FUND ACCOUNTING 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 BISYS Fund
Services Ohio, Inc. ("BISYS Ohio"), a corporation organized under the laws of
the State of Ohio and having its principal place of business at 0000 Xxxxxxx
Xxxx, Xxxxxxxx, Xxxx 00000-0000.
WHEREAS, the Trust desires that BISYS Ohio perform certain fund accounting
services for each investment portfolio of the Trust identified on Schedule A
hereto, as such Schedule shall be amended from time to time (individually
referred to herein as the "Fund" and collectively as the "Funds"); and
WHEREAS, BISYS Ohio is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Fund Accountant. BISYS Ohio will keep and maintain the
following books and records of each Fund pursuant to Rule 31a-1 (the "Rule")
under the Investment Company Act of 1940 (the "1940 Act"):
(a) Journals containing an itemized daily record
in detail of all purchases and sales of
securities, all receipts and disbursements of
cash and all other debits and credits, as
required by subsection (b)(1) of the Rule;
(b) General and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income
and expense accounts, including interest
accrued and interest received, as required by
subsection (b)(2)(i) of the Rule;
(c) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of the Rule;
and
(d) A monthly trial balance of all ledger
accounts (except shareholder accounts) as
required by subsection (b)(8) of the Rule.
In addition to the maintenance of the books and records specified above,
BISYS Ohio shall perform the following accounting services daily for each Fund:
(a) Calculate the net asset value per share;
(b) Calculate the dividend and capital gain
distribution, if any;
(c) Determine each Fund's net income;
(d) Reconcile cash movements with the Funds' custodian;
(e) Obtain security market quotes from independent
pricing services or, if such quotes are unavailable,
obtain such prices from the Funds' investment
adviser, and in either case calculate the market
value of each Fund's investments;
(f) Verify and reconcile with the Funds' custodian all
daily trade activity;
(g) Compute each Fund's income and capital gains,
dividend payables, dividend factors, 7-day yields,
7-day effective yields and 30-day yields, and
weighted average portfolio maturity;
(h) Review daily the calculation of the net asset value
and dividend factor (if any) of each Fund prior to
release to shareholders, check and confirm the net
asset values and dividend factors for reasonableness
and deviations and distribute net asset values and
yields to NASDAQ;
(i) Determine monthly outstanding receivables and
payables for security trades;
(j) Determine monthly outstanding receivables and
payables for Fund share transactions;
(k) Report to the Trust the daily market pricing of
securities in any money market Funds, with the
comparison to the amortized cost basis;
(l) Determine unrealized appreciation on securities held
in variable net asset value Funds;
(m) Amortize premiums and accrete discounts on securities
purchased at a price other than face value, if
applicable;
(n) Update the fund accounting system to reflect rate
changes, as received from the Funds' investment
adviser, on variable interest rate instruments;
(o) Record income collected as reported to BISYS Ohio by
the Funds' custodian;
2
(p) Post Fund income and expense transactions to
appropriate categories;
(q) Accrue for expense of each Fund according to the
instructions from the Trust;
(r) Determine monthly the outstanding receivables and
payables for all income and expense accounts;
(s) Provide accounting reports in connection with the
Trust's regular annual audit and other audits and
examinations by regulatory agencies;
(t) Provide the following reports:
Account Valuation Balances;
Amortization/Accretion by State;
Broker Commissions Paid on Portfolio Transactions;
Broker Volumes;
Cash Disbursements Journal;
Cash Receipts Journal; Current Cash Report; Earned
Amortization/Accretion; Earned Income; Expense
Summary; General Ledger Trial Balance; Investment
Income Detail; Investment Income Summary; Investment
Restrictions Reports; Maturity Schedule; Options -
Closed Positions; Options - Open Positions; Pricing
Exception Report;
Portfolio Transactions with Entities Acting as
Principals;
Portfolio Turnover;
Purchase Journal;
Sales Journal;
Schedule of Investments;
BISYS Ohio may provide additional special reports upon the
request of the Trust or the Funds' investment adviser(s),
which may result in an additional charge the amount of which
shall be agreed upon between the parties; and
(u) Provide such other similar services with respect to a
Fund as may be reasonably requested by the Trust,
which may result in an additional charge the amount
of which shall be agreed upon between the parties.
