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EXHIBIT (d).2
INTERIM SUBADVISORY AGREEMENT
FORTIS SERIES FUND, INC.
THIS INTERIM SUBADVISORY AGREEMENT AGREEMENT is made this 2nd day of
April, 2001 between HL Investment Advisors, LLC. (the "Manager"), a Connecticut
limited liability company, and A I M Capital Management, Inc. (the
"Sub-Adviser"), a Texas corporation.
WHEREAS, Fortis Series Fund, Inc. (the "Company") represents that it is
registered under the Investment Company Act of 1940, as amended (the "1940 Act")
as an open-end, diversified management investment company, consisting of
multiple series of investment portfolios;
WHEREAS, the Manager represents that it is registered under the
Investment Advisers Act of 1940, as amended (the "Advisers Act") as an
investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Sub-Adviser represents that it is registered under the
Advisers Act as an investment adviser and engages in the business of acting as
an investment adviser;
WHEREAS, the Company represents that the Board of Directors of the
Company is authorized to classify or reclassify authorized but unissued shares
of the Company, and as of the date of this Agreement the Company's Board of
Directors has authorized the issuance of series of shares representing interests
in investment portfolios; and
WHEREAS, the Manager represents that it has entered into an interim
investment management agreement dated as of April 2nd, 2001 with the Company
(the "Management Agreement"), pursuant to which the Manager shall act as manager
with respect to the portfolios listed on Schedule A hereto (each, a
"Portfolio");
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Company desires to employ its capital relating to each Portfolio by
investing and reinvesting in investments of the kind and in accordance with the
investment objective(s), policies and limitations specified in the prospectuses
(the "Prospectus") and the statements of additional information (the
"Statement") filed with the Securities and Exchange Commission as part of the
Company's Registration Statement on Form N-1A, as amended or supplemented from
time to time, and in the manner and to the extent as may from time to time be
approved by the Board of Directors of the Company (the "Board"). Copies of the
Registration Statement, Prospectus and the Statement have been or will be
provided to the Sub-Adviser. The Manager agrees promptly to provide copies of
all amendments and supplements to the current Registration Statement, Prospectus
and the Statement to the Sub-Adviser on or before the effective date
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thereof on an on-going basis. Until the Manager delivers any such amendment or
supplement to the Sub-Adviser, the Sub-Adviser shall be fully protected in
relying on the Prospectus and Statement as previously furnished to the
Sub-Adviser. The Company employs the Manager as the manager to each Portfolio
pursuant to the Management Agreement, and the Company and the Manager desire to
employ and hereby appoint the Sub-Adviser to act as the sub-investment adviser
to each Portfolio. The Sub-Adviser accepts the appointment and agrees to furnish
the services for the compensation set forth below.
2. SERVICES AS SUB-ADVISER
Subject to the supervision, direction and approval of the Board and the
Manager, the Sub-Adviser shall conduct a continual program of investment,
evaluation and, if appropriate in the view of the Sub-Adviser, sale and
reinvestment of each Portfolio's assets. The Sub-Adviser is authorized, in its
sole discretion and without prior consultation with the Manager, to: (a) manage
each Portfolio's assets in accordance with such Portfolio's investment
objective(s) and policies as stated in the Prospectus and the Statement; (b)
make investment decisions for each Portfolio; (c) place purchase and sale orders
for portfolio transactions on behalf of each Portfolio; and (d) employ
professional portfolio managers and securities analysts who provide research
services to each Portfolio.
The Manager agrees that the Sub-Adviser shall not be liable for any
failure to recommend the purchase or sale of any security on behalf of any
Portfolio on the basis of any information which might, in the Sub-Adviser's
opinion, constitute a violation of any federal or state laws, rules or
regulations.
In addition, (i) the Sub-Adviser shall furnish the Manager daily
information concerning portfolio transactions and quarterly and annual reports
concerning transactions and performance of each Portfolio in such form as may be
mutually agreed by the Manager and the Sub-Adviser, and the Sub-Adviser agrees
to review such Portfolio and discuss the management thereof with the Manager and
the Board.
(ii) Unless the Manager gives the Sub-Adviser written instructions to
the contrary, the Sub-Adviser shall use its good faith judgment in a manner
which it reasonably believes best serves the interests of each Portfolio's
shareholders to vote or abstain from voting all proxies solicited by or with
respect to the issuers of securities in which assets of each Portfolio may be
invested.
(iii) The Sub-Adviser shall maintain and preserve such records related
to each Portfolio's transactions as required under the 1940 Act. The Manager
shall maintain and preserve all books and other records not related to the
Portfolio transactions as required under the 1940 Act. The Sub-Adviser shall
timely furnish to the Manager all information relating to the Sub-Adviser's
services hereunder reasonably requested by the Manager. The Sub-Adviser agrees
that all records which it maintains for a Portfolio are the property of the
Company and the Sub-Adviser will surrender promptly to the Company copies of any
of such records.
