SUB-INVESTMENT ADVISORY AGREEMENT
This Sub-Investment Advisory Agreement (this "Agreement") is entered
into as of April 30, 2003 by and between HL Investment Advisors, LLC, a
Connecticut limited liability company ("Investment Manager") and Janus Capital
Management LLC, a Delaware limited liability company ("JCM").
RECITALS
a. Investment Manager has entered into an Investment Management
Agreement dated April 30, 2002 (the "Investment Management Agreement") with
Hartford HLS Series Fund II, Inc. (the "Fund"), to act as investment manager to
Hartford SmallCap Value HLS Fund (the "Portfolio"), which is a series of the
Fund.
b. The Investment Management Agreement provides that Investment Manager
may engage a sub-investment adviser to furnish investment information and advice
to assist Investment Manager in carrying out its responsibilities under the
Investment Management Agreement.
c. Investment Manager and the Directors of the Fund desire to retain
JCM to render investment management services to Investment Manager in the manner
and on the terms set forth in this Agreement.
AGREEMENT
In consideration of the mutual covenants and agreements set forth in
this Agreement, Investment Manager and JCM agree as follows:
1. SUB-INVESTMENT ADVISER SERVICES.
(a) JCM shall, subject to the control of the Directors of the
Fund and to the supervision of Investment Manager, have exclusive authority to
manage the investment and reinvestment of the assets of the Portfolio, including
cash, provided that such management is in accordance with the Fund's Articles of
Incorporation and bylaws, its registration statements under the Investment
Company Act of 1940 (the "1940 Act"), provisions of the Internal Revenue Code
(the "Code") applicable to "regulated investment companies" (as defined in
Section 851 of the Code), applicable provisions of Section 817(h) of the Code,
and with all applicable laws governing such Portfolio's operations and
investments including without limitation the 1940 Act, and rules adopted
thereunder and applicable federal and state securities laws. Investment Manager
acknowledges that JCM has authority to trade every day the market is open. JCM
makes no representation or warranty, express or implied, that any level of
performance or investment results will be achieved by the Portfolio or that the
Portfolio will perform comparably with any standard or index, including other
clients of JCM, whether public or private. JCM acknowledges that the Investment
Manager has the right to instruct JCM to effect any transaction necessary to
ensure compliance with the Portfolio's investment policies and restrictions as
well
as the requirements of Subchapter M of the Code and the provisions of Section
817(h) of the Code and the regulations promulgated thereunder.
(b) JCM shall furnish Investment Manager with monthly,
quarterly, and annual reports concerning transactions and performance of the
Portfolio in such form as may be mutually agreed upon. Upon prior notice, JCM
shall permit the financial statements, books and records with respect to the
Portfolio to be inspected and audited by Investment Manager (and/or the
independent accountants for Investment Manager or the Fund) at all reasonable
times during normal business hours. JCM shall also provide Investment Manager
with such other information and reports as may reasonably be requested by
Investment Manager from time to time, other than proprietary information and
provided JCM shall not be responsible for Portfolio accounting, nor shall it be
required to generate information derived from Portfolio accounting data.
(c) JCM has provided to Investment Manager a copy of JCM's
Form ADV as filed with the Securities and Exchange Commission. JCM shall provide
to Investment Manager a list of persons who JCM wishes to have authorized to
give written and/or oral instructions to Custodians of Fund assets for the
Portfolio.
(d) JCM shall be responsible for the preparation and filing of
Schedule 13G and Form 13F on behalf of the Portfolio. JCM shall not be
responsible for the preparation or filing of any reports required of the
Portfolio by any governmental or regulatory agency, except as expressly agreed
to in writing. JCM shall vote proxies received in connection with securities
held by the Portfolio.
(e) JCM shall have no responsibility to monitor certain
limitations or restrictions, including without limitation, the 90%-source test,
for which JCM determines it has not been provided sufficient information in
accordance with Section 2 of this Agreement or otherwise. All such monitoring
shall be the responsibility of Investment Manager.
