ACCESS VARIABLE INSURANCE TRUST
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT, dated as of May 1, 2003, between Access Fund
Management, LLC (the "Adviser"), and Xxxxx Asset Management, Inc. (the
"Sub-Adviser").
WHEREAS, the Adviser acts as an investment adviser to several series of
Access Variable Insurance Trust, an Ohio business trust (the "Trust"), pursuant
to a Management Agreement dated as of May 1, 2003 (the "Management Agreement");
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to render
investment advisory services to the Xxxxx S&P REIT Index Portfolio (the
"Portfolio"), a series of shares of beneficial interest of the Trust, and the
Sub-Adviser is willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
Section 1. Appointment and Status of Sub-Adviser. The Adviser hereby
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appoints the Sub-Adviser to provide investment advisory services to the
Portfolio for the period and on the terms set forth in this Agreement. The
Sub-Adviser accepts such appointment and agrees to render the services herein
set forth, for the compensation herein provided. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor of the Adviser and
the Trust and shall, unless otherwise expressly provided herein or authorized
by the Adviser or the Board of Trustees of the Trust from time to time, have
no authority to act for or represent the Adviser or the Trust in any way or
otherwise be deemed an agent of the Adviser or the Trust.
Section 2. Sub-Adviser's Duties. Subject to the general supervision of
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the Trust's Board of Trustees (the "Board") and the Adviser, the Sub-Adviser
shall, employing its discretion, manage the investment operations of the
Portfolio and the composition of the portfolio of securities and investments
(including cash) belonging to the Portfolio, including the purchase, retention
and disposition thereof, in accordance with the Portfolio's investment
objective, policies and restrictions as stated in the Portfolio's then-current
Prospectus and Statement of Additional Information (together, the "Prospectus")
and subject to the following understandings:
(a) The Sub-Adviser shall furnish a continuous investment program
for the Portfolio and determine from time to time what investments or
securities will be purchased, retained or sold by the Portfolio and what
portion of the assets belonging to the Portfolio will be invested or held
uninvested as cash;
(b) The Sub-Adviser, in the performance of its duties and
obligations under this Agreement for the Portfolio, shall act in conformity
with the Trust's Declaration of Trust, its By-Laws and the Portfolio's
Prospectus and with the reasonable instructions and directions of the Trust's
Board of Trustees and the Adviser, and will conform to and comply with the
requirements of the 1940 Act and all other applicable federal and state laws
and regulations;
(c) The Sub-Adviser shall determine the securities to be purchased
or sold by the Portfolio and will place portfolio transactions pursuant to its
determinations either directly with the issuer or with any broker and/or dealer
in such securities, subject to Section 3 below;
(d) The Sub-Adviser shall maintain books and records with respect
to the securities transactions of the Portfolio and shall render to the Adviser
and the Trust's Board of Trustees such periodic and special reports as the
Adviser or the Board may reasonably request;
(e) The Sub-Adviser shall provide the Trust's custodian on each
business day with information about Portfolio securities transactions, and with
such other information relating to the Trust as may be required under the terms
of the then-current custody agreement between the Trust and the custodian;
(f) The Sub-Adviser agrees to respond promptly to reasonable
requests from the Adviser or the Portfolio's fund accountant for assistance in
obtaining price sources for securities held by the Portfolio or determining a
price when a price source is not available and to promptly notify the
Portfolio's fund accountant if the Sub-Adviser becomes aware of facts or
circumstances which indicate to the Sub-Adviser that the last available sale
price does not reflect the current market value of a security; and
(g) The Sub-Adviser agrees to maintain adequate compliance
procedures to ensure its compliance with the 1940 Act, the Investment Advisers
Act of 1940, as amended, and other applicable federal and state regulations.
(h) Notwithstanding any other provision of this Agreement, the
Adviser and Sub-Adviser hereby agree that the Sub-Adviser may perform its
duties or meet its obligations under this Agreement (i) directly; or (ii)
indirectly by engaging a third party investment adviser (the "Sub-Sub-Adviser")
to perform such duties and meet such obligations; provided, however, that, to
the extent required under the 1940 Act, any such engagement (or termination of
any such engagement) is approved by a majority of the Trustees of the Trust,
including Trustees who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of any such party and by a majority of
the outstanding voting securities (as defined in the 0000 Xxx) of the
Portfolio. The parties hereto expressly acknowledge that, as of the date
hereof, the Sub-Adviser intends to engage PADCO Advisors, Inc., d/b/a Rydex
Global Advisors to serve as the Sub-Sub-Adviser.
