Exhibit 10.26

 

INVESTMENT MANAGEMENT AGREEMENT

 

 

THIS AGREEMENT, dated as of April 10, 2009, is entered into by and between Ivy
Funds Variable Insurance Portfolios (the “Trust”) and Waddell & Reed Investment
Management Company (“WRIMCO”), with respect to each series of the Trust listed
in Appendix A (each, a “Fund”).

 

WITNESSETH:

 

In consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as follows:

 

I.          In General

 

WRIMCO agrees to act as investment adviser to each  Fund with respect to the
investment of its assets and in general to supervise the investments of each
Fund, subject at all times to the direction and control of the Board of Trustees
of the Trust, all as more fully set forth herein.

 

II.         Duties of WRIMCO with respect to investment of assets of the Trust

 

A.  WRIMCO shall regularly provide investment advice to each Fund and shall,
subject to the succeeding provisions of this section, continuously supervise the
investment and reinvestment of cash, securities or other property comprising the
assets of the investment portfolios of each Fund; and in furtherance thereof,
WRIMCO shall as to each Fund:

 

1.  obtain and evaluate pertinent information about significant developments and
economic, statistical and financial data, domestic, foreign or otherwise,
whether affecting the economy generally or one or more of the portfolios of the
Fund, and whether concerning the individual companies whose securities are
included in the Fund’s portfolios or the industries in which they engage, or
with respect to securities which WRIMCO considers desirable for inclusion in the
Fund’s portfolio;

 

2.  furnish continuously an investment program for the Fund;

 

3.  determine what securities shall be purchased or sold by the Fund; and

 

4.  take, on behalf of the Fund, all actions which appear to WRIMCO necessary to
carry into effect such investment programs and supervisory functions as
aforesaid, including the placing of purchase and sell orders.

 

B.  WRIMCO shall make appropriate and regular reports to the Board of Trustees
of the Trust on the actions it takes pursuant to Section II.A. above.  Any
investment programs furnished by WRIMCO under this section, or any supervisory
function taken hereunder by WRIMCO shall at all times conform to and be in
accordance with any requirements imposed by:

 

 

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1.  the provisions of the Investment Company Act of 1940 Act, as amended (“1940
Act”) and any rules or regulations in force thereunder;

 

2.  any other applicable provision of law;

 

3.  the provisions of the Trust Instrument of the Trust as amended from time to
time;

 

4.  the provisions of the Bylaws of the Trust as amended from time to time;

 

5.  the terms of the registration statements of the Trust, as amended from time
to time, under the Securities Act of 1933 and the 1940 Act.

 

C.  Any investment programs furnished by WRIMCO under this section or any
supervisory functions taken hereunder by WRIMCO shall at all times be subject to
any directions of the Board of Trustees of the Trust, its Executive Committee,
or any committee or officer of the Trust acting pursuant to authority given by
the Board of Trustees.

 

III.       Allocation of Expenses

 

The expenses of the Trust and the expenses of WRIMCO in performing its functions
under this Agreement shall be divided into two classes, to wit:  (i) those
expenses which will be paid in full by WRIMCO as set forth in subparagraph “A”
hereof, and (ii) those expenses which will be paid in full by each Fund, as set
forth in subparagraph “B” hereof.

 

A.  With respect to the duties of WRIMCO under Section II above, it shall pay in
full, except as to the brokerage and research services acquired through the
allocation of commissions as provided in Section IV hereinafter, for (a) the
salaries and employment benefits of all employees of WRIMCO who are engaged in
providing these advisory services; (b) adequate office space and suitable office
equipment for such employees; and (c) all telephone and communications costs
relating to such functions.  In addition, WRIMCO shall pay the fees and expenses
of all trustees of the Trust who are employees of WRIMCO or an affiliated
corporation and the salaries and employment benefits of all officers of the
Trust who are affiliated persons of WRIMCO.

 

B.  The Funds shall pay in full for all of their respective expenses which are
not listed above (other than those assumed by WRIMCO or its affiliates in their
respective capacities as principal underwriter of the shares of each of the
Funds, as Shareholder Servicing Agent or as Accounting Services Agent for the
Funds), including (a) the costs of preparing and printing prospectuses and
reports to shareholders of the Funds, including mailing costs; (b) the costs of
printing all proxy statements and all other costs and expenses of meetings of
shareholders of the Funds (unless the Trust and WRIMCO shall otherwise agree);
(c) interest, taxes, brokerage commission and premiums on fidelity and other
insurance; (d) audit fees and expenses of independent accountants and legal fees
and expenses of attorneys, but not of attorneys who are employees of WRIMCO or
an affiliated company; (e) fees and expenses of its trustees not affiliated with
WRIMCO or its affiliates; (f) custodian fees and expenses; (g) fees payable by
the Trust and/or the Funds under the Securities Act of 1933, the 1940 Act and
the securities or

