1
EXHIBIT (d).4
INTERIM INVESTMENT SUB-ADVISORY AGREEMENT
Agreement dated April 2, 2001 by and between HL Investment Advisors,
LLC, a Connecticut limited liability company (the "Manager") and Xxxxxx LLC, a
Nevada Limited Liability Company (the "Sub-Adviser") whose principal office is
located at 000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000.
WHEREAS, the Manager serves as the investment adviser and manager for
Fortis Series Fund, Inc. (the "Company"), an open-end, management investment
company registered with the Securities and Exchange Commission ("SEC") pursuant
to the Investment Company Act of 1940, as amended ("1940 Act"), that is
comprised of a number of separate series of investments that act as funding
vehicles for various variable annuity contracts and variable universal life
insurance policies issued by Fortis Benefits Insurance Company ("FBIC") and/or
First Fortis Life Insurance Company ("First Fortis");
WHEREAS, the Manager desires to retain the Sub-Adviser to assist the
Manager in furnishing an investment program to one series of the Company, the
Small Cap Value Series (the "Portfolio");
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Manager and the Sub-Adviser agree as follows:
1. APPOINTMENT AND EXPENSES OF THE SUB-ADVISER. The Manager hereby
appoints the Sub-Adviser to serve as sub-adviser with respect to the assets of
the Portfolio and to perform the services hereinafter set forth and the
Sub-Adviser hereby accepts such appointment. The Sub-Adviser agrees, for the
compensation herein provided, to assume all obligations herein provided and bear
all its personnel and other expenses associated with the performance of its
services hereunder. The Company shall be responsible for the Portfolio's
administrative, operational, business and other direct expenses, including, but
not limited to: (a) the fees of the Manager as the investment adviser (and, any
reimbursement of advisory fees required by any expense limitation provision
shall be the sole responsibility of the Manager); (b) fees pursuant to any plan
of distribution that the Portfolio may adopt; (c) the Portfolio's brokerage and
commission expenses, including all ordinary and reasonable transaction costs;
(d) fees and expenses of pricing services used by the Company to determine the
value of the Portfolio's holdings; (e) Federal, state, local and foreign taxes,
including issue and transfer taxes incurred by or levied on the Portfolio; (f)
interest charges on any Portfolio borrowings; (g) the Company's organizational
and offering expenses; (h) the cost of the Company's personnel providing
services to the Company; (i) fees and expenses of registering the Company's
shares under the appropriate Federal securities laws and of qualifying the
Company's shares under applicable state securities laws and pursuant to any
foreign laws; (j) expenses of printing and distributing reports to the Company's
shareholders, proxy materials, prospectuses and distribution of dividends; (k)
costs of the Company's shareholders' meetings and proxy solicitation; (l)
charges and expenses of the Company's custodian and registrar, transfer agent
and dividend disbursing agent; (m) compensation of the Company's officers,
directors and employees that are not "affiliated persons" or "interested
persons" [as defined in Section 2(a) of the 1940 Act and the rules, regulations
and releases relating thereto] of the Sub-Adviser; (n) the
2
Company's legal and auditing expenses; (o) cost of certificates representing
shares of the Portfolio; (p) the Company's costs of stationery and supplies; (q)
the Company's insurance expenses; (r) the Company's association membership dues;
(s) travel expenses of officers and employees of the Sub-Adviser to the extent
such expenses relate to the attendance of such persons at meetings at the
request of the Board of Directors of the Company (EXCEPT that a representative
of the Sub-Adviser will attend one Board meeting per year, at the Sub-Adviser's
own expense); and (t) travel expenses for attendance at Board of Directors
meetings by members of the Board of Directors of the Company who are not
"interested persons" or "affiliated persons" of the Sub-Adviser. The Sub-Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized (whether herein or otherwise),
have no authority to act for or on behalf of the Company in any way or otherwise
be deemed an agent of the Company.
