INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of _____, 1997 between VARIABLE INSURANCE FUNDS, a
Massachusetts business trust (herein called the "Trust"), and AMSOUTH BANK, an
Alabama banking association with its principal place of business at 0000 Xxxxx
Xxxxxx, Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 (herein called the "Investment
Adviser").
WHEREAS, the Trust is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended ("1940
Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory services to certain investment portfolios of the Trust (the
"Funds") and the Investment Adviser represents that it is willing and possesses
legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Investment Adviser to act as
investment adviser to the Funds identified on Schedule A hereto for the period
and on the terms set forth in this Agreement. The Investment Adviser accepts
such appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. Delivery of Documents. The Trust has furnished the Investment Adviser
with copies properly certified or authenticated of each of the following:
(a) the Trust's Amended and Restated Declaration of Trust dated as of
July 20, 1994 and amended and restated as of February 5, 1997, and all
amendments thereto or restatements thereof (such Declaration, as presently in
effect and as it shall from time to time be amended or restated, is herein
called the "Declaration of Trust");
(b) the Trust's By-laws and amendments thereto;
(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) the Trust's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission on July 20, 1994 and
all amendments thereto;
(e) the Trust's Registration Statement on Form N-lA under the Securities
Act of 1933, as amended ("1933 Act"), (File No. 33-21660) and under the 1940 Act
as filed with the Securities and Exchange Commission and all amendments thereto;
and
(f) the Funds' most recent prospectuses and Statement of Additional
Information (such prospectus and Statement of Additional Information, as
presently in effect, and all amendments and supplements thereto are herein
collectively called the "Prospectus").
The Trust will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Trust's Board of Trustees,
the Investment Adviser will provide a continuous investment program for each
Fund, including investment research and management with respect to all
securities and investments and cash equivalents in said Funds. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by the Trust with respect to the Funds. The
Investment Adviser will provide the services under this Agreement in accordance
with each Fund's investment objective, policies, and restrictions as stated in
the Prospectus and resolutions of the Trust's Board of Trustees. The Investment
Adviser further agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has investment
responsibilities;
(b) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and in addition will conduct its activities
under this Agreement in accordance with any applicable regulations of any
governmental authority pertaining to the investment advisory activities of the
Investment Adviser;
(c) will not make loans to any person to purchase or carry units of
beneficial interest in the Trust or make loans to the Trust;
(d) will place orders pursuant to its investment determinations for the
Trust either directly with the issuer or with any broker or dealer. In placing
orders with brokers and dealers, the Investment Adviser will attempt to obtain
prompt execution of orders in an effective manner at the most favorable price.
Consistent with this obligation, when the execution and price offered by two or
more brokers or dealers are comparable, the Investment Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide the Investment Adviser with research advice and other
services. In no instance will portfolio securities be purchased from or sold to
BISYS Fund Services, AmSouth Bank, or any affiliated person of either the Trust,
BISYS Fund Services, or AmSouth Bank, except to the extent permitted by the 1940
Act and the Securities and Exchange Commission;
(e) will maintain all books and records with respect to the Trust's
securities transactions and will furnish the Trust's Board of Trustees such
periodic and special reports as the Board may request;
(f) will treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and prior, present, or
potential interestholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where the
Investment Adviser may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust; and
(g) will maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the Trust, the
Investment Adviser's personnel will not inquire or take into consideration
whether the issuers of securities proposed for purchase or sale for the Trust's
account are customers of the Investment Adviser or of its parent or its
subsidiaries or affiliates. In dealing with such customers, the Investment
Adviser and its parent, subsidiaries, and affiliates will not inquire or take
into consideration whether securities of those customers are held by the Trust.
4. Services Not Exclusive. The investment management services furnished by
the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others so long
as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Trust.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, each of the Funds will pay the Investment Adviser
and the Investment Adviser will accept as full compensation therefor a fee
computed daily and paid monthly at the applicable annual rate set forth on
Schedule A hereto. Each Fund's obligation to pay the above-described fee to the
Investment Adviser will begin as of the date of the initial public sale of
shares in that Fund. The fee attributable to each Fund shall be the obligation
of that Fund and not of any other Fund.
If in any fiscal year the aggregate expenses of any of the Funds exceed
any applicable expense limitation, the Investment Adviser will reimburse the
Fund for a portion of such excess expenses equal to such excess times the ratio
of the fees otherwise payable by the Fund to the Investment Adviser hereunder to
the aggregate fees otherwise payable by the Fund to the Investment Adviser
hereunder and to BISYS Fund Services under the Administration Agreement between
BISYS Fund Services and the Trust. The obligation of the Investment Adviser to
reimburse the Funds hereunder is limited in any fiscal year to the amount of its
fee hereunder for such fiscal year, provided, however, that notwithstanding the
foregoing, the Investment Adviser shall reimburse the Funds for such proportion
of such excess expenses regardless of the amount of fees paid to it during such
fiscal year to the extent that the securities regulations of any state having
jurisdiction over the Trust so require. Such expense reimbursement, if any, will
be estimated daily and reconciled and paid on a monthly basis.
