Exhibit (h)(3)
SUB-ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this ____ day of ___________ 1999, between The
Huntington National Bank, a national banking association, ("Huntington") and SEI
Investments Mutual Funds Services, a Delaware corporation, (the "Sub-
Administrator").
WHEREAS, Huntington has entered into an Administration Agreement, dated as
of ____________, 1999 (the "Administration Agreement") with Huntington Variable
Annuity Funds (the "Trust"), a Massachusetts business trust, concerning the
provision of management and administrative services for the investment
portfolios of the Trust identified on Schedule A hereto, as such Schedule shall
be amended from time to time (individually referred to herein as the "Fund" and
collectively as the "Funds"); and
WHEREAS, Huntington desires to retain the Sub-Administrator to assist it in
performing administrative services with respect to each Fund and the Sub-
Administrator is willing to perform such services on the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Sub-Administrator:
------------------------------
a. review, and where necessary, file with the National Association of
Securities Dealers marketing materials relating to the Trust;
b. register the Trust with each state pursuant to Blue Sky regulations;
monitor shareholders' transactions by state to maintain current
registration limits;
c. provide consultation services with respect to the Trust's fund
accounting issues;
d. assist Huntington in the preparation of the Trust's budget and
accruals, analysis and payment of the expenses and accruals;
e. maintain feeds to third party reporting agencies;
f. prepare and file the Trust's tax returns;
g. provide consultation services with respect to dividend calculation
process, including amount paid by Fund and tax ramifications;
h. perform internal audit examinations not less frequently that once
annually at the request of the Trustees;
i. provide consultation services and review with respect to the Trust's
financial statement process, including reporting requirements and
procedures;
j. complete monthly and quarterly total return performance reporting;
k. prepare and file with the Securities and Exchange Commission (the
"SEC") all required notices pursuant to Rule 24f-2, or its successor
provision, under the Investment Company Act of 1940, as amended (the
"1940 Act"); Edgarize and file with the SEC the semi-annual report for
the Trust on Form N-SAR;
l. perform secondary compliance functions with guidelines set forth for
the Trust pursuant to the Trust's prospectus, the 1940 Act and
provisions relating to maintaining registered investment company
status under the Internal Revenue Code of 1986, as amended;
m. provide, when requested by the Trust, individuals acceptable to the
Trustees for nomination, appointment, or election as officers of the
Trust, who will be responsible for the management of certain of the
Trust's affairs as determined by the Trustees; and
n. obtain and keep in effect fidelity bond and directors and
officers/errors and omissions insurance policies for the Trust in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by the Trust's Board
of Trustees.
Huntington will keep and maintain all books and records relating to its
services in accordance with Rule 31a-1 under the 1940 Act.
In the performance of its duties hereunder, the Sub-Administrator will
comply with the provisions of the Declaration of Trust and By-Laws of the Trust,
will safeguard and promote the welfare of the Trust and will comply with the
policies that the Trustees may from time to time reasonably determine; provided
that such policies are not in conflict with this Agreement, the Trust's
governing documents, or any applicable statutes or regulations.
2. Compensation; Reimbursement of Expenses. Huntington shall pay the Sub-
---------------------------------------
Administrator for the services to be provided by the Sub-Administrator under
this Agreement in accordance with and in the manner set forth in Schedule B
hereto. In addition, Huntington agrees to reimburse the Sub-Administrator for
the Sub-Administrator's reasonable out-of-pocket expenses in providing services
hereunder.
3. Effective Date. This Agreement shall become effective with respect to
--------------
a Fund as of the date first written above (or, if a particular Fund is not in
existence on that date, on the date specified in the amendment to Schedule A to
this Agreement relating to such Fund or, if no date is specified, the date on
which such amendment is executed) (the "Effective Date").
