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EXHIBIT (d).7
INTERIM SUBADVISORY AGREEMENT
This Interim Subadvisory Agreement (this "Agreement") is entered into
as of the 2nd day of April, 2001, by and between HL Investment Advisors, LLC, a
Connecticut limited liability company (the "Adviser") and Federated Investment
Management Company, a Delaware business trust ("FIM").
RECITALS:
A. The Adviser has entered into an advisory agreement dated April 2, 2001,
(the "Advisory Agreement") with Fortis Series Fund, Inc., a Minnesota
corporation (the "Company"), pursuant to which the Adviser provides
portfolio management services to the series of the Company set forth on
Schedule 1 to this Agreement (each a "Fund" and collectively the
"Funds");
B. The Advisory Agreement provides that the Adviser may delegate any or
all of its portfolio management responsibilities under the Advisory
Agreement to one or more subadvisers; and
C. The Adviser and the Board of Directors (the "Board") of the Company
desire to retain FIM to render portfolio management services in the
manner and on the terms set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Adviser and FIM agree as follows:
SECTION 1. APPOINTMENT OF SUBADVISER.
The Adviser hereby appoints FIM as subadviser for each Fund and
authorizes FIM, in its discretion and without prior consultation with the
Adviser, to invest and manage each Fund's portfolio of Securities in accordance
with such Fund's stated investment objective to the fullest extent permitted by:
(a) the Fund's investment policies, limitations, procedures and
guidelines set forth in the documents listed on Schedules 2
and 3 to this Agreement;
(b) any additional objectives, policies or guidelines established
by the Adviser or by the Board that have been furnished in
writing to FIM;
(c) the provisions of the Investment Company Act of 1940 (the
"1940 Act") and the rules and regulations thereunder
applicable to the Fund; and
(d) the provisions of Subchapter M of the Internal Revenue Code
("IRC") applicable to "regulated investment companies."
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For purposes of this Agreement, "Securities" include any investment
permitted under the foregoing policies, limitations, procedures, guidelines,
laws or regulations. Subject to the supervision of the Adviser and the Board,
the Adviser authorizes FIM to determine the structure and composition of the
Fund's portfolio, including the purchase, retention and disposition of, and
exercise of all rights pertaining to, the Securities comprising the portfolio.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF FIM
FIM represents and warrants to Adviser as follows:
(a) FIM is a business trust duly organized, validly existing, and
in good standing under the laws of the State of Delaware.
(b) This Agreement constitutes the legal, valid, and binding
obligation of FIM, enforceable against FIM in accordance with
its terms. FIM has the absolute and unrestricted right, power,
and authority to execute and deliver this and to perform its
obligations under this Agreement.
(c) Neither the execution and delivery of this Agreement by FIM
nor the performance of any of its obligations hereunder will
give any person the right to prevent, delay, or otherwise
interfere with the performance of such obligations pursuant
to:
(i) any provision of FIM's Declaration of Trust or
By-Laws;
(ii) any resolution adopted by the board of trustees or
the shareholders of FIM;
(iii) any law, regulation or administrative or court order
to which FIM may be subject; or
(iv) any contract to which FIM is a party or by which FIM
may be bound.
FIM is not and will not be required to obtain any consent from
any person in connection with the execution and delivery of
this Agreement or the performance of any obligations
hereunder.
(d) FIM is registered with the Securities and Exchange Commission
("SEC") as an investment adviser under the Investment Advisers
Act of 1940 (the "Advisers Act") and is registered or licensed
as an investment adviser under the laws of all jurisdictions
in which its activities require it to be so registered or
licensed, except where the failure to be so licensed would not
have a material adverse effect on its business.
(e) FIM has furnished to the Adviser true and complete copies of
all the documents listed on Schedule 3 to this Agreement.
SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE ADVISER
The Adviser represents and warrants to FIM as follows:
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(a) The Adviser is a limited liability company duly organized,
validly existing and in good standing under the laws of the
State of Connecticut.
(b) This Agreement constitutes the legal, valid, and binding
obligation of the Adviser, enforceable against the Adviser in
accordance with its terms. The Adviser has the absolute and
unrestricted right, power, and authority to execute and
deliver this and to perform its obligations under this
Agreement.
