VIRTUS VARIABLE INSURANCE TRUST
Virtus Premium AlphaSector Series
SUBADVISORY AGREEMENT
February 14, 2011
F-Squared Institutional Advisors, LLC
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
RE: Subadvisory Agreement
Ladies and Gentlemen:
Virtus Variable Insurance Trust (formerly The Phoenix Edge
Series Fund) (the "Fund") is an open-end investment company
of
the series type registered under the Investment Company Act
of
1940 (the "Act"), and is subject to the rules and regulations
promulgated thereunder. The shares of the Fund are offered
or
may be offered in several series (collectively, sometimes
hereafter referred to as the "Series").
Virtus Investment Advisers, Inc. (the "Adviser") evaluates
and
recommends series advisers for the Series and is responsible
for the day-to-day management of the Series.
1. Employment as a Subadviser. The Adviser, being duly
authorized, hereby employs F-Squared Institutional
Advisors, LLC (the "Subadviser") to furnish investment
advisory services to the Fund related to the Fund's
Premium AlphaSector strategy (the "AlphaSector Strategy")
for the Series designated by the Adviser as set forth on
Schedule C attached hereto (the "Designated Series") on
the terms and conditions set forth herein. The services
of the Subadviser hereunder are not to be deemed
exclusive; the Subadviser may render services to others
and engage in other activities that do not conflict in
any material manner with the Subadviser's performance
hereunder.
2. Acceptance of Employment; Standard of Performance. The
Subadviser accepts its employment as a discretionary
series adviser of the Designated Series and agrees to use
its best professional judgment to make investment
recommendations for the Designated Series in accordance
with the provisions of this Agreement and as set forth in
Schedule B attached hereto and made a part hereof.
3. Services of Subadviser. In providing advisory services
to the Designated Series, the Subadviser shall be subject
to the investment objectives, policies and restrictions
of the Fund as they apply to the Designated Series and as
set forth in the Fund's then current prospectus
("Prospectus") and statement of additional information
("Statement of Additional Information") filed with the
Securities and Exchange Commission (the "SEC") as part of
the Fund's Registration Statement, as may be periodically
amended and provided to the Subadviser by the Adviser,
and to the investment restrictions set forth in the Act
and the Rules thereunder, to the supervision and control
of the Trustees of the Fund (the "Trustees"), and to
instructions from the Adviser. The Subadviser shall not
recommend any transactions that would cause the
Designated Series at the time of the transaction to be
out of compliance with any of such restrictions or
policies.
4. Transaction Procedures. The Subadviser's duties under
this Agreement are limited to providing recommendations
to the Adviser with respect to the Designated Series.
The Subadviser shall have no authority or responsibility
for implementing its recommendations on behalf of the
Designated Series, including the execution of any
transactions (other than with respect to Subadviser's
recommendations as set forth herein). The Subadviser
shall not have possession or custody of such cash and/or
securities or any responsibility or liability with
respect to the custody of such cash and/or securities by
other persons.
5. Allocation of Brokerage. The Subadviser shall not have
any authority or discretion to select brokers and dealers
to execute Designated Series transactions.
6. Proxies. The Subadviser shall have no authority or
responsibility for voting or handling proxies in relation
to the assets of the Designated Series. The Subadviser
is similarly not authorized to deal with reorganizations,
exchange offers, other voluntary corporate actions or any
litigation with respect to securities held in the
Designated Series, unless the Fund or the Adviser
otherwise specifically directs in writing.
7. Prohibited Conduct. In providing the services described
in this Agreement, the Subadviser's responsibility
regarding investment advice hereunder is limited to the
Designated Series, and the Subadviser will not consult
with any other investment advisory firm that provides
investment advisory services to the Fund or any other
investment company sponsored by Virtus Investment
Partners, Inc. regarding recommended transactions for the
Fund in securities or other assets. The Fund shall
provide the Subadviser with a list of investment
companies sponsored by Virtus Investment Partners, Inc.
and the Subadviser shall be in breach of the foregoing
provision only if the investment company is included in
such a list provided to the Subadviser prior to such
prohibited action. In addition, the Subadviser shall
not, without the prior written consent of the Fund and
the Adviser, delegate any obligation assumed pursuant to
this Agreement to any affiliated or unaffiliated third
party.