3
BISYS Ohio shall also perform the following additional accounting
services for each Fund:
(a) Provide monthly a download (and hard copy thereof) of
the Financial Statement Package, upon request of the
Trust. The download will include the following items:
Schedule of Investments;
Statement of Assets and Liabilities;
Statement of Operations;
Statement of Changes in Net Assets;
Condensed Financial Information;
(b) Provide monthly broker security transaction reports;
(c) Provide monthly security transaction reports; and
(d) Provide accounting information for the following:
(i) federal and state income tax returns and
federal excise tax returns;
(ii) the Trust's semi-annual reports with the
Securities and Exchange Commission ("SEC") on
Form N-SAR;
(iii) the Trust's annual, semi-annual and quarterly
(if any) shareholder reports;
(iv) registration statements on Form N-1A and
other filings relating to the registration of
shares;
(v) the Trust's administrator's monitoring of the
Trust's status as a regulated investment
company under Subchapter M of the Internal
Revenue Code, as amended;
(vi) annual audit by the Trust's auditors; and
(vii) examinations performed by the SEC.
2. Subcontracting. BISYS Ohio may, at its expense, subcontract with any
entity or person concerning the provision of the services contemplated
hereunder; provided, however, that BISYS Ohio shall not be relieved of any of
its obligations under this Agreement by the appointment of such subcontractor
and provided further, that BISYS Ohio shall be responsible, to the extent
provided in Section 7 hereof, for all acts of such subcontractor as if such acts
were its own.
3. Compensation. The Trust shall pay BISYS Ohio for the services to be
provided by BISYS Ohio under this Agreement in accordance with, and in the
manner set forth in, Schedule B hereto.
4
4. Reimbursement of Expenses. In addition to paying BISYS Ohio the fees
described in Section 3 hereof, the Trust agrees to reimburse BISYS Ohio for
BISYS Ohio's out-of-pocket expenses in providing services hereunder, including
without limitation the following:
(a) All freight and other delivery and bonding charges incurred
by BISYS Ohio in delivering materials to and from the Trust;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS
Ohio in communication with the Trust, the Funds' investment
advisor or custodian, dealers or others as required for
BISYS Ohio to perform the services to be provided hereunder;
(c) Costs of pricing the portfolio securities of each Fund;
(d) The cost of microfilm or microfiche of records or other
materials; and
(e) Any expenses BISYS Ohio shall incur at the written direction
of an officer of the Trust thereunto duly authorized.
5. Effective Date. This Agreement shall become effective with respect to a
Fund as of the date first written above (or, if a particular Fund is not in
existence on that date, on the date an amendment to Schedule A to this Agreement
relating to the Fund is executed) (the "Effective Date").
6. Term. This Agreement shall continue in effect with respect to a Fund,
unless earlier terminated by either party hereto as provided hereunder, until
____________, and thereafter shall be renewed automatically for successive
one-year terms unless written notice not to renew is given by the non-renewing
party to the other party at least 60 days prior to the expiration of the
then-current term; provided, however, that after such termination for so long as
BISYS Ohio, with the written consent of the Trust, 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 BISYS Ohio and unpaid by the Trust upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. BISYS Ohio shall be entitled to collect from the Trust, in addition
to the compensation described under Section 3 hereof, the amount of all of BISYS
Ohio's cash disbursements for services in connection with BISYS Ohio's
activities in effecting such termination, including without limitation, the
delivery to the Trust and/or its designees of the Trust's property, records,
5
instruments and documents, or any copies thereof. Subsequent to such
termination, for a reasonable fee, BISYS Ohio will provide the Trust with
reasonable access to any Trust documents or records remaining in its possession.
