SUBADVISORY AGREEMENT
Xxxxxxxx Value Fund Series, Inc.
SUBADVISORY AGREEMENT, dated as of March 20, 1997 between J. & X. XXXXXXXX & CO.
INCORPORATED, a Delaware corporation (the "Manager") and XXXXXXXX XXXXXXXXX CO.,
a New York general partnership (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement dated March 20,
1997 (the "Management Agreement") with Xxxxxxxx Value Fund Series, Inc. (the
"Fund"), an open-end diversified management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), on behalf of
Xxxxxxxx Large-Cap Value Fund and Xxxxxxxx Small-Cap Value Fund (collectively,
together with any future series, the "Series") pursuant to which the Manager
will render investment management services to the Fund, and to administer the
business and other affairs of the Fund; and
WHEREAS, the Manager desires to retain the Subadviser to provide investment
management services to the Fund, and the Subadviser is willing to render such
investment management services.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will provide the Fund with
investment management services with respect to assets of the Series if, and to
the extent, designated by the Manager (such designated assets, "Qualifying
Assets"). Such services shall include investment research, advice and
supervision, determining which securities shall be purchased or sold by the
Series, making purchases and sales of securities on behalf of the Series and
determining how voting and other rights with respect to securities of the Series
shall be exercised, subject in each case to the control of the Board of
Directors of the Fund and in accordance with the objectives, policies and
principles set forth in the Registration Statement and Prospectus(es) of the
Fund and the requirements of the 1940 Act and other applicable law.
Subject to Section 36 of the 1940 Act, the Subadviser shall not be liable to the
Fund 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 the management of the Fund and the
performance of its duties under this Agreement except for willful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under this Agreement.
2. Expenses. The Subadviser shall pay all of its expenses arising from the
performance of its obligations under Section 1.
3. Compensation
(a) As compensation for the services performed and the facilities and
personnel provided by the Subadviser pursuant to Section 1, the
Manager will pay to the Subadviser each month a fee, equal to the
applicable percentage of the average monthly Net Qualifying Assets of
each Series.
(b) As used herein:
(1) The term "Applicable Percentage" means the percentage fee rate
that the Manager receives from each Series pursuant to the
Management Agreement, as indicated on the attached Fee Schedule.
(2) The term "Net Qualifying Assets" means the Qualifying Assets less
related liabilities as designated by the Manager.
(c) Average monthly Net Qualifying Assets shall be determined, for any
month, by taking the average of the value of the Net Qualifying Assets
as of the (i) opening of business on the first day of such month and
(ii) close of business on the last day of such month.
(d) If the Subadviser shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Subadviser shall purchase securities
from or through and sell securities to or through such persons, brokers or
dealers as the Subadviser shall deem appropriate in order to carry out the
policy with respect to allocation of portfolio transactions as set forth in the
Registration Statement and Prospectus(es) of the Fund or as the Board of
Directors of the Fund may direct from time to time. In providing the Fund with
investment management and supervision, it is recognized that the Subadviser will
seek the most favorable price and execution, and, consistent with such policy,
may give consideration to the research, statistical and other services furnished
by brokers or dealers to the Subadviser for its use, to the general attitude of
brokers or dealers toward investment companies and their support of them, and to
such other considerations as the Board of Directors of the Fund may direct or
authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for the Fund
that the Subadviser have access to supplemental investment and market research
and security and economic analysis provided by brokers who execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers on the basis of seeking the most favorable price and
execution. Therefore, the Subadviser is authorized to place orders for the
purchase and sale of securities of the Fund with such brokers, subject to review
by the Fund's Board of Directors from time to time with respect to the extent
and continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Subadviser in connection with its services
to other clients as well as the Fund.
If, in connection with purchases and sales of securities for the Fund, the
Subadviser may, without material risk, arrange to receive a soliciting dealer's
fee or other underwriter's or
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dealer's discount or commission, the Subadviser shall, unless otherwise directed
by the Board of Directors of the Fund, obtain such fee, discount or commission
and the amount thereof shall be applied to reduce the compensation to be
received by the Subadviser pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Fund from approving
the payment by the Fund of additional compensation to others for consulting
services, supplemental research and security and economic analysis.
5. Term of Agreement. This Agreement shall continue in full force and effect
until December 31, 1998, and from year to year thereafter if such continuance is
approved in the manner required by the 1940 Act, and if the Subadviser shall not
have notified the Manager in writing at least 60 days prior to such date or
prior to December 31 of any year thereafter that it does not desire such
continuance. This Agreement may be terminated at any time in respect of any
Series, without payment of penalty by the Series, on 60 days' written notice to
the Subadviser, by vote of the Board of Directors of the Fund or by vote of a
majority of the outstanding voting securities of such Series (as defined by the
1940 Act). The failure of the Board of Directors of the Fund or holders of
securities of any Series to approve the continuance of this Agreement with
respect to such Series, shall be without prejudice to the effectiveness of this
Agreement with respect to any other Series. This Agreement will automatically
terminate in the event of its assignment (as defined by the 0000 Xxx) or upon
the termination of the Management Agreement.
6. Amendments. This Agreement may be amended by consent of the parties hereto
provided that the consent of the Fund is obtained in accordance with the
requirements of the 1940 Act.
7. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Manager and the Subadviser have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
J. & X. XXXXXXXX & CO. INCORPORATED
By /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
XXXXXXXX XXXXXXXXX CO.
By /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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FEE SCHEDULE
Series Annual Rate
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Xxxxxxxx Large-Cap Value Fund .80% of the Series' average
daily net assets.
Xxxxxxxx Small-Cap Value Fund 1.00% of the Series' average
daily net assets.
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