INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE OFFITBANK VARIABLE INSURANCE FUND, INC.
AND
OFFITBANK
AGREEMENT made this 1st day of March, 1995, by and between The
OFFITBANK Variable Insurance Fund, Inc., a Maryland corporation which may issue
one or more series of shares (hereinafter the "Company"), and OFFITBANK, a New
York chartered trust company (hereinafter the "Adviser").
1. STRUCTURE OF AGREEMENT. The Company is entering into this Agreement
on behalf of the Company's series listed on Schedule A attached hereto
(individually, a "Fund" and collectively, the "Funds") severally and not
jointly. The responsibilities and benefits set forth in this Agreement shall
refer to each Fund severally and not jointly. No individual Fund shall have any
responsibility for any obligation with respect to any other Fund arising out of
this Agreement. Without otherwise limiting the generality of the foregoing,
(a) any breach of any term of this Agreement regarding the
Company with respect to any one Fund shall not create a
right or obligation with respect to any other Fund;
(b) under no circumstances shall the Adviser have the right to
set off claims relating to a Fund by applying property of
any other Fund; and
(c) the business and contractual relationships created by this
Agreement, consideration for entering into this Agreement,
and the consequences of such relationship and consideration
relate solely to the Company and the particular Fund to
which such relationship and consideration applies.
2. DELIVERY OF DOCUMENTS. The Company has delivered to the Adviser
copies of each of the following documents and will deliver to it all future
amendments and supplements thereto, if any:
(a) The Company's Articles of Incorporation (the "Articles");
(b) The By-Laws of the Company;
(c) Resolutions of the Board of Directors of the Company
authorizing the execution and delivery of this Agreement;
(d) The Company's Registration Statement under the Securities
Act of 1933, as amended (the "1933 Act"), and the Investment
Company Act of 1940, as amended (the "1940 Act"), on Form
N-1A as filed with the Securities and Exchange
Commission (the "Commission") on July 20, 1994 and all
subsequent amendments thereto relating to the Funds
(the "Registration Statement");
(e) Notification of Registration of the Company under the 1940
Act on Form N-8A as filed with the Commission; and
(f) Prospectuses and Statements of Additional Information of the
Funds (collectively, the "Prospectuses").
3. INVESTMENT ADVISORY SERVICES. The Company hereby appoints the
Adviser, and the Adviser hereby undertakes, to act as investment adviser of the
Funds and, subject to the supervision of the Company's Board of Directors, to
(a) make investment strategy decisions for the Funds, (b) manage the investing
and reinvesting of the Fund's assets, (c) place purchase and sale orders on
behalf of the Funds and (d) provide continuous supervision of each Fund's
investment portfolio. The Adviser shall, subject to review by the Board of
Directors, furnish such other services as the Adviser shall from time to time
determine to be necessary or useful to perform its obligations under this
Agreement.
As manager of the Funds' assets, the Adviser shall make investments for
the Funds' account in accordance with the investment objectives and limitations
set forth in the Articles, the Prospectuses, the 1940 Act, the provisions of the
Internal Revenue Code of 1986, as amended, including Subchapters L and M,
relating to variable contracts and regulated investment companies, respectively,
applicable banking laws and regulations, and policy decisions adopted by the
Company's Board of Directors from time to time. The Adviser shall advise the
Company's officers and Board of Directors, at such times as the Company's Board
of Directors may specify, of investments made for the Funds' accounts and shall,
when requested by the Company's officers or Board of Directors, supply the
reasons for making such investments.
The Adviser is authorized on behalf of the Company, from time to time
when deemed to be in the best interests of the Company and to the extent
permitted by applicable law, to purchase and/or sell securities in which the
Adviser or any of its affiliates underwrites, deals in and/or makes a market
and/or may perform or seek to perform investment banking services for issuers of
such securities. The Adviser is further authorized, to the extent permitted by
applicable law, to select brokers for the execution of trades for the Company,
which broker may be an affiliate of the Adviser, provided that the best
competitive execution price is obtained at the time of the trade execution.
