INVESTMENT SUB-ADVISORY AGREEMENT
(INTERNATIONAL BOND PORTFOLIO)
THIS AGREEMENT, made as of the 1st day of January2008, by and between Advantus
Capital Management, Inc., a Minnesota corporation, registered as an Investment
Adviser under the Investment Advisers Act of 1940 (the "Adviser") and
Franklin Advisers, Inc., a California corporation registered as an Investment
Adviser under the Investment Advisers Act of 1940 (the "Sub-Adviser").
WHEREAS, the Adviser is the Investment Adviser to Advantus Series Fund, Inc.
(the "Fund"), an open-end diversified management investment company organized
as a series fund, registered under the Investment Company Act of 1940, as
amended (the 1940 Act);
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with
portfolio selection and related research and statistical services in
connection with the Adviser's investment advisory activities on behalf of
the Funds International Bond Portfolio (hereinafter Portfolio), and the
Sub-Adviser desires to furnish such services to the Adviser; and
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:
1. APPOINTMENT OF SUB-ADVISER
In accordance with and subject to the Investment Advisory Agreement between
the Fund and the Adviser, the Adviser hereby appoints the Sub-Adviser to
perform portfolio selection services described herein for the investment
and reinvestment of the Portfolio, subject to the control and direction of
the Funds Board of Directors, for the period and on the terms hereinafter
set forth. The Sub-Adviser accepts such appointment and agrees to furnish
the services hereinafter set forth for the compensation described herein.
The Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized herein,
have no authority to act for or represent the Fund or the Adviser in any way
or otherwise be deemed an agent of the Fund or the Adviser.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY SUB-ADVISER
(a) The Sub-Adviser shall provide the following services and assume the
following obligations with respect to the Portfolio of the Fund:
(1) Investment Plan
In carrying out its obligations to manage the investments and reinvestments
of the assets of the Portfolio, the Sub-Adviser shall:
(i) obtain and evaluate pertinent economic, statistical, financial and other
information affecting the economy generally and individual companies or
industries the securities of which are included in the Portfolio or are under
consideration for inclusion therein;
(ii) formulate and implement a continuous investment program for the
Portfolio consistent with the investment objective and related investment
policies for such Portfolio as set forth in the Funds registration
statement, as amended; and
(iii) take such steps as are necessary to implement the aforementioned
investment program by purchase and sale of securities, including financial
futures contracts and currency exchange transactions, including the placing,
or directing the placement through an affiliate of the Sub-Adviser, of
orders for such purchases and sales.
(2) Investment Objectives, Policies, Practices and Restrictions
(i) The investment of the assets of the Portfolio shall at all times be
subject to the applicable provisions of the Articles of Incorporation, the
Bylaws, the Registration Statement, the current Prospectus and the Statement
of Additional Information of the Fund and shall conform to the investment
objectives, policies and restrictions of the Portfolio as set forth in such
documents and as interpreted from time to time by the Board of Directors of
the Fund and by the Adviser, including diversification of the holdings of the
Portfolio as a segregated asset account in accordance with Section 817 of the
Internal Revenue Code, as amended (the "Code"), and Regulation Section 1.817-5
thereunder, provided that Adviser shall be responsible for ensuring that the
Fund as a whole is "adequately diversified" if and to the extent required by
Section 817(h) of the Code and Regulation 1.817-5 thereunder.
(ii) Within the framework of the investment objectives, policies and
restrictions of the Portfolio, and subject to the supervision of the Adviser,
the Sub-Adviser shall formulate and implement an overall continuing program
for managing the investment of the assets of the Portfolio, and shall amend
and update such program from time to time as financial and other economic
conditions warrant.
(iii) Adviser agrees to promptly inform the Sub-Adviser, in writing, of any
changes in such documents or interpretations which may affect the
Sub-Advisers services hereunder, it being understood that such changes will
be effective with respect to the Sub-Adviser upon the Sub-Advisers receipt
of such notice, provided, however, that Sub-Adviser shall have a reasonable
period to effect any necessary portfolio changes to bring the assets into
compliance with such changes or interpretations.