8. Limitation of Liability. The Investment Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Funds in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
9. Duration and Termination. This Agreement will become effective as to a
particular Fund as of the date first written above (or , if a particular Fund is
not in existence on that date, on the date a registration statement relating to
that Fund becomes effective with the Commission), provided that it shall have
been approved by vote of a majority of the outstanding voting securities of such
Fund, in accordance with the requirements under the 1940 Act. Unless sooner
terminated, this Agreement shall continue in effect for an initial term of two
years and thereafter shall continue in effect for successive periods of one
year, provided such continuance is specifically approved at least annually (a)
by the vote of a majority of those members of the Trust's Board of Trustees who
are not parties to this Agreement or interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the vote of a majority of the Trust's Board of Trustees or
by the vote of a majority of all votes attributable to the outstanding Shares of
such Fund. Notwithstanding the foregoing, this Agreement may be terminated at
any time on sixty days' written notice, without the payment of any penalty, by
the Trust (by vote of the Trust's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Fund) or by the Investment Adviser.
This Agreement will immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meaning
of such terms in the 1940 Act.)
10. Investment Adviser's Representations. The Investment Adviser hereby
represents and warrants as follows:
(a) it will manage each Fund so that each Fund will qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code and
will comply with the diversification requirements of Section 817(h) of the
Internal Revenue Code and the regulations issued thereunder, and any other rules
and regulations pertaining to investment vehicles underlying variable annuity or
variable life insurance contracts;
(b) It shall immediately notify the Trust upon having a reasonable basis
for believing that any Fund has ceased to comply with the diversification
provisions of Section 817(h) of the Internal Revenue Code or the regulations
thereunder; and
(c) it shall be responsible for making inquiries and for reasonably
ensuring that any employee of the Investment Adviser, any person or firm that
the Investment Adviser has employed or with which it has associated, or any
employee thereof has not, to the best of the Investment Adviser's knowledge, in
any material connection with the handling of Trust assets: (i) been convicted,
in the last ten (10) years, of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or misappropriation of funds or
securities, or involving violations of Sections 1341, 1342, or 1343 of Xxxxx 00,
Xxxxxx Xxxxxx Code; or (ii) been found by any state regulatory authority, within
the last ten (10) years, to have violated or to have acknowledged violation of
any provision of any state insurance law involving fraud, deceit, or knowing
misrepresentation; or (iii) been found by any federal or state regulatory
authorities, within the last ten (10) years, to have violated or to have
acknowledged violation of any provisions of federal or state securities laws
involving fraud, deceit or knowing misrepresentation.
11. Insurance Company Offerees. All parties acknowledge that the Trust will
offer its shares so that it may serve as an investment vehicle for variable
annuity contracts and variable life insurance policies issued by insurance
companies, as well as to qualified pension and retirement plans. The Trust and
the Investment Adviser agree that shares of the Funds may be offered only to the
separate accounts and general accounts of insurance companies that are approved
in writing by the Investment Adviser. The Investment Adviser agrees that shares
of the Funds may be offered to separate accounts and the general account of
Hartford Life Insurance Company and to separate accounts and the general
accounts of any insurance companies that are affiliated with Hartford Life
Insurance Company. The Investment Adviser and the Trust agree that the
Investment Adviser shall be under no obligation to investigate insurance
companies to which the Trust offers or proposes to offer its shares.
12. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the law of The Commonwealth of Massachusetts.
The names "Variable Insurance Funds" and "Trustees of Variable Insurance
Funds" refer respectively to the Trust created and the Trustees, as trustees but
not individually or personally, acting from time to time under the Declaration
of Trust to which reference is hereby made and a copy of which is on file at the
office of the Secretary of State of The Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "Variable Insurance Funds" entered into in
the name or on behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, interestholders or representatives of the Trust personally, but
bind only the assets of the Trust, and all persons dealing with any Fund must
look solely to the assets of the Trust belonging to such Fund for the
enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
VARIABLE INSURANCE FUNDS
Seal By: _______________________
Name: _______________________
Title: _______________________
AMSOUTH BANK
Seal
By: _______________________
Name: _______________________
Title:_______________________
A-1
Dated: _______, 1997
Schedule A
to the Investment Advisory Agreement
between Variable Insurance Funds and AmSouth Bank
NAME OF FUND COMPENSATION
AmSouth Regional Equity Fund Annual rate of sixty one-hundredths of one
percent (.60%) of the average daily net
assets of such Fund.
AmSouth Equity Income Annual rate of sixty one-hundredths of one
percent (.60%) of the average daily net
assets of such Fund.
_________________________________
All fees are computed daily and paid monthly.
VARIABLE INSURANCE FUNDS
By:_______________________________
Name:_____________________________
Title:____________________________
AMSOUTH BANK
By:_______________________________
Name:_____________________________
Title:____________________________