8. Information and Reports.
A. The Subadviser shall keep the Fund and the Adviser
informed of developments relating to its duties as
Subadviser of which the Subadviser has, or should
have, knowledge that would materially affect the
Designated Series. In this regard, the Subadviser
shall provide the Fund, the Adviser and their
respective officers with such periodic reports
concerning the obligations the Subadviser has
assumed under this Agreement as the Fund and the
Adviser may from time to time reasonably request.
In addition, prior to each meeting of the Trustees,
the Subadviser shall provide the Adviser and the
Trustees with reports regarding the Subadviser's
advisory services to the Designated Series during
the most recently completed quarter, which reports:
(i) shall include Subadviser's representation that
its performance of its investment advisory duties
hereunder is in compliance with the Fund's
investment objectives and practices, the Act and
applicable rules and regulations under the Act, and
(ii) otherwise shall be in such form as may be
mutually agreed upon by the Subadviser and the
Adviser.
B. Each of the Adviser and the Subadviser shall provide
the other party with a list, to the best of the
Adviser's or the Subadviser's respective knowledge,
of each affiliated person (and any affiliated person
of such an affiliated person) of the Adviser or the
Subadviser, as the case may be, and each of the
Adviser and Subadviser agrees promptly to update
such list whenever the Adviser or the Subadviser
becomes aware of any changes that should be added to
or deleted from the list of affiliated persons.
C. The Subadviser shall also provide the Adviser with
any information reasonably requested by the Adviser
regarding its advice related to the Designated
Series required for any shareholder report, amended
registration statement, or Prospectus supplement to
be filed by the Fund with the SEC.
9. Fees for Services. The compensation of the Subadviser
for its services under this Agreement shall be calculated
and paid by the Adviser in accordance with the attached
Schedule A. Pursuant to the Investment Advisory
Agreement between the Fund and the Adviser, the Adviser
is solely responsible for the payment of fees to the
Subadviser.
10. Limitation of Liability. Except as otherwise stated in
this Agreement, neither the Subadviser, nor any of its
directors (including the limited liability company
managers of the Subadviser), officers or employees, shall
be liable for any action taken, omitted or suffered to be
taken by it in its best professional judgment, in good
faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Agreement, or in accordance with specific directions or
instructions from the Fund, provided, however, that such
acts or omissions shall not have constituted a material
breach of the investment objectives, policies and
restrictions applicable to the Designated Series as
defined in the Prospectus and Statement of Additional
Information and that such acts or omissions shall not
have resulted from the Subadviser's willful misfeasance,
bad faith or gross negligence, or reckless disregard of
its obligations and duties hereunder.
11. Confidentiality. Subject to the duty of the Subadviser
and the Fund to comply with applicable law, including any
demand of any regulatory or taxing authority having
jurisdiction, the parties hereto shall treat as
confidential all information pertaining to the Designated
Series and the actions of the Subadviser and the Fund in
respect thereof. Notwithstanding the foregoing, the Fund
and the Adviser agree that the Subadviser may (i)
disclose in marketing materials and similar
communications that the Subadviser has been engaged to
manage assets of the Designated Series pursuant to this
Agreement, and (ii) include performance statistics
regarding the Series in composite performance statistics
regarding one or more groups of Subadviser's clients
published or included in any of the foregoing
communications, provided that the Subadviser does not
identify any performance statistics as relating
specifically to the Series.
12. Assignment. This Agreement shall terminate automatically
in the event of its assignment, as that term is defined
in Section 2(a)(4) of the Act. The Subadviser shall
notify the Fund and the Adviser in writing sufficiently
in advance of any proposed change of control, as defined
in Section 2(a)(9) of the Act, as will enable the Fund to
consider whether an assignment as defined in Section
2(a)(4) of the Act will occur, and to take the steps
necessary to enter into a new contract with the
Subadviser.