(3) Cash Management and Short-Term Investment Funds
(i) The Adviser shall arrange with the custodian of the Portfolio
(Custodian) to have at least one Short-Term Investment Fund ("STIF")
available to be used as a sweep vehicle for the short-term investment of
cash for the Portfolio. The Sub-Adviser agrees to use this STIF for the
short-term investment of cash, subject to the limitations on investments in
shares of other investment companies set forth in the 1940 Act.
(ii) In addition, the Sub-Adviser agrees that the management of cash is the
Sub-Adviser's responsibility, and agrees that cash will be managed in full
compliance with any applicable restrictions, including the limitations on
investments in shares of other investment companies set forth in the 0000 Xxx.
(4) Electronic Delivery of Daily Trade File and Daily Holdings
(i) In connection with the purchase and sale of securities of the Portfolio,
the Sub-Adviser shall deliver to the Adviser by no later than 4 p.m. Central
Time on trading day, a trade file with respect to securities, including
financial futures contracts and currency exchange transactions, purchased or
sold on such trading day, if any, using a secure electronic system established
by Adviser, and confirmations, if customarily provided by counterparties,
relating to each transaction executed for the Portfolio.
(ii) Using a secure electronic system established by Adviser, Sub-Adviser
will deliver to Adviser by no later than noon Central Time on trade date plus
one, a complete list of investments held by the Portfolio on a daily basis.
Sub-Adviser agrees to reconcile these holdings with the Custodian on a monthly
basis.
(iii) Revisions to or cancellations of trades must be provided by Sub-Adviser
to Adviser using a secure electronic system established by Adviser by no later
than 2:00 p.m. Central Time on trade date plus one. If a revision or
cancellation is made after this deadline, Sub-Adviser will promptly notify
Adviser using a secure electronic system established by Adviser.
(5) Investment in New Securities
(i) Sub-Adviser further agrees to provide ongoing security related
information as is necessary (including, but not limited to payment
discrepancies).
(6) Trade Affirmation and Settlement
(i) The Sub-Adviser shall affirm and direct the Custodian to settle each
trade made by the Sub-Adviser on behalf of the Portfolio and shall advise
brokers to list Adviser as an Interested Party on all Depository Trust
Company ("DTC") confirms, supplying Adviser's DTC number as 71567.
Sub-Adviser agrees that all trades will be affirmed by the Sub-Adviser by no
later than 11:00 a.m. Central Time on trade date plus one.
(ii) With respect to portfolio securities to be purchased or sold through
DTC, the Sub-Adviser shall arrange for the automatic transmission of the I.D.
confirmation of the trade to the Custodian of the Portfolio. For non-DTC
eligible trades, Sub-Adviser will provide hard copy confirmation, if
customarily provided, via facsimile or e-mail to Adviser by no later than
11:00 a.m. Central Time on trade date plus one.
(iii) Sub-Adviser will work directly with Custodian and/or any applicable
broker to resolve any trade-related issues (including, but not limited to
re-registration of physical certificates, denominational breakdowns,
exchanges, etc.).
(iv) Sub-Adviser agrees to monitor any failing trades and to use its best
efforts to work proactively to resolve these issues, and seek reimbursement
from third parties as appropriate. Sub-Adviser agrees to reimburse the
Portfolio for any compensating interest due because of failing trades if due
to the fault of Sub-Adviser or if Sub-Adviser fails to use its best efforts
to seek reimbursement from third parties.
(7) Corporate Actions
(i) Sub-Adviser will work with appropriate parties to facilitate voluntary
corporate action processing;
(ii) Sub-Adviser will notify Adviser of any voluntary corporate actions and
the specific actions that will be taken; and
(iii) Sub-Adviser will provide appropriate details related to all corporate
actions, including any accounting data needed.
(8) Proxy Voting
Adviser is responsible for voting all proxies on behalf of the securities
held by the Portfolio in accordance with proxy voting policies and procedures
adopted by the Fund. Sub-Adviser shall consult with Adviser as requested
by Adviser on proxy voting matters.