2
4. Term. This Agreement shall continue in effect with respect to a Fund,
----
unless earlier terminated by either party hereto as provided hereunder, until
January 12, 2001; and thereafter shall be renewed automatically for successive
one-year terms unless written notice not to renew is given by the non-renewing
party to the other party at least 60 days prior to the expiration of the then-
current term; provided, however, that after such termination for so long as the
Sub-Administrator in fact continues to perform any one or more of the services
contemplated by this Agreement or any schedule or exhibit hereto, the provisions
of this Agreement, including without limitation the provisions dealing with
indemnification, shall continue in full force and effect. Notwithstanding
anything to the contrary herein, this Agreement shall terminate automatically
upon termination of the Administration Agreement. Either party to this Agreement
may terminate such Agreement prior to the expiration of the initial term set
forth above by providing the other party with written notice of such termination
at least 60 days prior the date upon which such termination shall become
effective. Compensation due the Sub-Administrator and unpaid by Huntington upon
such termination shall be immediately due and payable upon and notwithstanding
such termination. The Sub-Administrator shall be entitled to collect from
Huntington, in addition to the compensation described under paragraph 2 hereof,
the amount of all the Sub-Administrator's cash disbursements for services in
connection with the Sub-Administrator's activities in effecting such
termination, including without limitation, the delivery to Huntington, the
Trust, and/or their respective designees of the Trust's property, records,
instruments and documents, or any copies thereof. Subsequent to such
termination, the Sub-Administrator will provide Huntington and/or the Trust with
reasonable access to any Trust documents or records remaining in its possession,
and Huntington shall pay the Sub-Administrator the actual cost incurred in
providing such information.
5. Standard of Care of the Sub-Administrator; Indemnification. The duties
----------------------------------------------------------
of the Sub-Administrator shall be confined to those expressly set forth herein,
and no implied duties are assumed by or may be asserted against the Sub-
Administrator hereunder. The Sub-Administrator shall not be liable for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in carrying out its duties hereunder, except a loss
resulting from willful misfeasance, bad faith or negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "Sub-Administrator" shall include directors, officers, employees and other
agents of the Sub-Administrator as well as that of the corporation itself.)
So long as the Sub-Administrator or its agents act in good faith and with
due diligence and without negligence, the Trust assumes full responsibility and
shall indemnify the Sub-Administrator and hold it harmless from and against any
and all actions, suits and claims, whether groundless or otherwise, and from and
against any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of said sub-
administration relationship to the Trust or any other service rendered to the
Trust hereunder.
3
The indemnity and defense provisions set forth herein shall indefinitely survive
the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Sub-Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Sub-Administrator will use all reasonable care to identify
and notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but good faith failure to do shall not affect the rights hereunder.
The Trust shall be entitled to participate at its own expense or, if it so
elects, to assume the defense of any suit brought to enforce any claims subject
to this indemnity provision. If the Trust elects to assume the defense of any
such claim, the defense shall be conducted by counsel chosen by the Trust and
satisfactory to the Sub-Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Sub-Administrator shall bear the fees and expenses of
any additional counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Sub-Administrator for the reasonable
fees and expenses of any counsel retained by the Sub-Administrator.
The Sub-Administrator may apply to the Trust at any time for instructions
or may consult counsel or independent accountants with respect to any matter
arising in connection with the Sub-Administrator's duties, and the Sub-
Administrator shall not be liable or accountable for any action taken or omitted
by it in good faith in accordance with such instruction or with the opinion of
such counsel or accountants.
Also, the Sub-Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Sub-Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
6. Record Retention and Confidentiality. Huntington shall keep and
------------------------------------
maintain on behalf of the Trust all books and records which the Trust and
Huntington are, or may be, required to keep and maintain in connection with the
services to be provided hereunder pursuant to any applicable statutes, rules and
regulations, including without limitation Rules 31a-1 and 31a-2 under the 1940
Act. Huntington further agrees that all such books and records shall be the
property of the Trust and to make such books and records available for
inspection by the Trust, the Sub-Administrator or by the Securities and Exchange
Commission at reasonable times and otherwise to keep confidential all books and
records and other information relative to the Trust
4
and its shareholders; except when requested to divulge such information by duly-
constituted authorities or court process.
7. Uncontrollable Events. The Sub-Administrator assumes no
---------------------
responsibility hereunder, and shall not be liable, for any damage, loss of data,
delay or any other loss whatsoever caused by events beyond its reasonable
control.
8. Rights of Ownership. All computer programs and procedures developed to
-------------------
perform the services to be provided by the Sub-Administrator under this
Agreement are the property of the Sub-Administrator. All records and other data
except such computer programs and procedures are the exclusive property of the
Trust and all such other records and data will be furnished to Huntington and/or
the Trust in appropriate form as soon as practicable after termination of this
Agreement for any reason.
9. Return of Records. The Sub-Administrator at its option at any time,
-----------------
and shall promptly upon the demand of Huntington and/or the Trust, turn over to
Huntington and/or the Trust and cease to retain the Sub-Administrator's files,
records and documents created and maintained by the Sub-Administrator pursuant
to this Agreement which are no longer needed by the Sub-Administrator in the
performance of its services or for its legal protection. If no so turned over to
Huntington and/or the Trust, such documents and records will be retained by the
Sub-Administrator for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to Huntington
and/or the Trust unless the Trust authorizes in writing the destruction of such
records and documents.