13. Representations, Warranties and Agreements.
A. The Subadviser represents, warrants and agrees that:
1. it is a limited liability company duly
established, validly existing and in good
standing under the laws of the State of Delaware
and is duly qualified to do business and is in
good standing under the laws of each
jurisdiction where the failure to so qualify
would have a material adverse effect on its
business;
2. it is duly registered as an "investment adviser"
under the Advisers Act;
3. the execution, delivery and performance of this
Agreement are within the Subadviser's powers,
have been and remain duly authorized by all
necessary corporate action and will not violate
or constitute a default under any applicable law
or regulation or of any decree, order, judgment,
agreement or instrument binding on the
Subadviser;
4. no consent of any applicable governmental
authority or body is necessary, except for such
consents as have been obtained and are in full
force and effect, and all conditions of which
have been duly complied with;
5. this Agreement constitutes a legal, valid and
binding obligation enforceable against the
Subadviser;
6. It will maintain, keep current and preserve on
behalf of the Fund, in the manner required or
permitted by the Act and the Rules thereunder as
are required of an investment adviser of a
registered investment company (to the extent
applicable). The Subadviser agrees that such
records are the property of the Fund, and shall
be surrendered to the Fund or to the Adviser as
agent of the Fund promptly upon request of
either. The Fund acknowledges that Subadviser
may retain copies of all records required to
meet the record retention requirements imposed
by law and regulation.
7. It shall maintain a written code of ethics (the
"Code of Ethics") complying with the
requirements of Rule 204A-1 under the Advisers
Act and Rule 17j-l under the Act and shall
provide the Fund and the Adviser with a copy of
the Code of Ethics and evidence of its adoption.
It shall institute procedures reasonably
necessary to prevent Access Persons (as defined
in Rule 17j-1) from violating its Code of
Ethics. The Subadviser acknowledges receipt of
the written code of ethics adopted by and on
behalf of the Fund. Each calendar quarter while
this Agreement is in effect, a duly authorized
compliance officer of the Subadviser shall
certify to the Fund and to the Adviser that the
Subadviser has complied with the requirements of
Rules 204A-1 and 17j-l during the previous
calendar quarter and that there has been no
material violation of its Code of Ethics, or of
Rule 17j-1(b), or that any persons covered under
its Code of Ethics has divulged or acted upon
any material, non-public information, as such
term is defined under relevant securities laws,
and if such a violation has occurred or the code
of ethics of the Fund, or if such a violation of
its Code of Ethics has occurred, that
appropriate action was taken in response to such
violation. Annually, the Subadviser shall
furnish to the Fund and the Adviser a written
report which complies with the requirements of
Rule 17j-1 concerning the Subadviser's Code of
Ethics. The Subadviser shall permit the Fund
and the Adviser to examine the reports required
to be made by the Subadviser under Rules 204A-
1(b) and 17j-l(d)(1) and this subparagraph.
8. It has adopted and implemented, and throughout
the term of this Agreement shall maintain in
effect and implement, written policies and
procedures reasonably designed to prevent
violations, by it and its supervised persons, of
the Advisers Act and the rules that the SEC has
adopted under the Advisers Act. Throughout the
term of this Agreement, the Subadviser shall
provide the Adviser with any certifications,
information and access to personnel and
resources (including those resources that will
permit testing of Subadviser's compliance
policies by the Adviser) that the Adviser may
reasonably request to enable the Fund to comply
with Rule 38a-1 under the Act. The Subadviser
has provided the Fund with true and complete
copies of its policies and procedures (or
summaries thereof) and related information
reasonably requested by the Fund and/or the
Adviser. The Subadviser agrees to cooperate
with periodic reviews by the Fund's and/or the
Adviser's compliance personnel of the
Subadviser's policies and procedures, their
operation and implementation and other
compliance matters and to provide to the Fund
and/or the Adviser from time to time such
additional information and certifications in
respect of the Subadviser's policies and
procedures, compliance by the Subadviser with
federal securities laws and related matters as
the Fund's and/or the Adviser's compliance
personnel may reasonably request. The
Subadviser agrees to promptly notify the Adviser
of any compliance violations which affect the
Designated Series.
