EXHIBIT 23 (d)(3)
INVESTMENT SUB-ADVISORY AGREEMENT
THIS INVESTMENT SUB-ADVISORY AGREEMENT ("Agreement"), made this 15th day
of May, 2002 by and between Xxxxxx Advisors, LLC, a Delaware limited liability
company (the "Advisor"), and Xxxx X. Xxxxx & Co., Inc, a Delaware corporation
(the "Sub-Advisor").
Advisor and Sub-Advisor agree as follows:
1. Advisor hereby engages the services of Sub-Advisor in connection with
Advisor's management of the Xxxxxx/Xxxxx Large Cap Value Portfolio (the
"Portfolio") of MLIG Variable Insurance Trust (the "Trust"). Pursuant to this
Agreement and subject to the oversight and supervision by Advisor and the
officers and the board of trustees of the Trust, Sub-Advisor shall manage the
investment and reinvestment of that portion of the assets of the Portfolio
that the Advisor shall, from time to time, direct.
2. Sub-Advisor hereby accepts appointment by Advisor in the foregoing
capacity and agrees, at its own expense, to render the services set forth
herein and to provide the office space, furnishings, equipment and personnel
required by it to perform such services on the terms and for the compensation
provided in this Agreement.
3. In particular, Sub-Advisor shall furnish continuously an investment
program for the Portfolio and shall determine from time to time in its
discretion the securities and other investments to be purchased or sold or
exchanged and what portions of the Portfolio shall be held in various
securities, cash or other investments. In this connection, Sub-Advisor shall
provide Advisor and the officers and trustees of the Trust with such reports
and documentation as the latter shall reasonably request regarding
Sub-Advisor's management of the Portfolio assets.
4. Sub-Advisor shall carry out its responsibilities under this Agreement
in compliance with: (a) the Portfolio's investment objective, policies and
restrictions as set forth in the Trust's current registration statement, (b)
such policies or directives as the Trust's trustees may from time to time
establish or issue and communicate to the Sub-Advisor in writing, and (c)
applicable law and related regulations. Advisor shall promptly notify
Sub-Advisor in writing of changes to (a) or (b) above and shall notify
Sub-Advisor in writing of changes to (c) above promptly after it becomes aware
of such changes.
In particular, the Sub-Advisor shall be responsible to ensure that the
Portfolio: (a) complies with the diversification requirements of Section
817(h) of the Internal Revenue Code of 1986, as amended, (the "Code") and
regulations issued thereunder as these apply to separate accounts through
which variable life insurance contracts and variable annuity contracts are
issued, and (b) continuously qualifies as a regulated investment company under
Sub-Chapter M of the Code.
5. Sub-Advisor shall take all actions which it considers necessary to
implement the investment policies of the Portfolio as these relate to the
Portfolio, and in particular, to place all orders for the purchase or sale of
securities or other investments for the Portfolio with brokers or dealers
selected by it, and to that end, Sub-Advisor is authorized as the agent of the
Trust to give instructions to the Trust's custodian as to deliveries of
securities or other investments and payments of cash for the account of the
Portfolio. In connection with the selection of brokers or dealers and the
placing of purchase and sale orders with respect to investments of the
Portfolio, except where Advisor or the Trust instruct Sub-Advisor to place
orders with a particular broker or dealer, Sub-Advisor is directed at all
times to seek to obtain best execution and price within the policy guidelines
determined by the Trust's board of trustees and set forth in the Trust's
current registration statement.