2. DUTIES OF THE SUB-ADVISER. The Sub-Adviser will deal in good faith
and with due diligence and will use professional skill, care and judgment in the
performance of its duties under this Agreement. In so doing, the Sub-Adviser
shall formulate and implement a continuing program for the management of the
assets of the Portfolio. The Sub-Adviser shall amend and update such program
from time to time as financial and other economic conditions warrant. The
Sub-Adviser shall make all determinations with respect to the investment of the
assets of the Portfolio and shall take such steps as may be necessary to
implement the same, including the placement of purchase and sale orders on
behalf of the Portfolio. The Manager shall be responsible for the administration
of the investment activities of the Company and the Portfolio, including
compliance with the requirements of the 1940 Act, except for the investment
management activities specifically delegated to the Sub-Adviser pursuant to this
Agreement.
3. POWERS OF THE SUB-ADVISER.
3.1 The Sub-Adviser's power to direct the investment and
reinvestment of the assets of the Portfolio shall be exercised in accordance
with applicable law, the Company's Articles of Incorporation and the investment
objectives, policies and restrictions set forth in the then-current Prospectus
and Statement of Additional Information (collectively the "Prospectus") relating
to the Portfolio contained in the Company's Registration Statement under the
1940 Act and the Securities Act of 1933, as amended. The Company and/or the
Manager may also place additional limitations on the Sub-Adviser's investment
decisions by written notice to the Sub-Adviser. The Company agrees to provide to
the Sub-Adviser at or before the time they become effective a copy of the
documents mentioned above and all changes made, or supplements, to such
documents. In addition, the Company shall provide (or cause the Custodian to
provide) timely information to the Sub-Adviser regarding such matters as the
composition of assets in the Portfolio, cash requirements and cash available for
investment in the Portfolios and all other information as may be reasonably
necessary for the Sub-Adviser to perform its responsibilities hereunder.
3.2 While the Sub-Adviser will have day-to-day responsibility
for the discretionary investment decisions to be made on behalf of the
Portfolio, the Sub-Adviser will be subject to oversight by the Manager. Such
oversight, however, shall not require prior approval of discretionary investment
decisions made by the Sub-Adviser except as may be required by applicable law,
the Portfolio's investment policies and restrictions and/or any limitations
imposed
-2-
3
on the Sub-Adviser by the Company and/or the Manager pursuant to the preceding
paragraph. The Manager shall retain the right to instruct the Sub-Adviser to
effect any transactions necessary to ensure compliance with the Portfolio's
investment policies and restrictions as well as the requirements of Subchapter M
of the Internal Revenue Code and the provisions of Section 817(h) of the
Internal Revenue Code and the regulations promulgated thereunder.
3.3 In the event the Sub-Adviser's compliance with any
amendment of the Portfolio's investment objectives, policies and restrictions or
other limitations placed on the Sub-Adviser's investment decisions with respect
to the Portfolio would interfere with the completion of any transaction
commenced on behalf of the Portfolio prior to the Sub-Adviser's knowledge of
such amendment, the Sub-Adviser may complete such transaction unless doing so
would violate any applicable law, rule or regulation. In such an event, the
Sub-Adviser will not be responsible for any loss that may result from the
completion of the transaction.
3.4 Further, and except as may be qualified elsewhere in this
Agreement, the Sub-Adviser is hereby authorized, for and on behalf of the
Company, with respect to the Portfolio, in its discretion to:
(a) exercise any conversion and/or subscription
rights available in connection with any securities or other investments
held in the Portfolio;
(b) maintain all or part of the Portfolio's assets
uninvested in short-term income-producing instruments for such periods
of time as shall be deemed reasonable and prudent by the Sub-Adviser;
(c) instruct the Custodian, in accordance with the
Custodian Agreement, to deliver for cash received, securities or other
cash and/or securities instruments sold, exchanged, redeemed or
otherwise disposed of from the Portfolio, and to pay cash for
securities or other cash and/or securities instruments delivered to the
Custodian and/or credited to the Portfolio upon acquisition of the same
for the Portfolio;
(d) determine how to vote all proxies received with
respect to securities held in the Portfolio and direct the Custodian as
to the voting of such proxies; and
(e) generally, perform any other act necessary to
enable the Sub-Adviser to carry out its obligations under this
Agreement.
