FORM OF
AMENDED AND RESTATED SUB-ADVISORY AGREEMENT
XXXXXXXXX XXXXXX INCOME FUNDS
This Sub-Advisory Agreement ("Agreement") is made as of [_______], between
Xxxxxxxxx Xxxxxx Management Inc., a New York corporation ("Manager") and Xxxxxx
Brothers Asset Management LLC, a Delaware limited liability company ("Adviser").
WITNESSETH:
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WHEREAS, Xxxxxxxxx Xxxxxx Income Funds, a Delaware statutory trust ("Trust") is
registered under the Investment Company Act of 1940, as amended ("1940 Act"), as
an open-end, diversified management investment company and has established
several separate series of shares ("Series") with each Series having its own
assets and investment policies; and
WHEREAS, Trust has retained Manager to provide investment advisory and
administrative services to certain of the Series of the Trust pursuant to a
Management Agreement dated [_______], which agreement specifically provides for
the retention of a sub-adviser to provide the investment advisory services
described therein; and
WHEREAS, Manager desires to retain Adviser as investment adviser to furnish
investment advisory and portfolio management services to each Series listed in
Schedule A attached hereto, to such other Series of Trust hereinafter
established as agreed to from time to time by the parties, evidenced by an
addendum to Schedule A (hereinafter "Series" shall refer to each Series which is
subject to this Agreement), and the Adviser is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. SERVICES OF THE ADVISER
1.1 INVESTMENT MANAGEMENT SERVICES. The Adviser shall act as the investment
adviser to the Series and, as such, shall (i) obtain and evaluate such
information relating to the economy, industries, businesses, securities markets
and securities as it may deem necessary or useful in discharging its
responsibilities hereunder, (ii) formulate a continuing program for the
investment of the assets of the Series in a manner consistent with its
investment objectives, policies and restrictions, and (iii) determine from time
to time securities to be purchased, sold, retained or lent by the Series, and
implement those decisions, including the selection of entities with or through
which such purchases, sales or loans are to be effected; provided, that the
Adviser will place orders pursuant to its investment determinations either
directly with the issuer or with a broker or dealer, and if with a broker or
dealer, (a) will attempt to obtain the best net price and most favorable
execution of its orders, and (b) may nevertheless in its discretion purchase and
sell portfolio securities from and to brokers and dealers who provide the
Adviser with research, analysis, advice and similar services and pay such
brokers and dealers in return a higher commission or spread than may be charged
by other brokers or dealers.
The Series hereby authorizes any entity or person associated with the Adviser
which is a member of a national securities exchange to effect or execute any
transaction on the exchange for the account of the Series which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Series hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv).
The Adviser shall carry out its duties with respect to the Series' investments
in accordance with applicable law and the investment objectives, policies and
restrictions of the Series adopted by the trustees of Trust ("Trustees"), and
subject to such further limitations as the Series may from time to time impose
by written notice to the Adviser.
1.2 ADMINISTRATIVE SERVICES. The Adviser shall:
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1.2.1 BOOKS AND RECORDS. Assure that all records required to be
maintained and preserved by Trust and/or the Series with respect to securities
transactions are maintained and preserved by it or on its behalf in accordance
with applicable laws and regulations.
1.2.2 REPORTS AND FILINGS. Assist in the preparation of (but not pay
for) all periodic reports by Trust or the Series to Interestholders of the
Series and all reports and filings required to maintain the registration and
qualification of the Series, or to meet other regulatory or tax requirements
applicable to the Series, under federal and state securities and tax laws.
1.2.3 REPORTS TO THE MANAGER. Prepare and furnish to Manager such
reports, statistical data and other information in such form and at such
intervals as Manager may reasonably request.
1.2.4 OTHER SERVICES. The Adviser shall perform such other functions
of management and supervision as may be requested by the Manager and agreed to
by the Adviser.
2. ADVISORY FEE
2.1 FEE. As compensation for all services rendered, facilities provided and
expenses paid or assumed by the Adviser under this Agreement, Manager shall pay
the Adviser an annual fee as set out in Schedule B to this Agreement.
2.2 COMPUTATION AND PAYMENT OF FEE. The advisory fee shall accrue on each
calendar day, and shall be payable monthly on the first business day of the next
succeeding calendar month. The daily fee accruals shall be computed by
multiplying the fraction of one divided by the number of days in the calendar
year by the applicable annual advisory fee rate (as set forth in Schedule B
hereto), and multiplying this product by the net assets of the Series,
determined in the manner established by the Trustees, as of the close of
business on the last preceding business day on which the Series' net asset value
was determined. The fee provided in this Agreement for any Series shall be
adjusted proportionately with any waiver or rebate of the fee due to the Manager
from that Series, whether voluntary, contractual, or compelled by law.
2.3 EXPENSES. During the term of this Agreement, Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement other than
the cost of securities (including brokerage commissions, if any) purchased for
any Series.
3. OWNERSHIP AND HOLDING PERIOD OF RECORDS
All records required to be maintained and preserved by the Series pursuant to
the rules or regulations under Section 31(a) of the 1940 Act and maintained and
preserved by the Adviser on behalf of the Series are the property of the Series
and shall be surrendered by the Adviser promptly on request by the Series;
provided, that the Adviser may at its own expense make and retain copies of any
such records. The Adviser agrees to preserve for the period prescribed by Rule
31a-2 under the 1940 Act any such records required to be maintained by Rule
31a-1 under the 1940 Act.
4. REPORTS TO ADVISER
Manager shall furnish or otherwise make available to the Adviser such copies of
each Series' registration statements, financial statements, proxy statements,
reports, and other information relating to the Series' business and affairs as
the Adviser may, at any time or from time to time, reasonably require in order
to discharge its obligations under this Agreement.