2. OBLIGATIONS OF INVESTMENT MANAGER AND THE PORTFOLIO.
(a) Investment Manager has provided to JCM the information and
documents listed on the attached Exhibit A. Throughout the term of this
Agreement, Investment Manager shall continue to provide such information and
documents to JCM, including any amendments, updates or supplements to such
information or documents, before or at the time the amendments, updates or
supplements become effective. Investment Manager shall timely furnish JCM with
such additional information as may be reasonably necessary for or requested by
JCM to perform its responsibilities pursuant to this Agreement.
(b) Investment Manager shall be responsible for setting up and
maintaining brokerage accounts and other accounts JCM deems advisable to allow
for the purchase or sale of various forms of securities pursuant to this
Agreement.
(c) As permitted under the Shareholder Communications Act of
1985, as amended, Investment Manager has elected Objecting Beneficial Owner
status (restricting custodian from disclosing Portfolio holdings to third
parties) with respect to its relationship with
the custodian identified pursuant to Exhibit A. Throughout the term of this
Agreement, the Investment Manager shall maintain Objecting Beneficial Owner
status and, upon written request of JCM, shall provide written confirmation of
such status.
(d) Investment Manager hereby represents it is in compliance
with all currently applicable anti-money laundering laws, rules and regulations
including, but not limited to, the U.S.A. PATRIOT Act of 2001, P.L. 107-56.
3. CUSTODIAN. The Portfolio assets shall be maintained in the
custody of the custodian identified pursuant to Exhibit A. Any assets added to
the Portfolio shall be delivered directly to such custodian. JCM shall have no
liability for the acts or omissions of any custodian of the Portfolio's assets.
JCM shall have no responsibility for the segregation requirement of the 1940 Act
or other applicable law.
4. BROKER DEALERS. Absent written instructions from Investment
Manager to the contrary, JCM shall place all orders for the purchase and sale of
investment instruments for the Portfolio with brokers or dealers selected by
JCM, which may include brokers or dealers affiliated with JCM. Purchase or sell
orders for the Portfolio may be aggregated with contemporaneous purchase or sell
orders of other clients of JCM. JCM shall use its best efforts to obtain
execution of Portfolio transaction at prices that are advantageous to the
Portfolio and at commission rates that are reasonable in relation to the
benefits received. However, JCM may select brokers or dealers on the basis that
they provide brokerage, research, or other services or products to the Portfolio
and/or other accounts serviced by JCM. JCM may place portfolio transactions with
a broker or dealer with whom it has negotiated a commission in excess of the
commission another broker or dealer would have charged for effecting that
transaction if JCM determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research provided by
such broker or dealer, viewed in terms of either that particular transaction or
the overall responsibilities that JCM and its affiliates have with respect to
the Portfolio and to accounts over which they exercise investment discretion,
and not all such services or products will necessarily be used by JCM in
managing the Portfolio. In addition, consistent with best execution, JCM may
execute Portfolio transactions through brokers and dealers that sell shares of
mutual funds advised by JCM or recommend to their customers that they purchase
shares of such funds. If JCM determines that any product or service furnished by
a broker has a mixed use, such that it also serves functions that do not assist
in the investment decision-making process, JCM may allocate the costs of such
service or product accordingly. The portion of the product or service that JCM
determines will assist it in the investment decision-making process may be paid
for in brokerage commission dollars. This allocation may create a conflict of
interest for JCM.
5. FEES. Investment Manager shall pay to JCM a monthly fee in
accordance with the attached Exhibit B. Investment Manager shall calculate the
fee for each month during which JCM provides investment management services
based upon the average daily net assets of the Portfolio (including cash or cash
equivalents) for each such month. The fee shall be payable to JCM by the
fifteenth day of each month. The fee for the first month during which JCM
provides investment management services shall be based upon the number of days
the account was open in that month. Similarly, if this Agreement is terminated,
the fee shall be based upon the number
of days the account was open during the month in which the Agreement is
terminated.