4. SELECTION OF BROKER-DEALERS. The Sub-Adviser shall select the
brokers and dealers through whom transactions on behalf of the Portfolio will be
executed and the markets on or in which such transactions will be executed and
shall place, in the name of the Portfolio or its nominee (or appropriate foreign
equivalent), all such orders. In selecting brokers and dealers to execute such
transactions, and in negotiating brokerage commissions, and in obtaining
research, statistical and other information from brokers and dealers in
connection with Portfolio transactions, the Sub-Adviser shall comply with the
description of the process contained in the Prospectus. This notwithstanding,
when the Sub-Adviser places orders for the purchase or sale of Portfolio assets,
so long as the Sub-Adviser uses reasonable efforts in seeking the best execution
in selecting brokers to execute such orders, the Sub-Adviser is expressly
-3-
4
authorized to consider the fact that a broker has furnished, or has agreed to
furnish in the future, research, statistical or other information or services
permitted under Section 28(e) of the Securities and Exchange Act of 1934
("Services") provided by such broker that enhance the Sub-Adviser's investment
research and portfolio management capability generally. It is understood that
the Sub-Adviser may not use all Services in connection with the Portfolio.
Sub-Adviser will not be required or deemed to have the duty to obtain the lowest
brokerage commission rates available or to combine or arrange orders to obtain
the lowest brokerage commission rates available on transactions in the
Portfolio. If the amount of commission charged by a broker is reasonable in
relation to the value of the brokerage functions and the Services provided by
such broker to Sub-Adviser, Sub-Adviser may direct brokerage transactions to
such broker notwithstanding the fact that such broker charges a higher
commission than those that another broker might charge.
(a) It is understood that certain other clients
(including other funds, portfolios and accounts) of the Sub-Adviser may
have investment objectives and policies similar to those of the
Portfolio and that the Sub-Adviser may, from time to time, make
recommendations that result in the purchase (or sale) of a particular
security by its other clients and the Portfolio during the same period
of time. If transactions on behalf of more than one client during the
same period increase the demand for securities being purchased or the
supply of securities being sold, there may be an adverse effect on
price or quantity. In such event, the Sub-Adviser shall allocate the
securities or investments to be purchased or sold, as well as the
expenses incurred in the transactions (including price) in a manner the
Sub-Adviser considers equitable and consistent with its obligations to
the Portfolio and the Sub-Adviser's other clients.
(b) The Sub-Adviser agrees that it will only enter
into transactions that are covered by Section 10(f) or Section 17(e) of
the 1940 Act if it has (i) complied with Rule 10f-3 or Rule 17e-1
thereunder, respectively, or the terms of an appropriate exemptive
order issued to the Company by the SEC, and (ii) has complied with the
procedures adopted thereunder by the Board of Directors of the Company
which may, pursuant to authority granted by the Company, be
supplemented by interpretive guidelines of the Manager. Aside from
parties that are known or should be known by the Sub-Adviser, the
Manager shall promptly notify the Sub-Adviser in writing of any
additional parties with whom engaging in a transaction for the
Portfolio would result in a violation of the 1940 Act.