9. The Subadviser will immediately notify the Fund
and the Adviser of the occurrence of any event
which would disqualify the Subadviser from
serving as an investment adviser of an
investment company pursuant to Section 9 of the
Act or otherwise. The Subadviser will also
immediately notify the Fund and the Adviser 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 Designated Series.
B. The Fund represents, warrants and agrees that:
1. the Fund is a statutory trust established
pursuant to the laws of State of Delaware;
2. the Fund is duly registered as an investment
company under the 1940 Act;
3. the execution, delivery and performance of this
Agreement are within the Fund's powers, have
been and remain duly authorized by all necessary
action (including without limitation all
necessary approvals and other actions required
under the 0000 Xxx) and will not violate or
constitute a default under any applicable law or
regulation or of any decree, order, judgment,
agreement or instrument binding on the Fund;
4. no consent of any applicable governmental
authority or body is necessary, except for such
consents as have been obtained and are in full
force and effect, and all conditions of which
have been duly complied with; and
5. this Agreement constitutes a legal, valid and
binding obligation enforceable against the Fund
in accordance with its terms.
C. The Adviser represents, warrants and agrees that:
1. the Adviser is a corporation duly established,
validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and is
duly qualified to do business and is in good
standing under the laws of each jurisdiction
where the failure to so qualify would have a
material adverse effect on its business;
2. Adviser is duly registered as an "investment
adviser" under the Advisers Act;
3. Adviser has been duly appointed by the Trustees
and shareholders of the Fund to provide
investment services to the Fund as contemplated
by the advisory contract;
4. the execution, delivery and performance of this
Agreement are within Adviser's powers, have been
and remain duly authorized by all necessary
corporate action and will not violate or
constitute a default under any applicable law or
regulation or of any decree, order, judgment,
agreement or instrument binding on Adviser;
5. no consent of any applicable governmental
authority or body is necessary, except for such
consents as have been obtained and are in full
force and effect, and all conditions of which
have been duly complied with; and
6. this Agreement constitutes a legal, valid and
binding obligation enforceable against Adviser.
14. No Personal Liability. Reference is hereby made to the
Declaration of Trust establishing the Fund, a copy of
which has been filed with the Secretary of the State of
Delaware and elsewhere as required by law, and to any and
all amendments thereto so filed with the Secretary of the
State of Delaware and elsewhere as required by law, and
to any and all amendments thereto so filed or hereafter
filed. The name "Virtus Variable Insurance Trust" refers
to the Trustees under said Declaration of Trust, as
Trustees and not personally, and no Trustee, shareholder,
officer, agent or employee of the Fund shall be held to
any personal liability in connection with the affairs of
the Fund; only the trust estate under said Declaration of
Trust is liable. Without limiting the generality of the
foregoing, neither the Subadviser nor any of its
officers, directors, partners, shareholders or employees
shall, under any circumstances, have recourse or cause or
willingly permit recourse to be had directly or
indirectly to any personal, statutory, or other liability
of any shareholder, Trustee, officer, agent or employee
of the Fund or of any successor of the Fund, whether such
liability now exists or is hereafter incurred for claims
against the trust estate.
15. Entire Agreement; Amendment. This Agreement, together
with the Schedules attached hereto, constitutes the
entire agreement of the parties with respect to the
subject matter hereof and supersedes any prior written or
oral agreements pertaining to the subject matter of this
Agreement. This Agreement may be amended at any time, but
only by written agreement among the Subadviser, the
Adviser and the Fund, which amendment, other than
amendments to Schedules B and C is subject to the
approval of the Trustees and the shareholders of the Fund
as and to the extent required by the Act, subject to any
applicable orders of exemption issued by the SEC.
