XXXXXXX ASSET MANAGEMENT CORP.
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
May 3, 1999
XXXXXXX INVESTORS TRUST, on behalf of
Xxxxxxx Money Market Fund
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
XXXXX & TANG ASSET MANAGEMENT L.P.
000 XXXXX XXXXXX
XXX XXXX, XXX XXXX 00000-0000
Sub-advisory Agreement
Dear Sirs:
Xxxxxxx Investors Trust (the "trust"), of which Xxxxxxx Money Market Fund
(the "fund") is a series, has been organized as a business trust under the laws
of the State of Delaware to engage in the business of an investment company. The
trust's shares of beneficial interest are currently divided into five series
(including the fund), each series representing the entire undivided interest in
a separate portfolio of assets.
The board of trustees of the trust (the "trustees") has selected Xxxxxxx
Asset Management Corp. (the "adviser") to provide overall investment advice and
management for the fund, and to provide certain other services, under the terms
and conditions provided in the investment advisory agreement, dated as of the
date hereof, between the trust, on behalf of the fund, and the adviser (the
"investment advisory agreement").
The adviser and the trustees have selected Xxxxx & Tang Asset Management
L.P. (the "sub-adviser") to provide the adviser and the fund with the advice and
services set forth below, and the sub-adviser is willing to provide such advice
and services, subject to the review of the trustees and overall supervision of
the adviser, under the terms and conditions hereinafter set forth. The
sub-adviser hereby represents and warrants that it is registered
as an investment adviser under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"). Accordingly, the trust, on behalf of the fund, and the
adviser agree with the sub-adviser as follows:
1. Delivery of Documents. The trust has furnished the sub-adviser with
copies, properly certified or otherwise authenticated, of each of
the following:
(1) agreement and declaration of trust of the trust, dated August
20, 1998 (the "declaration of trust");
(2) by-laws of the trust as in effect on the date hereof;
(3) resolutions of the trustees selecting the sub-adviser as the
investment sub-adviser to the fund and approving this
sub-advisory agreement (the "agreement");
(4) resolutions of the trustees selecting the adviser as
investment adviser to the fund and approving the investment
advisory agreement and resolutions adopted by the initial
shareholder of the fund approving the investment advisory
agreement;
(5) the adviser's investment advisory agreement;
(6) the fund's prospectus and statement of additional information;
and
(7) the trust's code of ethics.
The adviser will furnish the sub-adviser from time to time with copies,
properly certified or otherwise authenticated, of all amendments of or
supplements to the foregoing, if any.
2. Investment Services. The sub-adviser will use its best efforts to
provide to the fund continuing and suitable investment advice with
respect to investments, consistent with the investment policies,
objectives and restrictions of the fund as set forth in the fund's
prospectus and statement of additional information. In the
performance of the sub-adviser's duties hereunder, subject always to
the provisions contained in the documents delivered to the
sub-adviser pursuant to Section 1 above, as from time to time
amended or supplemented, the sub-adviser will, at its own expense:
-44-
(1) furnish the adviser and the fund with advice and
recommendations, consistent with the investment policies,
objectives and restrictions of the fund as set forth above, with
respect to the purchase, holding and disposition of portfolio
securities and other permitted investments;
(2) furnish the adviser and the fund with advice in connection
with policy decisions to be made by the board of trustees or
any committee thereof about the fund's investments and, as
requested, furnish the fund with research, economic and
statistical data in connection with the fund's investments and
investment policies;
(3) submit such reports relating to the valuation of the fund's
securities as the adviser may reasonably request;
(4) subject to prior consultation with the adviser, assist the fund
in any negotiations relating to the fund's investments with
issuers, investment banking firms, securities brokers or dealers
and other institutions or investors;
(5) consistent with the provisions of Section 7 of this agreement,
place orders for the purchase, sale or exchange of portfolio
securities for the fund's account with brokers or dealers
selected by the adviser or the sub-adviser, provided that in
connection with the placing of such orders and the selection of
such brokers or dealers the sub-adviser will seek to obtain best
price and execution, except as otherwise provided in the
prospectus and statement of additional information of the fund;
(6) from time to time or at any time requested by the adviser or the
trustees, make reports to the adviser or the trustees, as
requested, of the sub-adviser's performance of the foregoing
services;
(7) subject to the supervision of the adviser, maintain and preserve
the records required by the Investment Company Act of 1940 (the
"1940 Act") to be maintained by the sub-adviser (the sub-adviser
agrees that such records are the property of the trust and
copies will be surrendered to the trust promptly upon request
therefor);
-45-
(8) give instructions to the custodian (including any sub-custodian)
of the fund as to deliveries of securities to and from such
custodian and payments of cash for the account of the fund, and
advise the adviser on the same day such instructions are given;
(9) cooperate generally with the fund and the adviser to provide
information necessary for the preparation of registration
statements and periodic reports to be filed with the Securities
and Exchange Commission, including Form N-1A, semi-annual
reports on Form N-SAR, periodic statements, shareholder
communications and proxy materials furnished to holders of
shares of the fund, filings with states and with United States
agencies responsible for tax matters, and other reports and
filings of like nature.
In the performance of its duties hereunder, the sub-adviser is and will be an
independent contractor and unless otherwise expressly provided or authorized
will have no authority to act for or represent the fund or trust in any way or
otherwise be deemed to be an agent of the fund, the trust or of the adviser.
