EXHIBIT (h)(1)(i)
FORM OF
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this ___ day of April, 2007, by and between
BB&T Variable Insurance Funds, a Massachusetts business trust (the "Company"),
having its principal place of business at 000 Xxxxxxxxxxxx Xxxxxx Xxxx, Xxxxxxx,
Xxxxx Xxxxxxxx 00000, and BB&T Asset Management, Inc. (the "Administrator"), a
North Carolina corporation having its principal place of business at 000
Xxxxxxxxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxxxx Xxxxxxxx 00000.
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest or common
stock ("Shares"); and
WHEREAS, the Company desires the Administrator to provide, and the
Administrator is willing to provide, management, compliance and administrative
services to each series of the Company, all as now or hereafter may be
established from time to time ("Portfolios"), on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and the Administrator hereby agree as
follows:
ARTICLE 1. Retention of the Administrator. The Company hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management, compliance and administrative services as set
forth in Article 2 below. The Administrator hereby accepts such employment to
perform the duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way and shall
not be deemed an agent of the Company.
ARTICLE 2. Administrative Services. The Administrator shall perform or
supervise the performance by others of other administrative services in
connection with the operations of the Portfolios, and, on behalf of the Company,
will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the Trustees of the Company with such reports
regarding investment performance as they may reasonably request but shall have
no responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities.
The Administrator shall provide the Company with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including Facilities for Shareholders' and Trustees' meetings) for handling the
affairs of the Portfolios and such other services as the Administrator shall,
from time to time, determine to be necessary to perform its
obligations under this Agreement. In addition, at the request of the Trustees,
the Administrator shall make reports to the Company's Trustees concerning the
performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate contractual Company expenses and control all disbursements
for the Company, and as appropriate, compute the Company's yields, total
return, expense ratios, portfolio turnover rate and, if required, portfolio
average dollar-weighted maturity;
(b) assist Company counsel with the preparation of prospectuses, statements
of additional information, registration statements and proxy materials;
(c) prepare such reports, notice filing forms and other documents
(including reports regarding the sale and redemption of Shares as may be
required in order to comply with Federal and state securities law) as may
be necessary or desirable to make notice filings relating to the Company's
Shares with state securities authorities, monitor the sale of Company
Shares for compliance with state securities laws, and file with the
appropriate state securities authorities the registration statements and
reports for the Company and the Company's Shares and all amendments
thereto, as may be necessary or convenient to qualify and keep effective
the Company and the Company's Shares with state securities authorities to
enable the Company to make a continuous offering of its Shares;
(d) develop and prepare, with the assistance of the Company's investment
adviser and independent auditors, communications to Shareholders, including
the semi-annual and annual reports to Shareholders;
(e) supervise the Company's transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
(f) calculate performance data of the Portfolios for dissemination to
information services covering the investment company industry;
(g) coordinate and supervise the preparation and filing of the Company's
tax returns;
(h) examine and review the operations and performance of the various
organizations providing services to the Company or any Portfolio of the
Company, including, without Stations the Company's investment adviser,
distributor, custodian, fund accountant, transfer agent, outside legal
counsel and independent public accountants, and at the request of the
Trustees, report to the Board on the performance of organizations;
(i) assist with the design, development, and operation of the Portfolios
including new classes, investment objectives, policies and structure;
(j) provide individuals reasonably acceptable to the Company's Trustees to
serve as officers of the Company, who will be responsible for the
management of certain of the Company's affairs as determined by the
Company's Trustees;
(k) advise the Company and its Trustees on matters concerning the Company
and its affairs;
(l) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Company in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the 1940
Act as such bonds and policies are approved by the Company's Trustees;
(m) monitor and advise the Company and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(n) perform all administrative services and functions of the Company and
each Portfolio to the extent administrative services and functions are not
provided to the Company or such Portfolio pursuant to the Company's or such
Portfolio's investment advisory agreement, distribution agreement,
custodian agreement, transfer agent agreement and fund accounting
agreement;
(o) furnish advice and recommendations with respect to other aspects of the
business and affairs of the Portfolios as the Company and the Administrator
shall determine desirable;
(p) prepare and file with the SEC the semi-annual report for the Company on
Form N-SAR and all required notices pursuant to Rule 24f-2 under the 1940
Act;
(q) assist in monitoring and developing compliance procedures for each
Portfolio which will include, among other matters, procedures to monitor
compliance with each Portfolio's investment objective, policies,
restrictions, tax matters and applicable laws and regulations;
(r) provide legal support to the Company with respect to regulatory matters
including: monitoring regulatory and legislative developments which may
affect the Company and assisting in the strategic response to such
developments, assisting the Company in routine regulatory examinations or
