Exhibit (d)(3)
XXXXX INTERNATIONAL SERIES, INC.
MARCSTONE CAPITAL MANAGEMNT, L.P..
SUB-ADVISORY AGREEMENT
FEBRUARY 1, 2003
Marcstone Capital Management, LP.
000 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Re: Sub-Advisory Agreement for Xxxxx Global Value Fund,
An Authorized Series of Xxxxx International Series, Inc.
Gentlemen:
This is to confirm that Xxxxx Selected Advisers, L.P. ("DSA") is retaining you
as Investment Sub-Adviser for the portfolio of Xxxxx Global Value (the "Fund")
of Xxxxx International Series, Inc. (the "Company").
This letter sets forth the terms and conditions of your retention. If they are
acceptable to you, please acknowledge in the space provided. Upon your
acceptance, the retention and the mutual obligations in respect thereto shall be
effective as provided herein. The terms and conditions are as follows:
1. Investment Services. You shall act as the Investment Sub-Adviser for the
Fund and will manage the investment and reinvestment of the assets of the
Fund subject to the supervision of the Board of Directors of the Company,
DSA, which serves as Adviser to the Company, and to any applicable
provisions as in effect from time to time of (a) the Articles of
Incorporation and Bylaws of the Company, (b) the prospectus, statement of
additional information, and other information set forth in the Fund's
registration documents under the Securities Act of 1933 (the "1933 Act")
and the Investment Company Act of 1940 (the "1940 Act"), including any
supplements thereto, and (c) the Investment Advisory agreement between DSA
and the Company (the "Investment Advisory Agreement") in respect to the
Fund and the Company's Code of Ethics. You acknowledge that you have
received copies of the above documents as in effect on the date of your
acceptance of this letter. The undersigned agrees that it will promptly
deliver to you any amendments, changes or additions of or to these
documents. Without limitation, you agree that all securities transactions
will conform to (a) the stated objectives and policies of the Fund, (b) the
brokerage policies set forth in the Investment Advisory Agreement (which
are hereby incorporated by reference herein) and the registration
documents, and (c) those investment and brokerage policies directed by the
Board of Directors of the Company or any committee thereof, that have been
provided to you.
2. Independent Contractor. You shall be an independent contractor. Unless
otherwise expressly provided or authorized hereunder, or by the Board of
Directors of Company, you have no authority to represent the Company or the
Fund in any way or otherwise be an agent of the Company or the Fund. You
shall also not represent or be the agent of the undersigned except as
expressly provided or authorized hereunder, or as authorized by the
undersigned in any other writing.
3. Reports and Records. You agree to provide DSA with any reasonable reports,
analyses or other documentation DSA requires to carry out its
responsibilities under its Investment Advisory Agreement with the Fund,
including those related to the placement of security transactions, its
administrative responsibilities, and its responsibility to monitor
compliance with stated investment objectives, policies and limitations and
the investment performance of the Fund. You agree, directly or through an
agent, to provide daily information with respect to the portfolio
transactions of the Fund to DSA. You agree to provide all documentation
reasonably required by DSA to maintain
the Fund's accounting records in accordance with the 1940 Act and the
Investment Advisers Act of 1940 (the "Advisers Act") and the regulations
issued thereunder, and to preserve copies of all documents and records
related to asset transactions, positions and valuations related to the Fund
in the manner and for the periods prescribed by such regulations. You agree
that all documents and records maintained by you with respect to the Fund,
exclusively relating to the Fund, are the property of the Company and will
be surrendered to DSA or the Company upon the request of either. You agree
to provide information and to allow inspection of such documents and
records at reasonable times by any authorized representative of DSA, the
Company's Board of Directors or any committee thereof, the Company's
independent public accountants, or appropriate regulatory authorities.
4. Make Personnel Available. You agree to make your personnel engaged in
activities on behalf of the Fund available at reasonable times for
consultations with DSA personnel and the Company's Board of Directors, or
any committee thereof, including attendance at their meetings, wherever
situated. Travel, meals and lodging expenses for such purposes shall be
reimbursed.
5. Facilities, Equipment, and Personnel. You agree to provide office
facilities, equipment and personnel for carrying out your duties hereunder
at your own expense except as specifically provided hereunder.