To the extent permitted by the policy guidelines set forth in the
Trust's current registration statement, Sub-Advisor is authorized to consider,
in the selection of brokers and dealers to execute portfolio transactions, not
only the available prices and rates of brokerage commissions, but also other
relevant factors which may include, without limitation: (a) the execution
capabilities of such brokers and dealers, (b) research, custody and other
services provided by such brokers and dealers which the Sub-Advisor believes
will enhance its general portfolio management capabilities, (c) the size of
the transaction, (d) the difficulty of execution, (e) the operational
facilities of such brokers and dealers, (f) the risk to such a broker or
dealer of positioning a block of securities, and (g) the overall quality of
brokerage and research services provided by such brokers and dealers. In
connection with the foregoing, Sub-Advisor is specifically authorized to pay
those brokers and dealers who provide brokerage and research services to it a
higher commission than that charged by other brokers and dealers if the
Sub-Advisor determines in good faith that the amount of such commission is
reasonable in relation to the value of such services in terms of either the
particular transaction or in terms of Sub-Advisor's overall responsibilities
with respect to the Portfolio and to any other client accounts or portfolios
which Sub-Advisor advises, whether or not the Portfolio derives all or any
part of the benefit of such services. The execution of such transactions shall
not be considered to represent an unlawful breach of any duty created by this
Agreement or otherwise.
In connection with the selection of brokers or dealers and the placing
of purchase and sale orders with respect to investments of the Portfolio, when
instructed to do so by either the Trust or the Advisor, Sub-Advisor agrees and
is authorized to place orders with one or more brokers or dealers identified
by the Trust or Advisor (including brokers or dealers who are affiliated
persons of the Trust or Advisor). The execution of such transactions shall not
be considered to represent an unlawful breach of any duty created by this
Agreement or otherwise.
Sub-Advisor also is authorized to aggregate purchase and sale orders
for securities held (or to be held) in the Portfolio with similar orders being
made on the same day for other client accounts or portfolios managed by
Sub-Advisor. When an order is so aggregated: (a) the actual prices applicable
to the aggregated transaction will be averaged and the Portfolio and each
other account or portfolio participating in the aggregated transaction shall
be treated as having purchased or sold its portion of the securities at such
average price, and (b) all transaction costs incurred in effecting the
aggregated transaction shall be shared on a pro-rata basis among the accounts
or portfolios (including the Portfolio) participating in the transaction.
Advisor
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable for the Portfolio.
When recommending or effecting a transaction in a particular security
or investment for more than one client account or portfolio (including the
Portfolio), Sub-Advisor may allocate such recommendations or transactions
among all accounts and portfolios for whom the recommendation is made or
transaction is effected on a basis that Sub-Advisor considers equitable.
6. Sub-Advisor's services under this Agreement are not exclusive.
Sub-Advisor may provide the same or similar services to other clients. Advisor
acknowledges that, except when transactions for multiple clients are
aggregated, transactions in a specific security or other investment may not be
recommended or executed at the same time or price for all client accounts or
portfolios (including the Portfolio) for which that security or investment is
recommended or executed. This Agreement does not require Sub-Advisor to give
priority to the Portfolio over other client accounts or portfolios.
7. Sub-Advisor shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Advisor, the Trust
or the Portfolio or otherwise be deemed agents of the Advisor, the Trust or
the Portfolio.
8. Sub-Advisor or an affiliated person of Sub-Advisor may act as broker
for the Portfolio in connection with the purchase or sale of securities or
other investments for the Portfolio, subject to: (a) the requirement that
Sub-Advisor seek to obtain best execution and price within the policy
guidelines determined by the Trust's board of trustees and set forth in the
Trust's current registration statement; (b) the provisions of the Investment
Advisors Act of 1940, as amended (the "Advisors Act"); (c) the provisions of
the Securities Exchange Act of 1934, as amended; and (d) other applicable
provisions of law. Such brokerage services are not within the scope of the
duties of Sub-Advisor under this Agreement. Subject to the requirements of
applicable law and any procedures adopted by Trust's board of trustees,
Sub-Advisor or its affiliated persons may receive brokerage commissions, fees
or other remuneration from the Portfolio or the Trust for such services in
addition to Sub-Advisor's fees for services under this Agreement.