investigations of the Company, and working closely with outside counsel to
the Company in response to any litigation or non-routine regulatory
matters;
(s) assist the Company in preparing for Board meetings by (i) coordinating
board book production and distribution, (ii) assisting in the preparation
of Board agendas, (iii) attending Board meetings, (iv) preparing the
Administrator section of Board materials, (v) preparing Board meeting
materials, including but not limited to, materials relating to annual
contract approvals and 12b-1 plan approvals, as agreed upon by the parties;
(t) prepare the Company's financial statements in connection with the
Company's annual and semi-annual shareholder reports, and prepare and
coordinate the filing of Forms N-CSR, N-Q, and N-PX;
(u) develop, implement and maintain written policies and procedures
required by Rule 38a-1 under the 1940 Act (the "Fund Compliance Program");
(v) conduct, as needed in response to significant compliance events,
changes in business arrangements and regulatory developments and, in no
event less than annually, a review of the Fund Compliance Program which
will include a review of the adequacy of the policies and procedures and
the effectiveness of their implementation; and
(w) provide a written report to the Board of Trustees that, at a minimum,
addresses the Chief Compliance Officer's assessment of (i) the operation of
the policies and procedures of the Trust and each Service Provider, any
material changes made to those policies and procedures since the date of
the last report, and any material changes to the policies and procedures
recommended as a result of the annual review conducted; (ii) each Material
Compliance Matter (as defined under Rule 38a-1) that has occurred since the
date of the last report; and (iii) the adequacy of the policies and
procedures and the effectiveness of their implementation.
The Administrator shall perform such other services for the Company that
are mutually agreed upon by the parties from time to time for such additional
fees, if any, that are agreed upon by the parties.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Company as well as all Trustees of the
Company who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Company retained by the Trustees of the
Company to perform services on behalf of the Company.
(B) The Company. The Company assumes and shall pay or cause to be paid all
other expenses of the Company not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees
and out-of-pocket expenses of Trustees who are not affiliated persons of the
Administrator or the Investment Adviser to the Company or any affiliated
corporation of the Administrator or the Investment Adviser, insurance, interest,
brokerage costs, litigation and other extraordinary or nonrecurring expenses,
and all fees and charges of investment advisers to the Company.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Company shall pay to the Administrator the fees set forth on
Schedule A hereto. Fees shall be computed daily and paid monthly. In addition to
paying the Administrator the fees set forth on Schedule A hereto, the Company
shall also reimburse the Administrator for its reasonable out-of-pocket
expenses, including but not limited to the travel and lodging expenses incurred
by officers and employees of the Administrator in connection with attendance at
Board meetings. The Company shall also reimburse the Administrator for its
allocable portion of the salary of the Company's Chief Financial Officer.
If this Agreement becomes effective subsequent to the first day of a month
or terminates before the last day of a month, the Administrator's compensation
for that part of the month in which this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Administrator's compensation for the preceding month shall
be made promptly.
(B) Survival of Compensation Rights. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. Limitation of Liability of the Administrator. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. (As used in this Article 5, the term "Administrator" shall include
partners, officers, employees and other agents of the Administrator as well as
the Administrator itself.)
So long as the Administrator acts in good faith and with due diligence and
without negligence, the Company assumes full responsibility and shall indemnify
the Administrator and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise, and from and against any and
all losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of the Administrator's actions taken or
non-action with respect to the performance of services hereunder. The indemnity
and defense provisions set forth herein shall indefinitely survive the
termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Company may be asked to indemnify or hold the
Administrator harmless, the Company shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Company promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Company, but failure to do so in good faith shall not affect the rights
hereunder.
The Company shall be entitled to participate at its own expense or, if it
so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Company elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the
Company and satisfactory to the Administrator, whose approval shall not be
unreasonably withheld. In the event that the Company elects to assume the
defense of any suit and retain counsel, the Administrator shall bear the fees
and expenses of any additional counsel retained by it. If the Company does not
elect to assume the defense of a suit, it will reimburse the Administrator for
the reasonable fees and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Company at any time for instructions and
may consult counsel for the Company or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Company until receipt of written notice thereof from the Company.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Company are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that directors, officers, employees
and Shareholders of the Company are or may be or become interested in the
Administrator, as officers, employees or otherwise and that partners, officers
and employees of the Administrator and its counsel are or may be or become
similarly interested in the Company, and that the Administrator may be or become
interested in the Company as a Shareholder or otherwise.