(iv) The Sub-Adviser shall maintain compliance procedures for each
Portfolio that it reasonably believes are adequate to ensure each Portfolio's
compliance with (A) the 1940 Act
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and the rules and regulations promulgated thereunder and (B) such Portfolio's
investment objective(s) and policies as stated in the Prospectus and Statement.
The Sub-Adviser shall maintain compliance procedures that it reasonably believes
are adequate to ensure its compliance with the Advisers Act.
(v) In furnishing the services under this Agreement, the Sub-Advisor
will comply with the requirements of the 1940 Act and will use its best efforts
to cause each Portfolio to comply with the adequate diversification requirements
of Section 817(h)(2) and the Subchapter M qualification requirements of Section
851(b)(2) and (3) of the Internal Revenue Code, applicable to each Portfolio,
and the regulations promulgated thereunder, to the extent such compliance is
within the Sub-Advisor's control.
(vi) The Sub-Adviser has adopted a written code of ethics that it
reasonably believes complies with the current requirements of Rule 17j-1 under
the 1940 Act, which it will provide to the Company. The Sub-Adviser has policies
and procedures regarding the detection and prevention and the misuse of
material, nonpublic information by the Sub-Adviser and its employees as required
by the Xxxxxxx Xxxxxxx and Securities Fraud Enforcement Act of 1988.
3. BROKERAGE
The Sub-Adviser is responsible for decisions to buy and sell securities
for each Portfolio, broker-dealer selection, and negotiation of brokerage
commission rates. It is the Sub-Adviser's general policy in selecting a broker
to effect a particular transaction to seek to obtain "best execution," which
means prompt and efficient execution of the transaction at the best obtainable
price with payment of commissions which are reasonable in relation to the value
of the brokerage services provided by the broker.
Consistent with this policy, the Sub-Adviser, in selecting
broker-dealers and negotiating brokerage commission rates, will take all
relevant factors into consideration, including, but not limited to: the best
price available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the applicable Portfolio on a continuing basis. Subject to such policies and
procedures as the Board may determine, the Sub-Adviser shall have discretion to
effect investment transactions for each Portfolio through broker-dealers
(including, to the extent permissible under applicable law, broker-dealers
affiliated with the Sub-Adviser) who provide brokerage and/or research services,
as such services are defined in section 28(e) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), and to cause such Portfolio to pay any such
broker-dealers an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker-dealer would
have charged for effecting that transaction, if the Sub-Adviser determines in
good faith that such amount of commission is reasonable in relation to the value
of the brokerage or research services provided by such broker-dealer, viewed in
terms of either that particular investment transaction or the Sub-Adviser's
overall responsibilities with respect to such Portfolio and other accounts as to
which the Sub-Adviser exercises investment discretion (as such term is defined
in section 3(a)(35) of the 1934 Act). Allocation of orders placed by the
Sub-Adviser on behalf of a Portfolio to such broker-dealers shall be in such
amounts and proportions as the Sub-Adviser shall determine in good faith in
conformity with its responsibilities under applicable laws, rules
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and regulations. The Sub-Adviser will submit reports on such allocations to the
Manager regularly as requested by the Manager, in such form as may be mutually
agreed to by the parties hereto, indicating the broker-dealers to whom such
allocations have been made and the basis therefor.
4. INFORMATION PROVIDED TO THE COMPANY AND THE MANAGER
The Sub-Adviser shall keep the Company and the Manager informed of
developments materially affecting each Portfolio's holdings, and shall, on its
own initiative, furnish the Company and the Manager from time to time with
whatever information the Sub-Adviser believes is appropriate for this purpose.
5. COMPENSATION
In consideration of the services rendered pursuant to this Agreement,
the Manager will pay the Sub-Adviser an annual fee calculated at the rate
specified in Schedule B hereto. The fee is calculated daily and paid monthly.
The fee for the period from the Effective Date (defined below) of the Agreement
to the end of the month during which the Effective Date occurs shall be prorated
according to the proportion that such period bears to the full monthly period.
Upon any termination of this Agreement before the end of a month, the fee for
such part of that month shall be prorated according to the proportion that such
period bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
the Sub-Adviser, the value of each Portfolio's net assets shall be computed at
the times and in the manner specified in the Prospectus and/or the Statement.
6. EXPENSES
The Sub-Adviser shall bear all expenses incurred by it in connection
with the performance of its services under this Agreement. Each Portfolio will
bear certain other expenses to be incurred in its operation, including, but not
limited to, investment advisory fees, sub-advisory fees (other than sub-advisory
fees paid pursuant to this Agreement) and administration fees; fees for
necessary professional and brokerage services; costs relating to local
administration of securities; fees for any pricing service; the costs of
regulatory compliance; and pro rata costs associated with maintaining the
Company's legal existence and shareholder relations. All other expenses not
specifically assumed by the Sub-Adviser hereunder or by the Manager under the
Management Agreement are borne by the applicable Portfolio or the Company.