(c) Neither the execution and delivery of this Agreement by the
Adviser nor the performance of any of its obligations
hereunder will give any person the right to prevent, delay, or
otherwise interfere with the performance of such obligations
pursuant to:
(i) any provision of the Adviser's Articles of
Incorporation or By-Laws;
(ii) any resolution adopted by the board of directors or
the shareholders of the Adviser;
(iii) any law, regulation or administrative or court order
to which the Adviser may be subject; or
(iv) any contract to which the Adviser is a party or by
which the Adviser may be bound.
Except for the approval of the Board and of each Fund's
shareholders as required by Section 15 of the 1940 Act, the
Adviser is not and will not be required to obtain any consent
from any person in connection with the execution and delivery
of this Agreement or the performance of any obligations
hereunder.
(d) The Adviser is registered with the SEC as an investment
adviser under the Advisers Act and is registered or licensed
as an investment adviser under the laws of all jurisdictions
in which its activities require it to be so registered or
licensed, except where the failure to be so licensed would not
have a material adverse effect on its business.
(e) The Adviser has furnished to FIM true and complete copies of
all the documents listed on Schedule 2 to this Agreement.
SECTION 3. CONDITIONS TO AGREEMENT.
FIM's and the Adviser's obligations under this Agreement are subject to
the satisfaction of the following conditions precedent:
(a) Receipt by FIM of a certificate of an officer of Company
stating that (i) this Agreement and the Advisory Agreement
have been approved by the vote of a majority of the directors,
who are not interested persons of FIM or the Adviser, cast in
person at a meeting of the Board call for the purpose of
voting on such
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approval, and (ii) this Agreement and the Advisory Agreement
have been approved by the vote of a majority of the
outstanding voting securities of the Company;
(b) Receipt by FIM of certified copies of instructions from the
Fund to its custodian designating the persons specified by FIM
as "Authorized Persons" under the Fund's custody agreement;
(c) The Fund's execution and delivery of a limited power of
attorney in favor of FIM, in a form mutually agreeable to FIM,
the Adviser and the Board;
(d) Receipt by FIM of Board resolutions, certified by an officer
of the Company, adopting all procedures and guidelines listed
on Schedule 3 to this Agreement and identified as required by
Rule 2a-7 or any other exemptive rule or order that is or will
become applicable to any Fund;
(e) Receipt by FIM of complete copies, certified by an officer of
the Company, of all other policies procedures, guidelines, and
codes listed on Schedule 2 to this Agreement; and
(f) Any other documents, certificates or other instruments that
FIM or the Adviser may reasonable request from the Fund.
SECTION 4. COMPENSATION.
For the services provided under this Agreement, the Adviser will pay to
FIM a fee at the annual rate set forth opposite each Fund's name on Schedule 1
multiplied times such Fund's average daily net assets. Such fee will accrue
daily and will be paid monthly to FIM on or before the last business day of the
next succeeding calendar month. If this Agreement is effective for only a
portion of a month, the fee will be prorated for the portion of such month
during which this Agreement is in effect.
SECTION 5. INFORMATION AND REPORTS.
(a) The Adviser will promptly notify FIM of any material change in
any of the documents listed on Schedule 2 to this Agreement
and will provide FIM with copies of any such modified
document. The Adviser will also provide FIM with a list, to
the best of the Adviser's knowledge, of all affiliated persons
of Adviser (and any affiliated person of such an affiliated
person) and will promptly update the list whenever the Adviser
becomes aware of any additional affiliated persons.
(b) FIM will maintain books and records relating to its management
of the Fund under its customary procedures and in compliance
with applicable regulations under the 1940 Act and the
Advisers Act. FIM will permit the Adviser to inspect such
books and records at all reasonable times during normal
business hours, upon reasonable notice. Prior to each Board
meeting, FIM will provide the Adviser and the Board with
reports regarding its management of the Fund during the
interim period, in such form as may be mutually agreed upon by
FIM and the
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Adviser. FIM will also provide the Adviser with any
information regarding its management of the Fund required for
any shareholder report, amended registration statement or
prospectus supplement filed by the Fund with the SEC.
