relating to
the services provided by the Subadviser hereunder.
(b) The Subadviser shall prepare and furnish to the
Manager and/or the Board such reports, statistical data and
other information in such form and at such intervals as the
Manager and/or the Board may reasonably request. The Subadviser
shall also make available to the Trust and the Board at
reasonable times, and with reasonable advance notice under the
circumstances, its portfolio managers and other appropriate
personnel as mutually agreed by the Trust, the Manager and the
Subadviser, either in person (including attendance at Board
meetings) or, at the mutual convenience of the Trust, the
Manager, the Board and the Subadviser, by telephone or other
electronic media, in order to review the investment policies,
performance and other matters relating to the management of the
Allocated Portion.
(c) In furnishing services hereunder, the Subadviser
will not consult with any other subadviser to (i) the Fund, (ii)
any other Fund of the Trust or (iii) any other investment
company under common control with the Trust concerning
transactions of the Fund in securities or other assets. (This
paragraph shall not be deemed to prohibit the Subadviser from
consulting with any of its affiliated persons concerning
transactions in securities or other assets.)
(d) The Subadviser shall bear all expenses, and shall
furnish all necessary services, facilities and personnel, in
connection with its responsibilities under this Agreement. Other
than as herein specifically indicated, the Subadviser shall not
be responsible for the Fund's expenses, including, without
limitation, advisory fees; distribution fees; interest; taxes;
governmental fees; voluntary assessments and other expenses
incurred in connection with membership in investment company
organizations; organizational costs of the Fund; the cost
(including brokerage commissions, transaction fees or charges,
if any) in connection with the purchase or sale of the Fund's
securities and other investments and any losses in connection
therewith; fees and expenses of custodians, transfer agents,
registrars, independent pricing vendors or other agents; Fund
legal expenses; loan commitment fees; expenses relating to the
issuing and redemption or repurchase of the Fund's shares and
servicing shareholder accounts; expenses of registering and
qualifying the Fund's shares for sale under applicable federal
and state law; the Fund's expenses relating to preparing,
setting in print, printing and distributing prospectuses and
statements of additional information and any supplements
thereto, reports, proxy statements, notices and dividends to the
Fund's shareholders; costs of stationery; Fund website costs;
costs of meetings of the Board or any committee thereof,
meetings of shareholders and other meetings of the Fund (other
than the costs of the attendance and travel of the Subadviser's
personnel to Board meetings); Board fees; Fund audit fees;
travel expenses of officers, members of the Board and employees
of the Fund (other than the travel expenses of officers and
employees of the Subadviser), if any; and the Fund's pro rata
portion of premiums on any fidelity bond and other insurance
covering the Fund and its officers, Board members and employees;
litigation expenses of the Fund and any non-recurring or
extraordinary expenses of the Fund as may arise, including,
without limitation, those relating to actions, suits or
proceedings to which the Fund is a party and the legal
obligation which the Fund may have to indemnify the Fund's Board
members and officers with respect thereto. The Subadviser
shall, or shall procure a third party to, be responsible for all
the costs associated with any special meetings of the Board or
shareholders convened for the primary benefit of the Subadviser
(including, but not limited to, the standard legal fees
associated with preparing a proxy statement or information
statement and associated mailing and solicitation costs).
9. Compensation of Board Members and Officers. No member
of the Board, officer or employee of the Trust or Fund shall
receive from the Trust or Fund any salary or other compensation
as such member of the Board, officer or employee while he is at
the same time a director, officer, or employee of the Subadviser
or any affiliated company of the Subadviser, except as the Board
may decide. This paragraph shall not apply to Board members,
executive committee members, consultants and other persons who
are not regular members of the Subadviser's or any affiliated
company's staff.
