SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 23rd day of October, 2003 by and between Xxxxxx
Xxxxxxx Investment Management Inc., a Delaware corporation (herein referred to
as the "Adviser"), and Xxxxxx Xxxxxxx Investment Advisors Inc., a Delaware
corporation, (herein referred to as the "Sub-Advisor").
WHEREAS, Xxxxxx Xxxxxxx Institutional Liquidity Funds (herein referred to
as the "Fund") is engaged in business as an open-end management investment
company and is registered as such under the Investment Company Act of 1940, as
amended (the "Act"); and
WHEREAS, the Investment Manager has entered into an Investment Advisory
Agreement with the Fund (the "Investment Advisory Agreement") wherein the
Adviser has agreed to provide investment management services to the various
portfolios of the Fund; and
WHEREAS, the Sub-Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as an
investment adviser; and
WHEREAS, Adviser desires to retain the services of the Sub-Advisor to
render investment advisory services for the Money Market Portfolio, the Prime
Portfolio, the Government Securities Portfolio, the Government Portfolio, the
Treasury Securities Portfolio, the Treasury Portfolio and the Tax-Exempt
Portfolio of the Fund (each a "Portfolio" and together the "Portfolios") in the
manner and on the terms and conditions hereinafter set forth; and
WHEREAS, the Sub-Advisor desires to be retained by the Adviser to perform
services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to the supervision of the Fund, its officers and Directors, and
the Adviser, and in accordance with the investment objectives, policies and
restrictions set forth in the then-current Registration Statement relating to
the Fund, and such investment objectives, policies and restrictions from time to
time prescribed by the Trustees of the Fund with respect to the Portfolios and
communicated by the Investment Adviser to the Sub-Advisor, the Sub-Advisor
agrees to provide the Fund with investment advisory services with respect to the
Portfolios' investments to obtain and evaluate such information and advice
relating to the economy, securities markets and securities as it deems necessary
or useful to discharge its duties hereunder; to continuously manage the assets
of each Portfolio in a manner consistent with the investment objective and
policies of the applicable Portfolio; to make decisions as to foreign currency
matters and make determinations as to forward foreign exchange contracts and
options and futures contracts in foreign currencies; shall determine the
securities to be purchased, sold or otherwise disposed of by the Fund and the
timing of such purchases, sales and dispositions; to take such further action,
including the placing of purchase and sale orders on behalf of the Portfolios,
as it shall deem necessary or appropriate; to furnish to or place at the
disposal of the Fund and Adviser such of the information, evaluations, analyses
and opinions formulated or obtained by it in the discharge of its duties as the
Fund and the Adviser may, from time to time, reasonably request. The Adviser and
the Sub-Advisor shall each make its officers and employees available to the
other from time to time at reasonable times to review investment policies of the
Portfolios and to consult with each other.
2. The Sub-Advisor shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it shall
from time to time determine to be necessary or useful to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Sub-Advisor shall be deemed to include
persons employed or otherwise retained by the Sub-Advisor to furnish statistical
and other factual data, advice regarding economic factors and trends,
information with respect to technical and scientific developments, and such
other information, advice and assistance as the Adviser may desire. The
Sub-Advisor shall maintain whatever records as may be required to be maintained
by it under the Act. All such records so maintained shall be made available to
the Fund, upon the request of the Adviser or the Fund.
1
3. The Fund will, from time to time, furnish or otherwise make available to
the Sub-Advisor such financial reports, proxy statements and other information
relating to the business and affairs of the Portfolios as the Sub-Advisor may
reasonably require in order to discharge its duties and obligations hereunder or
to comply with any applicable law and regulations and the investment objectives,
policies and restrictions from time to time prescribed by the Trustees of the
Fund.
4. The Sub-Advisor shall bear the cost of rendering the investment advisory
services to be performed by it under this Agreement, and shall, at its own
expense, pay the compensation of the officers and employees, if any, of the
Fund, employed by the Sub-Advisor, and such clerical help and bookkeeping
services as the Sub-Advisor shall reasonably require in performing its duties
hereunder.