 

 

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“Blue-Sky” laws of any jurisdiction; (h) fees and assessments of the Investment
Company Institute or any successor organization; (i) such nonrecurring or
extraordinary expenses as may arise, including litigation affecting the Trust
and/or the Funds, and any indemnification by the Trust of its officers,
directors, employees and agents with respect thereto; (j) the costs and expenses
provided for in any Shareholder Servicing Agreement or Accounting Services
Agreement, including amendments thereto, contemplated by subsection C of this
Section III.  In the event that any of the foregoing shall, in the first
instance, be paid by WRIMCO, a Fund shall pay the same to WRIMCO on presentation
of a statement with respect thereto.

 

C.  WRIMCO, or an affiliate of WRIMCO, may also act as (i) transfer agent or
shareholder servicing agent of each Fund of the Trust and/or as (ii) accounting
services agent of each Fund of the Trust if at the time in question there is a
separate agreement, “Shareholder Servicing Agreement” and/or “Accounting
Services Agreement,” covering such functions between the Trust and WRIMCO or
such affiliate.  The corporation, whether WRIMCO or its affiliate, which is the
party to such Agreement with the Trust is referred to as the “Agent.”  Each such
Agreement shall provide in substance that it shall not go into effect, or be
amended, or a new agreement covering the same topics between the Trust and the
Agent be entered into as to a Fund, unless the terms of such Agreement, such
amendment or such new agreement have been approved by the Board of Trustees of
the Trust, including the vote of a majority of the trustees who are not
“interested persons” as defined in the 1940 Act, of either party to the
Agreement, such amendment or such new agreement (considering WRIMCO to be such a
party even if at the time in question the Agent is an affiliate of WRIMCO), cast
in person at a meeting called for the purpose of voting on such approval.  Such
a vote is referred to as a “disinterested trustee” vote.  Each such Agreement
shall also provide in substance for its continuance, unless terminated, for a
specified period which shall not exceed two years from the date of its execution
and from year to year thereafter only if such continuance is specifically
approved at least annually by a disinterested trustee vote, and that any
disinterested trustee vote shall include a determination that (i) the Agreement,
amendment, new agreement or continuance in question is in the best interests of
each affected Fund and its shareholders; (ii) the services to be performed under
the Agreement, the Agreement as amended, new agreement or agreement to be
continued are services required for the operation of the Fund; (iii) the Agent
can provide services the nature and quality of which are at least equal to those
provided by others offering the same or similar services; and (iv) the fees for
such services are fair and reasonable in light of the usual and customary
charges made by others for services of the same nature and quality.  Any such
Agreement may also provide in substance that any disinterested trustee vote may
be conditioned on the favorable vote of the holders of a majority (as defined in
or under the 1940 Act) of the outstanding shares of each class or series of the
Trust.  Any such Agreement shall also provide in substance that it may be
terminated as to a Fund by the Agent at any time without penalty upon giving the
Trust one hundred twenty (120) days’ written notice (which notice may be waived
by the Trust) and may be terminated as to a Fund by the Trust at any time
without penalty upon giving the Agent sixty (60) days’ written notice (which
notice may be waived by the Agent), provided that such termination by the Trust
shall be directed or approved by the vote of a majority of the Board of Trustees
of the Trust in office at the time or by the vote of the holders of a majority
(as defined in or under the 1940 Act) of the outstanding shares of each class or
series of the Trust.

 

 

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IV.       Brokerage

 

A.  WRIMCO may select brokers to effect the portfolio transactions of each Fund
on the basis of its estimate of their ability to obtain, for reasonable and
competitive commissions, the best execution of particular and related portfolio
transactions.  For this purpose, “best execution” means prompt and reliable
execution at the most favorable price obtainable.  Such brokers may be selected
on the basis of all relevant factors including the execution capabilities
required by the transaction or transactions, the importance of speed,
efficiency, or confidentiality, and the willingness of the broker to provide
useful or desirable investment research and/or special execution services. 
WRIMCO shall have no duty to seek advance competitive commission bids and may
select brokers based solely on its current knowledge of prevailing commission
rates.

