SUB-ADVISORY AGREEMENT
This Agreement is made between, INVESTORS XXXX ADVISOR a limited liability
company, having its principal place of business in Kansas City (hereinafter
referred to as the "Advisor"), XXXXX XXX & FARNHAM, Inc., a corporation, having
its principal place of business in Chicago, Illinois (hereinafter referred to as
the "Sub-Advisor") and INVESTORS XXXX SERIES FUND, INC., a Maryland corporation
(hereinafter referred to as the "Fund").
WHEREAS, the Fund, an open-end diversified management investment
company, as that term is defined in the Investment Company Act of 1940, as
amended (the "Act"), that is registered as such with the Securities and Exchange
Commission, has appointed Advisor as investment advisor for and to the Small Cap
Portfolio and Large Cap Growth Portfolio, each being a sub-Fund of the Fund
(referred to individually as a "Sub-Fund" and collectively as the "Sub-Funds"),
pursuant to the terms of an investment advisory agreement effective July, 15,
1997, between the Fund and Advisor ("Investment Advisory Agreement");
WHEREAS, Sub-Advisor is engaged in the business of rendering investment
management services; and
WHEREAS, Advisor desires to retain Sub-Advisor to provide certain
investment management services for the Sub-Funds as more fully described below;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Retention of Sub-Advisor. Advisor hereby retains Sub-Advisor to assist
Advisor in its capacity as investment advisor for the Sub-Funds.
Subject to the oversight and review of Advisor and the Board of
Directors of the Fund, Sub-Advisor shall manage the investment and
reinvestment of the assets of the Sub-Funds. Sub-Advisor will determine
in its discretion, subject to the oversight and review of Advisor, the
investments to be purchased or sold, will provide Advisor with records
concerning its activities which Advisor or the Fund is required to
maintain and will render regular reports to Advisor and to officers and
Directors of the Fund concerning its discharge of the foregoing
responsibilities.
Sub-Advisor, in its supervision of the investments of the Sub-Funds,
will be guided by the Sub-Funds' investment objectives and policies and
the provisions and restrictions contained in the Articles of
Incorporation and Bylaws of the Fund and as set forth in the
Registration Statement and exhibits as may be on file with the
Securities and Exchange Commission, all as communicated by Advisor to
Sub-Advisor. Advisor hereby undertakes to provide Sub-Advisor with
copies of such Articles of Incorporation and Bylaws and Registration
Statement and exhibits as well as any amendments as the same become
available from time to time.
Sub-Advisor shall be deemed to be an independent contractor under this
Agreement and, unless otherwise expressly provided or authorized, shall
have no authority to act for or represent the Fund or any Sub-Fund in
any way or otherwise be deemed an agent of the Fund or any Sub-Fund.
The services furnished by Sub-Advisor hereunder are deemed not to be
exclusive, and nothing in this Agreement shall (i) prevent Sub-Advisor
or any affiliated person (as defined in the Act) of Sub-Advisor from
acting as investment advisor or manager for any other person or
persons, including other management investment companies with
investment objectives and policies the same as or similar to those of
the Sub-Funds, or (ii) limit or restrict Sub-Advisor or any such
affiliated person from buying, selling or trading any securities or
other investments (including any securities or other investments which
the Sub-Funds are eligible to buy) for its or their own accounts or for
the accounts of others for whom it or they may be acting; provided,
however, that Sub-Advisor agrees that it will not undertake any
activities which, in its reasonable judgment, will adversely affect the
performance of its obligations to the Sub-Funds under this Agreement
and provided that all such activities are in conformity with all
applicable provisions of the Fund's Registration Statement.
2. Fee. Advisor shall pay to Sub-Advisor, for all services rendered to the
Sub-Funds by Sub-Advisor hereunder, the sub-advisory fees set forth in
Exhibit A attached hereto. During the term of this Agreement,
Sub-Advisor will bear all expenses incurred by it in the performance of
its duties hereunder, other than the cost of securities, commodities
and other investments (including brokerage, commissions and other
charges, if any) purchased for the Sub-Funds.