10. Compensation. As compensation for the services
performed by the Subadviser, the Manager shall pay the
Subadviser, within twenty (20) days after the last day of each
month, a fee, computed daily at an annual rate set forth on
Schedule A annexed hereto. The first payment of the fee shall be
made within twenty (20) days after the end of the month
succeeding the effective date of this Agreement. If this
Agreement is terminated as of any date not the last day of a
month, such fee shall be paid within twenty (20) days after the
end of the month of termination, and the fee for such month will
be based on the average daily net assets of the days in that
month, up to and including the last day for which this Agreement
is in effect. The average daily net assets of the Fund shall in
all cases be based only on business days and be computed as of
the time of the regular close of business of the New York Stock
Exchange, or such other time as may be determined by the Board.
11. Representations, Warranties and Agreements of the
Subadviser. (a) The Subadviser represents and warrants that
it: (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long
as this Agreement remains in effect; (ii) is not prohibited by
the 1940 Act, the Advisers Act or other law, regulation or order
from performing the services contemplated by this Agreement;
(iii) has reviewed the requirements for registration as a
"commodity trading advisor" (a "CTA") under the CEA and is
either registered as a CTA and a member of the National Futures
Association (the "NFA") or is relying on an exemption or
exclusion from registration as a CTA (or otherwise does not
provide commodity trading advice); (iv) has met and will seek to
continue to meet for so long as this Agreement remains in
effect, 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 contemplated by this Agreement; (v) will comply with
the Manager's policy regarding reimbursements to the Fund of
errors that may occur either in the investment decision-making
process or in the trading execution process;; (vi) has the
authority to enter into and perform the services contemplated by
this Agreement; (vii) has taken all necessary corporate action
to authorize the execution, delivery and performance of this
Agreement; and (viii) has duly executed and delivered this
Agreement.
(b) The Subadviser will promptly notify the Trust and
the Manager: (i) of the occurrence of any event that would
disqualify the Subadviser from serving as an investment adviser
of an investment company pursuant to Section 9(a) of the 1940
Act or other applicable law, rule or regulation; (ii) if it is
served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity,
before or by any court, public board or body, involving the
affairs of the Fund, or is involved in any pending litigation or
administrative proceeding brought against the Subadviser or any
of its management persons (as defined in Form ADV), other than
ordinary routine litigation incidental to the Subadviser's
business or litigation involving management persons not based on
securities, commodities or other financial law or regulation;
(iii) if the Subadviser fails to be registered as an investment
adviser under the Advisers Act or under the laws of any
jurisdiction in which the Subadviser is required to be
registered as an investment adviser in order to perform its
obligations under this Agreement; (iv) of any material fact
known to the Subadviser respecting or relating to the Subadviser
or the investment strategies of the Subadviser's Allocated
Portion that is not contained in the Fund's prospectus and/or
SAI, as amended and supplemented from time to time, regarding
the Fund, or any amendment or supplement thereto, but that is
required to be disclosed therein, and of any statement
respecting or relating to the Subadviser, the Subadviser's
investment strategies or the Subadviser's Allocated Portion
contained therein that becomes untrue in any material respect;
(v) of any change in the Subadviser's financial condition which
could impact materially its abilities to perform its duties
hereunder and of any reduction in the amount of coverage under
the Subadviser's errors and omissions or professional liability
insurance coverage; and (vi) of any change in its status as a
registered CTA or member of the NFA or, if the Subadviser is
relying on an exemption or exclusion from registration as a CTA,
of any event that will make it ineligible for such exemption or
exclusion.
(c) The Subadviser represents and warrants that it
has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act, will provide the
Manager and the Board with a copy of such code of ethics,
together with evidence of its adoption, and will provide copies
of any future amendments thereto. Upon request within forty-five
days of the end of the last calendar quarter of each year that
this Agreement is in effect, and as otherwise requested, the
Chief Compliance Officer of the Subadviser or his/her designee
shall certify to the Manager and the Trust that the Subadviser
has complied with the requirements of Rule 17j-1 during the
previous year (or such shorter period that this Agreement has
been in effect) and that there has been no material violation of
the Subadviser's code of ethics or, if such a material violation
has occurred, that appropriate action was taken in response to
such violation. Upon the reasonable written request of the
Manager or the Trust, the Subadviser shall permit the Manager or
the Trust, its employees or its agents to examine the reports
required to be made to the Subadviser by Rule 17j-1(c)(1) and
all other records relevant to the Subadviser's code of ethics.