(9) Securities Lending
The Adviser may have entered into, prior to the existence of this agreement,
or may, at some point during the existence of this Agreement enter into a
securities lending agreement with the Custodian or another party to have
the securities of the Portfolio placed on loan for a fee. If the Adviser
does enter into such agreement, the Adviser will notify the Sub-Adviser of
such agreement. The Adviser agrees not to enter into such agreement without
the counterparty agreeing to contractual settlement, thereby guaranteeing the
return of any securities on loan when requested by the Custodian in
connection with settlements of transactions initiated by Sub-Adviser. If
requested by Sub-Adviser, and as permitted by the relevant securities
lending agreements, Adviser will instruct a buy-in against a borrower which
has failed to redeliver securities to the Portfolio.
(10) Directed Brokerage
Sub-Adviser understands that Adviser may, on occasion, enter into agreements
for directed brokerage with certain brokers. Sub-Adviser agrees to follow
Adviser's direction regarding directed brokerage.
(11) Broker Selection
Except as provided in paragraph 10 above, in placing orders or directing the
placement of orders for the execution of portfolio transactions, the
Sub-Adviser shall select brokers and dealers for the execution of the
Portfolio's transactions. In selecting brokers or dealers to execute such
orders, the Sub-Adviser is expressly authorized to consider the fact that a
broker or dealer has furnished statistical, research or other information or
services which enhance the Sub-Adviser's investment research and portfolio
management capability generally. It is further understood in accordance with
Section 28(e) of the Securities Exchange Act of 1934, as amended, that the
Sub-Adviser may negotiate with and assign to a broker a commission which may
exceed the commission which another broker would have charged for effecting the
transaction if the Sub-Adviser determines in good faith that the amount of
commission charged was reasonable in relation to the value of brokerage and/or
research services (as defined in Section 28(e)) provided by such broker, viewed
in terms either of the Portfolio or the Sub Adviser's overall responsibilities
to the Sub-Adviser's discretionary accounts.
(12) Availability and Retention of Records
The Sub-Adviser shall, in the name of the Portfolio, place or direct the
placement of orders for the execution of portfolio transactions in accordance
with its investment policies, as set forth in the Portfolio's investment
objectives, policies and restrictions. In connection with the placement of
orders for the execution of the Portfolio's portfolio transactions, the
Sub-Adviser shall create and maintain all necessary records required to be
created and maintained by an investment adviser under all applicable law,
rules and regulations, including, but not limited to, records required by
Section 31(a) of the 1940 Act . All records pertaining to the Sub-Advisers
management of the Portfolio shall be the property of the Fund and shall be
available for inspection and use, upon reasonable notice and during normal
business hours, by the Securities and Exchange Commission, state regulators,
Adviser, or any person retained by the Fund. Where applicable, such records
shall be maintained by the Sub-Adviser for the period and in the place
required by Rule 31a-2 under the 1940 Act.
(13) Investment Activity and Portfolio Composition Reporting
The Sub-Adviser shall render such reports to the Adviser and/or to the Funds
Board of Directors concerning the investment activity and portfolio
composition of the Portfolio in such form and at such intervals as the
Adviser or the Board may from time to time reasonably request.
The Sub-Adviser shall use the same skill and care in providing services to
the Portfolio as it uses in providing services to other fiduciary accounts
for which it has investment responsibility.
(14) Aggregation of Trades and Trade Allocations
On occasions when the Sub-Adviser deems the purchase or sale of a security
to be in the best interest of the Portfolio as well as other customers, the
Sub-Adviser, to the extent permitted by applicable law, may aggregate the
securities to be so sold or purchased in order to obtain the best execution
or lower brokerage commissions, if any. The Sub-Adviser also may purchase
or sell a particular security for one or more customers in different amounts.
On either occasion, and to the extent permitted by applicable law and
regulations, allocation of the securities so purchased or sold, as well as
the expenses incurred in the transaction, will be made by the Sub-Adviser in
the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Portfolio and to such other customers. In no
instance, however, will the Portfolios assets be purchased from or sold to
the Adviser, the Sub-Adviser, the Funds principal underwriter, or any
affiliated person of either the Fund, the Adviser, the Sub-Adviser or the
principal underwriter, acting as principal in the transaction, except to the
extent permitted by the SEC and the 1940 Act.
3. EXPENSES
During the term of this Agreement, the Sub-Adviser will pay all of its own
expenses incurred in connection with its activities under this Agreement.