It is understood and agreed that the Adviser may from time to time
employ or associate with such other entities or persons as the Adviser believes
appropriate to assist in the performance of this Agreement with respect to a
particular Fund or Funds (each a "Sub-Adviser") and that any such Sub-Adviser
shall have all the rights and powers of the Adviser set forth in this Agreement;
provided that a Fund shall not pay any additional compensation for any
Sub-Adviser and the Adviser shall be as fully responsible to the Company for the
acts and omissions of the Sub-Adviser as it is for its own acts and omissions;
and provided further that the retention of any Sub-Adviser shall be approved in
advance by (i) the Board of Directors of the Company and (ii) the shareholders
of the relevant Fund if required under any applicable provisions of the 1940
Act. The Adviser will review, monitor and report to the Company's Board of
Directors regarding the performance and investment procedures of any
Sub-Adviser. In the event that the services of any Sub-Adviser are terminated,
the Adviser may provide investment advisory services pursuant to this Agreement
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to the Fund without a Sub-Adviser and without further shareholder approval, to
the extent consistent with the 1940 Act. A Sub-Adviser may be an affiliate of
the Adviser.
4. EXPENSES.
(a) The Adviser shall, at its expense, provide the Funds
with office space, furnishings and equipment and
personnel required by it to perform the services to be
provided by the Adviser pursuant to this Agreement.
(b) Except as provided in subparagraph (a), the Company
shall be responsible for all of the Funds' expenses and
liabilities, including, but not limited to, taxes;
interest; fees (including fees paid to its directors
who are not affiliated with the Adviser or any of its
affiliates); fees payable to the Securities and
Exchange Commission; state securities qualification
fees; costs of preparing and printing Prospectuses for
regulatory purposes and for distribution to existing
shareholders; advisory and administration fees; charges
of the custodian and transfer agent; insurance
premiums; auditing and legal expenses; costs of
shareholders' reports and shareholders' meetings; any
extraordinary expenses; and brokerage fees and
commissions, if any, in connection with the purchase or
sale of portfolio securities.
5. COMPENSATION. In consideration of the services to be rendered by the
Adviser under this Agreement, the Company shall pay the Adviser monthly fees on
the first Business Day (as defined in the Prospectuses) of each month based upon
the average daily net assets of each Fund during the preceding month (as
determined on the days and at the time set forth in the Prospectuses for
determining net asset value per share) at the annual rate set forth opposite the
Fund's name on Schedule A attached hereto. If the fees payable to the Adviser
pursuant to this paragraph begin to accrue before the end of any month or if
this Agreement terminates before the end of any month, the fees 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 each such monthly fee, the
value of the Funds' net assets shall be computed in the manner specified in the
Prospectuses and the Articles for the computation of the value of the Funds' net
assets in connection with the determination of the net asset value of shares of
the Funds' capital stock.
If the aggregate expenses incurred by, or allocated to, each Fund in
any fiscal year shall exceed the lowest expense limitation, if applicable to
such Fund, imposed by state securities laws or regulations thereunder, as such
limitations may be raised or lowered from time to time, the Adviser shall
reimburse such Fund for such excess. The Adviser's reimbursement obligation will
be limited to the amount of fees it received under this agreement during the
period in which such expense limitations were exceeded, unless otherwise
required by applicable laws or regulations. With respect to portions of a fiscal
year in which this Agreement shall be in effect, the foregoing limitations shall
be prorated according to the proportion which that portion of the fiscal year
bears to the full fiscal year. Any payments required to be made by this
paragraph shall be made once a year promptly after the end of the Company's
fiscal year.
In consideration of the Adviser's undertaking to render the services
described in this Agreement, the Company agrees that the Adviser shall not be
liable under this Agreement for any error of judgment or mistake of law or for
any loss suffered by the Company in connection with the performance of this
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Agreement, provided that nothing in this Agreement shall be deemed to protect or
purport to protect the Investment Adviser against any liability to the Company
or its stockholders to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of the
Adviser's duties under this Agreement or by reason of the Adviser's reckless
disregard of its obligations and duties hereunder.