By entering into this Agreement, the Subadviser consents to the
filing of its code of ethics as an exhibit to the Trust's
registration statement, as may be required by law or regulation.
(d) The Subadviser represents and warrants that it
has adopted and implemented written policies and procedures, as
required by: (i) Rule 206(4)-7 under the Advisers Act that are
reasonably designed to prevent violations of the Advisers Act
and the rules thereunder by the Subadviser and its supervised
persons ("Advisers Act Compliance Procedures"), and the Manager
and the Trust have been provided a copy of a summary of the
Advisers Act Compliance Procedures and will be provided with any
future amendments thereto; and (ii) Rule 38a-1 under the 1940
Act, with respect to the Subadviser and the Allocated Portion,
that are reasonably designed to prevent violations of the
Federal Securities Laws, as defined in Rule 38a-1, by the
Subadviser, its employees, officers, and agents ("Fund
Compliance Procedures"), and the Manager and the Trust have been
provided a copy of a summary of the Fund Compliance Procedures
and Advisers Act Compliance Procedures (which may be combined)
and will be provided promptly with any future amendments
thereto.
(e) The Subadviser has provided the Trust and the
Manager with a copy of its Form ADV, which, as of the date of
this Agreement, is its Form ADV as most recently filed with the
SEC and upon reasonable request, will promptly furnish a copy of
all amendments thereto to the Trust and the Manager at least
annually.
(f) The Subadviser will promptly notify the Trust and
the Manager if there is, or there is expected to be, any
imminent assignment of this Agreement or change of control of
the Subadviser within the meaning of the Advisers Act and the
1940 Act, as applicable, and if there is, or there is expected
to be, any imminent changes in the key personnel who are either
the portfolio manager(s) of the Allocated Portion or senior
management of the Subadviser, as determined by agreement of the
parties hereto. The Subadviser agrees to bear all reasonable
expenses of the Trust, if any, arising out of an assignment by,
or change in control of, the Subadviser.
(g) The Subadviser agrees to maintain a commercially
reasonable level of errors and omissions or professional
liability insurance coverage from an insurance company that has
an A.M. Best rating of at least A (VII) or better.
(h) The Subadviser hereby grants each of the Trust,
the Fund, the Manager, the Fund's administrator, the Fund's
distributor and their affiliates and subsidiaries (each of the
aforementioned, a "Fund Party") a non-exclusive fully revocable
license to use its name, the names of its controlled affiliates,
tradename, trademark, trade device, service xxxx, symbol or any
abbreviation, contraction or simulation thereof in the Trust's
and the Fund's disclosure documents, shareholder communications,
advertising, sales literature and similar communications. The
Subadviser agrees that neither it, nor any of its affiliates,
will knowingly in any way refer directly or indirectly to its
relationship with the Trust, the Fund, the Manager or any of
their respective affiliates without the express prior written
consent of the Manager or its designee, except as required by
rule, regulation or upon the request of a governmental
authority. However, the Subadviser may use the performance of
the Allocated Portion in its composite performance. The Manager
hereby grants the Subadviser the right to identify the Fund,
Trust and/or the Manager as a client in the Subadviser's client
lists until this Agreement is terminated and may disclose the
aggregate amount of assets under management with respect to the
Allocated Portion..