Section 3. Execution of Purchase and Sale Orders. In connection with
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purchases or sales of portfolio securities for the account of the Portfolio, the
Sub-Adviser will arrange for the placing of all orders for the purchase and sale
of portfolio securities for the account with brokers or dealers selected by the
Sub-Adviser, subject to review of this selection by the Board from time to time.
The Sub-Adviser will be responsible for the negotiation and the allocation of
principal business and portfolio brokerage. In the selection of such brokers or
dealers and the placing of such orders, the Sub-Adviser will at all times seek
for the Portfolio the best qualitative execution, which is a combination of such
factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer, the brokerage and research services provided by the
broker or dealer and other factors.
The Sub-Adviser should generally seek favorable prices and
commission rates that are reasonable in relation to the benefits received. In
seeking best qualitative execution, the Sub-Adviser is authorized to select
brokers or dealers who also provide brokerage and research services to the
Portfolio and/or the other accounts over which it exercises investment
discretion. The Sub-Adviser is authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a Portfolio
portfolio transaction that is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Sub-Adviser determines in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or the Sub-Adviser's overall
responsibilities with respect to the Portfolio and to accounts over which the
Sub-Adviser exercises investment discretion. The Portfolio and the Sub-Adviser
understand and acknowledge that, although the information may be useful to the
Portfolio and the Sub-Adviser, it is not possible to place a dollar value on
such information. The Board shall periodically review the commissions paid by
the Portfolio to determine if the commissions paid over representative periods
of time were reasonable in relation to the benefits to the Portfolio.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, the Sub-Adviser may give consideration to sales of
shares of the Portfolio as a factor in the selection of brokers and dealers to
execute Fund portfolio transactions.
Subject to the provisions of the 1940 Act, and other
applicable law, the Sub-Adviser, any of its affiliates or any affiliates of its
affiliates may retain compensation in connection with effecting the Portfolio's
portfolio transactions, including transactions effected through others. If any
occasion should arise in which the Sub-Adviser gives any advice to clients of
the Sub-Adviser concerning the shares of the Portfolio, the Sub-Adviser will act
solely as investment counsel for such client and not in any way on behalf of the
Portfolio. The Sub-Adviser's services to the Portfolio pursuant to this
Agreement are not to be deemed to be exclusive and it is understood that the
Sub-Adviser may render investment advice, management and other services to
others, including other registered investment companies.
Section 4. Books and Records. The Sub-Adviser shall keep the Trust's
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books and records required to be maintained by it pursuant to Section 2(e) of
this Agreement. The Sub-Adviser agrees that all records that it maintains for
the Trust are the property of the Trust and it will promptly surrender any of
such records to the Trust upon the Trust's request. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any such records as are required to be maintained by the Sub-Adviser with
respect to the Trust by Rule 31a-1 under the 1940 Act.
Section 5. Expenses of the Sub-Adviser. During the term of this
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Agreement, the Sub-Adviser will pay all expenses (including without limitation
the compensation of all trustees or officers of the Trust, if any, who are
"interested persons" of the Sub-Adviser, as defined in the 0000 Xxx) incurred
by it in connection with its activities under this Agreement other than the
cost of securities and investments purchased for the Portfolio (including taxes
and brokerage commissions, if any). The Sub-Adviser will also pay all expenses
incurred by the Portfolio pursuant to the Trust's distribution agreement,
including the Portfolio's allocable share of Trust's distribution fees, to the
extent such expenses are not permitted to be paid (or can not be paid) by the
Portfolio under any distribution expense plan or any other permissible
arrangement that may be adopted in the future, up to a maximum annual expense
of $3,000.
Section 6. Compensation of the Sub-Adviser. For the services provided
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and the expenses borne pursuant to this Agreement, the Adviser will pay to the
Sub-Adviser as full compensation therefor a fee at the annual rate of 0.40% of
the Portfolio's average daily net assets. This fee for each month will be paid
to the Sub-Adviser during the succeeding month. For purposes of determining the
fee payable hereunder, the net asset value of the Portfolio shall be calculated
in the manner specified in the Portfolio's Prospectus. The Adviser is solely
responsible for the payment of the Sub-Adviser's fees, and the Sub-Adviser
agrees not to seek payment of its fees from the Trust or the Portfolio.
