FIRST INVESTORS LIFE SERIES FUND
SUBADVISORY AGREEMENT
Agreement made as of this 8th day of March, 2005, by and among FIRST
INVESTORS MANAGEMENT COMPANY, INC., a New York corporation (the
"Adviser"), PARADIGM CAPITAL MANAGEMENT, INC. (the "Subadviser"), and
FIRST INVESTORS LIFE SERIES FUND (the "Fund"), a Massachusetts
business trust and a diversified open-end management investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), on behalf of Life Series Discovery Fund.
W I T N E S S E T H:
WHEREAS, the Adviser has entered into an Investment Advisory
Agreement dated June 13, 1994 (the "Advisory Agreement") with the Fund,
pursuant to which the Adviser acts as investment adviser of each series
of the Fund; and
WHEREAS, the Adviser and the Fund each desire to retain the Subadviser
to provide investment advisory services to Life Series Discovery Fund,
a series of the Fund, and the Subadviser is willing to render such
investment advisory services.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. Subadviser's Duties.
(a) Portfolio Management. Subject to supervision by the Adviser
and the Fund's Board of Trustees, the Subadviser shall manage the
investment operations and such portion of the assets of Life Series
Discovery Fund (the "Series") that is allocated to it by the Adviser,
in accordance with that Series' investment objectives, policies and
restrictions, and subject to the following understandings:
(i) Investment Decisions. The Subadviser shall determine
from time to time what investments and securities will be purchased, retained,
sold or loaned by the Series, and what portion of such assets will be
invested or held uninvested as cash.
(ii) Investment Limits. In the performance of its duties
and obligations under this Agreement, the Subadviser shall act in conformity
with applicable limits and requirements, as amended from time to time, as set
forth in the (A) Fund's Declaration of Trust, as amended and restated from
time to time, its By-Laws, and the Prospectus and Statement of Additional
Information applicable to the Series, (B) instructions and directions of
the Adviser and of the Board of Trustees of the Fund, and (C) requirements
of the 1940 Act, the Internal Revenue Code of 1986, as amended, as
applicable to the Series, and all other applicable federal and state laws
and regulations.
(iii) Portfolio Transactions. With respect to the
securities and other investments to be purchased or sold for the Series,
the Subadviser shall place orders with or through such persons, brokers,
dealers or futures commission merchants selected by the Subadviser, provided,
however, that such orders shall (A) be consistent with the brokerage policy
set forth in the Prospectus and Statement of Additional Information
applicable to the Series, or approved by the Fund's Board of Trustees,
(B) conform with federal securities laws, and (C) be consistent with securing
the most favorable price and efficient execution. Within the framework of
this policy, the Subadviser may consider the research, investment information
and other services provided by, and the financial responsibility of, brokers,
dealers or futures commission merchants who may effect, or be a party to, any
such transaction or other transactions to which the Subadviser's other
clients may be a party.
On occasions when the Subadviser deems the purchase or sale of a security or
futures contract to be in the best interest of the Series as well as other
clients of the Subadviser, the Subadviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities or futures contracts to be sold or purchased in
order to obtain the most favorable price or lower brokerage commissions and
efficient execution. In such event, allocation of the securities or futures
contracts so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Subadviser in the manner the Subadviser
considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(iv) Records and Reports. The Subadviser shall maintain
such books and records required by Rule 31a-1 under the 1940 Act as shall be
agreed upon from time to time by the parties hereto, and shall render to the
Fund's Board of Trustees such periodic and special reports as the Board of
Trustees of the Fund may reasonably request.
(v) Transaction Reports. The Subadviser shall provide the
custodian of the Series on each business day with information relating to all
transactions concerning the Series' assets and shall provide the Adviser with
such information upon the Adviser's request.
(vi) Fund Policies. The Subadviser will comply with all
policies and procedures of the Fund, including the portfolio holdings
information policy.
(vii) Significant Events. The Subadviser will monitor the
securities owned by the Fund for potential significant events that could
affect their values and notify the Fund when, in its opinion, a significant
event has occurred that may not be reflected in the market values of such
securities.
(b) Subadviser's Directors, Officers and Employees.
Services to be furnished by the Subadviser under this Agreement may be
furnished through any of its directors, officers or employees. The
Subadviser shall notify the other parties to this Agreement of any change in
the Subadviser's management or ownership within a reasonable time after such
change.
(c) Maintenance of Records. The Subadviser shall timely
furnish to the Adviser all information relating to the Subadviser's services
hereunder which are needed by the Adviser to maintain the books and records
of the Series required by Rule 31a-1 under the 1940 Act. The Subadviser
agrees that all records that it maintains for the Series are the property of
the Fund and the Subadviser will surrender promptly to the Fund any of such
records upon the Fund's request; provided, however, that the Subadviser may
retain a copy of such records. The Subadviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act any such records as
are required to be maintained by it pursuant to paragraph 1(a) hereof.
(d) Fidelity Bond, Errors & Omissions Policy, and
Compliance Program. The Subadviser will provide the Fund with reasonable
evidence that, with respect to its activities on behalf of the Series, the
Subadviser is (i) maintaining adequate fidelity bond and errors & omissions
insurance, (ii) has adopted a compliance program that meets the requirements
of the federal securities laws, including all required codes of ethics, and
(iii) has designated a Chief Compliance Officer in accordance with the
requirements of the federal securities laws. The Subadviser shall also make
such compliance reports and certifications as are required by the Fund's
compliance program.
2. Adviser's Duties. The Adviser shall continue to have responsibility
for all other services to be provided to the Fund and each Series pursuant to
the Advisory Agreement and shall oversee and review the Subadviser's
performance of its duties under this Agreement.