 

B.  Subject to the foregoing, WRIMCO shall have discretion, in the interest of
the Funds, to direct the execution of its portfolio transactions to brokers who
provide brokerage and/or research services (as such services are defined in
Section 28(e) of the Securities Exchange Act of 1934) for the Funds and/or other
accounts for which WRIMCO exercises “investment discretion” (as that term is
defined in Section 3(a)(35) of the Securities Exchange Act of 1934); and in
connection with such transactions, to pay commission in excess of the amount
another adequately qualified broker would have charged if WRIMCO determines, in
good faith, that such commission is reasonable in relation to the value of the
brokerage and/or research services provided by such broker, viewed in terms of
either that particular transaction or the overall responsibilities of WRIMCO
with respect to the accounts for which it exercises investment discretion.  In
reaching such determination, WRIMCO will not be required to attempt to place a
specified dollar amount on the brokerage and/or research services provided by
such broker; provided that WRIMCO shall be prepared to demonstrate that such
determinations were made in good faith, and that all commissions paid by the
Funds over a representative period selected by the Trust’s Board of Trustees
were reasonable in relation to the benefits to the Funds.

 

V.        Compensation of WRIMCO

 

As compensation in full for services rendered and for the facilities and
personnel furnished under sections I, II, and IV of this Agreement, each Fund
will pay to WRIMCO for each day the fees specified in Appendix B hereto.

 

The amounts payable to WRIMCO shall be determined as of the close of business
each day; shall, except as set forth below, be based upon the value of net
assets computed in accordance with the Trust Instrument; and shall be paid in
arrears whenever requested by WRIMCO.  In computing the value of the net assets
of each Fund, there shall be excluded the amount owed to the Fund with respect
to shares which have been sold but not yet paid to the Fund by Waddell &
Reed, Inc.

 

Notwithstanding the foregoing, if the laws, regulations or policies of any state
in which shares of the Funds are qualified for sale limit the operation and
management expenses of the Funds, WRIMCO will refund to the Funds the amount by
which such expenses exceed the lowest of such state limitations.

 

 

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VI.       Undertakings of WRIMCO; Liabilities

 

WRIMCO shall give to the Trust the benefit of its best judgment, efforts and
facilities in rendering advisory services hereunder.

 

WRIMCO shall at all times be guided by and be subject to each Fund’s investment
policies, the provisions of the Trust Instrument and Bylaws of the Trust as each
shall from time to time be amended, and to the decision and determination of the
Trust’s Board of Trustees.

 

This Agreement shall be performed in accordance with the requirements of the
1940 Act, the Investment Advisers Act of 1940, the Securities Act of 1933, and
the Securities Exchange Act of 1934, to the extent that the subject matter of
this Agreement is within the purview of such Acts.  Insofar as applicable to
WRIMCO as an investment adviser and affiliated person of the Trust, WRIMCO shall
comply with the provisions of the 1940 Act, the Investment Advisers Act of 1940
and the respective rules and regulations of the Securities and Exchange
Commission thereunder.

 

In the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of WRIMCO it shall not
be subject to liability to the Trust or to any shareholder of the Funds (direct
or beneficial) for any act or omission in the course of or connected with
rendering services thereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.

 

VII.      Duration of this Agreement

 

This Agreement shall become effective on April 30, 2009, and shall continue in
effect as to a Fund, unless terminated as hereinafter provided, for a period of
one year and from year-to-year thereafter only if such continuance is
specifically approved at least annually by the Board of Trustees, including the
vote of a majority of the trustees who are not parties to this Agreement or
“interested persons” (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval, or by the
vote of the holders of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the Fund.

 

VIII.     Termination

 

This Agreement may be terminated as to a Fund by WRIMCO at any time without
penalty upon giving the Trust one hundred twenty (120) days’ written notice
(which notice may be waived by the Trust) and may be terminated as to a Fund by
the Trust at any time without penalty upon giving WRIMCO sixty (60) days’
written notice (which notice may be waived by WRIMCO), provided that such
termination by the Trust shall be directed or approved by the vote of a majority
of the Board of Trustees of the Trust in office at the time or by the vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities of
the affected Fund.  This Agreement shall automatically terminate in the event of
its assignment, the term “assignment” for this purpose having the meaning
defined in Section 2(a)(4) of the 1940 Act and the rules and regulations
thereunder.

 

 

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IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to
be executed by their duly authorized officers and their corporate seal to be
hereunto affixed, all as of the day and year first above written.