(c) The Adviser and the Company agree not to refer to any
designation comprised in whole or in part of the names or
marks of FIM or any other trademark relating to FIM in any
advertisement or other document without the prior consent of
FIM. Similarly, FIM and its affiliates shall not refer to the
Adviser, the Company, the Fund, or any affiliate of the
Manager in any advertisement or other document without the
Adviser's prior consent. Upon termination of this Agreement,
each party shall cease all use of any such name or xxxx as
soon as reasonably practicable.
SECTION 6. NONEXCLUSIVE AGREEMENT; ALLOCATION OF TRANSACTIONS.
(a) The investment management services provided by FIM hereunder
are not to be deemed to be exclusive, and FIM shall be free to
render similar services to other advisers, investment
companies, and other types of clients.
(b) To the extent consistent with applicable law, FIM may
aggregate purchase or sell orders for the Fund with
contemporaneous purchase or sell orders of other clients of
FIM or its affiliated persons. In such event, allocation of
the Securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by FIM in the manner
FIM considers to be the most equitable and consistent with its
and its affiliates' fiduciary obligations to the Fund and to
such other clients. The Adviser hereby acknowledges that such
aggregation of orders may not result in a more favorable price
or lower brokerage commissions in all instances.
(c) FIM will place purchase and sell orders for the Fund with or
through such banks, brokers, dealers, futures commission
merchants or other firms dealing in Securities ("Brokers") as
it determines, which may include Brokers that are affiliated
persons of FIM, provided such orders are exempt from the
provisions of Section 17(a), (d) and (e) of the 1940 Act. FIM
will use its best efforts to obtain execution of transactions
for the Fund at prices which are advantageous to the Fund and
at commission rates that are reasonable in relation to the
services received. FIM may, however, select Brokers on the
basis that they provide brokerage, research or other services
or products to the Fund and/or other clients of FIM and its
affiliated persons. In selecting Brokers in such a manner, FIM
will comply with the provisions of Section 28(e) of the
Securities and Exchange Act of 1934, as amended, and may also
consider the reliability, integrity and financial condition of
the Broker, and the size of and difficulty in executing the
order.
SECTION 7. FUND EXPENSES.
Each Fund shall pay or cause to be paid all of its own expenses and its
allocable share of Corporation expenses incurred in managing its portfolio of
Securities, including all commissions,
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xxxx-ups, transfer fees, registration fees, ticket charges, transfer taxes,
custodian fees and similar expenses. Each Fund will also pay its allocable share
of such extraordinary expenses as may arise including expenses incurred in
connection with litigation, proceedings, and claims and the legal obligations of
the Corporation to indemnify its officers and Directors and agents with respect
thereto. Each Fund will promptly reimburse FIM for any such expense to the
extent advanced by FIM. In no event will FIM have any obligation to pay any of
the Funds' expenses, including without limitation, the expenses of organizing
the Corporation and continuing its existence; fees and expenses of Directors and
officers of the Corporation; fees for administrative personnel and services;
expenses incurred in the distribution of its shares ("Shares"), including
expenses of administrative support services; fees and expenses of preparing and
printing its Registration Statements under the Securities Act of 1933 and the
1940 Act; expenses of registering and qualifying the Corporation, the Funds, and
Shares of the Funds under federal and state laws and regulations; expenses of
preparing, printing, and distributing prospectuses (and any amendments thereto)
to shareholders; interest expense, taxes, fees, and commissions of every kind;
expenses of issue (including cost of Share certificates), purchase, repurchase,
and redemption of Shares; charges and expenses of custodians, transfer agents,
dividend disbursing agents, shareholder servicing agents, and registrars;
printing and mailing costs, auditing, accounting, and legal expenses; reports to
shareholders and governmental officers and commissions; expenses of meetings of
Directors and shareholders and proxy solicitations therefor; insurance expenses;
association membership dues and such nonrecurring items as may arise, including
all losses and liabilities incurred in administering the Corporation and the
Funds.
SECTION 8. LIMITATION OF LIABILITY.
