SUB-ADVISORY AGREEMENT
AGREEMENT dated as of _______, 1997 between AmSouth Bank, an Alabama
banking association with its principal place of business in Alabama (herein
called the "Investment Adviser") and Rockhaven Asset Management, LLC, a Delaware
limited liability corporation with its principal place of business in
Pennsylvania (herein called the "Sub-Adviser").
WHEREAS, Variable Insurance Funds (the "Trust"), a Massachusetts business
trust having its principal place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx,
Xxxx 00000-0000, is registered as an open-end, management investment company
under the Investment Company Act of 1940, as amended (the "40 Act");
WHEREAS, the Trust has retained the Investment Adviser to provide or
procure investment advisory services on behalf of certain investment portfolios
of the Trust; and
WHEREAS, the Investment Adviser wishes to retain the Sub-Adviser to assist
the Investment Adviser in providing investment advisory services in connection
with such portfolios of the Trust as now or hereafter may be identified on
Schedule A hereto as such Schedule may be amended from time to time with the
consent of the parties hereto (each herein called a "Fund").
WHEREAS, the Sub-Adviser is willing to provide such services to the
Investment Adviser upon the terms and conditions and for the compensation set
forth below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. Appointment. The Investment Adviser hereby appoints the Sub-Adviser its
sub-adviser with respect to the Fund as provided for in the Investment Advisory
Agreement between the Investment Adviser and the Trust dated as of _______, 1997
(such Agreement or the most recent successor advisory agreement between such
parties is herein called the "Advisory Agreement"). The Sub-Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. Delivery of Documents. The Investment Adviser shall provide to the
Sub-Adviser copies of the Trust's most recent prospectus and statement of
additional information (including supplement thereto) which relate to any class
of shares representing interests in the Fund (each such prospectus and statement
of additional information as presently in effect, and as they shall from time to
time be amended and supplemented, is herein respectively called a "Prospectus"
and a "Statement of Additional Information").
3. Sub-Advisory Services to the Funds.
(a) Subject to the supervision of the Investment Adviser, the
Sub-Adviser will supervise the day-to-day operations of the Fund and perform the
following services: (i) provide investment research and credit analysis
concerning the Fund's investments; (ii) conduct a continual program of
investment of the Fund's assets; (iii) place orders for all purchases and sales
of the investments made for the Fund; (iv) maintain the books and records
required in connection with its duties hereunder; and (v) keep the Investment
Adviser informed of developments materially affecting the Fund.
(b) The Sub-Adviser 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; provided that, notwithstanding this Paragraph 3(b),
the liability of the Sub-Adviser for actions taken and non-actions with respect
to the performance of services under this Agreement shall be subject to the
limitations set forth in Paragraph 11(a) of this Agreement.
(c) The Sub-Adviser will communicate to the Investment Adviser and to
the Trust's custodian and Fund accountants as instructed by the Investment
Adviser on each day that a purchase or sale of a security is effected for the
Fund (i) the name of the issuer, (ii) the amount of the purchase or sale, (iii)
the name of the broker or dealer, if any, through which the purchase or sale
will be affected, (iv) the CUSIP number of the security, if any, and (v) such
other information as the Investment Adviser may reasonably require for purposes
of fulfilling its obligations to the Trust under the Advisory Agreement.
(d) The Sub-Adviser will provide the services rendered by it hereunder
in accordance with the Fund's investment objectives, policies and restrictions
as stated in the Prospectus and Statement of Additional Information.
(e) The Sub-Adviser will maintain records of the information set forth
in Paragraph 3(c) hereof with respect to the securities transactions of the Fund
and will furnish the Trust's Board of Trustees with such periodic and special
reports as the Board may reasonably request.
(f) The Sub-Adviser will promptly review all (1) reports of current
security holdings in the Fund, (2) summary reports of transactions and pending
maturities (including the principal, cost and accrued interest on each portfolio
security in maturity date order) and (3) current cash position reports
(including cash available from portfolio sales and maturities and sales of the
Fund's shares less cash needed for redemptions and settlement of portfolio
purchases), all within a reasonable time after receipt thereof from the Trust
and will report any errors or discrepancies in such reports to the Trust or its
designee within three (3) business days after discovery of such discrepancies.
