INTERIM INVESTMENT SUB-ADVISORY AGREEMENT
XXXXXX STREET FUNDS
AGREEMENT made this 29th day of April, 2005 between Xxxxxx Street Funds
(the "Trust"), Xxxxxx Street Capital Management (the "Adviser") and Xxxxxxx
Xxxxxxx Trees & Xxxxx, Inc. (the "Sub-Adviser").
WHEREAS, Xxxxxx Street Funds, a Massachusetts business trust (the
"Trust"), is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated March 31, 1999 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser acts as investment adviser to the series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain
the Sub-Adviser to provide investment advisory services to the Adviser in
connection with the management of the Money Market Fund and Treasury Money
Market Fund (each a "Fund" and together, the "Funds"), and the Sub-Adviser is
willing to render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage on a discretionary
basis all of the securities and other assets of the Funds entrusted to it
hereunder (the "Assets"), including the purchase, retention and
disposition of the Assets, in accordance with the Funds' investment
objectives, policies and restrictions as stated in the Funds'
prospectus(es) and statements of additional information, as currently in
effect and as amended or supplemented from time to time (referred to
collectively as the "Prospectuses"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the direction
of the Adviser, determine from time to time what Assets will be purchased,
retained or sold by the Funds, and what portion of the Assets will be
invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser may delegate some or all of the performance of the services to
its subsidiaries or affiliates. The Sub-Adviser will however remain
responsible to the Adviser for any such delegated functions.
(c) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein), the Prospectuses, and with the written instructions
and directions of the Adviser and of the Board of Trustees of the Trust
received from time to time, and will conform to and comply with the
requirements of the 1940 Act, the Internal Revenue Code of 1986 (the
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"Code"), and all other applicable federal and state laws and regulations,
as each is amended from time to time.
(d) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Funds as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Funds' Registration Statement (as
defined herein) and Prospectuses or as the Board of Trustees or the
Adviser may direct in writing from time to time, in conformity with all
federal securities laws. Additionally, the Sub-Adviser is authorized to
execute agreements as agent for the Funds with brokers or dealers
necessary to carry out its duties under this Agreement. In executing Fund
transactions and selecting brokers or dealers, the Sub-Adviser will use
its best efforts to seek on behalf of the Funds the best overall terms
available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that 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 or dealer, and the reasonableness of the commission, if any, both
for the specific transaction and on a continuing basis. In evaluating the
best overall terms available, and in selecting the broker-dealer to
execute a particular transaction, the Sub-Adviser may also consider the
brokerage and research services provided (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934 (the "Exchange
Act")). Consistent with any guidelines established by the Board of
Trustees of the Trust and Section 28(e) of the Exchange Act, the
Sub-Adviser is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for a Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if, but only if, the Sub-Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer -- viewed in terms of
that particular transaction or in terms of the overall responsibilities of
the Sub-Adviser to its discretionary clients, including the Funds. In
addition, the Sub-Adviser is authorized to allocate purchase and sale
orders for securities to brokers or dealers (including brokers and dealers
that are affiliated with the Adviser, Sub-Adviser or the Trust's principal
underwriter) and to take into account the sale of shares of the Trust if
the Sub-Adviser believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified
firms. In no instance, however, will the Funds' Assets be purchased from
or sold to the Adviser, Sub-Adviser, the Trust's principal underwriter, or
any affiliated person of either the Trust, Adviser, the Sub-Adviser or the
principal underwriter, acting as principal in the transaction, except to
the extent permitted by the Securities and Exchange Commission ("SEC") and
the 0000 Xxx.
(e) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940
Act. The Sub-Adviser shall provide to the Adviser or the Board of Trustees
such periodic and special reports, balance sheets or financial
information, and such other information with regard to its affairs as the
Adviser or Board of Trustees may reasonably request.
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The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and
shall timely furnish to the Adviser all information relating to the
Sub-Adviser's services under this Agreement needed by the Adviser to keep
the other books and records of the Fund required by Rule 31a-1 under the
1940 Act. The Sub-Adviser shall also furnish to the Adviser any other
information relating to the Assets that is required to be filed by the
Adviser or the Trust with the SEC or sent to shareholders under the 1940
Act (including the rules adopted thereunder) or any exemptive or other
relief that the Adviser or the Trust obtains from the SEC. The Sub-Adviser
agrees that all records that it maintains on behalf of the Funds are
property of the Funds and the Sub-Adviser will surrender promptly to the
Funds any of such records upon the Funds' request; provided, however, that
the Sub-Adviser may retain a copy of such records. In addition, for the
duration of this Agreement, the Sub-Adviser shall 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 this Agreement, and shall
transfer said records to any successor sub-adviser upon the termination of
this Agreement (or, if there is no successor sub-adviser, to the Adviser).