(i) The Subadviser shall not use the name or any
tradename, trademark, trade device, service xxxx, symbol or any
abbreviation, contraction or simulation thereof of the Manager,
the Trust, the Fund or any of their affiliates in its marketing
materials unless it first receives prior written approval of the
Manager or its designee (and may include execution of a
trademark licensing agreement). It is understood that the name
of each party to this Agreement, and any derivatives thereof or
logos associated with that name ("Intellectual Property"), is
the valuable property of the party in question and its
affiliates, and that each other party has the right to use such
Intellectual Property pursuant to the relationship created by,
and in accordance with the terms of, this Agreement only so long
as this Agreement shall continue in effect. Upon termination of
this Agreement, the parties shall forthwith cease to use the
Intellectual Property of the other parties, except for the
rights of the Manager, the Trust, the Fund or any of their
affiliates to use such Intellectual Property during a one-year
adjustment period after such termination and to the extent as
may be required by applicable laws, rules and regulations. For
the avoidance of doubt, nothing in this Agreement shall be
construed as granting to any party any right, title or interest
in Intellectual Property, other than the right to use the
Intellectual Property in accordance with this Agreement.
(j) The Subadviser agrees to provide any and all
material composite performance information, records and
supporting documentation about accounts the Subadviser manages,
if appropriate, which are relevant to the Allocated Portion and
that have investment objectives, policies, and strategies
substantially similar to those employed by the Subadviser in
managing the Allocated Portion that may be reasonably necessary,
under applicable laws, to allow the Fund or its agent to present
information concerning the Subadviser's prior performance in the
Prospectus and the SAI of the Fund and any permissible reports
and materials prepared by the Fund or its agent. For the
avoidance of doubt, the Subadviser may use the performance of
the Allocated Portion in its composite performance.
12. Representations and Warranties of the Manager. The
Manager represents and warrants that it: (i) is registered as an
investment adviser under the Advisers Act and will continue to
be so registered for so long as this Agreement remains in
effect; (ii) is not prohibited by the 1940 Act, the Advisers Act
or other law, regulation or order from performing the services
contemplated by this Agreement; (iii) has reviewed the
requirements for registration as a "commodity pool operator" (a
"CPO") under the CEA and is either registered as a CPO and a
member of the NFA or is relying on an exemption or exclusion
from registration as a CPO or has made a permissible delegation
of its duties and responsibilities as a CPO to another entity;
(iv) has adopted and implemented a written code of ethics
complying with requirements of Rule 17j-1 under the 1940 Act;
(v) has the authority to enter into and perform the services
contemplated by this Agreement; (vi) has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement; and (vii) has duly executed and
delivered this Agreement and this Agreement has been approved in
accordance with the requirements of the 1940 Act.
13. Confidentiality. No party to this Agreement will
disclose or use any records or information obtained pursuant to
this Agreement in any manner whatsoever except as expressly
authorized in this Agreement or, with respect to the Subadviser,
as may reasonably be required to execute transactions on behalf
of the Fund or, with respect to the Manager (or its affiliates),
as may reasonably be required to provide its services to the
Fund. The parties will keep confidential any non-public
information obtained directly as a result of this service
relationship; provided that, the Manager may make any disclosure
to its affiliates, the Trust, the Fund, the disinterested Board
members or their legal advisors or auditors or other service
providers to the Fund (including, without limitation, any
prospective or current prime broker, broker-dealer, accounting
agent, compliance services provider, administrator or sub-
administrator and the agents, employees, service providers,
subsidiaries, parents, affiliates or divisions of the
foregoing), as the Manager may reasonably determine necessary
in its sole discretion; provided that no such information may be
used for any trading or investment purpose unrelated to
management of the Fund and provided, further, that each such
service provider is subject to confidentiality duties or
obligations for their respective relationship to U.S. registered
investment companies (which obligations, without limitation, may
be fiduciary or professional in nature). Notwithstanding the
foregoing, any party may disclose such non-public information if
(i) such information is or hereafter otherwise known by the
receiving party or has been disclosed to the receiving party by
a third party not known by the receiving party to be under an
obligation of confidentiality to the party whose information has
been disclosed or such information has been disclosed publicly
(other than through a breach of this Agreement) or otherwise
becomes ascertainable from public or published information or
trade sources, (ii) if such disclosure is required by applicable
federal, state or other law or regulation, (iii) if such
disclosure is required or requested by regulatory authorities or
judicial process, (iv) to the extent such disclosure is
reasonably required by auditors or attorneys of the party (or of
the Trust, Fund, the disinterested Board members or affiliates
of the Manager) in connection with the performance of their
professional services, or (v) as may otherwise be contemplated
by this Agreement. The Subadviser shall not disclose
information regarding characteristics of the Fund or Allocated
Portion, trading history, portfolio holdings, performance
information or any other related information to any third party,
except in compliance with the Trust's policies on disclosure of
portfolio holdings or as required by applicable law or
regulation.