4. Brokerage. The Sub-Adviser may place orders pursuant to its investment
determinations for the Fund either directly with the issuer or with any broker
or dealer. In placing orders, the Sub-Adviser will consider the experience and
skill of the firm's securities traders, as well as the firm's financial
responsibility and administrative efficiency. The Sub-Adviser will attempt to
obtain the best price and the most favorable execution of its orders. Consistent
with these obligations, the Sub-Adviser may, subject to the approval of the
Board of Trustees of the Trust, select brokers on the basis of the research,
statistical and pricing services they provide to the Fund. A commission paid to
such brokers may be higher than that which another qualified broker would have
charged for effecting the same transaction, provided that the Sub-Adviser
determines in good faith that such transaction is reasonable in terms either of
the transaction or the overall responsibility of the Sub-Adviser to the Fund and
its other clients and that the total commissions paid by the Fund will be
reasonable in relation to the benefits in the Fund over the long term. In no
instance will portfolio securities be purchased from or sold to the Trust's
principal distributor, the Investment Adviser or any affiliate thereof (as the
term "affiliate" is defined in the 40 Act), except to the extent permitted by
SEC exemptive order or by applicable law.
5. Compliance with Laws: Confidentiality: Conflicts of Interest.
(a) The Sub-Adviser agrees that it will comply with all applicable laws,
rules and regulations of all federal and state regulatory agencies having
jurisdiction over the Sub-Adviser in performance of its duties hereunder (herein
called the "Rules").
(b) The Sub-Adviser will treat confidentially and as proprietary
information of the Trust all records and information relative to the Trust 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, which approval shall not be unreasonably withheld and may not be
withheld where the Sub-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.
(c) The Sub-Adviser will maintain a policy and practice of conducting
sub-advisory services hereunder independently of the banking operations of its
affiliates. In making investment recommendations for the Fund, the Sub-Adviser's
personnel will not inquire or take into consideration whether the issuers of
securities proposed for purchase or sale for the Fund's account are bank
customers of the Sub-Adviser's affiliates unless so required by applicable law.
In dealing with their bank customers, affiliates of Sub-Adviser will not inquire
or take into consideration whether securities of those customers are held by the
Fund.
6. Control by Trust's Board of Trustees. Any recommendations concerning
the Fund's investment program proposed by the Sub-Adviser to the Fund and the
Investment Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Fund pursuant thereto shall at
all times be subject to any applicable directives of the Board of Trustees of
the Trust.
7. Services Not Exclusive. The Sub-Adviser's services hereunder are not
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
dissimilar services to others so long as its services under this Agreement are
not impaired thereby.
8. Books and Records. In compliance with the requirements of Rule 31a-3 of
the Rules, and any other applicable Rule, the Sub-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 such records upon the
Trust's request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 and any other applicable Rule, the records required to
be maintained by the Sub-Adviser hereunder pursuant to Rule 31a-1 and any other
applicable Rule.
9. Expenses. During the term of this Agreement, the Sub-Adviser will bear
all expenses incurred by it in connection with the performance of its services
under this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund. Notwithstanding the foregoing, the
Sub-Adviser shall not bear expenses related to the operation of the Trust or any
Fund including, but not limited to, taxes, interest, brokerage fees and
commissions and any extraordinary expense items.
10. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Investment Adviser will pay the Sub-Adviser and
the Sub-Adviser will accept as full compensation therefor a fee computed daily
and paid monthly in arrears on the first business day of each month equal to the
lesser of (i) the fee at the applicable annual rates set forth on Schedule A
hereto or (ii) such fee as may from time to time be agreed upon in writing by
the Investment Adviser and the Sub-Adviser. If the fee payable to the
Sub-Adviser pursuant to this paragraph begins to accrue after the beginning of
any month or if this Agreement terminates before the end of any month, the fee
for the period from such date to the end of such month or from the beginning of
such month to the date of termination, as the case may be, shall be prorated
according to the proportion which such period bears to the full month in which
such effectiveness or termination occurs. For purposes of calculating fees, the
value of a Fund's net assets shall be computed in the manner specified in the
Prospectus and the Trust's Declaration of Trust for the computation of the value
of the Fund's net assets in connection with the determination of the net asset
value of the Fund's shares. Payment of said compensation shall be the sole
responsibility of the Investment Adviser and shall in no way be an obligation of
the Fund or of the Trust.