6. EXPENSES. Investment Manager, the Fund and the Portfolio shall
assume and pay their respective organizational, operational, and business
expenses not specifically assumed or agreed to be paid by JCM pursuant to this
Agreement. JCM shall pay its own organizational, operational, and business
expenses but shall not be obligated to pay any expenses of Investment Manager,
the Fund, or the Portfolio, including without limitation: (a) interest and
taxes; (b) brokerage commissions and other costs in connection with the purchase
or sale of securities or other investment instruments for the Portfolio; and (c)
custodian fees and expenses. Any reimbursement of management fees required by
any expense limitation provision and any liability arising out of a violation of
Section 36(b) of the 1940 Act shall be the sole responsibility of Investment
Manager.
7. REPRESENTATIONS AND WARRANTIES.
(a) Investment Manager represents and warrants the
following:
(i) Investment Manager has been duly
incorporated and is validly existing and in
good standing as a corporation under the
laws of the state of Connecticut.
(ii) Investment Manager has all requisite
corporate power and authority under the laws
of Connecticut and federal securities laws
to execute, deliver and to perform this
Agreement.
(iii) All necessary corporate proceedings of
Investment Manager have been duly taken to
authorize the execution, delivery and
performance of this Agreement by Investment
Manager.
(iv) Investment Manager is a registered
investment adviser under the Investment
Advisers Act of 1940 and is in compliance
with all other registrations required.
(v) Investment Manager has complied, in all
material respects, with all registrations
required by, and will comply, in all
material respects, with all applicable rules
and regulations of, the Securities and
Exchange Commission.
(vi) Investment Manager has authority under the
Investment Management Agreement to execute,
deliver and perform this Agreement.
(vii) Investment Manager has received a copy of
Part II of JCM's Form ADV no less than 48
hours prior to entering into this Agreement.
(b) JCM represents and warrants the following:
(i) JCM has been duly incorporated and is
validly existing and in good standing as a
limited liability company under the laws of
the state of Delaware.
(ii) JCM has all requisite corporate power and
authority under the laws of Delaware and
federal securities laws to execute, deliver
and to perform this Agreement.
(iii) All necessary corporate proceedings of JCM
have been duly taken to authorize the
execution, delivery and performance of this
Agreement by JCM.
(iv) JCM is a registered investment adviser under
the Investment Advisers Act of 1940 and is
in compliance with all other registrations
required.
(v) JCM has complied, in all material respects,
with all registrations required by, and will
comply, in all material respects, with all
applicable rules and regulations, of the
Securities and Exchange Commission.
8. CONFIDENTIALITY AND PROPRIETARY RIGHTS. Investment Manager
will not, directly or indirectly, and will not permit its affiliates, employees,
officers, directors, agents, contractors, or the Portfolio to, in any form or by
any means, use, disclose, or furnish, to any person or entity, records or
information concerning the business of JCM, except as necessary for the
performance of its duties under this Agreement or the Investment Management
Agreement, or as required by law upon prior written notice to JCM. JCM or its
affiliates are the sole owners of the name and xxxx "Xxxxx." Investment Manager
shall not, and shall not permit the Portfolio to, without prior written consent
of JCM, use the name or xxxx "Janus" or make representations regarding JCM or
its affiliates. All references contained in this Agreement to "the name or xxxx
`Xxxxx'" shall include but not be limited to the Janus logo, the website
xxx.xxxxx.xxx and any and all electronic links relating to such website.
Investment Manager will make no use of the name or xxxx "Xxxxx" except as
expressly provided in this Agreement or expressly authorized by JCM in writing.