14. Indemnification. (a) Except as may otherwise be
provided by the 1940 Act or any other federal securities law or
the CEA, neither the Subadviser nor any of its officers, members
or employees (its "Affiliates") shall be liable for any losses,
claims, damages, liabilities or litigation (including legal and
other expenses) ("Losses") incurred or suffered by the Manager
or the Trust as a result of any act or omission of the
Subadviser or its Affiliates with respect to the Fund, except
that nothing in this Agreement shall operate or purport to
operate in any way to exculpate, waive or limit the liability of
the Subadviser or its Affiliates for, and the Subadviser shall
indemnify and hold harmless the Trust, the Manager, all
affiliated persons thereof (within the meaning of Section
2(a)(3) of the 1940 Act, and all controlling persons (as
described in Section 15 of the Securities Act of 1933, as
amended ("1933 Act")) (collectively, "Manager Indemnitees")
against, any and all Losses to which any of the Manager
Indemnitees may become subject under the 1933 Act, the 1940 Act,
the Advisers Act, the CEA, or under any other statute, or common
law or otherwise arising out of or based on (i) any willful
misconduct, bad faith, reckless disregard or gross negligence of
the Subadviser in the performance of any of its duties or
obligations hereunder, (ii) any Losses accruing to the extent,
if any, caused by or based upon the Subadviser's
misrepresentations, omissions or breach of any representation or
warranty in this Agreement or (iii) any untrue statement of a
material fact contained in the Prospectus and/or SAI, proxy
materials, reports, advertisements, sales literature, or other
materials pertaining to the Fund or the omission to state
therein a material fact known to the Subadviser which was
required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission
was made in reliance upon information furnished to the Manager
Indemnitees or the Trust by the Subadviser Indemnitees (as
defined below) for use therein
(b) Except as may otherwise be provided by the 1940
Act or any other federal securities law or the CEA, the Manager
and the Trust shall not be liable for any Losses incurred or
suffered by the Subadviser as a result of any act or omission of
the Manager with respect to the Fund, except that nothing in
this Agreement shall operate or purport to operate in any way to
exculpate, waive or limit the liability of the Manager for, and
the Manager shall indemnify and hold harmless the Subadviser,
all affiliated persons thereof (within the meaning of Section
2(a)(3) of the 1940 Act and all controlling persons (as
described in Section 15 of the 1933 Act) (collectively,
"Subadviser Indemnitees") against, any and all Losses to which
any of the Subadviser Indemnitees may become subject under the
1933 Act, the 1940 Act, the Advisers Act, the CEA or under any
other statute, at common law or otherwise arising out of or
based on (i) any willful misconduct, bad faith, reckless
disregard or gross negligence of the Manager in the performance
of any of its duties or obligations hereunder, (ii) any Losses
accruing to the extent, if any, caused by or based upon the
Manager's misrepresentations, omissions or breach of any
representation or warranty in this Agreement or (iii) any untrue
statement of a material fact contained in the Prospectus and/or
SAI, proxy materials, reports, advertisements, sales literature,
or other materials pertaining to the Fund or the omission to
state therein a material fact known to the Manager that was
required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or
omission was made in reliance upon information furnished to the
Manager Indemnitees or the Trust by the Subadviser Indemnitees.