Section 7. Use of Names. The Trust and Sub-Adviser acknowledge that all
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rights to the name "Access" belong to the Adviser, and that the Trust is being
granted a limited license to use such words in its Portfolio name or in any
class name. In the event the Adviser ceases to be the adviser, the Trust's
right to the use of the name "Access" shall automatically cease on the
ninetieth (90th) day following the termination of this Agreement. The right to
the name may also be withdrawn by the Adviser during the term of the Management
Agreement upon ninety (90) days written notice by the Adviser to the Trust.
Nothing contained herein shall impair or diminish in any respect the Adviser's
right to use the name "Access" in the name of, or in connection with, any other
business enterprises with which the Adviser is or may become associated. There
is no charge to the Trust for the right to use this name.
The Adviser and the Trust acknowledge that all rights to the
name "Xxxxx" belong to the Sub-Adviser, and that the Trust is being granted a
limited license to use such words in its Portfolio name or in any class name.
In the event the Sub-Adviser ceases to be the sub-adviser to the Portfolio, the
Trust's right to the use of the name "Xxxxx" shall automatically cease upon the
termination of this Agreement, and the Trust shall cease to use such name as
soon as practicable thereafter, but in any event within sixty (60) days
thereafter. The right to the name may also be withdrawn by the Sub-Adviser
during the term of the Sub-Advisory Agreement upon sixty (60) days' written
notice by the Sub-Adviser to the Trust. Nothing contained herein shall impair
or diminish in any respect the Sub-Adviser's right to use the name "Xxxxx" in
the name of, or in connection with, any other business enterprises with which
the Sub-Adviser is or may become associated. There is no charge to the Trust
for the right to use this name.
Section 8. Liability of the Parties. Neither the Sub-Adviser nor its
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shareholders, members, officers, directors, employees, agents, control persons
or affiliates of any thereof, shall be liable for any error of judgment or
mistake of law or for any loss suffered by the Portfolio in connection with the
matters to which this Agreement relates except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 0000 Xxx) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement. Any person, even though also a director, officer, employee,
shareholder, member or agent of the Sub-Adviser, who may be or become an
officer, director, or trustee of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with the Sub-Adviser's duties hereunder), to
be rendering such services to or acting solely for the Trust and not as a
director, officer, employee, shareholder, member or agent of the Sub-Adviser, or
one under the Sub-Adviser's control or direction, even though paid by the
Sub-Adviser.
The Sub-Adviser will indemnify the Adviser and its directors,
members, trustees, officers, employees and agents ("Adviser Parties") against
and hold the Adviser Parties harmless from any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) arising
from any claim, demand, action or suit which results from the Sub-Adviser
Parties' (as such term is defined immediately below) willful misfeasance, bad
faith, gross negligence or reckless disregard of the Sub-Adviser's obligations
and duties under this Agreement.
The Adviser will indemnify the Sub-Adviser and its directors,
members, officers, employees and agents ("Sub-Adviser Parties") against and hold
the Sub-Adviser Parties harmless from any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses) arising
from any claim, demand, action or suit which results from the Adviser Parties'
willful misfeasance, bad faith, gross negligence or reckless disregard of the
Adviser's obligations and duties under this Agreement.
The term "Access Variable Insurance Trust" means and refers
to the Trustees from time to time serving under the Trust's Agreement and
Declaration of Trust as the same may subsequently thereto have been, or
subsequently hereto be, amended. It is expressly agreed that the obligations of
the Trust hereunder shall not be binding upon any of Trustees, officers,
employees, agents or nominees of the Trust, or any shareholders of any series of
the Trust, personally, but bind only the trust property of the Trust (and only
the property of the Portfolio), as provided in the Agreement and Declaration of
Trust. The execution and delivery of this Agreement have been authorized by the
Trustees and shareholders of the Portfolio and signed by an officer of the
Trust, acting as such, and neither such authorization by such Trustees and
shareholders nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of the Trust (and only
the property of Portfolio) as provided in its Agreement and Declaration of
Trust. A copy of the Agreement and Declaration of Trust is on file with the
Secretary of State of Ohio.