5. REPORTS AND INFORMATION TO BE PROVIDED BY THE SUB-ADVISER. The
Sub-Adviser shall furnish such information and reports relating to the
Portfolio, its holdings and transactions involving Portfolio securities as the
Manager and/or the Company may reasonably require to fulfill its or their legal
responsibilities or to meet regulatory requirements or discharge other duties
they may have. Among the subjects of the reports and information to be provided
by the Sub-Adviser, to the extent such reports and information are not otherwise
available from the Portfolio's Custodian, are the following:
(a) Information required by the Manager to determine
the Company's and Portfolio's compliance with the 1940 Act, the
Advisers Act, the Internal Revenue Code, applicable federal and state
securities and insurance laws and other applicable laws
-4-
5
and regulations or regulatory and taxing authorities in the United
States and other relevant countries;
(b) Information required by the Manager to meet the
accounting and operational requirements of the Portfolio. Specific
examples of the types of reports and information that will be needed by
the Manager and the Company are set forth in Exhibit A, attached
hereto;
(c) Information required by the Manager to satisfy
its reporting obligations to the Company arising from the Investment
Advisory and Management Agreement between the Manager and the Company;
(d) Information reasonably requested by the Manager
to determine the Portfolio's compliance with Rule 17f-5 under the 1940
Act, relating to foreign custodians and sub-custodians;
(e) Information required by the Manager to determine
the Sub-Adviser's compliance with Rule 17j-1 under the 1940 Act with
respect to the Sub-Adviser's activities on behalf of the Portfolio;
(f) Information required by the Manager to determine
compliance with Rule 10f-3 and Rule 17e-1 under the 1940 Act with
respect to the Sub-Adviser's (or its affiliates') activities on behalf
of the Portfolio; and
(g) Information reasonably necessary to respond to
specific inquiries from the Company's management and/or Board of
Directors.
6. NON-EXCLUSIVE SERVICES, CONFLICTS OF INTEREST AND MATERIAL NONPUBLIC
INFORMATION. The Manager understands that the Sub-Adviser and its affiliates may
furnish investment management and advisory services to others, and that the
Sub-Adviser and its affiliates shall be at all times free, in their discretion,
to make recommendations to, and investments for, others which may or may not
correspond to investments made for the Portfolio. The Manager further
understands that the Sub-Adviser, its affiliates, and any officer, director,
stockholder, employee or any member of their families may or may not have an
interest in the securities whose purchase and sale the Sub-Adviser effects for
the Portfolio. Actions taken by the Sub-Adviser on behalf of the Portfolio may
be the same as, or different from, actions taken by the Sub-Adviser on its own
behalf or for others or from actions taken by the Sub-Adviser's affiliates,
officers, directors, partners, employees of the Sub-Adviser or its affiliates,
or the family members of such persons or other investors. The Sub-Adviser
represents that it has in effect a code of ethics that complies with Rule
17j-1 under the 1940 Act and has procedures in place that, taken together,
provide reasonable enforcement of the code's provisions. Similarly, the
Sub-Adviser represents that, with respect to the use of nonmaterial nonpublic
information, it has complied, and will continue to comply, with Section 204A of
the Investment Advisers Act of 1940, as amended ("Advisers Act") and any rules
thereunder.
-5-
6
7. DISCLOSURE OF INFORMATION AND CONFIDENTIALITY.
7.1 The Sub-Adviser, the Company and the Manager, either
during, or after the termination of, this Agreement, are authorized with respect
to matters arising out of this Agreement to make any disclosures and/or
participate in any conduct required by any applicable law, rule, regulation,
self-regulating organization, investment exchange or any other body having
regulatory or enforcement responsibility with respect to any investment business
conducted by the Sub-Adviser on behalf of the Portfolio.
7.2 Subject to the preceding paragraph, the Sub-Adviser agrees
that all information which has or will come into its possession or knowledge
concerning the Portfolio or its investments in connection with this Agreement
shall be held by the Sub-Adviser in confidence. The Sub-Adviser shall make no
use of such information other than for the performance of this Agreement, shall
disclose such information only to the directors, officers or employees of the
Sub-Adviser or its affiliated firms or of any third party appointed pursuant to
this Agreement requiring such information and shall not disclose such
information to any other person without the written consent of the Company;
provided, however, that to the extent the investments for the Portfolio are
similar to investments for other clients of the Sub-Adviser, the Sub-Adviser may
disclose such investments without direct reference to the Portfolio. The
Sub-Adviser may also include the name of the Portfolio in a representative
client list.