(f) The Sub-Adviser shall provide the Funds' custodian on each business day
with information relating to all transactions concerning the Funds' Assets
and shall provide the Adviser with such information upon request of the
Adviser. The Adviser has obtained the agreement of the Funds' custodian to
act in accordance with the instructions of the Sub-Adviser.
(g) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar or different services to others, as long as such
services do not impair the services rendered to the Adviser or the Trust.
Nothing in this Agreement shall limit or restrict the Sub-Adviser or any
of its officers, employees, affiliates, or subsidiaries from buying,
selling, or trading in any securities for its or their own account or
accounts in compliance with applicable federal securities laws as well as
the Sub-Adviser's Code of Ethics. The Trust and the Adviser acknowledge
that the Sub-Adviser and its officers, employees, affiliates, or
subsidiaries and its other clients may at any time have, acquire,
increase, decrease, or dispose of positions in investments that are at the
same time being acquired or disposed of for the accounts of the Funds in a
manner consistent with the Sub-Adviser's Code of Ethics. The Sub-Adviser
will have no obligation to acquire for the Funds a position in any
investment that the Sub-Adviser, its officers, employees, affiliates, or
subsidiaries may acquire for its or their own accounts or for the account
of another client, if in the sole discretion of the Sub-Adviser, it is not
feasible or desirable to acquire a position in such investment for the
accounts of the Funds.
(h) The Sub-Adviser shall as soon as reasonably practicable notify the Adviser
of any financial condition that is likely to impair the Sub-Adviser's
ability to fulfill its commitment under this Agreement.
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(i) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held as Assets in the Funds. The Adviser shall instruct the
custodian and other parties providing services to the Funds to promptly
forward misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners,
officers or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Funds pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of
its duties under this Agreement; provided, however, that in connection
with its management of the Assets, nothing herein shall be construed to
relieve the Sub-Adviser of responsibility for compliance with the Trust's
Declaration of Trust (as defined herein), the Prospectuses, the written
instructions and directions of the Board of Trustees of the Trust, the
requirements of the 1940 Act, the Code, and all other applicable federal
and state laws and regulations, as each is amended from time to time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such Agreement
and Declaration of Trust, as in effect on the date of this Agreement and
as amended from time to time, herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws"); and
(c) Prospectuses of the Funds.
The Adviser agrees to promptly furnish the Sub-Adviser with copies of any
changes, amendments or other modifications made to the Declaration of
Trust, the By-Laws, the Prospectuses of the Funds, the Investment
Guidelines or any other document relating to the Sub-Adviser's services
hereunder.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average daily value of the Assets under the
Sub-Adviser's management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
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5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or
damages (including reasonable attorney's fees and other related expenses)
howsoever arising from or in connection with the performance of the
Sub-Adviser's obligations under this Agreement; provided, however, that
the Sub-Adviser's obligation under this Section 5 shall be reduced to the
extent that the claim against, or the loss, liability or damage
experienced by the Adviser, is caused by or is otherwise directly related
to the Adviser's own willful misfeasance, bad faith or negligence, or to
the reckless disregard of its duties under this Agreement.
The Adviser shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorney's fees and other related expenses) howsoever arising
from or in connection with the performance of the Adviser's obligations
under this Agreement; provided, however, that the Adviser's obligation
under this Section 5 shall be reduced to the extent that the claim
against, or the loss, liability or damage experienced by the Sub-Adviser,
is caused by or is otherwise directly related to the Sub-Adviser's own
willful misfeasance, bad faith or negligence, or to the reckless disregard
of its duties under this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon
approval by the Trust's Board of Trustees and its execution by the parties
hereto.
This Agreement shall continue until the earlier of its termination in
accordance with the provisions herein or 150 days from the date of this
Agreement.
This Agreement may be terminated at any time, without the payment of any
penalty, by vote of a majority of the Trustees of the Fund or by a vote of
a majority of the outstanding voting securities of the Fund on not more
than 10 calendar days' written notice to the Sub-Adviser. The Sub-Adviser
may terminate the Agreement without penalty on not less than 60 calendar
days' written notice to the Trust and the Adviser.
