SUB-ADVISORY AGREEMENT
VALUE LINE VALUE FUND
THIS SUB-ADVISORY AGREEMENT, made this _____ day of _____________________,
2002, by and among VALUE LINE VALUE FUND, INC., a Maryland corporation (the
"Fund"), VALUE LINE, INC., a New York corporation (the "Adviser"), and CONCORDE
FINANCIAL CORPORATION, a corporation organized and in good standing under the
laws of the State of Texas (the "Sub-Adviser").
W I T N E S S E T H :
The Fund is a diversified open-end management investment Fund registered as
an investment Fund under the Investment Company Act of 1940 (the "Act"), as
amended, and subject to the rules and regulations promulgated thereunder.
The Adviser acts as the "investment adviser" to the Fund (as defined in
Section 2(a)(20) of the Act) pursuant to the terms of an Investment Advisory
Agreement, dated ___________, 2002. The Adviser is responsible for the
day-to-day management and overall administration of the Fund and the
coordination of investment of the Fund's assets in portfolio securities.
However, specific portfolio purchases and sales for the Fund's investment
portfolio, or a portion thereof, are to be made by advisory organizations
recommended and identified by the Adviser, subject to the approval of the Board
of Directors of the Fund.
WHEREAS, the Adviser and the Fund desire to retain the Sub-Adviser as the
sub-adviser and portfolio manager for the Fund.
NOW, THEREFORE, the Fund, the Adviser and the Sub-Adviser do mutually
promise and agree as follows:
1. Employment. The Adviser being duly authorized hereby appoints and
employs the Sub-Adviser as the investment sub-adviser for the Fund for the
period and on the terms set forth in this Agreement. The Sub-Adviser hereby
accepts such appointment and agrees to use its best professional judgment to
make timely investment decisions for the Fund with respect to the investments of
the Fund in accordance with the provisions of this Agreement and the Fund's
Prospectus and Statement of Additional Information. Xxxx X. Xxxx and Xxxx X.
Xxxxxxx shall act on behalf of the Sub-Adviser in managing the investment
portfolio of the Fund. In the event that either of them ceases managing the
investment portfolio of the Fund, or if ownership of the Sub-Adviser changes,
the Adviser shall be
notified immediately, without delay, and any successor shall be subject to the
Adviser's approval. In the event that both Xxxx X. Xxxx and Xxxx X. Xxxxxxx
shall cease managing the investment portfolio of the Fund, the Adviser will
manage the portfolio until such time as a suitable replacement is approved by
the Adviser or the Adviser decides to manage the portfolio itself, and during
this time, no compensation shall be payable to the Sub-Adviser.
2. Authority of the Sub-Adviser. The Sub-Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or represent the
Fund in any way or otherwise be deemed an agent of the Fund.
3. Portfolio Management Services of Sub-Adviser. Sub-Adviser is hereby
employed and authorized to select portfolio securities for investment by the
Fund, to purchase and sell securities for the Fund, and upon making any purchase
or sale decision, to place orders for the execution of such portfolio
transactions in accordance with paragraphs 5 and 6 hereof and such operational
procedures as may be agreed to from time to time by the Sub-Adviser and the Fund
or the Adviser (the "Operational Procedures"). In providing investment
sub-advisory services to the Fund, Sub-Adviser shall be subject to such
investment restrictions as are set forth in the Act and the rules thereunder,
the Internal Revenue Code, applicable state securities laws, the supervision and
control of the Board of Directors of the Fund, such specific instructions as the
Board of Directors may adopt and communicate to Sub-Adviser, the investment
objectives, policies and restrictions of the Fund furnished pursuant to
paragraph 4, the provisions of Schedule A hereto and instructions from the
Adviser. Sub-Adviser is not authorized by the Fund to take any action, including
the purchase or sale of securities for the Fund, in contravention of any
restriction, limitation, objective, policy or instruction described in the
previous sentence. Sub-Adviser shall maintain on behalf of the Fund all
materials required to be maintained under the Investment Adviser's Act of 1940,
as amended, including the records listed in Schedule A hereto (as amended from
time to time). At the Fund's or the Adviser's request, Sub-Adviser will consult
with the Fund or with the Adviser or both, as the case may be, with respect to
any decision made by it with respect to the investments of the Fund. If Adviser
requests any information regarding management or the management of the Fund from
the Sub-Adviser, it will be delivered within 5 days.