(c) Promptly after receipt of notice of any action,
arbitration, claim, demand, dispute, investigation, lawsuit or
other proceeding (each a "Proceeding") by a party seeking to be
indemnified under paragraph 14(a) or 14(b) (the "Indemnified
Party"), the Indemnified Party will, if a claim in respect
thereof is to be made against a party against whom
indemnification is sought under paragraph 14(a) or 14(b) (the
"Indemnifying Party") notify the Indemnifying Party in writing
of the commencement of such Proceeding; provided that, the
failure to so notify the Indemnifying Party in the absence of a
showing of actual prejudice shall not relieve the Indemnifying
Party from any indemnification liability which it may have to
the Indemnified Party. The Indemnifying Party shall have the
right to assume control of the defense of the Proceeding by
giving written notice to the Indemnified Party within 10 days of
receiving notice of the Proceeding (or such shorter period as is
required to respond to the Proceeding), and the Indemnified
Party shall cooperate fully in the defense of the Proceeding.
No Indemnifying Party shall be liable under paragraph 14 for any
settlement of any Proceeding entered into without its consent
with respect to which indemnity may be sought hereunder, nor
shall any Indemnifying Party enter into any settlement (other
than a purely monetary "no admission" settlement) without the
consent of the Indemnified Party.
15. Other Business. Nothing in this Agreement shall limit
or restrict the right of any member, partner (whether limited or
general), manager, director, officer, or employee of the
Subadviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar
nature, nor to limit or restrict the right of the Subadviser to
engage in any other business or to render services of any kind,
including investment advisory and management services, to any
other fund, firm, individual or association. The Subadviser may
give advice or take action with respect to other investment
entities that it manages that differs from the advice given with
respect to the Allocated Portion, subject to applicable law.
16. Certain Definitions. For the purposes of this
Agreement, the Fund's "net assets" shall be determined as
provided in the Fund's then-current Prospectus and SAI and the
terms "assignment," "interested person," and "majority of the
outstanding voting securities" shall have the meanings given to
them by Section 2(a) of the 1940 Act, subject to such
exemptions, modifications and interpretations as may be granted
by the SEC by any rule, regulation or order.
17. Term. This Agreement will become effective with
respect to the Fund on the date set forth opposite the Fund's
name on Schedule A annexed hereto, provided that it shall have
been approved by the Trust's Board and, if so required by the
1940 Act, by the shareholders of the Fund in accordance with the
requirements of the 1940 Act and, unless sooner terminated as
provided herein, will continue in effect through the second
anniversary of the date of effectiveness. Thereafter, if not
terminated, this Agreement shall continue in effect with respect
to the Fund, so long as such continuance is specifically
approved at least annually (i) by the Board or (ii) by a vote of
a majority of the outstanding voting securities of the Fund,
provided that in either event the continuance is also approved
by a majority of the Board members who are not interested
persons of any party to this Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval.
18. Termination. This Agreement may be terminated at any
time, without the payment of any penalty, by (i) the Board of
Trustees, including a majority of the Independent Trustees, by
the vote of a majority of the outstanding voting securities of
the Fund, on sixty (60) days' prior written notice to the
Manager and the Subadviser, (ii) the Manager on sixty (60) days'
prior written notice to the Subadviser, or (iii) the Subadviser
on ninety (90) days' prior written notice to the Manager and the
Trust. This Agreement will automatically terminate, without the
payment of any penalty, (i) in the event of its assignment (as
defined in the 1940 Act), or (ii) in the event the Management
Agreement between the Manager and the Trust is assigned (as
defined in the 0000 Xxx) or terminates for any other reason.
This Agreement will also terminate upon written notice to the
other party that the other party is in material breach of this
Agreement, unless the other party in material breach of this
Agreement cures such breach to the reasonable satisfaction of
the party alleging the breach within thirty (30) days after
written notice. Upon termination in accordance with this
paragraph 18, the rights and obligations of the parties under
this Agreement shall terminate and be of no future effect,
except that paragraphs 13 and 14 and compensation obligations
that have accrued and are outstanding as of the termination
shall remain in full force and effect.