16. Effective Date; Term. This Agreement shall become
effective on the date set forth on the first page of this
Agreement, and shall continue in effect until December
31, 2011. The Agreement shall continue from year to year
thereafter only so long as its continuance has been
specifically approved at least annually by the Trustees
in accordance with Section 15(a) of the Act, and by the
majority vote of the disinterested Trustees in accordance
with the requirements of Section 15(c) thereof.
17. Termination. This Agreement may be terminated by any
party, without penalty, immediately upon written notice
to the other parties in the event of a material breach of
any provision thereof by a party so notified, or
otherwise upon thirty (30) days' written notice to the
other parties, but any such termination shall not affect
the status, obligations or liabilities of any party
hereto to the other parties.
18. Applicable Law. To the extent that state law is not
preempted by the provisions of any law of the United
States heretofore or hereafter enacted, as the same may
be amended from time to time, this Agreement shall be
administered, construed and enforced according to the
laws of the State of Delaware.
19. Severability. If any term or condition of this Agreement
shall be invalid or unenforceable to any extent or in any
application, then the remainder of this Agreement shall
not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced
to the fullest extent permitted by law.
20. Notices. Any notice or other communication required to
be given pursuant to this Agreement shall be deemed duly
given if delivered personally or by overnight delivery
service or mailed by certified or registered mail, return
receipt requested and postage prepaid, or sent by
facsimile addressed to the parties at their respective
addresses set forth below, or at such other address as
shall be designated by any party in a written notice to
the other party.
(a) To Virtus or the Fund at:
Virtus Investment Advisers, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxx.xxxx@xxxxxx.xxx
(b) To Subadviser at:
F-Squared Institutional Advisors, LLC
00 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx Present
Telephone: 000-000-0000
Facsimile: 000-000-0000
Email: xxxxxxxx@x-xxxxxxxxxxxxxxxxxx.xxx
21. Certifications. The Subadviser hereby warrants and
represents that it will provide any requisite
certifications reasonably requested by the chief
executive officer and chief financial officer of the Fund
necessary for those named officers to fulfill their
reporting and certification obligations on Form N-CSR and
Form N-Q as required under the Xxxxxxxx-Xxxxx Act of 2002
to the extent that such reporting and certifications
relate to the Subadviser's duties and responsibilities
under this Agreement.
22. Indemnification. The Adviser agrees to indemnify and
hold harmless the Subadviser and the Subadviser's
directors, officers, employees and agents from and
against any and all losses, liabilities, claims, damages,
and expenses whatsoever, including reasonable attorneys'
fees (collectively, "Losses"), arising out of or relating
to (i) any breach by the Adviser of any provision of this
Agreement; (ii) the negligence, willful misconduct, bad
faith, or breach of fiduciary duty of the Adviser; (iii)
any violation by the Adviser of any law or regulation
relating to its activities under this Agreement; and (iv)
any dispute between the Adviser and any Fund shareholder,
except to the extent that such Losses result from the
gross negligence, willful misconduct, bad faith of the
Subadviser or the Subadviser's reckless disregard of its
obligations and duties hereunder.
23. Receipt of Disclosure Document. The Fund and the Adviser
acknowledge receipt, at least 48 hours prior to entering
into this Agreement, of a copy of Part II of the
Subadviser's Form ADV containing certain information
concerning the Subadviser and the nature of its business.
24. Relationship of Parties. The Adviser, the Fund and
Subadviser are not partners or joint venturers with each
other and nothing in this Agreement shall be construed so
as to make them partners or joint venturers or impose any
liability as such on either of them. Subadviser shall
perform its duties under this Agreement as an independent
contractor and not as an agent of the Fund, the Trustees
or the Adviser.