4. Investment Objectives, Policies and Restrictions. The Fund will provide
Sub-Adviser with a statement of the investment objectives, policies and
restrictions applicable to the Fund and any specific investment restrictions
applicable to the Fund as established by the Fund, including those set forth in
its registration statement under the Act and the Securities Act of 1933.
5. Transaction Procedures. All transactions will be consummated by payment
to or delivery by State Street Bank and Trust Company (the "Custodian"), or such
depositories or agents as may be designated by the Custodian in writing, as
custodian for the Fund, of all
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cash and/or securities due to or from the Fund, and Sub-Adviser shall not have
possession or custody thereof. Sub-Adviser shall advise Custodian and confirm in
writing by the close of business the same day to the Adviser or any other
designated agent of the Fund, all transactions for the Fund executed by it with
brokers and dealers at the time and in the manner as set forth in the
Operational Procedures. Sub-Adviser shall issue to the Custodian such
instructions as may be appropriate in connection with the settlement of any
transaction initiated by Sub-Adviser. The Fund shall be responsible for all
custodial arrangements and the payment of all custodial charges and fees, and,
upon giving appropriate instructions to the Custodian, Sub-Adviser shall have no
responsibility or liability with respect to custodial arrangements or the acts,
omissions or other conduct of the Custodian, except that it shall be the
responsibility of the Sub-Adviser to promptly notify the Adviser to take
appropriate action if the Custodian fails to confirm in writing proper execution
of the instructions.
6. Proxies. The Sub-Adviser will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Fund may be invested
from time to time.
7. Compensation of the Sub-Adviser. The compensation of Sub-Adviser for its
services under this Agreement shall be calculated and paid by Adviser in
accordance with the attached Schedule B. Pursuant to the provisions of the
Investment Advisory Agreement between the Fund and Adviser, Adviser is solely
responsible for the payment of fees to Sub-Adviser, and Sub-Adviser agrees to
seek payment of its fees solely from Adviser.
8. Other Investment Activities of Sub-Adviser. The Fund acknowledges that
Sub-Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that Sub-Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph 3 hereof, the
Fund agrees that Sub-Adviser or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund, provided that Sub-Adviser acts
in good faith, and provided further, that it is Sub-Adviser's policy to
allocate, within its reasonable discretion, investment opportunities to the Fund
on a fair and equitable basis relative to the Affiliated Accounts, taking into
account the investment objectives and policies of the Fund and any specific
investment restrictions applicable thereto. The Fund acknowledges that one or
more of the Affiliated Accounts may at any time hold, acquire, increase,
decrease, dispose of or otherwise deal with positions in investments in which
the Fund may have an interest from time to time, whether in transactions which
involve the Fund or otherwise. Sub-Adviser shall have no obligation to acquire
for the Fund a position in any investment which any Affiliated Account may
acquire, and Fund shall have no first refusal, co-investment or other rights in
respect of any such investment, either for the Fund or otherwise.
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9. Certificate of Authority. The Fund, Adviser and Sub-Adviser shall
furnish to each other from time to time certified copies of the resolutions of
their Boards of Directors or executive committees, as the case may be,
evidencing the authority of officers and employees who are authorized to act on
behalf of the Fund, the Sub-Adviser and/or Adviser.
10. Liability. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of Sub-Adviser, Sub-Adviser shall not be liable for any act or omission in the
course of, or connected with, rendering services hereunder, or for any losses
that may be sustained in the purchase, holding or sale of any security.