9. The Advisor delegates the Advisor's discretionary authority to
exercise voting rights with respect to the securities and other investments in
the Portfolio to the Sub-Advisor. The Sub-Advisor shall exercise these voting
rights unless and until the Advisor revokes this delegation. The Advisor may
revoke this delegation at any time without cause. The Sub-Advisor shall
maintain and preserve a record, in an easily-accessible place for a period of
not less than three years, of the Sub-Advisor's voting procedures, and of the
Sub-Advisor's actual votes, and shall supply this record to the Advisor, or
any authorized representative of the Advisor, upon the written request of the
Advisor or the Advisor's authorized representative, as appropriate.
10. Nothing in this Agreement shall require Sub-Advisor to take or receive
physical possession of cash, securities or other investments of the Portfolio.
11. Sub-Advisor is registered with the U.S. Securities and Exchange
Commission under the Advisors Act. Sub-Advisor shall remain so registered
throughout the term of this Agreement and shall notify Advisor immediately if
Sub-Advisor ceases to be so registered as an investment advisor.
12. Sub-Advisor: (a) is duly organized and validly existing under the laws
of the State of Delaware with the power to own and possess its assets and
carry on its business as it is now being conducted, (b) has the authority to
enter into and perform the services contemplated by this Agreement, (c) is not
prohibited by the Investment Company Act of 1940, as amended, (the "1940 Act")
or the Advisors Act from performing the services contemplated by this
Agreement, (d) has met, and will continue to seek to meet for the duration of
this Agreement, any other applicable federal or state requirements, or the
applicable requirements of any regulatory or industry self-regulatory agency,
necessary to be met in order to perform the services this Agreement, and (e)
will promptly notify Advisor of the occurrence of any event that would
disqualify it from serving as an investment advisor to an investment company
pursuant to Section 9(a) of the 1940 Act.
13. Advisor: (a) is duly organized and validly existing under the laws of
the State of Delaware with the power to own and possess its assets and carry
on its business as it is now being conducted, (b) has the authority to enter
into and perform the services contemplated by this Agreement, (c) is not
prohibited by the 1940 Act or the Advisors Act from performing the services
contemplated by this Agreement, (d) has met, and will continue to seek to meet
for the duration of this Agreement, any other applicable federal or state
requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency, necessary to be met in order to perform the services
this Agreement, and (e) will promptly notify Sub-Advisor of the occurrence of
any event that would disqualify it from serving as an investment advisor to an
investment company pursuant to Section 9(a) of the 1940 Act. Advisor
represents that the Trust is (and during the term of this Agreement, will
remain) registered as an open-end management investment company under the 1940
Act and that the shares of the Trust representing an interest in the Portfolio
are (and during the term of this Agreement will remain) registered under the
Securities Act of 1933 and under any applicable state securities laws.
14. Sub-Advisor has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide Advisor and the
Trust with a copy of that code, together with evidence of its adoption. Within
20 days of the end of each calendar quarter during which this Agreement
remains in effect, the president or a vice president of Sub-Advisor shall
certify to Advisor or the Trust that Sub-Advisor has complied with the
requirements of Rule 17j-1 during the previous quarter and that there have
been no violations of Sub-Advisor's code of ethics or, if such a violation has
occurred, that appropriate action has been taken in response to such
violation. Upon written request of Advisor or the Trust, Sub-Advisor shall
permit representatives of Advisor or the Trust to examine the reports (or
summaries of the reports) required to be made to Sub-Advisor by Rule
17j-1(c)(1) and other records evidencing enforcement of the code of ethics.
15. For the services rendered, the facilities furnished and the expenses
assumed by Sub-Advisor, Advisor shall pay Sub-Advisor at the end of each month
a fee based on the average daily net assets of the Portfolio at the following
annual rates:
0.35% on the first $200 million
0.27% on the next $200 million
and
0.25% on amounts in excess of $400 million
Sub-Advisor's fee shall be accrued daily at 1/365th of the applicable annual
rate set forth above. For the purpose of accruing compensation, the net assets
of the Portfolio shall be determined in the manner and on the dates set forth
in the current prospectus of the Trust, and, on days on which the net assets
are not so determined, the net asset value computation to be used shall be as
determined on the immediately preceding day on which the net assets were
determined. In the event of termination of this Agreement, all compensation
due through the date of termination will be calculated on a pro-rated basis
through the date of termination and paid within thirty business days of the
date of termination.