7.3 Subject to the preceding paragraph, the Company and the
Manager agree that all information which has or will come into their possession
or knowledge concerning the operations and procedures of the Sub-Adviser shall
be held by the Company and the Manager in confidence. The Company and the
Manager shall make no use of such information other than for the performance of
this Agreement, shall disclose such information only to their directors,
officers or employees or those of its affiliated firms requiring such
information and shall not disclose such information to any other person without
the written consent of the Sub-Adviser.
7.4 The Manager and the Company agree not to refer to Xxxxxx
LLC or Perkins, Wolf, XxXxxxxxx & Company or their affiliates in any
advertisement or other document without prior consent of the Sub-Adviser.
Similarly, Xxxxxx LLC and Perkins, Wolf, XxXxxxxxx & Company and their
affiliates shall not refer to the Manager, the Company, the Portfolio, or any
affiliate of the Manager in any advertisement or other document without the
Manager's prior consent. However, the Parties to this Agreement agree that they
may reference one another as necessary in regulatory and other legal filings.
Further, the parties agree that they will not unreasonably withhold permission
to use their names or otherwise reference them in materials used to describe the
Portfolio and/or the Company.
8. DEALINGS WITH THE CUSTODIAN. The Manager shall notify the
Sub-Adviser of the appointment of the custodian(s) ("Custodian") for all or any
portion of the Portfolio's assets, shall provide the Sub-Adviser with a true and
complete copy of each agreement with the Custodian that deals with the
Portfolio's assets ("Custodian Agreements"), and shall provide the Sub-Adviser
with the names of persons authorized to act on behalf of the Custodian and such
other information as the Sub-Adviser shall reasonably require. The Sub-Adviser
agrees to give instructions in accordance with the terms of the applicable
Custodian Agreements. The Company agrees to provide promptly to the Sub-Adviser
a copy of all relevant
-6-
7
Custodian Agreements, and all changes made to such documents, at or before the
time they become effective.
9. DELEGATION OF THE SUB-ADVISER'S RESPONSIBILITIES. Notwithstanding
anything herein to the contrary, Sub-Adviser may delegate any or all of its
investment management duties and responsibilities under this Agreement to
Perkins, Wolf, XxXxxxxxx & Company. No delegation pursuant to this provision
shall relieve Sub-Adviser of its duties or responsibilities thereunder, and
Sub-Adviser shall appropriately oversee, monitor and evaluate the activities of
any party appointed hereunder for the Portfolio. The Sub-Adviser (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 the Sub-Adviser (or such delegatee),
the Manager or 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 the Sub-Adviser (or such
delegatee's) may deem necessary, appropriate or convenient for the discharge of
its obligations hereunder or as may otherwise be helpful to the Manager or the
Portfolio, or in the discharge of the Sub-Adviser's (or such delegatee's)
overall responsibilities with respect to the other accounts for which it serves
as investment manager or investment adviser. The Sub-Adviser's (or such
delegatee's) acquisition of information, advice or assistance pursuant to this
paragraph shall be at the Sub-Adviser's (or such delegatee's) own expense and
shall not relieve the Sub-Adviser (or such delegatee) of any of its obligations
under this Agreement.
10. COMPENSATION. For the services to be rendered under this Agreement
and the facilities to be furnished, the Manager shall pay to the Sub-Adviser for
each fiscal year of the Company, a monthly management fee at the annual rate of
.50 of 1% of the Portfolio's first $50 million of average daily net assets and
.45 of 1% of the Portfolio's average daily net assets in excess of $50 million.
The monthly management fee shall be paid to the Sub-Adviser not later than the
tenth business day of the month following the month in which such services were
rendered and shall be based upon the average net asset values of all the issued
and outstanding shares of the Portfolio as determined as of the close of each
business day of the month pursuant to the Articles of Incorporation, Bylaws and
currently effective Prospectus of the Portfolio. Payments of the monthly
management fee will be accompanied by documentation that verifies the
calculation of such fee. If the management of the Portfolio by the Sub-Adviser
commences or terminates at any time other than the beginning or end of a month,
the management fee shall be prorated for that portion of such month during which
this Agreement was in force.