This Agreement shall terminate automatically and immediately in the event
of its assignment, or in the event of a termination of the Advisory
Agreement with the Trust. As used in this Section 6, the terms
"assignment" and "vote of a majority of the outstanding voting securities"
shall have the respective meanings set forth in the 1940 Act and the rules
and regulations thereunder, subject to such exceptions as may be granted
by the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. 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.
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9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other
party:
To the Adviser at: Xxxxxx Street Capital Management
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
To the Sub-Adviser at: Xxxxxxx Xxxxxxx Trees & Xxxxx, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Managing
Director
10. ANTI MONEY LAUNDERING. The Adviser agrees to provide the Sub-Adviser with
any documentation that it may reasonably require in order to comply with
all applicable anti money laundering regulation, including but not limited
to that of the United States and the United Kingdom. In addition, the
Adviser agrees that the Sub-Adviser may provide copies of such
documentation to counterparties which they may reasonably require in order
to fulfill their anti-money laundering procedures.
11. ENTIRE AGREEMENT; AMENDMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
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In the event the terms of this Agreement are applicable to more than one
portfolio of the Trust (for purposes of this Section 11, each a "Fund"),
the Adviser is entering into this Agreement with the Sub-Adviser on behalf
of the respective Funds severally and not jointly, with the express
intention that the provisions contained in each numbered paragraph hereof
shall be understood as applying separately with respect to each Fund as if
contained in separate agreements between the Adviser and Sub-Adviser for
each such Fund. In the event that this Agreement is made applicable to any
additional Funds by way of a Schedule executed subsequent to the date
first indicated above, provisions of such Schedule shall be deemed to be
incorporated into this Agreement as it relates to such Fund so that, for
example, the execution date for purposes of Section 6 of this Agreement
with respect to such Fund shall be the execution date of the relevant
Schedule.
This Agreement may be amended in writing at any time by the mutual
agreement of the Trust, the Adviser and the Sub-Adviser.
13. MISCELLANEOUS.
(a) A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Fund or the Trust.
(b) 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 SEC, whether of special or general application, such provision shall
be deemed to incorporate the effect of such rule, regulation or order.
(c) The Adviser and the Fund, hereby consents to being treated by the
Sub-Adviser as a "qualified eligible person" as defined in the rules
promulgated under the United States Commodity Exchange Act (the "CEA") for
the purposes of the CEA and the regulations thereunder.
(d) The Sub-Adviser represents to the Adviser and the Funds that it is a
"registered commodity trading advisor", as such term is defined in the CEA
and the regulations promulgated thereunder and shall during the term of
this Agreement satisfy all applicable requirements of the CEA relating to
a registered commodity trading advisor.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN
CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE CLIENTS, THIS BROCHURE OR
ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE
COMMISSION. THE COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING
IN A TRADING PROGRAM OR UPON THE ACCURACY OF COMMODITY TRADING ADVISOR
DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION
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HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR ACCOUNT DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
XXXXXX STREET FUNDS XXXXXXX XXXXXXX TREES & XXXXX, INC.
By: By:
/s/ Xxxx Xxxxxxxxx /s/ Xxxxx X. Xxxxxxx
---------------------------- ----------------------------------
Name: Name:
Xxxx Xxxxxxxxx Xxxxx X. Xxxxxxx
Title: Title:
Asst. Secretary Managing Director
XXXXXX STREET CAPITAL MANAGEMENT
By:
/s/ Xxxxxxx X. Xxxxx
----------------------------
Name:
Xxxxxxx X. Xxxxx
Title:
President and Chief Investment Officer
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SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
XXXXXX STREET FUNDS,
XXXXXX STREET CAPITAL MANAGEMENT,
AND
XXXXXXX XXXXXXX TREES & XXXXX, INC.
AS OF APRIL 29, 2005
Pursuant to Paragraph 4, the Adviser shall pay the Sub-Adviser compensation
calculated daily and paid monthly at an annual rate of 0.060% of the aggregate
average daily net assets of the Money Market and Treasury Money Market Funds,
respectively, up to $500 million and 0.020% of the aggregate average daily net
assets of the Money Market and Treasury Money Market Funds, respectively, in
excess of $500 million.
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