Written notice not to renew may be given for any reason, with or without "cause"
(as defined below). This Agreement is terminable with respect to a particular
Fund through a failure to renew the Agreement at the end of a one-year term;
upon mutual agreement of the parties hereto; or for "cause" (as defined below)
by the party alleging "cause," in any case on not less than 60 days' notice by
the Trust's Board of Trustees or by BISYS Ohio. This Agreement will terminate
automatically 90 days after: (1) the effective date of the repeal or
modification of the Xxxxx-Xxxxxxxx Act permitting banks or bank affiliates to
underwrite or distribute shares of mutual funds; or (2) a change of control of,
or assignment of this Agreement (within the meaning of section 2(a)(4) of the
1940 Act), by BISYS Ohio; provided, however, that the Fund may, at its sole
option, elect to waive said automatic termination or to specify a termination
date which is later than 90 days but not to exceed the expiration of the
then-current contract term.
For purposes of this Agreement, "cause" shall mean (a) willful misfeasance,
bad faith, gross negligence or reckless disregard on the part of the party to be
terminated with respect to its obligations and duties set forth herein; (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 it business; (c) financial difficulties on the part
of the party to be terminated which is 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
State 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; or
(d) any circumstance which substantially impairs the performance of the
obligations and duties of the party to be terminated, or the ability to perform
those obligations and duties as contemplated herein.
If, for any reason other than "cause" as defined above, or the 90-day
automatic termination provision described above, BISYS Ohio is replaced as Fund
Accountant, or if a third party is added to perform all or a part of the
services provided by BISYS Ohio under this Agreement (excluding any
sub-accountant appointed by BISYS Ohio as provided in Section 2 hereof), then
the Trust shall make a one-time cash payment, as liquidated damages, to BISYS
Ohio equal to the balance due BISYS Ohio for the remainder of the term of this
Agreement, assuming for purposes of calculation of the payment that the asset
level of the Trust on the date BISYS Ohio is replaced, or a third party is
added, will remain constant for the balance of the contract term.
6
7. Standard of Care; Reliance on Records and Instructions; Indemnification.
BISYS Ohio shall use its best efforts to insure the accuracy of all services
performed under this Agreement, but shall not be liable to the Trust for any
action taken or omitted by BISYS Ohio in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. A Fund agrees to indemnify and hold harmless BISYS Ohio, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS Ohio's actions taken or nonactions with respect to
the performance of services under this Agreement with respect to such Fund or
based, if applicable, upon reasonable reliance on information, records,
instructions or requests with respect to such Fund given or made to BISYS Ohio
by a duly authorized representative of the Trust; provided that this
indemnification shall not apply to actions or omissions of BISYS Ohio in cases
of its own bad faith, willful misfeasance, negligence or from reckless disregard
by it of its obligations and duties, and further provided that prior to
confessing any claim against it which may be the subject of this
indemnification, BISYS Ohio shall give the Trust written notice of and
reasonable opportunity to defend against said claim in its own name or in the
name of BISYS Ohio.
8. Record Retention and Confidentiality. BISYS Ohio shall keep and maintain
on behalf of the Trust all books and records which the Trust and BISYS Ohio is,
or may be, required to keep and maintain pursuant to any applicable statutes,
rules and regulations, including without limitation Rules 31a-1 and 31a-2 under
the 1940 Act, relating to the maintenance of books and records in connection
with the services to be provided hereunder. BISYS Ohio further agrees that all
such books and records shall be the property of the Trust and to make such books
and records available for inspection by the Trust or by the Securities and
Exchange Commission at reasonable times and otherwise to keep confidential all
books and records and other information relative to the Trust and its
shareholders; except when requested to divulge such information by
duly-constituted authorities or court process.
9. Uncontrollable Events. BISYS Ohio assumes no responsibility hereunder,
and shall not be liable, for any damage, loss of data, delay or any other loss
whatsoever caused by events beyond its reasonable control.