11. REPRESENTATIONS OF THE SUB-ADVISER. The Sub-Adviser represents and
agrees that:
(a) The Sub-Adviser is registered as an "investment
adviser" under the Advisers Act and is currently in compliance in all
material respects and shall at all times continue to comply in all
material respects with the requirements imposed upon it by the Advisers
Act, the 1940 Act, the Internal Revenue Code, state securities laws and
all applicable rules and regulations thereunder as they relate to the
services provided under this Agreement. The Sub-Adviser will
immediately notify the Manager if it becomes aware of the occurrence of
any event that would disqualify the Sub-Adviser from serving
-7-
8
as an investment adviser of an investment company pursuant to Section 9
of the 1940 Act or any other applicable law or regulation.
(b) The Sub-Adviser will maintain, keep current and
accurate, and preserve all records with respect to the Portfolio as are
required of it under the Advisers Act and the 1940 Act, in the manner
provided by such Acts and the rules thereunder. The Sub-Adviser agrees
that such records are the property of the Company, and following
termination of this Agreement will be surrendered to the Company
promptly upon request except to the extent that they are required to be
retained by the Sub-Adviser under applicable law. Further, such records
shall be open to inspection by the Company. The Sub-Adviser will also
assure that the Company will have the same access as the Sub-Adviser
has to records relating to the Portfolio that are held by relevant
third parties. Such inspections will be at reasonable times during
business hours and only upon reasonable notice of the Company's desire
to make an inspection.
(c) The Sub-Adviser agrees to advise the Manager of
any developments, such as the reassignment of a portfolio manager, that
would require Prospectus disclosure and to provide any necessary
information related to such developments.
(d) The Sub-Adviser has provided the Manager and the
Company with a copy of its most recent and complete Form ADV and will
promptly furnish them with copies of any material amendments to the
Form.
(e) If the Sub-Adviser's performance of its
obligations under this Agreement takes place in the United Kingdom, the
Sub-Adviser shall be and shall remain during the effectiveness of this
Agreement, a member of the Investment Management Regulatory
Organization, Ltd. ("IMRO") and thereby regulated in the conduct of
Investment Business (as defined in IMRO's rules) by the IMRO. The
Company and the Manager will be treated as a Non-Private Customer (as
defined in IMRO's rules) of the Sub-Adviser.
(f) The Sub-Adviser shall furnish the Manager with a
certificate, signed by a duly authorized officer of the Sub-Adviser
that designates the officers or employees of the Sub-Adviser having
authority to act for and on behalf of the Sub-Adviser in connection
with this Agreement. The Sub-Adviser agrees that, until such time as
the Manager is otherwise informed in writing by a duly authorized
officer of the Sub-Adviser, the Manager shall be authorized and
entitled to rely on any notice, instruction, request, order or other
communication, given either in writing or orally, and reasonably
believed by the Manager in good faith to be given by an authorized
representative of the Sub-Adviser.
12. REPRESENTATIONS OF THE MANAGER. The Manager represents and agrees
that:
(a) The Manager is registered as an "investment
adviser" under the Advisers Act and has provided to the Sub-Adviser a
copy of its most recent and complete
-8-
9
Form ADV, along with a copy of the Investment Advisory and Management
Agreement between the Manager and the Company and the current Company
Prospectus regarding the Portfolio. After any amendment to the
documents referenced in this paragraph, the Manager will promptly
furnish a copy of such amended document to the Sub-Adviser. In
addition, the Manager will provide the Sub-Adviser with notice of
proposed changes in the Prospectus and the opportunity to review and
comment upon such changes before they are finalized, wherever possible.
(b) The Manager and the Company are currently in
material compliance and shall at all times continue to be in material
compliance with the relevant requirements of the Advisers Act, the 1940
Act, all applicable state securities and insurance laws, and the rules
thereunder, as they pertain to the Portfolio.
(c) The Manager shall furnish the Sub-Adviser with a
certificate, signed by a duly authorized officer of the Manager that
designates the officers or employees of the Manager having authority to
act for and on behalf of the Manager in connection with this Agreement.
