INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___ day of _____, 1997, between VARIABLE INSURANCE
FUNDS (the "Trust"), a Massachusetts business trust having its principal place
of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000-0000, and AMSOUTH BANK
(the "Investment Adviser"), a national bank having its principal place of
business at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000.
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish or
procure investment advisory and administrative services to newly created
investment portfolios of the Trust and may retain the Investment Adviser to
serve in such capacity with respect to certain additional investment portfolios
of the Trust, all as now or hereafter may be identified in Schedule A hereto as
such Schedule may be amended from time to time (individually referred to herein
as a "Fund" and collectively referred to herein as the "Funds") and the
Investment Adviser represents that it is willing and possesses legal authority
to so furnish such services without violation of applicable laws and
regulations;
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 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. Additional investment portfolios may
from time to time be added to those covered by this Agreement by the
parties executing a new Schedule A which shall become effective upon
its execution and shall supersede any Schedule A having an earlier
date.
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 Agreement and Declaration
of Trust, dated as of July 20, 1994 and amended and restated
as of February 5, 1997, and any 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 any 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 (the "Commission") on July 20, 1994, and all
amendments thereto;
(e) the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), and
under the 1940 Act as filed with the Commission and all
amendments thereto (the "Registration Statement"); and
(f) the most recent Prospectus and Statement of Additional
Information of each of the Funds (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 or procure a continuous
investment program for the Funds, including investment research and
management with respect to all securities and investments and cash
equivalents in the 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 of the Fund's investment objectives, 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 Commission under the 1940 Act 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;
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(c) will not make loans to any person to purchase or carry units
of beneficial interest ("shares") in the Trust or make loans
to the Trust;
(d) will place or cause to be placed orders for the Funds
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 and to the extent
permitted by the 1940 Act, 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, the
Investment Adviser, or any affiliated person of the Trust,
BISYS Fund Services or the Investment Adviser, except to the
extent permitted by the 1940 Act and the Commission;
(e) will maintain all books and records with respect to the
securities transactions of the Funds and will furnish the
Trust's Board of Trustees with such periodic and special
reports as the Board may request;
(f) will treat confidentially and as proprietary information of
the Trust and the Adviser all records and other
information relative to the Trust and the Funds and prior,
present, or potential shareholders, 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 or the Subadvier, as appropriate, which
approval shall not be unreasonably withheld and may not be
withheld where the Subadviser 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 or the
Subadviser, as appropriate;
(g) will maintain its policy and practice of conducting its
fiduciary functions independently. In making investment
recommendations for the Funds, the Subadviser'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 Adviser or the
Subadviser or of its parent or its subsidiaries or
affiliates. In dealing with such customers, the Subadviser
and its parent, subsidiaries, and affiliates will not
inquire or take into consideration whether securities of
those customers are held by the Trust;
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(h) will promptly review all (1) current security reports, (2)
summary reports of transactions and (3) current cash
position reports upon receipt thereof from the Trust and
will report any errors or discrepancies in such reports to
the Trust or their designees, and the Adviser within three
(3) business days; and
(i) will use its best efforts to obtain and provide to the
Trust's fund accountant (1) dealer quotations, (2) prices
from a pricing service, (3) matrix prices, or (4) any other
price information believed to be reliable by the Subadviser
with respect to any security held by a Fund, when requested
to do so by the Trust's fund accountant.
4. Services Not Exclusive. The investment management services furnished
by the Subadviser hereunder are not to be deemed exclusive, and the
Subadviser 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 Subadviser hereby agrees that all records
which it maintains for the Funds 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 Subadviser further agrees to preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act the
following records: (a) completed trade tickets for all portfolio
transactions, (b) broker confirmations for individual and block
trades, (c) credit files relating to (i) money market securities and
their issuers, (ii) repurchase agreement counterparties and (iii)
letter of credit providers, (d) transaction records indicating the
method of allocation with respect to the selection of brokers, and (e)
such other records that may be deemed necessary and appropriate by the
parties to this Agreement.
6. Expenses. During the term of this Agreement, the Subadviser 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 Funds.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Adviser will pay the Subadviser and
the Subadviser will accept as full compensation therefor a fee as set
forth on Schedule A hereto. The obligation of the Adviser to pay the
above- described fee to the Subadviser will begin as of the date of
the initial public sale of shares in such Fund.
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8. Limitation of Liability. The Subadviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the
Funds or the Adviser 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 Subadviser in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Agreement. It is further agreed that the Subadviser shall have no
responsibility or liability for the accuracy or completeness of the
Trust's Registration Statement under the 1940 Act and the 1933 Act,
except for information supplied by the Subadviser for inclusion
therein or information known by the Subadviser to be false or
misleading.
9. Duration and Termination. This Agreement will become effective with
respect to each Fund listed on Schedule A 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,
and, unless sooner terminated as provided herein, shall continue in
effect for an initial term of two years. Thereafter, if not
terminated, this Agreement shall continue in effect as to a particular
Fund for successive one-year terms, only so long as such continuance
is specifically approved at least annually
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(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 as to
a particular Fund 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), by the Adviser, or by the Subadviser. 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 meanings as ascribed to such terms in the 1940 Act.)
10. Subadviser's Representations. The Subadviser hereby represents and
warrants as follows:
(a) it is willing and possesses all requisite legal authority to
provide the services contemplated by this Agreement without violation
of applicable laws and regulations;
(b) 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 policies;
(c) it shall immediately notify the Trust and the Adviser in the event
(1) that the Commission or any other regulatory authority has censured
the Subadviser; placed limitations upon its activities, functions or
operations; or has commenced proceedings or an investigation that may
result in any of these actions, (2) upon having a reasonable basis for
believing that any Fund has ceased to qualify or might not qualify as
a regulated investment company under Subchapter M of the Internal
Revenue Code, (3) 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. The Subadviser further agrees to notify the Trust and the
Adviser immediately of any material fact known to the Subadviser
respecting or relating to the Subadviser that is not contained in the
Registration Statement or Prospectus for the Trust, or any amendment
or supplement thereto, or of any statement contained therein that
becomes untrue; and
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(d) it shall be responsible for making inquiries and for reasonably
ensuring that any employee of the Subadviser, any person or firm that
the Subadviser has employed or with which it has associated, or any
employee thereof has not, to the best of the Subadviser'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 Adviser and the Subadviser 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
Subadviser. The Subadviser agrees that shares of the Funds may be
offered to separate accounts and the general account of Nationwide
Life and Annuity Insurance Company and to separate accounts and the
general accounts of any insurance companies that are affiliated with
Nationwide Life and Annuity Insurance Company. The Subadviser and the
Trust agree that the Subadviser 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. Governing Law. This Agreement shall be governed by and its provisions
shall be construed in accordance with the laws of the Commonwealth of
Massachusetts.
14. It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind
only the trust property of the Trust. The execution and delivery of
this Agreement has been authorized by the Trustees, and this Agreement
has been signed and delivered by an authorized officer of the Trust,
acting as such, and neither such authorization by the Trustees 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 as provided in the Trust's Declaration of Trust.
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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.
[SEAL] VARIABLE INSURANCE FUNDS
By: _________________________
Title:_______________________
AMSOUTH BANK
[SEAL] By:__________________________
Title: ______________________
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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 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:_____________________________
A-1
AMSOUTH BANK
By:________________________________
Name:______________________________
Title:_____________________________
A-2