All goodwill associated with the name and xxxx "Janus" shall inure to the
benefit of JCM or its affiliates. Upon termination of this Agreement for any
reason, Investment Manager shall immediately cease, and Investment Manager shall
cause the Portfolio to immediately cease any and all use of any Xxxxx xxxx(s).
9. NON-EXCLUSIVITY.
(a) JCM, its affiliates, or any of their directors, officers,
employees, or agents may buy, sell, or trade any securities or other investment
instruments for their own account or for the account of others for whom it or
they may be acting, provided that such activities will not
adversely affect or otherwise impair the performance by JCM of its
responsibilities under this Agreement. JCM and its affiliates may act as
investment manager to or provide other services with respect to various
investment companies and other managed accounts, which advice or services,
including the nature of such services, may differ from or be identical to advice
given or action taken with respect to the Portfolio. In the event of such
activities, the transactions and associated costs will be allocated among such
clients (including the Portfolio) in a manner that JCM believes to be equitable
to the accounts involved and consistent with such accounts' objectives,
policies, and limitations.
(b) JCM shall be subject to a written code of ethics adopted
by it pursuant to Rule 17j-1(b) of the 1940 Act, and shall not be subject to any
other code of ethics, including Investment Manager's code of ethics, unless
specifically adopted by JCM.
(c) JCM may provide advice to or take action with respect to
other clients, which advice or action, including the timing and nature of such
action, may differ from or be identical to advice given or action taken with
respect to the Portfolio. Except as necessary to perform this Agreement, JCM
shall be deemed to be an independent contractor and shall have no authority,
unless otherwise provided or authorized, to act for or represent the Portfolio
or Investment Manager in any way or otherwise be deemed an agent of the
Portfolio or Investment Manager. Investment Manager and JCM shall not be
considered as partners or participants in a joint venture.
10. LIABILITY. Except as may otherwise be provided by the 1940
Act, or other federal securities laws, neither JCM nor any of its affiliates,
officers, directors, officers, shareholders, employees, or agents shall be
liable for any loss, liability, cost, damage, or expense (including reasonable
attorneys' fees and costs) (collectively referred to in this Agreement as
"Losses"), including without limitation, Losses in connection with pricing
information or other information provided by JCM, except for Losses directly
resulting from JCM's gross negligence, bad faith, or willful misconduct.
Investment Manager and the Fund shall, jointly and severally, hold harmless and
indemnify JCM, its affiliates, directors, officers, shareholders, employees or
agents for any Loss not directly resulting from JCM's gross negligence, bad
faith, or willful misconduct. JCM shall hold harmless and indemnify Investment
Manager, its affiliates, directors, officers, shareholders, employees or agents
for any Loss not directly resulting from Investment Manager's gross negligence,
bad faith, or willful misconduct. The obligations contained in this Section 10
shall survive termination of this Agreement.
11. DELEGATION OF RESPONSIBILITIES. Notwithstanding anything
herein to the contrary, JCM may delegate any or all of its investment management
duties and responsibilities under this Agreement to Perkins, Wolf, XxXxxxxxx and
Company. No delegation pursuant to this provision shall relieve JCM of its
duties or responsibilities thereunder, and JCM shall appropriately oversee,
monitor and evaluate the activities of any party appointed hereunder for the
Portfolio. JCM (or such delegatee) may employ, retain or otherwise avail itself
of the services and facilities of persons and entities within its own
organization or any other organization for the purpose of providing JCM (or such
delegatee) or the Investment Manager of the Portfolio with such information,
advice or assistance, including but not limited to advice regarding economic
factors and trends and advice as to transactions in specific securities, as JCM
(or such delegatee) may
deem necessary, appropriate or convenient for the discharge of its obligations
hereunder or as may otherwise be helpful to the Investment Manager of the
Portfolio, or in the discharge of JCM's (or such delegatee's) overall
responsibilities with respect to the other accounts for which it serves as
investment manager or investment adviser. JCM's (or such delegatee's)
acquisition of information, advice or assistance pursuant to this paragraph
shall be at JCM's (or such delegatee's) own expense and shall not relieve JCM
(or such delegatee) of any of its obligations under this Agreement.