10. Representations of Huntington. Huntington certifies to the Sub-
-----------------------------
Administrator that this Agreement has been duly authorized by Huntington and,
when executed and delivered by Huntington, will constitute a legal, valid and
binding obligation of Huntington, enforceable against Huntington in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and remedies of
creditors and secured parties.
11. Representations of the Sub-Administrator. The Sub-Administrator
----------------------------------------
represents and warrants that: (1) the various procedures and systems which the
Sub-Administrator has implemented with regard to safeguarding from loss or
damage attributable to fire, theft, or any other cause of the records and other
data of the Trust and the Sub-Administrator's records, data, equipment
facilities and other property used in the performance of its obligations
hereunder are adequate and that it will make such changes therein from time to
time as are required for the secure performance of its obligations hereunder,
and (2) this Agreement has been duly authorized by the Sub-Administrator and,
when executed and delivered by the Sub-Administrator, will constitute a legal,
valid and binding obligation of the Sub-Administrator, enforceable against the
Sub-Administrator in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
5
The Sub-Administrator warrants that all software code owned by or under the
Sub-Administrator's control, used in the performance of the Sub-Administrator's
obligations under this contract, will be Year 2000 compliant. For purposes of
this paragraph, "Year 2000 Compliant" means that the software will continue to
operate beyond December 31, 1999 without creating any logical or mathematical
inconsistencies concerning any date after December 31, 1999 and without
decreasing the functionality of the system applicable to dates prior to January
1, 2000 including, but not limited to, making changes to (a) date and data
century recognition; (b) calculations which accommodate same- and multi- century
formulas and date values; and (c) input/output of date values which reflect
century dates. All changes described in this paragraph will be made at no
additional cost to the Trust.
12. Insurance. The Sub-Administrator shall notify Huntington should any
---------
of its insurance coverage be canceled or reduced. Such notification shall
include the date of change and the reasons therefor. The Sub-Administrator shall
notify Huntington of any material claims against it with respect to services
performed under this Agreement, whether or not they may be covered by insurance,
and shall notify Huntington from time to time as may be appropriate of the total
outstanding claims made by the Sub-Administrator under its insurance coverage.
13. Notices. Any notice provided hereunder shall be sufficiently given
-------
when sent by registered or certified mail to Huntington at the following
address: ▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and to the Sub-
Administrator at the following address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attn: Legal Department or at such other address as either party may from time to
time specify in writing to the other party pursuant to this Section.
14. Headings. Paragraph headings in this Agreement are included for
--------
convenience only and are not to be used to construe or interpret this Agreement.
15. Assignment. This Agreement and the rights and duties hereunder shall
----------
not be assignable with respect to a Fund by either of the parties hereto except
by the specific written consent of the other party and with the specific written
consent of the Trust.
16. Governing Law. This Agreement shall be governed by and provisions
-------------
shall be construed in accordance with the laws of the commonwealth of
Massachusetts.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE HUNTINGTON NATIONAL BANK
By: _______________________________
Title: ____________________________
Date: _____________________________
SEI INVESTMENTS MUTUAL FUNDS SERVICES
By: _______________________________
Title: ____________________________
Date: _____________________________
7
SCHEDULE A
TO THE SUB-ADMINISTRATION AGREEMENT
DATED AS OF ___________, 1999 BETWEEN
THE HUNTINGTON NATIONAL BANK
AND
SEI INVESTMENTS MUTUAL FUNDS SERVICES
NAME OF FUND
------------
Huntington VA Growth Fund
Huntington VA Income Fund
THE HUNTINGTON NATIONAL BANK
By: ________________________________
Title: _____________________________
SEI INVESTMENTS MUTUAL FUNDS SERVICES
By: ________________________________
Title: _____________________________
8
SCHEDULE B
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
THE HUNTINGTON NATIONAL BANK
AND
SEI INVESTMENTS MUTUAL FUNDS SERVICES
NAME OF FUND
------------
Huntington VA Growth Fund
Huntington VA Income Fund
COMPENSATION*
-------------
Annual Rate of four and one-half one-hundredths of one percent (.0450%) of each
Fund's average daily net assets.
THE HUNTINGTON NATIONAL BANK
By: ________________________________
Title: _____________________________
SEI INVESTMENTS MUTUAL FUNDS SERVICES
By: ________________________________
Title: _____________________________
* All fees are computed daily and paid periodically.
9