3. Documents Provided to the Subadviser. The Adviser has or will
deliver to the Subadviser current copies and supplements thereto of each of
the following documents, and will deliver to it all future amendments and
supplements, if any:
(a) the Declaration of Trust of the Fund, as filed with the
Massachusetts Department of Assessment and Taxation;
(b) the By-Laws of the Fund;
(c) certified resolutions of the Board of Trustees of the Fund
authorizing the appointment of the Adviser and the Subadviser and approving
the form of this Agreement;
(d) the Fund's Registration Statement on Form N-1A under the 1940
Act and the Securities Act of 1933, as amended ("1933 Act"), pertaining to
the Series, as filed with the Securities and Exchange Commission; and
(e) the Prospectus and Statement of Additional Information
pertaining to the Series.
4. Compensation of the Subadviser. For the services provided and the
expenses assumed pursuant to this Agreement, the Adviser will pay to the
Subadviser, effective from the date of this Agreement, a fee which is
computed daily and paid monthly from the Series' assets at the annual rates
set forth in the attached Schedule A. If this Agreement becomes effective or
terminates before the end of any month, the fee for the period from the
effective date to the end of the month or from the beginning of such month to
the date of termination, as the case may be, shall be prorated according to
the proportion that such month bears to the full month in which such
effectiveness or termination occurs.
5. Liability of the Subadviser. The Subadviser agrees to perform
faithfully the services required to be rendered to the Fund and the Series
under this Agreement, but nothing herein contained shall make the Subadviser
or any of its officers, partners or employees liable for any loss sustained
by the Fund or its officers, Trustees or shareholders or any other person on
account of the services which the Subadviser may render or fail to render
under this Agreement; provided, however, that nothing herein shall protect
the Subadviser against liability to the Fund, or to any of the Series'
shareholders, to which the Subadviser would otherwise be subject, by reason
of its willful misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement. Nothing in this Agreement shall protect the
Subadviser from any liabilities that it may have under the 1933 Act or the
1940 Act.
6. Duration and Termination. Unless sooner terminated as provided
herein, this Agreement shall continue in effect for a period of more than two
years from the date written above only so long as such continuance is
specifically approved at least annually in conformity with the requirements
of the 1940 Act; provided, however, that this Agreement may be terminated at
any time, without the payment of any penalty, by the Board of Trustees of the
Fund or by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of the Series, or by the Subadviser at any time,
without the payment of any penalty, on not more than 60 days' nor less than
30 days' written notice to the other parties. This Agreement shall terminate
automatically in the event of its assignment (as defined in the 0000 Xxx) or
upon the termination of the Advisory Agreement.
7. Subadviser's Services are Not Exclusive. Nothing in this Agreement
shall limit or restrict the right of any of the Subadviser's partners,
officers or employees to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any
business, whether of a similar or a dissimilar nature, or limit or restrict
the Subadviser's right to engage in any other business or to render services
of any kind to any other corporation, firm, individual or association.
8. References to the Subadviser. During the term of this Agreement,
the Adviser agrees to furnish to the Subadviser at its principal office all
prospectuses, proxy statements, reports to shareholders, sales literature or
other material prepared for distribution to sales personnel, shareholders of
the Series or the public, which refer to the Subadviser or its clients in any
way.
9. Exclusivity. The Subadviser agrees not to manage the assets of any
non-affiliated third party investment company that has investment objectives
and policies substantially similar to the investment objectives and policies
employed by the Series.
10. Amendments. This Agreement may be amended by mutual consent,
subject to approval by the Fund's Board of Trustees and the Series'
shareholders to the extent required by the 1940 Act.
11. Governing Law. This Agreement shall be governed by the laws of the
State of New York.
12. Entire Agreement. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof.
13. Severability. Should any part of this Agreement be held invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors.
14. The 1940 Act. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
15. Headings. The headings in this Agreement are intended solely as a
convenience, and are not intended to modify any other provision herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first
above written.
FIRST INVESTORS MANAGEMENT COMPANY, INC.
Attest:
/s/ Xxxxx Xxxxxx Xxxxx
Xxxxx Xxxxxx Xxxxx, Secretary
By: /s/ Xxxxxxx X. Head
Xxxxxxx X. Head, Chairman & President
FIRST INVESTORS LIFE SERIES FUND, on
behalf of Life Series Discovery Fund
Attest:
/s/ Xxxxx Xxxxxx Xxxxx
Xxxxx Xxxxxx Xxxxx, Secretary
By: /s/ Xxxxxxx X. Head
Xxxxxxx X. Head, President
PARADIGM CAPITAL MANAGEMENT, INC.
Attest:
/s/ Xxxxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, Assistant
By: /s/ Xxxxxxx Xxxx Xxxx
Xxxxxxx Xxxx Xxxx, Chief Executive Officer
SCHEDULE A
The fee paid to the Subadviser under this Agreement for managing that portion
of the assets of Life Series Discovery Fund allocated to it by the Adviser
shall be computed in the following manner.
1. The daily net assets of Life Series Discovery Fund and First
Investors Special Situations Fund shall first be added together;
2. An aggregate fee shall then be computed on the sum as if the two
funds were combined using the following schedule:
a. 0.40% of the first $50 million;
b. 0.30% of the next $200 million; and
c. 0.25% on the balance over $250 million.
3. The fee payable under this Agreement shall then be computed by
multiplying the aggregate fee by the ratio of the net assets of
Life Series Discovery Fund to the sum of the net assets of both funds.
The balance of the aggregate fee will be paid pursuant to a separate
subadvisory agreement among the Adviser, the Subadviser, and Life Series Fund.
Life Series Discovery Fund shall have no responsibility for any obligation
arising under that agreement.
Dated: March 8, 2005
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