The Manager agrees that, until such time as the Sub-Adviser is
otherwise informed in writing by a duly authorized officer of the
Manager, the Sub-Adviser shall be authorized and entitled to rely on
any notice, instruction, request, order or other communication, given
either in writing or orally, and reasonably believed by the Sub-Adviser
in good faith to be given by an authorized representative of the
Manager.
13. LIABILITY, INDEMNIFICATION AND FORCE MAJEURE.
13.1 The Sub-Adviser, its affiliated firms or its or their
employees, officers, or directors will not be liable for any error of judgment
or mistake of law or for any loss suffered by the Portfolio, its shareholders,
contract owners or First Fortis contract owners in connection with the
performance of their duties under this Agreement, except for loss resulting from
willful misfeasance, bad faith or gross negligence on their part in the
performance of their duties or from reckless disregard by them of their duties
under this Agreement.
13.2 The Manager shall indemnify the Sub-Adviser against all
claims which may be made against the Sub-Adviser in connection with the exercise
of the powers and discretion conferred upon it pursuant to this Agreement,
EXCEPT insofar as such claims are the result of the willful misfeasance, bad
faith or gross negligence of the Sub-Adviser or any of its affiliated firms or
its or their employees, officers or directors or its or their material breach of
this Agreement or violation of applicable law. Conversely, the Sub-Adviser shall
indemnify the Manager and the Company against all claims resulting from the
willful misfeasance, bad faith or gross negligence of the Sub-Adviser or any of
its affiliated firms or its or their employees, officers or directors or its or
their material breach of this Agreement or violation of applicable law.
13.3 Neither party shall be held responsible for their
non-performance of any of their obligations under this Agreement by reason of
any cause beyond their control, including any breakdown or failure of
transmission, communication or computer facilities, postal or other
-9-
10
strikes or similar industrial action and the failure of any relevant exchange,
clearing house and/or broker for any reason to perform its obligations.
14. TERM, RENEWAL AND TERMINATION.
14.1 This Agreement shall, with respect to the Portfolio,
become effective as of the date first above written and shall remain in force
for two years thereafter, and for successive annual periods thereafter but only
so long as each such continuance is specifically approved at least annually by
(1) a majority of the Directors of the Company who are not parties to this
Agreement or interested persons of any such parties (other than as Directors of
the Company), by vote cast in person at a meeting called for the purpose of
voting on such approval; or (2) a vote of the holders of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of such Portfolio. It
shall be the duty of the Directors of the Company to request and evaluate, and
the duty of the Manager and Sub-Adviser to furnish, such information as may be
reasonably necessary to evaluate the terms of this Agreement and any renewal
hereof.
14.2 This Agreement may be terminated with respect to the
Portfolio at any time without the payment of any penalty by the Portfolio (1) by
a vote of a majority of the entire Board of Directors of the Company on sixty
(60) days' written notice to the Manager and the Sub-Adviser; (2) by vote of the
holders of a majority of the outstanding voting securities of such Portfolio (as
defined in the 1940 Act); or (3) by the Sub-Adviser on 60 days' written notice
to the Manager and the Company.
14.3 This Agreement shall automatically terminate in the event
of its assignment, as that term is defined in Section 2(a)(4) of the 1940 Act
and the rules thereunder.
14.4 On the effective date of any termination of this
Agreement or as close to such date as is reasonably possible, the Sub-Adviser
shall provide the Manager with a final report for the Portfolio.
14.5 Upon the Manager's receipt or service of any notice given
by or to the Company concerning the termination of the Manager's appointment as
the investment adviser to the Company, the Manager shall immediately forward a
copy of such notice to the Sub-Adviser and the Sub-Adviser's appointment under
this Agreement shall terminate on the same date as the termination of the
Manager's appointment.
15. AMENDMENT. No amendment to or modification of this Agreement shall
be effective unless and until it is set forth in a written amendment signed by
the Manager and the Sub-Adviser and if so required approved by the vote of a
majority of the outstanding shares of the Portfolio, as defined in the 1940 Act.