3. Term. The term of this Agreement shall begin on the date of its
execution and shall remain in effect for two years from that date and
from year to year thereafter, subject to the provisions for termination
and all of the other terms and conditions hereof, if such continuation
is specifically approved at least annually in the manner required by
the Act. This Agreement shall be submitted to the shareholders of the
Fund and each Sub-Fund for approval and shall automatically terminate
if not approved by a majority of the shares of the Sub-Fund.
4. Termination. This Agreement may be terminated at any time without the
payment of any penalty, by the Advisor on sixty (60) days written
notice to the Sub-Advisor, by a majority of the Board of Directors of
the Fund, by a vote of the majority of the outstanding shares of
beneficial interest of any Sub-Fund or by the Sub-Advisor on sixty (60)
days written notice to the Advisor.
This Agreement will terminate automatically in the event of the
termination of the Investment Advisory Agreement.
This Agreement shall automatically terminate in the event of its
assignment. The Sub-Advisor may employ or contract with any other
person, persons, corporation, or corporations at its own cost and
expense as it shall determine in order to assist it in carrying out its
obligations and duties under this Agreement.
5. Sub-Advisor's Representations. Sub-Advisor represents and warrants
that each the Sub-Fund will at all times be invested in such a manner
as to ensure compliance with Section 817(h) of the Internal Revenue
Code of 1986, as amended, and Treasury Regulations, Section 1.817.5,
relating to the diversification requirements for variable annuity
endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulation. Sub-Advisor will be
relieved of this obligation and shall be held harmless when direction
from the Advisor or Directors causes non-compliance with Section
817(h) and/or Regulation Section 1.817-5. Sub-Advisor agrees to
provide quarterly reports to Advisor, executed by a duly authorized
officer of Sub-Advisor, within fifteen (15) calendar days of the close
of each calendar quarter certifying as to compliance with said Section
or Regulations. In addition to the quarterly reports, Advisor may
request and Sub-Advisor agrees to provide Section 817 diversification
compliance reports at more frequent intervals, as reasonably requested
by Advisor.
6. Standard of Care and Indemnification. In the performance of its
duties, the Sub Advisor will comply with the stated investment
objectives, policies and restrictions of the Sub-Funds as set forth in
the Prospectus and Statement of Additional Information and will in all
material respects act in accordance with any applicable regulations of
any governmental authority pertaining to its activities hereunder. The
Sub-Advisor shall exercise its best judgment and shall act in good
faith in rendering its services pursuant to this Agreement. The
Sub-Advisor shall not be liable for any error of judgment or for any
loss suffered by the Sub-Funds in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall
be deemed to protect or purport to protect the Sub-Advisor against any
liability to the Advisor, the Fund or to the shareholders of the
Sub-Funds to which the Sub-Advisor would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or by reason of the
Sub-Advisor's reckless disregard of its obligations and duties under
this Agreement.
The Advisor shall indemnify and hold harmless the Sub-Advisor, its
officers and directors and each person, if any, who controls the
Sub-Advisor within the meaning of Section 15 of the Securities Act of
1933 ("1933 Act") (any and all such persons shall be referred to as an
"Indemnified Party"), against loss, liability, claim, damage or expense
(including the reasonable cost of investigating or defending any
alleged loss, liability, claim, damages or expense and reasonable
counsel fees incurred in connection therewith), arising by reason of
any matter to which this Agreement relates.
The Sub-Advisor shall indemnify and hold harmless the Advisor and each
of its directors and officer and each person if any who controls the
Advisor within the meaning of Section 15 of the 1933 Act, against any
loss, liability, claim, damage or expense described in the foregoing
indemnity, but only with respect to the Sub-Advisor's willful
misfeasance, bad faith or gross negligence in the performance of its
duties under the Sub-Advisory Agreement. In case any action shall be
brought against the Advisor or any person so indemnified, in respect of
which indemnity may be sought against Sub-Advisor, the Sub-Advisor
shall have the rights and duties given to the Advisor, and the Advisor
and each person so indemnified shall have the rights and duties given
to the Sub-Advisor by the provisions of subsections (i) and (ii) of
this section.
However, in no case (i) are these indemnifications deemed to protect
any particular Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties
under this Agreement or (ii) is the Advisor or Sub-Advisor to be liable
under this indemnity with respect to any claim made against any
particular Indemnified Party unless such Indemnified Party shall have
notified the Advisor or Sub-Advisor in writing within a reasonable time
after the summons or other first legal process giving information of
the nature of the claim shall have been served upon the Advisor or
Sub-Advisor or their controlling persons.
