INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT, made this 1st day of May, 1997, 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 X.X.
Xxxxxx Investment Management Inc., a Delaware 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., formerly MIMLIC 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"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with
portfolio selection and related research and statistical services, as may be
provided in this Agreement in connection with the Adviser's investment advisory
activities on behalf of the Fund's Macro-Cap Value Portfolio (hereinafter
"Portfolio"), and the Sub-Adviser desires to furnish such services to the
Adviser;
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 dated May 1, 1997, the Adviser hereby appoints the Sub-
Adviser to perform portfolio selection services described herein for investment
and reinvestment of the Portfolio, subject to the control and direction of the
Fund's 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 herein provided. The Sub-
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized, 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 THE 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) 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 Advantus and Minnesota
Mutual 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.
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 have the sole and exclusive
responsibility for the making and execution of all investment
decisions for the Portfolio. Advantus agrees to promptly inform
the Sub-Adviser if such objective, policies or restrictions change
and to deliver to the Sub-Adviser updated documents, if prepared.
In addition the Adviser agrees, on an ongoing basis, to provide the
Sub-Adviser as promptly as practicable copies of all amendments and
supplements to the Prospectus, Statement of Additional Information
and Articles of Incorporation of the Fund.
(2) In carrying out its obligations to manage the investments and
reinvestments of the assets of the Portfolio, the Sub-Adviser
shall: (1) 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; (2) 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 Fund's registration statement, as amended; and (3) take such
steps as are necessary to implement the aforementioned investment
program by purchase and sale of securities including the placing,
or directing the placement through an affiliate of the Sub-Adviser,
of orders for such purchases and sales.
(3) In connection with the purchase and sale of securities of the
Portfolio, the Sub-Adviser shall arrange for the transmission to
the Adviser and the Custodian for the Fund on a daily basis such
confirmation, trade tickets and other documents as may be necessary
to enable them to perform their administrative responsibilities
with respect to the Portfolio. With respect to portfolio
securities to be purchased or sold through the Depository Trust
Company, the Sub-Adviser shall arrange for the automatic
transmission of the I.D. confirmation of the trade to the Custodian
of the Portfolio. The Sub-Adviser shall render such reports to the
Adviser and/or to the Fund's Board of Directors
2
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 require.
(4) The Sub-Adviser shall, in the name of the Fund, place or direct the
placement of orders for the execution of portfolio transactions in
accordance with the policies with respect thereto, as set forth in
the Fund's Registration Statement, as amended from time to time,
and under the 1933 Act and the 1940 Act. In connection with the
placement of orders for the execution of the Fund's portfolio
transactions, the Sub-Adviser shall create and maintain all
necessary brokerage records of the Fund in accordance with all
applicable law, rules and regulations, including but not limited
to, records required by Section 31(a) of the 1940 Act. All records
shall be the property of the Fund and shall be available for
inspection and use by the Securities and Exchange Commission, the
Fund 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.
(5) 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.
(b) The Sub-Adviser shall use the same skill and care in providing services
to the Fund as it uses in providing services to fiduciary accounts for which it
has investment responsibility. The Sub-Adviser will conform with all applicable
rules and regulations of the Securities and Exchange Commission.
3
3. EXPENSES
During the terms of this Agreement, the Sub-Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement.
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 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 values of all of the issued and outstanding shares of the
Portfolio as determined as of the close of each business day pursuant to the
Articles of Incorporation, Bylaws and currently effective Prospectus and
Statement of Additional Information of the Fund. The fee shall be payable in
arrears on the last day of each calendar month.
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 Fee
------ ---
Total Portfolio Assets .45%
5. RENEWAL AND TERMINATION
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 days' prior written notice, or (ii) by either party hereto upon sixty
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, with notice provided
to the Sub-Adviser in such event. 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.