16. AUTHORITY AND ENFORCEABILITY.
16.1 Each of the parties to this Agreement hereby represents
that it is duly authorized and empowered to execute, deliver, and perform this
Agreement and that such actions do not conflict with or violate any provision of
law, rule, regulation, other legal requirement, contract or other instrument to
which it is a party or to which it is subject and that this
-10-
11
Agreement constitutes a valid and binding obligation, inuring to the benefit of
the Manager and the Sub-Adviser and their respective successors, enforceable in
accordance with its terms.
16.2 If any provision of this Agreement shall be held or made
invalid or unenforceable by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby and any such invalid
or unenforceable provision shall be deemed to be replaced with a valid and
enforceable provision that most closely reflects the intention of the parties.
17. APPLICABLE 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 shall be
administered, construed and enforced according to the laws of the State of
Minnesota.
18. NOTICES. All notices hereunder shall be in writing and shall be
delivered in person or by facsimile (followed by delivery in person) to the
parties at the addresses set forth below:
If to the Manager: HL Investment Advisors, LLC
000 Xxxxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxxx 00000.
Fax:
Attn: Legal Department
If to the Sub-Adviser: Xxxxxx LLC
000 Xxxxxxxxxx Xxxxxxxxx - Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax #: (000) 000-0000
or such other name or address as may be given in writing to the other party.
Unless specifically provided elsewhere, notice given as provided above shall be
deemed to have been given, if by personal delivery, on the day of such delivery,
and if by facsimile and mail, on the date on which such facsimile is sent.
19. EXECUTION. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
-11-
12
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers.
Attest: HL INVESTMENT ADVISORS, LLC.
/s/ Xxxxx X. Xxxx /s/ Xxxxx X. Xxxxxxxxxxxx
----------------------------- ---------------------------------------
Attest: XXXXXX LLC, a Nevada Limited Liability
Company
/s/ Xxxxx Xxxxx /s/ Xxxxxx X. Xxxxxx
----------------------------- ---------------------------------------
-12-
13
EXHIBIT A
EXAMPLES OF THE ROUTINE ACCOUNTING AND OPERATIONAL
INFORMATION AND DOCUMENTATION REQUIREMENTS
OF THE PORTFOLIO TO BE SATISFIED BY THE SUB-ADVISER
The following information is to be provided to:
Fortis Series Fund, Inc.
ATTN: Fund Accounting
X.X. Xxx 00000
Xx. Xxxx, XX 00000
FAX: (000) 000-0000
PHONE: (000) 000-0000
1. DOCUMENTATION OF TRADES. On a trade date plus one basis, via
facsimile, a listing of that day's executed trades and copies of the trade
tickets for those trades. At the end of each week, by mail, hard copies of
documentation for that week's executed trades. The signature or initials of the
portfolio manager or duly authorized officer or employee of the Sub-Adviser
should be placed on the trade tickets to validate the authenticity of the
trading information. On a weekly basis, with respect to trades for which no DTC
affirmation is available, hard copies of broker confirmations for such trades.
20. PORTFOLIO HOLDINGS. On a monthly basis, via facsimile, a list of
the Portfolio's holdings. The list should include the following information, for
each of the Portfolio's holdings, where applicable: long description,
cusip/sedol number, maturity date, par/principal amounts, market value, market
price, coupon rate and bond rating.
21. SECURITY PRICING. On a daily basis, by telephone or facsimile: (i)
upon request by the Company, review with the Company's Fund Accounting
Department (the "Department") the prices of the Portfolio's securities, which
shall be provided by the Department; (ii) inform the Department any material
disagreement with such prices; (iii) provide the Department with the basis for
any disagreement it may have with respect to a particular security's price and
its opinion (along with outside broker quotes) as to what that security's price
should be; and (iv) in any instance where the pricing services utilized by the
Department do not provide a price for a security held by the Portfolio, provide
the Department with the reasonable assistance necessary for them to determine a
price for such security.
-13-