ARTICLE 7. Duration of this Agreement. The Term of this Agreement shall be
as specified in Schedule A hereto.
ARTICLE 8. Assignment. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that the Administrator shall be responsible, to the extent provided in Article 5
hereof, for all acts of such subcontractor as if such acts were its own. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
ARTICLE 9. Amendments. This Agreement, or any term thereof, may be modified
only by a written amendment, signed by the party against whom enforcement of
such modification is sought.
ARTICLE 10. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Company shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Company and follow the
Company's instructions as to permitting or refusing such inspection; provided
that the Administrator may exhibit such records to any person in any case where
it is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Company has agreed to indemnify the Administrator against such liability.
ARTICLE 11. Disaster Recovery. The Administrator shall enter into and shall
maintain in effect (i) agreements entered into and maintained in effect with
appropriate parties making reasonable provisions for emergency use of electronic
data processing equipment to the extent appropriate equipment is available, and
(ii) emergency data recovery policies and procedures (a "Disaster Recovery
Plan"), which are commercially reasonable in light of the services provided. In
the event of equipment failures, the Administrator shall, at no additional
expense to the Company, take reasonable steps to minimize service interruptions.
The Administrator shall have no liability with respect to the loss of data or
service interruptions caused by equipment failure, provided such loss or
interruption is not caused by the Administrator's own willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties and obligations
under this Agreement, and further provided that the Administrator has
implemented and materially complied with its Disaster Recovery Plan.
ARTICLE 12. Definitions of Certain Terms. The terms "interested person" and
"affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 13. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the following address: if to the Company, at 000 Xxxxxxxxxxxx Xxxxxx Xxxx,
Xxxxxxx, Xxxxx Xxxxxxxx 00000; and if to the Administrator, at 000 Xxxxxxxxxxxx
Xxxxxx Xxxx, Xxxxxxx, Xxxxx Xxxxxxxx 00000, or at such other address as such
party may from time to time specify in writing to the other party pursuant to
this Section.
ARTICLE 14. Governing Law and Matters Relating to the Company as a
Massachusetts Business Trust. This Agreement shall be governed by the laws of
The Commonwealth of Massachusetts. The names "BB&T Variable Insurance Funds" and
"Trustees of BB&T Variable Insurance Funds" refer respectively to the Company
created and the Trustees, as trustees but not individually or personally, acting
from time to time under an Agreement and Declaration of Trust dated as of
November 8, 2004 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 "BB&T 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, shareholders or representatives of the
Company personally, but bind only the assets of the Company, and all persons
dealing with any series of shares of the Company must look solely to the assets
of the Company belonging to such series for the enforcement of any claims
against the Company.
ARTICLE 15. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
BB&T VARIABLE INSURANCE FUNDS
By:
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Title:
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BB&T ASSET MANAGEMENT, INC.
By:
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Title:
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
BETWEEN
BB&T VARIABLE INSURANCE FUNDS
AND
BB&T ASSET MANAGEMENT, INC.
Portfolios: This Agreement shall apply to all Portfolios of the Company,
either now or hereafter created. The current Portfolios of the
Company are set forth below:
BB&T Large Cap VIF
BB&T Capital Manager Equity VIF
BB&T Mid Cap Growth VIF
BB&T Special Opportunities Equity VIF
BB&T Total Return Bond VIF
Fees: Asset Based Fees - Pursuant to Article 4, the following annual
asset-based fee will be calculated based upon each Portfolio's
average net assets as well as the average net assets of the BB&T
Funds*:
0.110% of the first $3.5 billion of average net assets;
0.075% of the next $1 billion of average net assets;
0.060% of the next $1.5 billion of average net assets; and
0.040% of average net assets in excess of $ 6 billion.
No asset-based fees will be applied to the funds of funds.
* The Company will pay the compensation that is due only on
its assets.