4
6. GENERAL PROVISIONS
(a) The Sub-Adviser may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be 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 or exchange
control restrictions which might affect the liquidity of the Portfolio's assets,
or from acts or omissions of custodians or securities depositories, 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 Fund or to its
shareholders 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 (each such act or omission shall be referred to
as "Disqualifying in Conduct"). The Sub-Adviser shall not be deemed to have
engaged in Disqualifying Conduct if it complies with the Guidelines and acts in
reliance on the Report, and the Sub-Adviser's failure to act in accordance
therewith shall not constitute evidence that it engaged in Disqualifying
conduct.
(b) The Adviser agrees on an on-going basis to provide or cause to be
provided to the Sub-Adviser guidelines, the Fund's investment objective(s) and
policies stated in the Prospectus, the Statement and the Articles of
Incorporation to be revised as provided below (the "Guidelines"), setting forth
limitations, by dollar amount or percentage of net assets, on the types of
securities in which the Fund is permitted to invest or investment activities in
which the Fund is permitted to engage. Among other matters, the Guidelines
shall set forth clearly the limitations imposed upon the Fund as a result of
relevant diversification requirements under state and federal law pertaining to
insurance products, including, without limitation, the provisions of Section
817(h) of the Internal Revenue Code of 1986, as amended (the "Code"). The
Guidelines shall remain in effect until 12:00 p.m. on the third business day
following actual receipt by the Sub-Adviser of a written notice, denominated
clearly as such, setting forth revised Guidelines. The Adviser agrees to cause
to be delivered to a person designated in writing for such purpose by the Sub-
Adviser each day, by ______p.m., New York time, a written report dated the date
of its delivery (the "Report") with respect to the funds' compliance for its
current fiscal year with the short-three test set forth in Section 851(b) (3) of
the Code (the "short-three test"). The Report shall include in chart form the
fund's gross income (within the meaning of Section 851 of the Code) from the
beginning of the current fiscal year to the date of the Report and its
cumulative income and gains described in Section 851(b) (3) of the Code for such
period. If the Report is not timely delivered, the Sub-Adviser shall be
permitted to rely on the most recent Report delivered to it. The Company and
the Adviser agree that the Sub-Adviser may rely on the Guidelines and the Report
without independent verification of their accuracy.
5
(c) The Adviser and the Fund's Board of Directors understand that the value
of investments made for the Account may go up as well as down, is not guaranteed
and that investment decisions will not always be profitable. The Adviser has
not made and is not making any guarantees, including any guarantee as to any
specific level of performance of the Portfolio. The Adviser and the Fund's
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.
(d) 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, and
by a majority of the outstanding voting securities of the class of capital stock
of the Portfolio.
(e) The Adviser understands that the Sub-Adviser now acts, will continue to
act, or may act in the future, as investment adviser to fiduciary and 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 Fund. Nothing in this
Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell
or to recommend for purchase or sale, with respect to the Fund, 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.
(f) 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.
(g) Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof. This Agreement
shall be construed and enforced in accordance with and governed by the laws of
the State of Minnesota. 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.
(h) 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 and the Fund at 000 Xxxxxx Xxxxxx Xxxxx, Xx. Xxxx,
Xxxxxxxxx 00000-0000, and the Sub-
6
Adviser at X. X. Xxxxxx Investment Management Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxx Xxxxx.
(i) Sub-Adviser agrees to notify Adviser of any change in Sub-Adviser's
officers and directors within a reasonable time after such change.
7. INDEMNIFICATION
The Adviser agrees to indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including reasonable
attorneys' fees and other related expenses), howsoever arising, from or in
connection with this Agreement or the performance by the Sub-Adviser of its
duties hereunder, provided, however, that nothing contained herein shall require
that the Sub-Adviser be indemnified for Disqualifying Conduct.
8. DISCLOSURE
Neither the Company nor the Adviser shall, without the prior written
consent of the Sub-Adviser, make representations regarding or reference to the
Sub-Adviser or any affiliates in any disclosure document, advertisement, sales
literature or other promotional materials.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
ADVANTUS CAPITAL MANAGEMENT, INC.
By:
------------------------------
Its:
-----------------------------
X. X. XXXXXX INVESTMENT MANAGEMENT INC.
By:
------------------------------
Its:
-----------------------------
7