11. Limitation of Liability.
(a) The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Investment Adviser, the Trust or
the Fund in connection with the matters to which Agreement relates, except that
Sub-Adviser shall be liable to the Investment Adviser for a loss resulting from
a breach of fiduciary duty by Sub-Adviser under the 40 Act 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 Sub-Adviser in the
performance of its duties or from reckless disregard by it of its obligations or
duties under this Agreement. In no case shall the Sub-Adviser be liable for
actions taken or non-actions with respect to the performance of services under
this Agreement based upon specific information, instructions or requests given
or made to the Sub-Adviser by the Investment Adviser.
(b) The Investment Adviser shall be responsible at all times for
supervising the Sub-Adviser, and this Agreement does not in any way limit the
duties and responsibilities that the Investment Adviser has agreed to under the
Advisory Agreement.
12. Duration and Termination. This Agreement shall become effective as of
the date hereof provided that it shall have been approved by vote of a majority
of the outstanding voting securities of the Fund and, unless sooner terminated
as provided herein, shall continue with respect to the Fund for an initial term
of two years. Thereafter, if not terminated, this Agreement shall continue in
effect for successive 12-month periods, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of those
members of the Board of Trustees of the Trust who are not parties to this
Agreement or interested persons of the Trust or any such party, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by the
Board of Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Fund; provided, however, that this Agreement may be
terminated with respect to the Fund (i) by the Trust at any time without the
payment of any penalty by the Board of Trustees of the Trust, (ii) by vote of a
majority of the outstanding voting securities of the Fund, (iii) by the
Investment Adviser on 60 days written notice to the Sub-Adviser or (iv) by the
Sub-Adviser on 60 days written notice to the Investment Adviser. This Agreement
will also immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities",
"interested person" and "assignment" shall have the same meaning as such terms
have in the 40 Act.)
13. Sub-Adviser's Representations. The Sub-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 policies;
(b) it shall immediately notify the Trust and the Investment Adviser
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 Sub-Adviser, any person or firm that the
Sub-Adviser has employed or with which it has associated, or any employee
thereof has not, to the best of the Sub-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.
14. 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 Investment
Adviser and the Sub-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 Sub-Adviser. The Sub-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 Sub-Adviser and the Investment Adviser agree that the
Sub-Adviser shall be under no obligation to investigate insurance companies to
which the Trust offers or proposes to offer its shares.
15. Amendment of this Agreement. No provision of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought.
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any 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 effected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties herein and their respective successors and shall be governed by
Massachusetts law.
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 an Amended
and Restated Declaration of Trust dated as of July 20, 1994 and amended and
restated as of February 5, 1997, 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, shareholders or representatives of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with any series of shares of the Trust must look solely to the assets of the
Trust belonging to such series 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.
(SEAL) AmSouth Bank
By: _______________________________
Title: ____________________________
(SEAL) Rockhaven Asset Management, LLC
By: _______________________________
Title: ____________________________
Dated: _______, 1997
Schedule A
to the Subadvisory Agreement
between AmSouth Bank and
Rockhaven Asset Management, LLC
NAME OF FUND COMPENSATION
AmSouth Equity Income Fund Annual rate of thirty-six
one-hundredths of one percent (.36%)
of the average daily net assets of such
Fund; provided that if AmSouth Bank
waives some or all of its investment
advisory fee, Rockhaven Asset
Management, LLC shall waive its fee so
that if shall receive no more than
sixty percent (60%) of the net
investment advisory fee paid to
AmSouth Bank.
All fees are computed daily and paid monthly.
AmSouth Bank
By:
Name:
Title:
Rockhaven Asset Management, LLC
By:__________________________
Name:________________________
Title:_______________________