7. STANDARD OF CARE
The Sub-Adviser shall exercise its best judgment and shall act in good
faith in rendering the services listed in paragraphs 2 and 3 above. The
Sub-Adviser, its officers, directors and employees shall not be liable for any
error of judgment or mistake of law or for any loss suffered by any Portfolio,
any shareholder of any Portfolio or the Manager in connection with the matters
to which this Agreement relates, provided that nothing in this Agreement shall
be deemed to protect or purport to protect the Sub-Adviser against any liability
to the Manager, the Company or to the shareholders of any Portfolio to which the
Sub-Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its
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duties or by reason of the Sub-Adviser's reckless disregard of its obligations
and duties under this Agreement.
8. TERM OF AGREEMENT
This Agreement shall become effective as of April 2nd, 2001 (the
"Effective Date") and shall continue for an initial two-year term and shall
continue thereafter so long as such continuance is specifically approved at
least annually as required by the 1940 Act. This Agreement is terminable with
respect to any Portfolio, without penalty, on 60 days' written notice, by the
Board or by vote of holders of a majority (as defined in the 1940 Act and the
rules thereunder) of the outstanding voting securities of such Portfolio, or
upon 60 days' written notice, by the Sub-Adviser. This Agreement will also
terminate automatically in the event of its assignment (the term "assignment"
having the meaning defined in Section 2(a)(4) of the 1940 Act and the rules
thereunder).
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
It is understood that the Sub-Adviser now acts, will continue to act
and may act in the future as investment manager or adviser to fiduciary and
other managed accounts, and as investment manager or adviser to other investment
companies, including any offshore entities, or accounts, and the Company has no
objection to the Sub-Adviser's so acting, provided that whenever a Portfolio and
one or more other investment companies or accounts managed or advised by the
Sub-Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula believed to
be equitable to each company and account. The Company and the Manager recognize
that in some cases this procedure may adversely affect the size of the position
obtainable for such Portfolio. In addition, it is understood that the persons
employed by the Sub-Adviser to assist in the performance of the Sub-Adviser's
duties under this Agreement will not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or restrict the
right of the Sub-Adviser or any affiliate of the Sub-Adviser to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature.
10. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other parties at such address as such
other parties may designate for the receipt of such notice. Until further notice
to the other parties, it is agreed that the address of each party is as follows:
(a) To the Manager:
HL Investment Advisors, LLC
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Legal Department
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(b) To the Sub-Adviser:
A I M Capital Management, Inc.
President
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
cc: General Counsel
11. REPRESENTATIONS
Each of the parties hereto represents that the Agreement has been duly
authorized, executed and delivered by all required action.
12. USE OF NAME
The names "A I M Capital Management, Inc.", "A I M Capital Management",
or "A I M Capital" (collectively the "A I M Names") may be used only for so long
as this Agreement or any extension, renewal, or amendment hereof remains in
effect. At such times as this Agreement shall no longer be in effect, the
Company and Manager shall cease to use such names or any other name indicating
that it is advised by or otherwise connected with the Sub-Adviser and shall
promptly change its name accordingly. The Company and Manager each acknowledge
that it has authority to use the A I M Names through permission of the
Sub-Adviser, and agrees that the Sub-Adviser reserves to itself and any
successor to its business the right to grant the non-exclusive right to use the
aforementioned names or any similar names to any other corporation or entity,
including but not limited to any investment company of which the Sub-Adviser or
any subsidiary or affiliate thereof or any successor to the business of any
thereof shall be the investment adviser.
13. SEVERABILITY
If any provision of this Agreement is found to be unenforceable, then
this Agreement shall be deemed to be amended by modifying such provision to the
extent necessary to make it legal and enforceable while preserving its intent.
The remainder of this Agreement shall not be affected by such modification.
14. QUESTIONS OF INTERPRETATION
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act or the Advisers Act shall be resolved by reference to such term
or provision of the 1940 Act or the Advisers Act and to interpretations thereof,
if any, by the United States Courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to said Acts. In addition, where the
effect of a requirement of the 1940 Act or the Advisers Act reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first written above.
HL INVESTMENT ADVISORS, LLC
Attest: /s/ Xxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxxxxxx
-------------------- -----------------------------
Name:
---------------------------
Title: Senior Vice President
--------------------------
A I M CAPITAL MANAGEMENT, INC.
Attest: /s/ Xxxxxxxx Xxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------- -----------------------------
Name:
---------------------------
Title: Senior Vice President
--------------------------
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SCHEDULE A
Portfolios
Multi-Sector Bond Series
Blue Chip Stock Series II
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SCHEDULE B
Fee Schedule
Pursuant to Section 5 of the Sub-Advisory Agreement between HL Investment
Advisors, LLC and A I M Capital Management, Inc. (the "Sub-Advisor"), the fees
payable to the Sub-Adviser shall be calculated by applying the following rates
to the average daily net assets of each Portfolio as indicated below:
Multi-Sector Bond Series
Net Assets Annual Rate
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first $200 million...................... .45 bps
over $200 million....................... .40 bps
Blue Chip Stock Series II
Net Assets Annual Rate
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first $200 million...................... .55 bps
over $200 million....................... .50 bps
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