Section 9. Duration and Termination. The term of this Agreement shall
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begin on the date of this Agreement and shall continue in effect for a period
of two years from the date of this Agreement. This Agreement shall continue in
effect from year to year thereafter, subject to termination as hereinafter
provided, if such continuance is approved at least annually (a) by a majority
of the outstanding voting securities (as defined in the 0000 Xxx) of such
Portfolio or by vote of the Trust's Board of Trustees, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by vote of a
majority of the Trustees of the Trust who are not parties to this Agreement or
"interested persons" (as defined in the 0000 Xxx) of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. The Sub-Adviser shall furnish to the Adviser and the Trust, promptly
upon their request, such information as may reasonably be necessary to evaluate
the terms of this Agreement or any extension, renewal or amendment thereof.
This Agreement may be terminated at any time on at
least 60 day's prior written notice to the Sub-Adviser, without the payment of
any penalty, (i) by vote of the Board of Trustees, (ii) by the Adviser, (iii)
by vote of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of the Portfolio, or (iv) in accordance with the terms of any
exemptive order obtained by the Trust or the Portfolio under Section 6(c) of
the 1940 Act, exempting the Trust or the Portfolio from Section 15(a) and Rule
18f-2 under the 1940 Act. The Sub-Adviser may terminate this Agreement at any
time, without the payment of any penalty, on at least 60 days' prior written
notice to the Adviser and the Trust. This Agreement will automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).
Section 10. Amendment. This Agreement may be amended by mutual consent
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of the Adviser and the Sub-Adviser, provided the Trust approves the amendment
(a) by vote of a majority of the Trustees of the Trust, including Trustees who
are not parties to this Agreement or "interested persons" (as defined in the
0000 Xxx) of any such party, cast in person at a meeting called for the purpose
of voting on such amendment, and (b) if required under then current
interpretations of the 1940 Act by the Securities and Exchange Commission, by
vote of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of each Portfolio affected by such amendment.
Section 11. Notices. Notices of any kind to be given in writing and
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shall be duly given if mailed or delivered to the Sub-Adviser at 0000 Xxx
Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxx 00000, and to the Adviser at 000 Xxxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000, or at such other address or to such other
individual as shall be specified by the party to be given notice.
Section 12. Governing Law. (a) This Agreement shall be governed by and
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construed in accordance with the laws of the State of Georgia, without regard
to the conflicts of laws principles thereof, and (b) any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act, shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any, by the United States courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said 1940 Act. In
addition, where the effect of a requirement of the Act reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
Section 13. Severability. In the event any provision of this Agreement
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is determined to be void or unenforceable, such determination shall not affect
the remainder of this Agreement, which shall continue to be in force.
Section 14. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 15. Binding Effect. Each of the undersigned expressly warrants
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and represents that he has the full power and authority to sign this Agreement
on behalf of the party indicated and that his signature will operate to bind the
party indicated to the foregoing terms.
Section 16. Captions. The captions in this Agreement are included for
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convenience of reference only and in no way define or delimit any of the
provisions hereto or otherwise affect their construction or effect.
Section 17. Change of Control. The Sub-Adviser shall notify Adviser and
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the Trust in writing at least 60 days in advance of any change of control, as
defined in Section 2(a)(9) of the 1940 Act, as will enable the Trust to consider
whether an assignment, as defined in Section 2(a)(4) of the 1940 Act, would
occur.
Section 18. Other Business. Except as set forth above, nothing in this
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Agreement shall limit or restrict the right of any of the Sub-Adviser's
directors, officers or employees who may also be a trustee, officer, partner or
employee of the Trust to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any business,
whether of a similar or a dissimilar nature, nor limit or restrict the
Sub-Adviser's right to engage in any other business or to render services of
any kind to any other corporation, firm, individual or association.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date and year first above
written.
Access Fund Management, LLC Xxxxx Asset Management, Inc.
By /s/ By /s/
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Name: Xxxxxxx X. Xxxxxxxx Name Xxxx X. Xxxxxxxx
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Title: President Title Vice President
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ACKNOWLEDGED AND AGREED TO:
Access Variable Insurance Trust
By /s/
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Name: Xxxxxxx X. Xxxxxxxx
Title: President