Regulatory Filing Services - The Company shall pay the following
fees for regulatory filing services (N-CSR, N-Q and N-PX):
(a) Form N-CSR Filing Preparation Fee (2 filings per year per
registrant):
$1,000 per filing
(b) Form N-Q Quarterly Filing Preparation Fees (2 filings per
year per registrant):
First Portfolio Each Additional Portfolio
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$750 each (per filing) $375 each (per filing)
(c) Form N-PX Filing Preparation Fees (1 filing per year per
registrant):
$500 per registrant if the Portfolios have no voting
securities;
$1,000 per registrant with 1-10 Portfolios with voting
securities; and
$1,500 per registrant with more than 10 Portfolios with
voting securities.
Term: Pursuant to Article 7, the term of this Agreement shall commence
on April __, 2007 and unless terminated pursuant to its terms
shall continue for a period of three (3) years (the "Initial
Term"). Upon the expiration of the Initial Term, this Agreement
shall automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Company or the Administrator
provides written notice to the other party of its intent not to
renew or unless otherwise terminated as provided herein. Such
notice of non-renewal must be received not less than sixty (60)
days prior to the expiration of the Initial Term or the then
current Renewal Term. This Agreement also may be terminated
without penalty (i) by mutual agreement of the parties or (ii)
for "cause," as defined below, upon the provision of sixty (60)
days advance written notice by the party alleging cause.
For purposes of this Agreement, "cause" shall mean (a) a material
breach of this Agreement that has not been remedied for thirty
(30) days following written notice of such breach from the
non-breaching party; (b) a final, unappealable judicial,
regulatory or administrative ruling or order in which the party
to be terminated has been found guilty of criminal or unethical
behavior in the conduct of its business; or (c) financial
difficulties on the part of the party to be terminated which are
evidenced by the authorization or commencement of, or involvement
by way of pleading, answer, consent or acquiescence in, a
voluntary or involuntary case under Title 11 of the United States
Code, as from time to time is in effect, or any applicable law,
other than said Title 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification
or alteration of the rights of creditors.
Notwithstanding the foregoing, after such termination for so long
as the Administrator, with the written consent of the Company, in
fact continues to perform any one or more of the services
contemplated by this Agreement or any schedule or exhibit hereto,
the provisions of this Agreement, including without limitation
the provisions dealing with indemnification, shall continue in
full force and effect. Compensation due the Administrator and
unpaid by the Company upon such termination shall be immediately
due and payable upon and notwithstanding such termination. The
Administrator shall be entitled to collect from the Company, in
addition to the compensation described in this Agreement, the
amount of all of the Administrator's cash disbursements for
services in connection with the Administrator's activities in
effecting such termination, including without limitation, the
delivery to the Company and/or its designees of the Company's
property, records, instruments and documents.
If, for any reason other than nonrenewal, mutual agreement of the
parties or "cause," as defined above, the Administrator is
replaced as administrator, or if a third party is added to
perform all or a part of the services provided by the
Administrator under this Agreement (excluding any
sub-administrator appointed by the Administrator as provided in
Article 7 hereof), then the Company shall make a one-time cash
payment, in consideration of the fee structure and services to be
provided under this Agreement, and not as a penalty, to the
Administrator in accordance with the following schedule: (i) if
the one-time cash payment becomes due and payable at any time
during years one through four of the Initial Term, such payment
shall be equal to the balance due for one-half of the period
remaining until the end of the Initial Term and (ii) if such
payment becomes due and payable at any time during year five of
the Initial Term, such payment shall be equal to the balance due
for the entire period remaining until the end of the Initial
Term. For purposes of calculation of the payment, it shall be
assumed that the balance due shall be based upon the average
amount of the Company's assets for the twelve months prior to the
date the Administrator is replaced or a third party is added.
In the event the Funds are merged into another legal entity in
part or in whole pursuant to any form of business reorganization
or is liquidated in part or in whole prior to the expiration of
the then-current term of this Agreement, the parties acknowledge
and agree that the liquidated damages provision set forth above
shall be applicable in those instances in which the Administrator
is not retained to provide administration services consistent
with this Agreement. The one-time cash payment referenced above
shall be due and payable on the day prior to the first day in
which the Administrator is replaced or a third party is added.
The parties further acknowledge and agree that, in the event the
Administrator is replaced, or a third party is added, as set
forth above, (i) a determination of actual damages incurred by
the Administrator would be extremely difficult, and (ii) the
liquidated damages provision contained herein is intended to
adequately compensate the Administrator for damages incurred and
is not intended to constitute any form of penalty.