10. Reports. BISYS Ohio will furnish to the Trust and to its properly
authorized auditors, investment advisers, examiners, distributors, dealers,
underwriters, salesmen, insurance companies and others designated by the Trust
in writing, such reports and at such times as are prescribed pursuant to the
terms and the conditions of this Agreement to be provided or completed by BISYS
7
Ohio, or as subsequently agreed upon by the parties pursuant to an amendment
hereto. The Trust agrees to examine each such report or copy promptly and will
report or cause to be reported any errors or discrepancies therein no later than
three business days from the receipt thereof. In the event that errors or
discrepancies, except such errors and discrepancies as may not reasonably be
expected to be discovered by the recipient within three days after conducting a
diligent examination, are not so reported within the aforesaid period of time, a
report will for all purposes be accepted by and binding upon the Trust and any
other recipient, and BISYS shall have no liability for errors or discrepancies
therein and shall have no further responsibility with respect to such report
except to perform reasonable corrections of such errors and discrepancies within
a reasonable time after requested to do so by the Trust.
11. Rights of Ownership. All computer programs and procedures developed to
perform services required to be provided by BISYS Ohio for this Agreement are
the property of BISYS Ohio. All records and other data except such computer
programs and procedures are the exclusive property of the Trust and all such
other records and data will be furnished to the Trust in appropriate form as
soon as practicable after termination of this Agreement for any reason.
12. Return of Records. BISYS Ohio may at its option at any time, and shall
promptly upon the Trust's demand, turn over to the Trust and cease to retain
BISYS Ohio's files, records and documents created and maintained by BISYS Ohio
pursuant to this Agreement which are no longer needed by BISYS Ohio in the
performance of its services or for its legal protection. If not so turned over
to the Trust, such documents and records will be retained by BISYS Ohio for six
years from the year of creation. At the end of such six-year period, such
records and documents will be turned over to the Trust unless the Trust
authorizes in writing the destruction of such records and documents.
13. Representations of the Trust. The Trust certifies to BISYS Ohio that:
(1) as of the close of business on the Effective Date, each Fund that is in
existence as of the Effective Date has authorized unlimited shares, and (2) this
Agreement has been duly authorized by the Trust and, when executed and delivered
by the Trust, will constitute a legal, valid and binding obligation of the
Trust, enforceable against the Trust in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
14. Representations of BISYS Ohio. BISYS Ohio represents and warrants that:
(1) the various procedures and systems which BISYS Ohio has implemented with
regard to safeguarding from loss or damage attributable to fire, theft, or any
other cause the records, and other data of the Trust and BISYS Ohio's records,
data,
8
equipment facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of it obligations
hereunder, and (2) this Agreement has been duly authorized by BISYS Ohio and,
when executed and delivered by BISYS Ohio, will constitute a legal, valid and
binding obligation of BISYS Ohio, enforceable against BISYS Ohio in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and remedies of
creditors and secured parties.
15. Insurance. BISYS Ohio shall notify the Trust should any of its
insurance coverage be canceled or reduced. Such notification shall include the
date of change and the reasons therefor. BISYS Ohio shall notify the Trust of
any material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Trust from time to time as may be appropriate of the total outstanding claims
made by BISYS Ohio under its insurance coverage.
16. Information Furnished by the Trust and Funds. The Trust has furnished
to BISYS Ohio the following:
(a) Copies of the Amended and Restated Declaration of Trust of the
Trust and of any amendments thereto.
(b) Copies of the following documents:
1. The Trust's Bylaws and any amendments thereto;
2. Resolutions of the Board of Trustees covering the
approval of this Agreement, authorization of a
specified officer of the Trust to execute and deliver
this Agreement and authorization for specified officers
of the Trust to instruct BISYS Ohio thereunder.
(c) A list of all the officers of the Trust, together with specimen
signatures of those officers who are authorized to instruct BISYS
Ohio in all matters.
(d) Two copies of the Prospectuses and Statements of Additional
Information for each Fund.