7. Portfolio Transactions Brokerage. Investment decisions for the
Sub-Funds shall be made by Sub-Advisor independently from those for
any other investment companies and accounts advised or managed by
Sub-Advisor. The Sub-Funds and such investment companies and accounts
may, however, invest in the same securities. When a purchase or sale
of the same security is made at substantially the same time on behalf
of a Sub-Fund and/or another investment company or account, the
transaction will be averaged as to price, and available investments
allocated as to amount, in a manner which Sub-Advisor believes to be
equitable to the Sub-Fund and such other investment company or
account. In some instances, this investment procedure may adversely
affect the price paid or received by the Sub-Fund or the size of the
position obtained or sold by the Sub-Fund. To the extent permitted by
law, Sub-Advisor may aggregate the securities to be sold or purchased
for the Sub-Funds with those to be sold or purchased for other
investment companies or accounts in order to obtain best execution.
Sub-Advisor shall place all orders for the purchase and sale of
portfolio securities for the accounts of the Sub-Funds with
broker-dealers selected by the Sub-Advisor. In executing portfolio
transactions and selecting broker-dealers, the Sub-Advisor will use its
best efforts to seek best execution on behalf of the Sub-Funds. In
assessing the best execution available for any transaction, the
Sub-Advisor shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker-dealer, and
the reasonableness of the commission, if any (all for the specific
transaction and on a continuing basis). In evaluating the best
execution available, and in selecting the broker-dealer to execute a
particular transaction, the Sub-Advisor may also consider the brokerage
and research services (as those terms are used in Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided to the Sub-Funds
and/or other accounts over which the Sub-Advisor or an affiliate of the
Sub-Advisor (to the extent permitted by law) exercises investment
discretion. The Sub-Advisor is authorized to cause the Sub-Funds to pay
a broker-dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Sub-Funds
which is in excess of the amount of commission another broker-dealer
would have charged for effecting that transaction if, but only if, the
Sub-Advisor determines in good faith that such commission is reasonable
in relation to the value of the brokerage and research services
provided by such broker-dealer viewed in terms of that particular
transaction or in terms of all of the accounts over which investment
discretion is so exercised.
8. Amendment. This Agreement may be amended at any time by agreement of
the parties, provided that the amendment shall be approved in the
manner required by the Act.
9. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Missouri.
10. Registration as an Investment Advisor. Advisor and Sub-Advisor each
hereby acknowledges that it is registered as an investment advisor
under the Investment Advisors Act of 1940, that it will use its
reasonable best efforts to maintain such registration, and that it will
promptly notify the other if it ceases to be so registered, if its
registration is suspended for any reason, or if it is notified by any
regulatory organization or court of competent jurisdiction that it
should show cause why its registration should not be suspended or
terminated.
Witness the due execution hereof this _____ day of ________________,
1997.
Attest: INVESTORS XXXX ADVISOR
__________________________ By:______________________________________
Attest: XXXXX XXX & FARNHAM, Inc.,
__________________________ By:______________________________________
Attest: INVESTORS XXXX SERIES FUND, INC.
__________________________ By:______________________________________
EXHIBIT A
FEES
Advisor will pay Sub-Advisor, as compensation for the Sub-Advisor's investment
management services provided for each Sub-Fund, the annual fee (denominated in
"basis points" which are one-hundredths of one percent) specified below. This
fee will be: computed daily as shown below; determined in accordance with the
Fund's "price make-up" sheet; payable monthly or at such other interval as may
be agreed to by the parties.
The daily fee will be calculated as follows:
.01*(X/100)
(----------) * ADB
Y
Where:
1. X is 55 for the Small Cap Sub-Fund;
2. X is 45 for the Large Cap Growth Sub-Fund;
3. Y is 365, except in leap years when it is 366; and,
4. ADB is the average daily total net assets of the Sub-Fund.
This compensation will not be due or payable until either:
1. the expiration of 180 days from the date that the first insurance product
is sold that results in funds being deposited in the Fund; or,
2. the Sub-Fund achieves a daily balance of at least $20,000,000.00.