During any period when the determination of net asset value is
suspended, the net asset value of the Portfolio as of the last business day
prior to such suspension shall for this purpose be deemed to be the net asset
value at the close of each succeeding business day until it is again
determined.
16. Sub-Advisor hereby undertakes and agrees to maintain, in the form and
for the period required by Rule 31a-2 under the 1940 Act, all records relating
to the Portfolio's investments that are required to be maintained by the Trust
pursuant to the requirements of paragraphs (b)(5), (b)(6), (b)(7), (b)(9),
(b)(10) and (f) of Rule 31a-1 under the 1940 Act.
Sub-Advisor agrees that all books and records which it maintains for
the Portfolio or the Trust are the property of the Trust and further agrees to
surrender promptly to the Advisor or the Trust any such books, records or
information upon the Advisor's or the Trust's request (provided, however, that
Sub-Advisor may retain copies of such records). All such books and records
shall be made available, within five business days of a written request, to
the Trust's accountants or auditors during regular business hours at
Sub-Advisor's offices. Advisor and the Trust or either of their authorized
representative shall have the right to copy any records in the possession of
Sub-Advisor which pertain to the Portfolio or the Trust. Such books, records,
information or reports shall be made available to properly authorized
government representatives consistent with state and federal law and/or
regulations. In the event of the termination of this Agreement, all such
books, records or other information shall be returned to Advisor or the Trust.
The Sub-Advisor agrees that the policies and procedures established by the
Sub-Advisor for managing the Portfolio, including, but not limited to, all
policies and procedures designed to ensure compliance with federal and state
regulations governing the sub-advisor/client relationship and management and
operation of the Portfolio, shall be made available for inspection by the
Advisor and the Trust or either of their authorized representatives not less
frequently than annually.
17. It is agreed that Sub-Advisor, in the maintenance of its records, does
not assume responsibility for the accuracy of information furnished to it by
the Advisor or the Trust or any other party. Sub-Advisor agrees that it will
not disclose or use any records or confidential information obtained pursuant
to this Agreement in any manner whatsoever except as authorized in this
Agreement or specifically by Advisor or the Trust, or if such disclosure is
required by federal or state regulatory authorities.
Sub-Advisor may disclose the investment performance of the Portfolio,
provided that such disclosure does not reveal the identity of the Advisor, the
Portfolio or the Trust. Sub-Advisor may, however, disclose that Advisor, the
Trust and the Portfolio are its clients, provided that such disclosure does
not reveal the investment performance or the composition of the Portfolio.
18. In the absence of willful misfeasance, bad faith or gross negligence
on the part of Sub-Advisor or its officers, trustees or employees, or reckless
disregard by Sub-Advisor of its duties under this Agreement (together,
"disabling conduct"), Sub-Advisor shall not be liable to Advisor, the
Portfolio, the Trust or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security, except to the extent otherwise provided in Section 36(b) of the 1940
Act concerning loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services. Notwithstanding the foregoing,
breach by the Sub-Advisor of the second paragraph of section 4 hereof is
deemed to be disabling conduct.
19. Sub-Advisor agrees to indemnify and defend Advisor, its officers,
trustees, partners, employees and any person who controls Advisor for any loss
or expense (including attorneys' fees) arising out of any claim, demand,
action, suit or proceeding arising out of any actual or alleged material
misstatement or omission in the Trust's registration statement, any proxy
statement, or communication to current or prospective investors in the
Portfolio relating to disclosure about Sub-Advisor provided to Advisor by
Sub-Advisor.
Sub-Advisor agrees to indemnify and defend Advisor, its officers,
trustees, partners, employees and any person who controls Advisor for any loss
or expense (including attorneys' fees) arising out of any claim, demand,
action, suit or proceeding arising out of the Sub-Advisor's failure to ensure
that the Portfolio: (a) complies with the diversification requirements of
Section 817(h) of the Code and regulations issued thereunder as these apply to
separate accounts through which variable life insurance contracts and variable
annuity contracts are issued, and (b) continuously qualifies as a regulated
investment company under Sub-Chapter M of the Code.