6. NON-EXCLUSIVE SERVICES. Except to the extent necessary to perform
the Investment Adviser's obligations under this Agreement, nothing herein shall
be deemed to limit or restrict the right of the Adviser, or any affiliate of the
Adviser, including any employee of the Adviser, to engage in any other business
or to devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.
7. EFFECTIVE DATE; MODIFICATIONS; TERMINATION. This Agreement shall
become effective on the date hereof, provided that it shall have been approved
by a majority of the outstanding voting securities of each Fund, in accordance
with the requirements of the 1940 Act, or such later date as may be agreed by
the parties following such shareholder approval.
(a) Subject to prior termination as provided in
sub-paragraph (d) of this paragraph, this Agreement
shall continue in force until February 28, 1997 and
indefinitely thereafter, but only so long as the
continuance after such date shall be specifically
approved at least annually by vote of the Directors
of the Company or by vote of a majority of the
outstanding voting securities of each Fund.
(b) This Agreement may be modified by mutual consent,
such consent on the part of the Company to be
authorized by vote of a majority of the outstanding
voting securities of each Fund.
(c) In addition to the requirements of sub-paragraphs (a)
and (b) of this paragraph, the terms of any
continuance or modification of this Agreement must
have been approved by the vote of a majority of those
Directors of the Company who are not parties to this
Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of
voting on such approval.
(d) Either party hereto may, at any time on sixty (60)
days prior written notice to the other, terminate
this Agreement, without payment of any penalty, by
action of its Trustees or Board of Directors, as the
case may be, or by action of its authorized officers
or, with respect to a Fund, by vote of a majority of
the outstanding voting securities of that Fund. This
Agreement may remain in effect with respect to a Fund
even if it has been terminated in accordance with
this paragraph with respect to the other Funds. This
Agreement shall terminate automatically in the event
of its assignment.
8. USE OF NAME. Upon expiration or earlier termination of this
Agreement, the Company shall, if reference to "OFFITBANK" is made in the
corporate name of the Company or in the names of the Funds and if the Adviser
requests in writing, as promptly as practicable change its corporate name and
the names of the Funds so as to eliminate all reference to "OFFITBANK", and
thereafter the Company and the Funds
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shall cease transacting business in any corporate name using the words
"OFFITBANK" or any other reference to the Adviser or "OFFITBANK". The foregoing
rights of the Adviser and obligations of the Company shall not deprive the
Adviser, or any affiliate thereof which has "OFFITBANK" in its name, of, but
shall be in addition to, any other rights or remedies to which the Adviser and
any such affiliate may be entitled in law or equity by reason of any breach of
this Agreement by the Company, and the failure or omission of the Adviser to
request a change of the Company's or a Fund's name or a cessation of the use of
the name of "OFFITBANK" as described in this paragraph shall not under any
circumstances be deemed a waiver of the right to require such change or
cessation at any time thereafter for the same or any subsequent breach.
9. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Maryland.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date written above.
OFFITBANK VARIABLE INSURANCE FUND, INC. OFFITBANK
By: /s/Xxxxxxx Xxxxxx-Xxxxx By: /s/ Xxxxxx X. Xxxxx
----------------------- -------------------
Xxxxxxx Xxxxxx-Xxxxx Xxxxxx X. Xxxxx
Secretary Chairman
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SCHEDULE A
OFFITBANK VIF FUND: FEE:
HIGH YIELD FUND .85% (first $200 million of net assets)
.75% (thereafter)
INVESTMENT GRADE GLOBAL DEBT FUND .80% (first $200 million of net assets)
.70% (thereafter)
EMERGING MARKETS FUND .90% (first $200 million of net assets)
.80% (thereafter)
LATIN AMERICA TOTAL RETURN FUND 1.00%
TOTAL RETURN FUND .80%
GLOBAL CONVERTIBLE FUND .90%
U.S. GOVERNMENT SECURITIES FUND .40%
U.S. SMALL CAP FUND 1.00%
Revised: July 17, 1996
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