19. Statutory Trust Matters. The Subadviser agrees that
for any claim by it against the Fund in connection with this
Agreement or the services rendered under this Agreement, it
shall look only to assets of the Fund for satisfaction and that
it shall have no claim against the assets of any other series of
the Trust.
20. Amendment. 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, and no material amendment of the Agreement shall be
effective until approved, if so required by the 1940 Act, by
vote of the holders of a majority of the Fund's outstanding
voting securities.
21. Miscellaneous. This Agreement, and any supplemental
terms contained on Annex I hereto, if applicable, embodies the
entire agreement and understanding between the parties hereto,
and supersedes all prior agreements and understandings relating
to the subject matter hereof. No provision of this Agreement is
intended to conflict with any applicable law. Should any part
of this Agreement be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding
on and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Paragraph
headings herein are for convenience only and are not a part of
this Agreement. This Agreement may be executed simultaneously
in counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
22. Choice of Law. This Agreement shall be construed and
the provisions thereof interpreted under and in accordance with
the laws of the State of New York without regard to conflicts of
laws principles. Any legal suit, action or proceeding related
to, arising out of or concerning this Agreement shall be brought
only in the U.S. District Court for the Southern District of New
York, or if such action may not be brought in that court, then
such action shall be brought in the Supreme Court of the State
of New York sitting in New York County (including its appellate
division) (the "Designated Courts"). Each party (i) consents to
jurisdiction in the Designated Courts; (ii) waives any objection
to venue in either Designated Court and (iii) waives any
objection that either Designated Court is an inconvenient forum.
For any action commenced in the Supreme Court of the State of
New York, application shall be submitted to the Commercial
Division.
23. Third-Party Beneficiary. This Agreement does not, and
is not intended to, create any third-party beneficiary or
otherwise confer any rights, privileges, claims or remedies upon
any shareholder or other person other than the parties
(including the Trust with respect to the Fund)and their
respective successors and permitted assigns.
24. Notices. Notices and other communications required or
permitted under this Agreement shall be in writing, shall be
deemed to be effectively delivered when actually received, and
may be delivered by US mail (first class, postage prepaid), by
facsimile transmission, electronic mail, by hand or by
commercial overnight delivery service, addressed as follows:
MANAGER:
Xxxxxxxxxxx Xxxxxxxxxxx
Deputy Chief Investment Officer
Permal Group
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 |
Fax: (000) 000-0000
Email: XXxxxxxxxxxx@xxxxxx.xxx
With a copy to:
Xxxxxxx Xxx
Deputy General Counsel
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000 |
Fax: (000) 000-0000
Email: xxxx@xxxxxx.xxx
SUBADVISER:
First Quadrant, L.P.
000 Xxxx Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000
Attention: FQ Client Service
Telephone: 000-000-0000
Fax: 000-000-0000
Email:
XXXxxxxxXxxxxxx@xxxxxxxxxxxxx.xxx
With a copy to:
First Quadrant, L.P.
000 Xxxx Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxx
Telephone: 000-000-0000
Email: xxxxx@xxxxxxxxxxxxx.xxx
TRUST:
Xxxxxx X. Xxxxxxx
c/o Legg Xxxxx & Co., LLC
000 Xxxxx Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Email: xxxxxxxxx@xxxxxxxxx.xxx
[signature page to follow]
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their officers thereunto duly
authorized.
ENTRUSTPERMAL MANAGEMENT
LLC
By:
Name:
Title:
FIRST QUADRANT, L.P.
By:
Name:
Title:
The foregoing is acknowledged:
The undersigned officer of the Trust has executed this
Agreement not individually but in his/her capacity as an officer
of the Trust. The Trust does not hereby undertake, on behalf of
the Fund or otherwise, any obligation to the Subadviser.
XXXX XXXXX PARTNERS
VARIABLE EQUITY TRUST
By:
Name:
Title:
SCHEDULE A
Permal Alternative Select VIT Portfolio
Date:
May 20, 2016
Fee per annum:
The following percentage of the average daily net assets
allocated to the Subadviser:
1.00%
16238155.4
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