 

 

 

IVY FUNDS VARIABLE INSURANCE

 

PORTFOLIOS

 

 

 

 

 

By:

   /s/ Mara Herrington

 

 

 

Mara Herrington

 

 

 

Vice President

 

 

 

 

 

ATTEST:

 

 

 

By:

 /s/ Megan E. Bray

 

 

 

Megan E. Bray

 

 

 

Assistant Secretary

 

 

 

 

 

 

 

 

 

 

 

WADDELL & REED INVESTMENT

 

MANAGEMENT COMPANY

 

 

 

By:

   /s/ Henry J. Herrmann

 

 

 

Henry J. Herrmann

 

 

 

President

 

 

ATTEST:

 

 

 

By:

/s/ Wendy J. Hills

 

 

 

Wendy J. Hills

 

 

 

Secretary

 

 

 

 

 

 

 

 

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APPENDIX A

TO INVESTMENT MANAGEMENT AGREEMENT

 

 

Ivy Funds VIP Asset Strategy

Ivy Funds VIP Balanced

Ivy Funds VIP Bond

Ivy Funds VIP Core Equity

Ivy Funds VIP Dividend Opportunities

Ivy Funds VIP Energy

Ivy Funds VIP Growth

Ivy Funds VIP High Income

Ivy Funds VIP International Growth

Ivy Funds VIP Mid Cap Growth

Ivy Funds VIP Money Market

Ivy Funds VIP Science and Technology

Ivy Funds VIP Small Cap Growth

Ivy Funds VIP Value

Ivy Funds VIP Pathfinder Aggressive

Ivy Funds VIP Pathfinder Moderately Aggressive

Ivy Funds VIP Pathfinder Moderate

Ivy Funds VIP Pathfinder Moderately Conservative

Ivy Funds VIP Pathfinder Conservative

 

 

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APPENDIX B

TO INVESTMENT MANAGEMENT AGREEMENT

 

 

IVY FUNDS VARIABLE INSURANCE PORTFOLIOS

 

FEE SCHEDULE

 

 

A cash fee computed each day on net asset value for each Fund at the annual
rates listed below*:

 

 

Asset Strategy

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.70%

Over $1 billion and up to $2 billion

 

0.65%

Over $2 billion and up to $3 billion

 

0.60%

Over $3 billion

 

0.55%

 

 

 

Balanced

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.70%

Over $1 billion and up to $2 billion

 

0.65%

Over $2 billion and up to $3 billion

 

0.60%

Over $3 billion

 

0.55%

 

 

 

Bond

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.475%

Over $1 billion and up to $1.5 billion

 

0.450%

Over $1.5 billion

 

0.400%

 

 

 

Core Equity

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.70%

Over $1 billion and up to $2 billion

 

0.65%

Over $2 billion and up to $3 billion

 

0.60%

Over $3 billion

 

0.55%

 

 

 

Dividend Opportunities

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.70%

Over $1 billion and up to $2 billion

 

0.65%

Over $2 billion and up to $3 billion

 

0.60%

Over $3 billion

 

0.55%

 

 

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Energy

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.85%

Over $1 billion and up to $2 billion

 

0.83%

Over $2 billion and up to $3 billion

 

0.80%

Over $3 billion

 

0.76%

 

 

 

Growth

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.70%

Over $1 billion and up to $2 billion

 

0.65%

Over $2 billion and up to $3 billion

 

0.60%

Over $3 billion

 

0.55%

 

 

 

High Income

 

 

Net Assets

 

Fee

Up to $500 million

 

0.625%

Over $500 million and up to $1 billion

 

0.600%

Over $1 billion and up to $1.5 billion

 

0.550%

Over $1.5 billion

 

0.500%

 

 

 

International Growth

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.85%

Over $1 billion and up to $2 billion

 

0.83%

Over $2 billion and up to $3 billion

 

0.80%

Over $3 billion

 

0.76%

 

 

 

Mid Cap Growth

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.85%

Over $1 billion and up to $2 billion

 

0.83%

Over $2 billion and up to $3 billion

 

0.80%

Over $3 billion

 

0.76%

 

Money Market

A cash fee computed each day on net asset values for the Fund at the annual rate
of 0.40% of net assets.

 

Science & Technology

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.85%

Over $1 billion and up to $2 billion

 

0.83%

Over $2 billion and up to $3 billion

 

0.80%

Over $3 billion

 

0.76%

 

 

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Small Cap Growth

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.85%

Over $1 billion and up to $2 billion

 

0.83%

Over $2 billion and up to $3 billion

 

0.80%

Over $3 billion

 

0.76%

 

 

 

Value

 

 

Net Assets

 

Fee

Up to $1 billion

 

0.70%

Over $1 billion and up to $2 billion

 

0.65%

Over $2 billion and up to $3 billion

 

0.60%

Over $3 billion

 

0.55%

 

 

 

W&R Target Pathfinder Aggressive

W&R Target Pathfinder Moderately Aggressive

W&R Target Pathfinder Moderate

W&R Target Pathfinder Moderately Conservative

W&R Target Pathfinder Conservative

Net Assets

 

Fee

All net assets

 

0.00%

 

 

*If a Fund’s net assets are less than $25 million, WRIMCO has agreed to
voluntarily waive the management fee, subject to its right to change or modify
this waiver.

 

 

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