All brokerage and custodial expenses relating to the operation of the
Portfolio shall be borne by the Portfolio.
4. COMPENSATION
In payment for the investment sub-advisory services to be rendered by the
Sub Adviser in respect of the Portfolio hereunder, the Adviser shall pay to
the Sub-Adviser a fee, determined as described on Exhibit A, attached
hereto and made a part hereof.
5. RENEWAL, AMENDMENT AND TERMINATION
This Agreement shall not become effective unless and until it is approved by
the Board of Directors of the Fund, including a majority of the members who
are not "interested persons" to parties to this Agreement, by a vote cast in
person at a meeting called for the purpose of voting such approval.
This Agreement shall continue in effect for a period more than two years
from the date of this Agreement, only so long as such continuance is
specifically approved at least annually by a vote of the holders of the
majority of the outstanding voting securities of the Portfolio, or by a
vote of the majority of the Fund's Board of Directors. And further
provided that such continuance is also approved annually by a vote of the
majority of the Fund's Board of Directors who are not parties to this
Agreement or interested persons of parties hereto, cast in person at a
meeting called for the purpose of voting on such approval. This Agreement
may be terminated at any time without payment of penalty: (i) by the Fund's
Board of Directors or by a vote of a majority of the outstanding voting
securities of the class of capital stock of the Portfolio on sixty (60) days'
prior written notice, or (ii) by either party hereto upon sixty (60) days'
prior written notice to the other. This Agreement will terminate
automatically upon any termination of the Investment Advisory Agreement
between the Fund and the Adviser or in the event of its assignment. The
terms "interested person," "assignment" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the
1940 Act. This Agreement may only be amended by mutual written agreement,
signed by both parties.
6. LIABILITY
The Sub-Adviser may rely on information reasonably believed by it to be
accurate and reliable. Except as provided by the 1940 Act, neither the
Sub-Adviser nor its officers, directors, employees or agents shall be
subject to any liability for any error of judgment or mistake of law or
for any loss arising out of any investment or other act or omission in the
performance by the Sub-Adviser of its duties under this Agreement or for
any loss or damage resulting from the imposition by any government of
exchange control restrictions which might affect the liquidity of the
Portfolio's assets, or from acts or omissions of the Adviser, custodians,
securities depositories or other third parties, or from any war or
political act of any foreign government to which such assets might be
exposed, provided that nothing herein shall be deemed to protect, or
purport to protect, the Sub-Adviser against any liability to the Portfolio
to which the Sub-Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of the Sub-Adviser's reckless disregard of its
obligations and duties hereunder. Notwithstanding the foregoing, if there
is a higher standard of care imposed by applicable law, such standard will
apply under this Agreement.
7. NO GUARANTEE AS TO INVESTMENT PERFORMANCE
The Adviser and the Funds Board of Directors understand that the value of
investments made for the Portfolio may go up as well as down and is not
guaranteed, and that investment decisions will not always be profitable.
Neither the Adviser nor the Sub-Adviser has made or is making any
guarantees, including any guarantee as to any specific level of performance
of the Portfolio. The Adviser and the Funds Board of Directors acknowledge
that this Portfolio is designed for the described investment objective and
is not intended as a complete investment program. They also understand that
investment decisions made on behalf of the Portfolio by Sub-Adviser are
subject to various market and business risks.
8. OTHER CLIENTS OF SUB-ADVISER
The Adviser understands that the Sub-Adviser now acts, or may act in the
future, as investment adviser to other managed accounts, including other
investment companies, and the Adviser has no objection to the Sub-Adviser
so acting, provided that the Sub-Adviser duly performs all obligations under
this Agreement. The Adviser also understands that the Sub-Adviser may give
advice and take action with respect to any of its other clients or for its
own account which may differ from the timing or nature of action taken by
the Sub-Adviser with respect to the Portfolio. Nothing in this Agreement
shall impose upon the Sub-Adviser any obligation to purchase or sell, with
respect to the Portfolio, any security which the Sub-Adviser or its
shareholders, directors, officers, employees or affiliates may purchase or
sell for its or their own account(s) or for the account of any other client.