17. Information Furnished by BISYS Ohio. BISYS Ohio has furnished to the
Trust the following:
(a) BISYS Ohio's Articles of Incorporation.
(b) BISYS Ohio's Bylaws and any amendments thereto.
9
(c) Certified copies of actions of BISYS Ohio covering the following
matters:
1. Approval of this Agreement, and authorization of a
specified officer of BISYS Ohio to execute and deliver
this Agreement;
2. Authorization of BISYS Ohio to act as fund accountant
for the Trust and to provide accounting services for
the Trust.
18. Amendments to Documents. The Trust shall furnish BISYS Ohio written
copies of any amendments to, or changes in, any of the items referred to in
Section 16 hereof forthwith upon such amendments or changes becoming effective.
In addition, the Trust agrees that no amendments will be made to the
Prospectuses or Statements of Additional Information of the Trust which might
have the effect of changing the procedures employed by BISYS Ohio in providing
the services agreed to hereunder or which amendment might affect the duties of
BISYS Ohio hereunder unless the Trust first obtains BISYS Ohio's approval of
such amendments or changes.
19. Compliance with Law. Except for the obligations of BISYS Ohio set forth
in Section 8 hereof, the Trust assumes full responsibility for the preparation,
contents and distribution of each prospectus of the Trust as to compliance with
all applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. BISYS Ohio shall have no
obligation to take cognizance of any laws relating to the sale of the Trust's
shares. The Trust represents and warrants that no shares of the Trust will be
offered to the public until the Trust's registration statement under the
Securities Act and the 1940 Act has been declared or becomes effective.
20. Notices. Any notice provided hereunder shall be sufficiently given when
sent by registered or certified mail to the party required to be served with
such notice, at the following address: 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx
00000-0000, or at such other address as such party may from time to time specify
in writing to the other party pursuant to this Section.
21. Headings. Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
22. Assignment. This Agreement and the rights and duties hereunder shall
not be assignable with respect to a Fund by either of the parties hereto except
by the specific written consent of the other party.
10
23. Governing Law. This Agreement shall be governed by and provisions shall
be construed in accordance with the laws of the Commonwealth of Massachusetts.
24. Limitation of Liability of the Trustees and Shareholders. 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 have 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 Amended and Restated Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
VARIABLE INSURANCE FUNDS
By:_________________________________
BISYS FUND SERVICES OHIO, INC.
By:_________________________________
11
Dated: ________, 1997
Schedule A
to the Fund Accounting Agreement
between Variable Insurance Funds and
BISYS Fund Services Ohio, Inc.
NAME OF FUND
Variable Insurance Money Market Fund
Variable Insurance Allocated Conservative Fund
Variable Insurance Allocated Balanced Fund
Variable Insurance Allocated Growth Fund
Variable Insurance Allocated Aggressive Fund
BB&T Growth and Income Fund
BB&T Capital Manager Fund
VARIABLE INSURANCE FUNDS
By:_______________________________
BISYS FUND SERVICES OHIO, INC.
By:________________________________
A-1
Dated: _________, 1997
Schedule B
to the Fund Accounting Agreement
between Variable Insurance Funds and
BISYS Fund Services Ohio, Inc.
BISYS Fund Services Ohio, Inc. shall be entitled to receive a fee from each
Fund in accordance with the following schedule:
Funds Average Daily Net Assets Fee Amount
Funds-of-Funds: All assets Greater of
$10,000 or .01%
Non-Funds-of-Funds: All Assets Greater of
$30,000 or .03%
Multiple Classes of Shares:
Funds which have two or more classes of shares each having different net
asset values or paying different daily dividends are subject to the following
additional annual fee per additional class:
Fund Additional Per Class Fee
Funds-of-Funds $2,000
Non-Funds-of-Funds $10,000
VARIABLE INSURANCE FUNDS
BY:_______________________________
BISYS FUND SERVICES OHIO, INC.
BY:_______________________________
B-1