11. Brokerage Commissions. The Sub-Adviser, subject to the control and
direction of the Board of Directors of the Fund, shall have authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Sub-Adviser for the Fund and for the selection of the markets
on or in which the transactions will be executed. The Sub-Adviser may cause the
Fund to pay a broker-dealer which provides brokerage and research services, as
such services are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended, (the "Exchange Act"), to the Sub-Adviser a commission for
effecting a securities transaction in excess of the amount another broker-dealer
may have charged for effecting such transaction, if the Sub-Adviser determines
in good faith that such amount of commission is reasonable in relation to the
value of brokerage and research services provided by the executing broker-dealer
viewed in terms of either that particular transaction or his overall
responsibilities with respect to the accounts as to which he exercises
investment discretion (as defined in Section 3(a)(35) of the Exchange Act). The
Sub-Adviser shall provide such reports as the Board of Directors of the Fund or
the Adviser may reasonably request with respect to the Fund's total brokerage
and the manner in which such brokerage was allocated. The Sub-Adviser may direct
brokerage to an affiliate of the Adviser.
12. Representations, Warranties and Agreements of the Fund. The Fund
represents, warrants and agrees that:
A. Sub-Adviser has been duly appointed by the Board of Directors of Fund to
provide investment services to the Fund as contemplated hereby.
B. The Fund will deliver to Sub-Adviser a true and complete copy of its
then current prospectus and statement of additional information as effective
from time to time and such other documents or instruments governing the
investment of the Fund and such other information as is necessary for
Sub-Adviser to carry out its obligations under this Agreement.
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13. Representations, Warranties and Agreements of Sub-Adviser. Sub-Adviser
represents, warrants and agrees that:
A. Sub-Adviser is registered as an "investment adviser" under the
Investment Advisers Act of 1940, as amended, ("Advisers Act").
B. Sub-Adviser will maintain, keep current and preserve on behalf of Fund,
in the manner required or permitted by the Act and the Adviser's Act, the
records identified in Schedule A. Sub-Adviser agrees that such records (unless
otherwise indicated on Schedule A) are the property of the Fund, and will be
surrendered to the Fund promptly upon request. Copies of such records will be
furnished to the Adviser upon its request.
C. Sub-Adviser will complete such reports concerning purchases or sales of
securities on behalf of the Fund as the Adviser or the Fund may from time to
time require.
D. Sub-Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the Act, a copy of which is attached hereto.
Upon the request of the Fund, Sub-Adviser shall permit the Fund, its employees
or its agents to examine the reports required to be made to Sub-Adviser by Rule
17j-1(c)(1).
E. Sub-Adviser will promptly after filing with the Securities and Exchange
Commission an amendment to its Form ADV furnish a copy of such amendment to the
Fund and the Adviser.
F. Sub-Adviser will immediately notify the Fund and the Adviser of the
occurrence of any event which would disqualify Sub-Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the Act
or otherwise.
14. Amendments. This Agreement may be amended by the mutual consent of the
parties; provided, however, that in no event may it be amended without the
approval of the Board of Directors in the manner required by the Act.
15. Termination. This Agreement may be terminated at any time by the Fund
or the Sub-Adviser, without the payment of any penalty, immediately upon written
notice to the other in the event of a breach of any provision hereof by the
party so notified, or otherwise, upon giving sixty (60) days' written notice to
the other, and this Agreement shall be terminated immediately if the Adviser or
its successors shall cease to be the investment adviser to the Fund, but any
such termination shall not affect the obligations or liabilities of any party
hereto to the others. This Agreement shall terminate automatically in the event
of its assignment (as defined in Section 2(a)(4) of the Act). Subject to prior
termination as hereinbefore provided, this Agreement shall continue in effect
for an initial period beginning as of the date hereof and ending on the day
immediately preceding the first anniversary of the date of this Agreement
(_________________, 2003) and indefinitely thereafter, but only so
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long as the continuance after such initial period is specifically approved
annually by the Board of Directors of the Company in the manner required by the
Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day first above written.