5. SERVICES TO OTHER CLIENTS
Nothing herein contained shall limit the freedom of the Adviser or any
affiliated person of the Adviser to render investment management to other
investment companies, to act as investment adviser or investment counselor to
other persons, firms or corporations, or to engage in other business activities.
6. LIMITATION OF LIABILITY OF ADVISER AND ITS PERSONNEL
Neither the Adviser nor any director, officer or employee of the Adviser
performing services for the Series at the direction or request of the Adviser in
connection with the Adviser's discharge of its obligations hereunder shall be
liable for any error of judgment or mistake of law or for any loss suffered by
the Manager or a Series in connection with any matter to which this Agreement
relates; provided, that nothing herein contained shall be construed (i) to
protect the Adviser against any liability to Trust or a Series or its
Interestholders to which the Adviser would otherwise be subject by reason of the
Adviser's willful misfeasance, bad faith, or gross negligence in the performance
of the Adviser's duties, or by reason of the Adviser's reckless disregard of its
obligations and duties under this Agreement, or (ii) to protect any director,
officer or employee of the Adviser who is or was a Trustee or officer of Trust
against any liability to Trust or a Series or its Interestholders to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such person's office with Trust.
7. TERM OF AGREEMENT
The term of this Agreement shall begin on the date first above written with
respect to each Series listed in Schedule A on the date hereof and, unless
sooner terminated as hereinafter provided, this Agreement shall remain in effect
through October 31, 2007. With respect to each Series added by execution of an
Addendum to Schedule A, the term of this Agreement shall begin on the date of
such execution and, unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect to October 31 of the year following the year of
execution. Thereafter, in each case, this Agreement shall continue in effect
with respect to each Series from year to year, subject to the termination
provisions and all other terms and conditions hereof, provided, such continuance
with respect to a Series is approved at least annually by vote of the holders of
a majority of the outstanding voting securities of the Series or by the
Trustees, provided, that in either event such continuance is also approved
annually by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trustees who are not parties to
this Agreement or interested persons of either party hereto; and provided
further that neither party hereto shall have notified the other party in writing
at least sixty (60) days prior to the first expiration date hereof or at least
sixty (60) days prior to any expiration date hereof of any year thereafter that
it does not desire such continuation. The Adviser shall furnish to the Manager,
promptly upon its request, such information as the Trustees of the Trust deem
reasonably necessary to evaluate the terms of this Agreement or any extension,
renewal or amendment thereof.
8. AMENDMENT OR ASSIGNMENT OF AGREEMENT
Any amendment to this Agreement shall be in writing signed by the parties
hereto; provided, that no such amendment shall be effective unless authorized on
behalf of any Series (i) by resolution of the Trustees, including the vote or
written consent of a majority of the Trustees who are not parties to this
Agreement or interested persons of either party hereto, and (ii), as and to the
extent required under the 1940 Act, by vote of a majority of the outstanding
voting securities of the Series. This Agreement shall terminate automatically
and immediately in the event of its assignment.
9. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time with respect to any Series by
either party hereto, without the payment of any penalty, upon sixty (60) days'
prior written notice to the other party. This Agreement shall terminate
automatically and immediately with respect to a Series if the Management
Agreement between the Trust and Manager terminates with respect to that Series.
This Agreement may also be terminated with respect to any Series on sixty (60)
days notice to the Adviser, without the payment of any penalty, by a vote of the
Board of Trustees of the Trust or by the vote of a majority of the outstanding
voting securities of the Series.
10. INTERPRETATION AND DEFINITION OF TERMS
Any question of interpretation of any term or provision of this Agreement having
a counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any, by the United States courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested person," "assignment" and "affiliated person," as used
in this Agreement shall have the meanings assigned to them by Section 2(a) of
the 1940 Act. In addition, when the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is modified, interpreted or relaxed
by a rule, regulation or order of the Securities and Exchange Commission,
whether of special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
11. CHOICE OF LAW
This Agreement is made and to be principally performed in the State of New York
and except insofar as the 1940 Act or other federal laws and regulations may be
controlling, this Agreement shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of New York.
12. CAPTIONS
The captions in this Agreement are included for convenience of reference only
and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
13. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
seals to be hereunto affixed, as of the day and year first above written.
XXXXXXXXX XXXXXX MANAGEMENT INC.
___________________________________________
Name:
Title:
XXXXXX BROTHERS ASSET MANAGEMENT LLC
___________________________________________
Name:
Title:
Date:
FORM OF
SCHEDULE A
SERIES OF XXXXXXXXX XXXXXX INCOME FUNDS
Xxxxxxxxx Xxxxxx Cash Reserves
Xxxxxxxxx Xxxxxx Government Money Fund
Xxxxxx Brothers High Income Bond Fund
Xxxxxx Brothers Short Duration Bond Fund
Xxxxxx Brothers Municipal Securities Trust
Xxxxxx Brothers Strategic Income Fund
Xxxxxx Brothers Municipal Money Fund
Date: [February __, 2007]
FORM OF
SCHEDULE B
RATE OF COMPENSATION
FUND RATE OF COMPENSATION BASED ON
EACH FUND'S AVERAGE DAILY NET
ASSETS
Xxxxxxxxx Xxxxxx Cash Reserves [___%]
Xxxxxxxxx Xxxxxx Government Money Fund [___%]
Xxxxxx Brothers High Income Bond Fund [___%]
Xxxxxx Brothers Short Duration Bond Fund [___%]
Xxxxxx Brothers Municipal Securities Trust [___%]
Xxxxxx Brothers Strategic Income Fund [___%]
Xxxxxx Brothers Municipal Money Fund [___%]
Date: [February __, 2007]