(a) In the absence of willful misfeasance, bad faith or gross
negligence on the part of FIM, or of reckless disregard by FIM
of its obligations and duties hereunder, FIM shall not be
subject to any liability to the Adviser, the Fund, the
Company, any shareholder of the Fund, or to any person, firm
or organization. Without limiting the foregoing, FIM shall not
have any liability whatsoever for any investment losses
incurred by a Fund, or arising from transactions by a Fund,
prior to the date on which FIM assumes responsibility for the
management of the Fund's portfolio.
(b) The Adviser, the Company, and the Fund are hereby expressly
put on notice of the limitation of liability as set forth in
the Declaration of Trust of FIM and agree that the obligations
assumed by FIM pursuant to this Agreement will be limited in
any case to FIM and its assets and the Adviser, the Company,
and the Fund shall not seek satisfaction of any such
obligation from the shareholders of FIM, the trustees of FIM,
officers, employees or agents of FIM, or any of them.
SECTION 9. PRICING.
The Adviser, the Company and the Fund hereby acknowledge that FIM is
not responsible for pricing portfolio Securities, and that the Adviser, the
Company, the Fund, and FIM will rely on the pricing agent chosen by the Board of
the Company for prices of Securities, for any purposes. However, in any instance
where the pricing services utilized by the Fund do not provide an appropriate
price for a security held by the Fund, FIM will provide the Adviser with
reasonable assistance in determining a price for such security.
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SECTION 10. TERM.
This Agreement shall begin as of the date of its execution and shall
continue in effect for a period of two years from the date hereof and thereafter
for successive periods of one year, subject to the provisions for termination
and all of the other terms and conditions hereof if such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by the
Fund at any time, without the payment of any penalty, by the Board or by vote of
a majority of the outstanding voting securities (as defined in the 0000 Xxx) of
the Fund, or by the Adviser or FIM at any time, without the payment of any
penalty, on not more than 60 days' nor less than 30 days' written notice to the
other party. This Agreement will terminate automatically in the event of its
assignment (as defined in the 0000 Xxx) or upon the termination of the Adviser's
management agreement with the Fund.
SECTION 11. LIMITED POWER OF ATTORNEY.
Subject to any other written instructions of the Adviser or the
Company, FIM is hereby appointed the Fund's agent and attorney-in-fact for the
limited purposes of executing account documentation, agreements, contracts and
other documents as FIM shall be requested by brokers, dealers, counter parties
and other persons in connection with its management of the Fund's assets. The
Adviser and the Company hereby ratify and confirm as good and effectual, at law
or in equity, all that FIM and its officers and employees, may do in its
capacity as attorney-in-fact. However, nothing herein shall be construed as
imposing a duty on FIM to act or assume responsibility for any matters in its
capacity as attorney-in-fact for the Fund. Any person, partnership, corporation
or other legal entity dealing with FIM in its capacity as attorney-in-fact
hereunder for the Fund is hereby expressly put on notice that FIM is acting
solely in the capacity as an agent of the Fund and that any such person,
partnership, corporation or other legal entity must look solely to the Fund for
enforcement of any claim against Fund, as FIM assumes no personal liability
whatsoever for obligations of the Fund entered into by FIM in its capacity as
attorney-in-fact for the Fund.
SECTION 12. GENERAL PROVISIONS
SECTION 12.1. Notices
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
FIM: Federated Investment Management Company
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
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Adviser: HL Investment Advisors, LLC
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Legal Department
Facsimile No.:
SECTION 12.2. Further Assurances
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.
SECTION 12.3. Waiver
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
SECTION 12.4. Entire Agreement and Modification
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the party to be
charged with the amendment.
SECTION 12.5. Assignments, Successors, and No Third-Party Rights
Neither party may assign any of its rights under this Agreement without
the prior consent of the other parties. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its
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provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
SECTION 12.6. Severability
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
SECTION 12.7. Section Headings, Construction
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
SECTION 12.8. Governing Law
To the extent that state law is not preempted by the provisions of any
law of the United States, heretofore or hereafter enacted, as the same may be
amended from time to time, this Agreement will be governed by the laws of the
State of Pennsylvania without regard to conflicts of laws principles.
SECTION 12.9. Counterparts
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be signed on their behalf by their duly authorized officers as of the date first
above written.