12. DURATION.
(a) This Agreement shall remain in full force and effect for
two years from the date it is entered into, and is then renewable annually upon
approval by (i) the vote of a majority of those members of the Fund's Board of
Directors who are not interested persons* of the Fund, the Investment Manager,
or JCM, cast in person at a meeting called for the purpose of voting on such
approval, or (ii) the vote of a majority of outstanding voting securities* of
the applicable Portfolio; provided, however, that if this Agreement or the
continuation of this Agreement is not approved, JCM may continue to render
services under this Agreement in the manner and to the extent permitted by the
1940 Act and applicable regulations.
(b) This Agreement may be terminated as to a Portfolio at any
time, without penalty, by JCM, by the Fund's Directors or by a majority of the
outstanding voting securities* of the applicable Portfolio, on sixty days'
written notice to the other party. This Agreement will immediately terminate in
the event of its assignment.* Investment Manager shall provide advance written
notice of any anticipated assignment.
13. AMENDMENT. This Agreement may be amended only in accordance
with applicable law, and only by a written instrument signed by all the parties
to this Agreement.
14. GENERAL.
(a) This Agreement constitutes the entire understanding of the
parties with respect to its subject matter, shall supersede all prior
understandings, agreements, contracts or other documents, and shall continue in
full force and effect until terminated.
(b) If any provision of this Agreement is held to be invalid
or unenforceable to any extent, the remainder of this Agreement shall be
enforced to the greatest extent permitted by law.
(c) This Agreement shall be governed by applicable federal law
and the laws of the State of Connecticut without regard to choice of law
principals.
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* As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons," and "assignment" have the same meaning as
such terms have in the 1940 Act.
(d) This Agreement may be executed in two or more counterparts
which together shall constitute one document.
HL INVESTMENT ADVISORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxxxx
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Title: Senior Vice President
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JANUS CAPITAL MANAGEMENT LLC
By: /s/ Xxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxx X. Xxxx
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Title: Vice President
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EXHIBIT A
Information and documentation provided by Investment Manager:
1. A copy of the Portfolio's registration statement.
2. Copies of the Portfolio's prospectus and statement of additional
information.
3. Copies of the Fund's organizational documents, Bylaws, and as applicable to
the Portfolio, minutes of meetings of the Directors of the Fund.
4. Notice of the Portfolio's custodian designated to hold assets in the
Portfolio.
5. A list of the countries approved by the Directors in accordance with
Rule 17f-5 in which Portfolio assets may be maintained and a list of those
countries available immediately.
6. Certified copies of financial statements or reports prepared for the Fund,
including the Portfolio, by certified or independent public accountants.
7. Copies of any financial statement or reports made by the Portfolio to its
shareholders or to any governmental body or securities exchange.
8. Reports as to the composition of assets in the Fund, cash requirements and
cash available for investment in the Portfolio.
9. Copies of Investment Manager's liquidity procedures, cross-trade
procedures, repurchase agreement procedures, 10f-3, 17a-7 and 17e-1
procedures and other procedures that may affect the duties of JCM.
10. An Internal Revenue Service Form W-9 completed by the Fund.
11. A Qualified Institutional Investor Certification completed by the Fund.
12. A list of persons authorized to act on behalf of the Portfolio.
13. A list of "affiliates" of the Fund, as such term is used in the 1940 Act,
including all broker-dealers affiliated with the Fund.
14. Applicable Commodities Futures Trading Commission exemptions, notifications
and/or related documentation.
15. A list of established futures accounts.
EXHIBIT B
Annual Fee Rate
Portfolio's average daily net assets
Hartford SmallCap Value HLS Fund 0.50% first $50 million
0.45% assets over $50 million