9. OTHER BUSINESS ACTIVITIES OF SUB-ADVISER
Except to the extent necessary to perform its obligations hereunder, nothing
herein shall be deemed to limit or restrict the right of the Sub-Adviser, or
the right of any of its officers, directors or employees who may also be an
officer, director or employee of the Fund, or persons otherwise affiliated
with the Fund (within the meaning of the 0000 Xxx) to engage in any other
business or to devote time and attention to the management or other aspects
of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other trust, corporation, firm,
individual or association.
10. REPRESENTATIONS
Sub-Adviser represents that it is registered as an investment adviser under
the Investment Advisers Act of 1940 and that such registration is currently
effective and will remain effective throughout the term of this Agreement.
The Sub-Adviser will perform its duties hereunder with the care, skill,
prudence, and diligence under the circumstances then prevailing that a
prudent man acting in like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like aims.
The Sub-Adviser acknowledges that it will be acting as a fiduciary for
Adviser in the performance of its duties hereunder. The Sub-Adviser shall
at no time have custody or physical control of any assets of the Portfolio.
11. DISCLOSURE STATEMENT
Adviser acknowledges receipt of Sub-Adviser's Disclosure Statement, as
required by Rule 204-3 under the Investment Advisers Act of 1940, not less
than 48 hours prior to the date of execution of this Agreement shown below.
12. ENTIRE AGREEMENT, GOVERNING LAW AND WAIVER OF JURY TRIAL
This Agreement constitutes the entire agreement of the parties with
respect to management of the Portfolio and it supercedes and replaces
any pre-existing agreement between the parties. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the
State of Minnesota. To the extent permitted by the Federal securities laws,
the parties hereby waive their right to a jury trial.
13. ATTORNEYS FEES
In the event of any litigation between the parties with respect to the
subject matter of this Agreement, the prevailing party shall be entitled
to recover, in addition to any other relief awarded by the court, its
reasonable attorneys' fees and other costs of preparing for and
participating in the litigation.
14. CAPTIONS
The captions in this Agreement are included for convenience only and in
no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
15. SEVERABILITY
Each provision of this Agreement is intended to be severable from the
others so that if any provision or term is found to be invalid or
illegal for any reason whatsoever, such invalidity or illegality shall
not affect the validity or legality of the remaining provisions and
terms hereof.
16. CONTACT INFORMATION
Sub-Adviser agrees to provide to Adviser, and update as necessary, all
specific contact information regarding individual's names, phone
numbers, facsimile numbers, e-mail addresses, and similar information
for all back-up personnel, and for all personnel who have any
individual responsibility for the operation of the Portfolio.
17. NOTICES
Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage pre-paid to the appropriate party at the
following address:
The Adviser at:
Advantus Capital Management, Inc.
000 Xxxxxx Xxxxxx Xxxxx
Mail Station 15-3175
St. Xxxx, Minnesota 55101-2098
Attn: Chief Legal Officer
and the Sub Adviser at:
Franklin Advisers, Inc.
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000-0000
18. The effective date of this agreement shall be January 1, 2008.
IN WITNESS WHEREOF, the parties have duly executed this Agreement.
ADVANTUS CAPITAL MANAGEMENT, INC.
(ADVISER) FRANKLIN ADVISERS, INC. (SUB-ADVISER)
By: By:
(printed or typed name and title) (printed or typed name and title)
By: By:
(printed or typed name and title) (printed or typed name and title)
EXHIBIT A
SCHEDULE OF FEES
In payment for the investment sub-advisory services to be rendered by
the Sub Adviser in respect of the Portfolio, the Adviser shall pay to
the Sub-Adviser as full compensation for all services hereunder a fee
computed at an annual rate which shall be a percentage of the average
daily value of the net assets of the Portfolio. The fee shall be
accrued daily and shall be based on the net asset value of the
Portfolio assets as determined as of the close of each business day.
The fee shall be payable quarterly by Adviser to Sub-Adviser within 30
days after quarter end and shall be accompanied by a worksheet created
by Adviser which sets forth the supporting documentation upon which
Adviser relied to calculate such fee.
The amount of such annual fee, as applied to the average daily value of
the net assets of the Portfolio shall be as described in the schedule
below:
Assets Annual Fee
All Assets of the Portfolio 37 basis points (0.37 %)