5. The Fund assumes and shall pay or cause to be paid all other expenses of
the Fund, including, without limitation: any fees paid to the Adviser; fees
pursuant to any plan of distribution that the Fund may adopt; the charges and
expenses of any registrar, any custodian, sub-custodian or depository appointed
by the Fund for the safekeeping of its cash, portfolio securities and other
property, and any stock transfer or dividend agent or agents appointed by the
Fund; brokers' commissions chargeable to the Fund in connection with portfolio
securities transactions to which the Fund is a party; all taxes, including
securities issuance and transfer taxes, and fees payable by the Fund to federal,
state or other governmental agencies or pursuant to any foreign laws; the cost
and expense of engraving or printing certificates representing shares of the
Fund; all costs and expenses in connection with the registration and maintenance
of registration of the Fund and its shares with the Securities and Exchange
Commission and various states and other jurisdictions or pursuant to any foreign
laws (including filing fees and legal fees and disbursements of counsel); the
cost and expense of printing (including typesetting) and distributing
prospectuses of the Fund and supplements thereto to the Fund's shareholders; all
expenses of shareholders' and Trustees' meetings and of preparing, printing and
mailing proxy statements and reports to shareholders; fees and travel expenses
of Trustees or members of any advisory board or committee who are not employees
of the Adviser or Sub-Advisor; all expenses incident to the payment of any
dividend, distribution, withdrawal or redemption whether in shares or in cash;
charges and expenses of any outside service used for pricing of the Fund's
shares; charges and expenses of legal counsel, including counsel to the Trustees
of the Fund who are not interested persons (as defined in the Act) of the Fund,
the Adviser or the Sub-Advisor, and of independent accountants, in connection
with any matter relating to the Fund; membership dues of industry associations;
interest payable on Fund borrowings; postage; insurance premiums on property or
personnel (including officers and Trustees) of the Fund which inure to its
benefit; extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related thereto); and
all other charges and costs of the Fund's operation unless otherwise explicitly
provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Sub-Advisor, the Adviser shall pay to the Sub-Advisor
monthly compensation equal to 40% of the fee that the Adviser receives from each
Portfolio pursuant to the Investment Advisory Agreement. Any subsequent change
in the Investment Advisory Agreement which has the effect of raising or lowering
the compensation of the Investment Manager will have the concomitant effect of
raising or lowering the fee payable to the Sub-Advisor under this Agreement. In
addition, if the Investment Adviser has undertaken in the Fund's Registration
Statement as filed under the Act (the "Registration Statement") or elsewhere to
waive all or part of its fee under the Investment Advisory Agreement, the
Sub-Advisor's fee payable under this Agreement will be proportionately waived in
whole or in part. The calculation of the fee payable to the Sub-Advisor pursuant
to this Agreement will be made, each month, at the time designated for the
monthly calculation of the fee payable to the Adviser pursuant to the Investment
Advisory Agreement. If this Agreement becomes effective subsequent to the first
day of a month or shall terminate before the last day of a month, compensation
for the part of the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fee as set forth above.
2
7. The Sub-Advisor will use its best efforts in the performance of
investment activities on behalf of the Fund, but in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Sub-Advisor shall not be liable to the Investment
Adviser or the Fund or any of its investors for any error of judgment or mistake
of law or for any act or omission by the Sub-Advisor or for any losses sustained
by the Fund or its investors.
8. It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, director, officer or employee of, or
be otherwise interested in, the Sub-Advisor, and in any person controlled by or
under common control with the Sub-Advisor, and that the Sub-Advisor and any
person controlled by or under common control with the Sub-Advisor may have an
interest in the Fund. It is also understood that the Sub-Advisor and any
affiliated persons thereof or any persons controlled by or under common control
with the Sub-Advisor have and may have advisory, management service or other
contracts with other organizations and persons, and may have other interests and
businesses, and further may purchase, sell or trade any securities or
commodities for their own accounts or for the account of others for whom they
may be acting.
9. This Agreement shall remain in effect with respect to each Portfolio
until April 30, 2005 and from year to year thereafter provided such continuance
is approved at least annually by the vote of holders of a majority, as defined
in the Act, of the outstanding voting securities of the applicable Portfolio or
by the Trustees of the Fund, provided, that in either event such continuance is
also approved annually by the vote of a majority of the Trustees of the Fund who
are not parties to this Agreement or "interested persons" (as defined in the
Act) of any such party, which vote must be cast in person at a meeting called
for the purpose of voting on such approval; provided, however, that (a) the Fund
may, at any time and without the payment of any penalty, terminate this
Agreement with respect to either Portfolio or both Portfolios upon thirty days'
written notice to the Adviser and the Sub-Advisor, either by majority vote of
the Trustees of the Fund or by the vote of a majority of the outstanding voting
securities of the applicable Portfolio(s); (b) this Agreement shall immediately
terminate in the event of its assignment (within the meaning of the Act) unless
such automatic termination shall be prevented by an exemptive order of the
Securities and Exchange Commission; (c) this Agreement shall immediately
terminate in the event of the termination of the Investment Advisory Agreement;
(d) the Investment Adviser may terminate this Agreement with respect to either
Portfolio or both Portfolios without payment of penalty on thirty days' written
notice to the Fund and the Sub-Advisor; and (e) the Sub-Advisor may terminate
this Agreement with respect to either Portfolio or both Portfolios without the
payment of penalty on thirty days' written notice to the Fund and the Investment
Adviser. Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed post-paid, to the other party at the principal office
of such party.
10. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Portfolios to supply any omission, to cure,
correct or supplement any ambiguous, defective or inconsistent provision hereof,
or if they deem it necessary to conform this Agreement to the requirements of
applicable federal laws or regulations, but neither the Fund, the Investment
Adviser nor the Sub-Advisor shall be liable for failing to do so.
11. This Agreement shall be construed in accordance with the law of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Act, the latter shall control.
3
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
XXXXXX XXXXXXX
INVESTMENT MANAGEMENT INC.
By:
-------------------------------------
Attest:
----------------------------------
XXXXXX XXXXXXX INVESTMENT
ADVISORS INC.
By:
-------------------------------------
Attest:
----------------------------------
Accepted and agreed to as of
the day and year first above written:
XXXXXX XXXXXXX
INSTITUTIONAL LIQUIDITY FUNDS
By: -----------------------------
Attest: ---------------------------
4