25. AlphaSector License. The Adviser and the Fund
acknowledge that Subadviser is providing advisory
services related to the AlphaSector Strategy pursuant to
an AlphaSector License and Redistribution Agreement
between Subadviser and Active Index Solutions, LLC (the
"License Agreement"). The Adviser (on behalf of itself
and its affiliated persons) and the Fund (on behalf of
itself and the Trustees) hereby acknowledge that they do
not have nor will they obtain under any of the terms of
this Agreement any ownership claim, right, title,
interest or license to the AlphaSector Strategy or any
intellectual property of Subadviser, or any intellectual
property rights relating thereto, other than to receive
the services of Subadviser, as described in and in
accordance with the terms of this Agreement.
26. Counterparts; Fax Signatures. This Agreement may be
executed in any number of counterparts (including
executed counterparts delivered and exchanged by
facsimile transmission) with the same effect as if all
signing parties had originally signed the same document,
and all counterparts shall be construed together and
shall constitute the same instrument. For all purposes,
signatures delivered and exchanged by facsimile
transmission shall be binding and effective to the same
extent as original signatures.
[signature page follows]
VIRTUS VARIABLE INSURANCE TRUST
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
VIRTUS INVESTMENT ADVISERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
ACCEPTED:
F-Squared Institutional Advisors, LLC
By: /s/ Xxxxxx Present
Name: Xxxxxx Present
Title: Chief Executive Officer
SCHEDULES: A. Fee Schedule
B. Subadviser Functions
C. Designated Series
SCHEDULE A
FEE SCHEDULE
(a) For services provided to the Fund, the Adviser will
pay to the Subadviser a monthly fee, payable in arrears, at
the annual rate stated below. The fee shall be prorated for
any month during which this Agreement is in effect for only a
portion of the month. Payment shall be made in federal funds
wired to a bank account designated by Subadviser. In
computing the fee to be paid to the Subadviser, the net asset
value of each Designated Series shall be valued as set forth
in the then current registration statement of the Fund.
(b) The fee to be paid to the Subadviser is to be 50%
of
the net advisory fee applicable to the Designated Series.
For
this purpose, the "net advisory fee" means the advisory fee
paid to the Adviser after accounting for any applicable fee
waiver and/or expense limitation agreement, which shall not
include reimbursement of the Adviser for any expenses or
recapture of prior waivers. In the event that the Adviser
waives its entire fee and also assumes expenses of the
Designated Series pursuant to an applicable expense
limitation
agreement, the Subadviser will similarly waive its entire fee
and will share in the expense assumption by contributing 50%
of the assumed amount. However, because the Subadviser
shares
the fee waiver and/or expense assumption equally with the
Adviser, if during the term of this Agreement the Adviser
later recaptures some or all of the fees so waived or
expenses
so assumed by the Adviser and the Subadviser together, the
Adviser shall pay to the Subadviser 50% of the amount
recaptured.
SCHEDULE B
SUBADVISER FUNCTIONS
With respect to its investment advisory services
hereunder, the Subadviser shall, at its own expense:
(a) Furnish investment advisory services to the
Designated Series related to its AlphaSector
Strategy, consistent with the terms of this
Agreement. In furnishing these investment advisory
services, the Subadviser shall:
(i) to the extent it deems necessary, formulate,
revise and update the investment models and
analyses comprising the AlphaSector Strategy;
(ii) calculate and promptly provide to the Adviser
the monthly results of the investment models and
assist the Adviser in interpreting such results
with respect to the investment programs for the
Designated Series;
(iii) assist the Adviser in selecting appropriate
investments for the Designated Series to enter
into in order to implement the AlphaSector
Strategy; and
(iv) provide such reports with respect to the
implementation of the AlphaSector Strategy by
the Designated Series as the Adviser or Trustees
shall reasonably request;
(b) Promptly after filing with the SEC an amendment to
its Form ADV, provide a copy of such amendment to
the Adviser and the Fund;
(c) Ensure that appropriate representatives of the
Subadviser attend meetings requested by the Adviser
or Fund at such time(s) and location(s) as
reasonably requested by the Adviser or Fund.
SCHEDULE C
DESIGNATED SERIES
Virtus Premium AlphaSector Series