6. Standard of Care. We shall expect of you your best judgment in rendering
these services to us, and we agree as an inducement to your undertaking the
same that you shall not be liable hereunder for any mistake of judgment or
in any other event whatsoever, except for lack of good faith, provided that
nothing herein shall be deemed to protect or purport to protect you against
any liability to us or to our security holders to which you would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence
in the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
7. Indemnification. You will indemnify and hold harmless DSA, its affiliated
persons and the Fund (collectively, the "Indemnified Persons") to the
fullest extent permitted by law against any and all loss, damage,
judgments, fines, amounts paid in settlement and attorneys fees incurred by
any Indemnified Person to the extent resulting, in whole or in part, from
any of your acts or omissions: (i) causing the Fund to be in violation of
any applicable federal or state law, rule or regulation or any investment
policy or restriction set forth in the Fund's prospectus or Statement of
Additional Information or any written guidelines or instruction provided in
writing by the Fund's Board of Directors or DSA, (ii)causing the Fund to
fail to satisfy the diversification requirements of Subchapter M of the
Internal Revenue Code, (iii) your willful misfeasance, bad faith or
negligence generally in the performance of its duties hereunder or its
reckless disregard of its obligations and duties under this Agreement, or
(iv)any inaccuracy of any representation of you have made and which was
relied upon in drafting federal or state filing or sales literature.
However, nothing herein contained will provide indemnity to any Indemnified
Person for liability resulting from its own willful misfeasance, bad faith,
or negligence in the performance of its duties or reckless disregard of
such duties.
DSA shall indemnify you and hold you harmless to the fullest extent
permitted by law against any and all loss, damage, judgments, fines,
amounts paid in settlement and attorneys fees incurred by you to the extent
resulting, in whole or in part, from (i) DSA's willful misfeasance, bad
faith or negligence generally in the performance of its duties hereunder or
its reckless disregard of its obligations and duties under this Agreement
and (ii) any inaccuracy of any representation by DSA which was relied upon
in drafting any federal or state filing or sales literature. However, that
nothing herein contained will provide indemnity to the you for liability
resulting from your own willful misfeasance, bad faith, or negligence in
the performance of your duties or reckless disregard of such duties.
Neither DSA nor you shall be obligated to make any indemnification payment
in respect of any settlement as to which it has not been notified and
consented, such consent not to be unreasonably withheld.
8. Compensation. DSA shall pay you a portion of the fee it receives from the
Company with respect to the Fund under the Investment Advisory Agreement
based upon the attached fee schedule, and shall reimburse expenses
expressly approved for reimbursement by DSA. You agree that neither the
Company nor the Fund is responsible for paying your sub-advisory fees.
Payment for your services and reimbursement of expenses approved by DSA
shall be made monthly.
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8. Effective Date. This Agreement shall become effective on the later of
February 1, 2003, or the first business day after the date this Agreement
is approved in accordance with the 1940 Act. Unless sooner terminated as
hereunder provided, it shall initially remain in effect for a period of two
years. Thereafter, subject to the termination provisions herein, this
Agreement shall continue in force from year to year thereafter, but only as
long as such continuance is specifically approved, at least annually, in
the manner required by the 1940 Act; provided, however, that if the
continuation of this Agreement is not approved, you may continue to serve
in the manner and to the extent permitted by the 1940 Act and the rules and
regulations thereunder.
9. Termination. This Agreement shall automatically terminate immediately in
the event of its assignment (except as otherwise permitted by the 1940 Act
or rules thereunder) or in the event of the termination of the Investment
Advisory Agreement. This Agreement may be terminated without penalty at any
time (a) upon sixty (60) days' written notice to you by DSA, or upon such
sixty (60) days' written notice to you by the Company pursuant to action by
the Board of Directors of the Company, or by the vote of a majority of the
outstanding voting securities of the Fund, or (b) upon sixty (60) or more
days' written notice by you to DSA and the Company. The terms "assignment"
and "vote of a majority of the outstanding voting securities" shall have
the meaning set forth in the 1940 Act and the rules and regulations
thereunder. Termination of this Agreement shall not affect your right to
receive payments of the unpaid balance of the compensation earned and
reimbursable expenses incurred prior to such termination.
10. Severability. If any provisions of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
shall not be thereby affected.
11. Choice of Law. This Agreement shall be construed according to the laws of
the State of New York. It may be executed in counterparts each of which
shall be deemed an original and all of which together shall constitute one
and the same agreement.
Yours very truly,
Xxxxx Selected Advisers, L.P., by
Xxxxx Investments, LLC, General Partner
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ACCEPTED AND APPROVED this 1st day of February, 2003.
Marcstone Capital Management, LP.
By
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SUB-ADVISORY FEE SCHEDULE FOR
MARCSTONE CAPITAL MANAGEMENT, LP.
Xxxxx Selected Advisers, L.P. shall pay to Marcstone Capital Management, L.P. an
amount equal to one-half of the contractual management fee which it receives for
providing investment advisory services to Xxxxx Global Value Fund. The
contractual management fee which Xxxxx Selected Advisers, L.P. receives is
subject to change, and if changed, the sub-advisory fees paid to Marcstone
Capital Management , L.P. will also change.
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