SUB-ADVISORY AGREEMENT
AGREEMENT made this ___ day of _____, 1997, between AMSOUTH BANK (the
"Adviser"), a national bank having its principal place of business at 0000 Xxxxx
Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000, and ROCKHAVEN ASSET MANAGEMENT, LLC
(the "Subadviser"), a limited liability company having its principal place of
business at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxxxxxx 00000.
WHEREAS, VARIABLE INSURANCE FUNDS, 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 "1940 Act");
WHEREAS, the Trust has retained the Adviser to provide or procure
investment advisory services on behalf of certain investment portfolios of the
Trust; and
WHEREAS, the Adviser desires to retain the Subadviser to furnish investment
advisory and administrative services to certain investment portfolios of the
Trust and may retain the Subadviser 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 Subadviser 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 Adviser hereby appoints the Subadviser to act as
subadviser to the Funds for the period and on the terms set forth
in this Agreement. The Subadviser 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 or the Adviser has furnished
the Subadviser 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 Subadviser 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 or the Adviser will furnish the Subadviser from time to
time with copies of all amendments of or supplements to the
foregoing.
3. Management. Subject to the supervision of the Adviser and the
Trust's Board of Trustees, the Subadviser will provide 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 Subadviser
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 Subadviser 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 Subadviser 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 Subadviser;
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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 Subadviser 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 Subadviser may, in its
discretion, purchase and sell portfolio securities to and
from brokers and dealers who provide the Subadviser with
research advice and other services. In no instance will
portfolio securities be purchased from or sold to BISYS Fund
Services, the Adviser, the Subadviser, or any affiliated
person of the Trust, BISYS Fund Services, the Adviser, or
the Subadviser, 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
Adviser, 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 Adviser, 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 and the Adviser, or their designees, 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; suspended or revoked its
registration as an investment adviser; 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 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 Subadviser and the Adviser 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.
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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] AMSOUTH BANK
By: _________________________
Title:_______________________
ROCKHAVEN ASSET MANAGEMENT, LLC
[SEAL] By:__________________________
Title:_______________________
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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 it
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:_____________________________
A-1