Value Line Value Fund, Inc.
(the "Fund")
By:
-------------------------------------------
VALUE LINE, INC.
(the "Adviser")
By:
-------------------------------------------
CONCORDE FINANCIAL CORPORATION
(the "Sub-Adviser")
By:
-------------------------------------------
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SCHEDULE A
RECORDS TO BE MAINTAINED BY THE SUB-ADVISER
1. (1940 Act Rule 31a-1(b)(5) and (6)). A record of each brokerage order, and
all other portfolio purchases and sales, given by the Sub-Adviser on behalf
of the Fund for, or in connection with, the purchase or sale of securities,
whether executed or unexecuted. Such records shall be in conformance with
the Act or the Investment Advisors Act of 1940, as each shall be amended
from time to time and shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Fund.
2. (1940 Act Rule 31a-1(b)(9)). A record for each fiscal quarter, completed
and sent to the Adviser by overnight delivery within ten (10) days after
the end of the quarter, showing specifically the basis or bases upon which
the allocation of orders for the purchase and sale of portfolio securities
to named brokers or dealers was effected, the commission rate and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) the sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Fund,
(b) The Adviser,
(c) The Sub-Adviser, and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the technical qualifications
of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available
to the Fund.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The name of the person responsible for making the determination
of such allocation and such division of brokerage commissions or
other compensation.
3. (1940 Act Rule 31a-1(b)(10)). A record in the form of an appropriate
memorandum approved by the Adviser identifying Xxxx X. Xxxx or Xxxx X.
Xxxxxxx as the person authorizing the purchase or sale of portfolio
securities. Where an authorization is made by a committee or group, a
record shall be kept of the names of its members who participate in the
authorization. There shall be retained as part of this record: any
memorandum, recommendation or instruction supporting or authorizing the
purchase or sale of portfolio securities and such other information as is
appropriate to support the authorization.(1) Records shall be retained by
the Sub-Adviser for at least seven years of all trade confirmations which
will be available to Value Line upon request.
4. (1940 Act Rule 31a-1(f)). Such accounts, books and other documents as are
required to be maintained by registered investment advisers by rule adopted
under Section 204 of the Investment Advisers Act of 1940, to the extent
such records are necessary or
---------------------------
(1) Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or portfolio adviser reviews).
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appropriate to record the Sub-Adviser's transactions with respect to the
Fund.
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SCHEDULE B
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FEE SCHEDULE
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For its services to the Fund, the Adviser shall pay the Sub-Adviser a fee,
provided that the Adviser is paid advisory fees by the Fund, paid monthly as
follows:
(a) 1/12 of 0.9% of the aggregate net asset value of the Fund as of
the Closing Date, ("Closing Date NAV") paid 15 days after the end of each
month.
(b) Nothing on the next $15,000,000 of the average aggregate net asset
value ("AANAV") of the Fund for the month in excess of the Closing Date
NAV.
(c) On the AANAV of the Fund for the month in excess of the aggregate
of the amounts specified in clauses (a) and (b) hereof, 1/12 of 1/2 of the
annual Advisory Fee specified in the Investment Advisory Agreement for the
Fund or 0.9%, whichever is greater, less 1/2 of the percentage fee, if any,
in excess of 0.25% paid to mutual fund marketing intermediaries ("Fund
Super-Markets"). For example, if a Fund Super Market Fee is 0.35%, then the
Sub-Adviser would be paid 1/12 of 0.40% on the AANAV of the Fund for the
month in excess of the aggregate of the amounts specified in clauses (a)
and (b) hereof:
0.35% - 0.25% = 0.10%
0.90% x 1/2 = 0.45%
0.45% - .05% = 0.40%
The fee shall be pro-rated for any month during which the Agreement is
in effect for only a portion of the month.
