ACCESS VARIABLE INSURANCE TRUST
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT, dated as of May 1, 2004, between Access Fund
Management, LLC (the "Adviser"), and Xxxxxxxx Asset Management, LLC (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, 2004, 2004 (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 portfolios (the "Portfolios") listed on
Exhibit A, each a series 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 appoints
the Sub-Adviser to provide investment advisory services to the Portfolios 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 the
Trust's Board of Trustees (the "Board") and the Adviser, the Sub-Adviser shall,
employing its discretion, manage the investment operations of the Portfolios and
the composition of the portfolio of securities and investments (including cash)
belonging to each Portfolio, including the purchase, retention and disposition
thereof and the execution of agreements relating thereto, in accordance with
each Portfolio's investment objective, policies and restrictions as stated in
each 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 each
Portfolio and determine from time to time what investments or securities will be
purchased, retained or sold by the Portfolios and what portion of the assets
belonging to the Portfolios will be invested or held uninvested as cash;
(b) The Sub-Adviser shall use its best judgment in the performance of its duties
under this Agreement;
(c) The Sub-Adviser, in the performance of its duties and obligations under this
Agreement for the Portfolios, shall act in conformity with the Trust's
Declaration of Trust, its By-Laws and each 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;
(d) The Sub-Adviser shall determine the securities to be purchased or sold by
each 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;
(e) The Sub-Adviser shall maintain books and records with respect to the
securities transactions of each 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;
(f) The Sub-Adviser shall provide the Trust's custodian on each business day
with information about each Portfolio's 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;
(g) The Sub-Adviser shall respond immediately to any request from the Adviser or
the Portfolios' fund accountant for assistance in obtaining price sources for
securities held by each Portfolio or determining a price when a price source is
not available, and shall periodically review the prices used by the fund
accountant to determine net asset value and advise the fund accountant promptly
if any price appears to be incorrect; and
(h) 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.
Section 3. Execution of Purchase and Sale Orders. In connection with
purchases or sales of portfolio securities for the account of each 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 Portfolios the best qualitative execution, taking into account such
factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer.
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 Portfolios
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 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
Portfolios and to accounts over which the Sub-Adviser exercises investment
discretion. The Portfolios and the Sub-Adviser understand and acknowledge that,
although the information may be useful to the Portfolios 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 Portfolios to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Portfolios.
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 Portfolios 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 Portfolios' 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 Portfolios, the Sub-Adviser will act
solely as investment counsel for such client and not in any way on behalf of the
Portfolios. The Sub-Adviser's services to the Portfolios 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 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 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).
Section 6. Compensation of the Sub-Adviser. For the services provided 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 .40% of
the Portfolio' 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 each Portfolio shall be calculated in
the manner specified in each 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 Portfolios.
Section 7. Use of Names. The Trust and Sub-Adviser acknowledge that all
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 names 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 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 names "Potomac
Mid Cap Plus Portfolio," "Potomac Small Cap Plus Portfolio," "Potomac OTC/Short
Portfolio" and "Potomac U.S./Short Portfolio" belong to the Sub-Adviser, and
that the Trust is being granted a limited license to use such words in the names
of the Portfolios or in any class name. In the event the Sub-Adviser ceases to
be the sub-adviser to the Portfolios, the Trust's right to the use of the name
"Potomac Mid Cap Plus Portfolio," "Potomac Small Cap Plus Portfolio," "Potomac
OTC/Short Portfolio" and "Potomac U.S./Short Portfolio" shall automatically
cease on the ninetieth day following the termination of this Agreement. The
right to the names 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 names "Potomac Mid Cap Plus
Portfolio," "Potomac Small Cap Plus Portfolio," "Potomac OTC/Short Portfolio"
and "Potomac U.S./Short Portfolio" 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 these names.
Section 8. Liability. Neither the Sub-Adviser nor its 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 Portfolios 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,
trustee, employee or agent 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 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 Portfolios), 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 each 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
Portfolios) 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 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 such
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 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 shall
be duly given if mailed or delivered to the Sub-Adviser at 000 Xxxxx Xxx., Xxxxx
000, Xxx Xxxx, XX 00000, and to the Adviser at 00000 XX Xxx. 00 X., Xxxxx 000,
Xxxxxxxxxx, 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
construed in accordance with the laws of the State of Ohio, 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 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
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 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
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 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
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 XXXXXXXX ASSET MANAGEMENT, LLC
By /s/Xxxxxxx X. Williams_____ By /s/Xxx O'Neill_________
--------------------------- -----------------------
Name: Xxxxxxx X. Xxxxxxxx Name: Xxx X'Xxxxx
Title: President Title: Managing Director
ACKNOWLEDGED AS TO SECTION 7 ONLY:
ACCESS VARIABLE INSURANCE TRUST
By /s/Xxxxxxx X. Williams___
Name: Xxxxxxx X. Xxxxxxxx
Title: President
Exhibit A
ACCESS VARIABLE INSURANCE TRUST
SUB-ADVISORY AGREEMENT
Dated: As of May 1, 2004
Portfolios
Potomac Mid Cap Plus Portfolio
Potomac Small Cap Plus Portfolio
Potomac OTC/Short Portfolio
Potomac U.S./Short Portfolio
Access Fund Management, LLC Xxxxxxxx Asset Management, LLC
By:/s/Xxxxxxx X. Xxxxxxxx By:/s/Xxx X'Xxxxx
------------------------ --------------------------------
Name: Xxxxxxx X. Xxxxxxxx Name: Xxx X'Xxxxx
Title: President Title: Managing Director