FEDERATED INVESTMENT MANAGEMENT COMPANY
By:
/s/ J. Xxxxxxxxxxx Xxxxxxx
-----------------------------------------
Name:
Title: President, CEO, COO
HL INVESTMENT ADVISORS, LLC
By:
/s/ Xxxxx X. Xxxxxxxxxxxx
-----------------------------------------
Name:
Title: Senior Vice President
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SCHEDULE 1 - FUNDS AND SUBADVISORY FEES
Name of Series Subadvisory Fee
-------------- ------------------------------------
American Leaders Series For the first $35 million .50%
$35 million - $100 million .35%
For assets over $100 million .25%
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SCHEDULE 2 - FUND DOCUMENTATION
1. Company's Articles of Incorporation and Bylaws.
2. Currently effective registration statement for each class of each
Fund's shares and any pending amendments to such registration
statement.
3. Any supplements to any prospectus or statement of additional
information for any class of any Fund's shares.
4. Custody Agreement between the Trust and U.S. Bank National Association,
as Custodian for the Portfolio's securities, including information as
to:
o the Portfolio's nominee,
o the Federal tax identification numbers of the Portfolio and
its nominee,
o all routing, bank, participant and account numbers and other
information necessary to provide proper instructions for
transfer and delivery of Securities to the Portfolio's
accounts at the Custodian,
o the name, address, phone and fax number of the Custodian's
employees responsible for the Portfolio's accounts, and
o the Portfolio's pricing service and contact persons.
5. All policies, procedures, guidelines and codes adopted by the Board
under the 1940 Act or any regulation thereunder, including:
o Rule 2a-7 (if the Portfolio holds itself out as a "money
market fund"),
o Rule 10f-3 (relating to affiliated underwriting syndicates),
o Rule 17a-7 (relating to interfund transactions),
o Rule 17e-1 (relating to transactions with affiliated Brokers),
o Rule 17f-4 (relating to securities held in securities
depositories),
o Rule 17j-1 (relating to a code of ethics), and
o Rule 17f-5 (relating to foreign custody).
6. All SEC exemptive orders applicable to the Portfolio, and all
procedures and guidelines adopted by the Board under the terms of such
orders.
7. All procedures and guidelines adopted by the Board or the Manager
regarding:
o Repurchase agreements,
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o Evaluating the liquidity of securities, include restricted
securities, municipal leases and stripped U.S. government
securities,
o Segregation of liquid assets in connection with reverse
repurchase agreements, firm commitments, standby commitments,
short sales, options and futures agreements,
o Derivative contracts and securities, and
o Affiliated bank procedures.
8. Any master agreements that the Trust has entered into on behalf of the
Portfolio, including:
o Master Repurchase Agreement,
o Master Futures and Options Agreements,
o Master Foreign Exchange Netting Agreements, and
o Master Swap Agreements.
9. Blue Sky undertakings.
10. CFTC Rule 4.5 letter.
11. Schedule of the current year's Board meetings, and the reports needed
by the Board.
12. Pricing and performance calculation entities and contact persons.
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SCHEDULE 3 - SUBADVISER DOCUMENTATION
1. Part II of FIM's Form ADV most recently filed with the SEC.
2. Procedures and checklists required by the following exemptive rules and
orders under the 1940 Act:
o Rule 10f-3 (relating to affiliated underwriting syndicates),
o Rule 17a-7 (relating to interfund transactions),
o Rule 17e-1 (relating to transactions with affiliated Brokers),
o Rule 17f-4 (relating to securities held in securities
depositories),
o Rule 17j-1 (relating to a code of ethics),
o Release No. IC-22903 (granting an exemption for the use of
"core funds"),
o Release No. IC-22313 (granting an exemption for the purchase
of affiliated money market funds)
o Release Nos. IC-16602 and IC-19816 (granting an exemption for
certain transactions with affiliated banks), and
o Release No. IC-15243 (granting an exemption permitting the
purchase of insurance from an affiliate and the settlement of
claims therefrom).
3. Procedures and checklist required
4. All exemptive orders granted by the SEC that will become applicable to
the Portfolio, and the procedures and guidelines followed by FIM in
accordance therewith.
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