20. Advisor agrees to indemnify and defend Sub-Advisor, its officers,
trustees, partners, employees and any person who controls Sub-Advisor for any
loss or expense (including attorneys' fees) arising out of any claim, demand,
action, suit or proceeding arising out of any actual or alleged material
misstatement or omission in the Trust's registration statement, any proxy
statement, or other communication to current or prospective investors in the
Portfolio (other than a misstatement or omission relating to disclosure about
Sub-Advisor approved by the Sub-Advisor or provided to Advisor or the Trust by
Sub-Advisor).
Sub-Advisor shall not be responsible for any loss incurred by reason of any
act or omission of any broker or dealer or such other party as the Advisor or
the Trust may designate in writing; provided, however, that Sub-Advisor will
make reasonable efforts to require that brokers and dealers perform their
obligations with respect to the Portfolio.
21. The Sub-Advisor agrees to permit the Advisor and the Trust to use its
name, along side the Advisor's name, in the Portfolio's name and in
descriptions of the Portfolio, as these appear in the Trust's prospectus(es)
and/or sales literature related to the Portfolio, provided, however, that the
Advisor and the Trust shall cease such use of the Sub-Advisor's name in the
event that this Agreement is terminated.
22. This Agreement shall not become effective unless and until it is
approved by the board of trustees of the Trust, including a majority of
trustees who are not parties to this Agreement or interested persons of any
such party to this Agreement, and, to the extent required by law, a majority
of the outstanding shares of the class of the Trust's stock representing an
interest in the Portfolio. This Agreement shall come into full force and
effect on the date which it is so approved. This Agreement shall continue in
effect for two years and shall thereafter continue in effect from year to year
so long as such continuance is specifically approved at least annually by (a)
the board of trustees of the Trust, or by the vote of a majority of the
outstanding shares of the class of stock representing an interest in the
Portfolio, and (b) a majority of those trustees who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
23. Notwithstanding any other provision of this Agreement, this Agreement
may be terminated at any time without the payment of any penalty, by the
Trust's board of trustees, or by vote of a majority of the outstanding shares
of the class of stock representing an interest in the Portfolio on sixty days
written notice to the Advisor and Sub-Advisor, or by the Advisor, or by the
Sub-Advisor, on sixty days written notice to the other. This Agreement shall
automatically terminate in the event of its assignment or in the event of the
termination of the investment advisory agreement between the Advisor and the
Trust regarding the Advisor's management of the Portfolio.
24. This Agreement may be amended by the parties only if such amendment is
specifically approved by (a) a majority of those trustees who are not parties
to this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval, and, if required by
applicable law, (b) a majority of votes attributable to the outstanding Trust
shares of the class representing an interest in the Portfolio.
25. The terms "assignment", "affiliated person" and "interested person",
when used in this Agreement, shall have the respective meanings specified in
the 1940 Act. The term "majority of the outstanding shares of the class" means
the lesser of (a) 67% or more of the votes attributable to shares of such
class present at a meeting if more than 50% of the votes attributable to such
shares are present or represented by proxy or (b) more than 50% of the votes
attributable to shares of such class.
26. This Agreement shall be construed in accordance with laws of the State
of Delaware, and applicable provisions of the Advisors Act and 1940 Act.
27. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
Xxxxxx Advisors, LLC
By: /s/ XXXX XXXXXXX
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Name: Xxxx Xxxxxxx
Title: President
ATTEST:
/s/ XXXXXX X. XXXXXX, XX.
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Xxxx X. Xxxxx & Co., Inc.
By: /s/ XXXXX X. XXXXX, CPA
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Name: Xxxxx X. Xxxxx, CPA
Title: Senior Vice President & Chief Financial
Officer
ATTEST:
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