3. Expenses Paid by the Sub-adviser. The sub-adviser will pay the cost
of maintaining the staff and personnel necessary for it to perform
its obligations under this agreement, the expenses of office rent,
telephone, telecommunications and other facilities that it is
obligated to provide in order to perform the services specified in
Section 2, and any other expenses incurred by it in connection with
the performance of its duties hereunder.
4. Expenses of the Fund Not Paid by the Sub-adviser. The sub-adviser
will not be required to pay any expenses which this agreement does
not expressly state will be payable by the sub-adviser. In
particular, and without limiting the generality of the foregoing but
subject to the provisions of Section 3, the sub-adviser will not be
required to pay any fund expense or to reimburse the adviser for any
such expense that the adviser is required to pay.
5. Compensation of the Sub-adviser. The adviser will pay the
sub-adviser, as compensation for services and expenses assumed
hereunder, a fee as set forth in Schedule I. Sub-advisory fees
payable hereunder will be computed daily and paid monthly in
arrears. If this agreement is effective subsequent to the first day
of the month, or if this agreement is terminated, the fee provided
in
-46-
this section will be computed on the basis of the number of days in
the month for which this Agreement is in effect, subject to a pro
rata adjustment based on the number of days elapsed in the current
month as a percentage of the total number of days in such month. The
sub-adviser understands and agrees that neither the trust nor the
fund has any liability for the sub-adviser's fee hereunder.
Calculations of the sub-adviser's fee will be based on average net
asset values as provided by the adviser.
6. Other Activities of the Sub-adviser and Its Affiliates. Nothing
herein contained will prevent the sub-adviser or any of its
affiliates or associates from engaging in any other business or from
acting as investment adviser or investment manager for any other
person or entity, whether or not having investment policies or a
portfolio similar to the fund. It is specifically understood that
officers, directors and employees of the sub-adviser and its
affiliates may engage in providing portfolio management services and
advice to other investment advisory clients of the sub-adviser or of
its affiliates.
7. Avoidance of Inconsistent Position. In connection with purchases or
sales of portfolio securities for the account of the fund, neither
the sub-adviser nor any of its directors, officers or employees will
act as principal or agent or receive any commission. The sub-adviser
will not knowingly recommend that the fund purchase, sell or retain
securities of any issuer in which the sub-adviser has a financial
interest without obtaining prior approval of the adviser prior to
the execution of any such transaction. Access persons (as defined in
Rule 17j-1 under the 0000 Xxx) of the sub-adviser will provide
personal trading reports to a designated representative of the
adviser in accordance with the trust's code of ethics.
8. No Partnership or Joint Venture. The trust, the fund, the adviser
and the sub-adviser are not partners of or joint venturers with each
other and nothing herein shall be construed so as to make them such
partners or joint venturers or impose any liability as such on any
of them.
9. Limitation of Liability of the Sub-adviser. The sub-adviser will not
be liable for any error of judgment or mistake of law or for any
loss suffered by the trust, the fund or the adviser in connection
with the matters to which this agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on
the sub-
-47-
adviser's part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this agreement.
10. Duration and Termination of this Agreement. This agreement will
remain in effect until April 30, 2001 and from year to year
thereafter, but only so long as such continuance is specifically
approved at least annually by (a) a majority of the trustees who are
not interested persons of the adviser, of the sub-adviser or (other
than as board members) of the trust, cast in person at a meeting
called for the purpose of voting on such approval, and (b) either
(i) the trustees or (ii) a majority of the outstanding voting
securities of the fund. This agreement may, on 60 days written
notice, be terminated at any time without the payment of any penalty
by the fund by vote of a majority of the outstanding voting
securities of the fund or by the board of trustees or by the adviser
or by the sub-adviser. Termination of this agreement with respect to
the fund will not be deemed to terminate or otherwise invalidate any
provisions of any contract between you and any other series of the
trust. This agreement will automatically terminate in the event of
its assignment or upon the termination of the adviser's investment
advisory agreement. In interpreting the provisions of this Section
10, the definitions contained in Section 2(a) of the 1940 Act
(including the definitions of "assignment," "interested person" and
"voting security"), will apply.
11. Amendment of this Agreement. No provision of this agreement may be
changed or waived orally, but only by an instrument in writing
signed by the party against which enforcement of the change or
waiver is sought. No amendment, transfer, assignment, sale,
hypothecation or pledge of this agreement shall be effective until
approved by (a) the trustees, including a majority of the trustees
who are not interested persons of the adviser, the sub-adviser or
(other than as board members) the trust, cast in person at a meeting
called for the purpose of voting on such approval, and (b) a
majority of the outstanding voting securities of the fund, as
defined in the 1940 Act.
12. Miscellaneous.
(1) The captions in this agreement are included for convenience of
reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect. This agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
-48-
original, but all of which together shall constitute one and the
same instrument. The name Xxxxxxx Investors Trust is the
designation of the trustees under the declaration of trust,
dated August 20, 1998 and the declaration of trust has been
filed with the Secretary of State of the State of Delaware. The
obligations of the trust and the fund are not personally binding
upon, nor will resort be had to the private property of, any of
the trustees, shareholders, officers, employees or agents of the
trust or the fund, but only the fund's property shall be bound.
The fund will not be liable for the obligations of any other
series of the trust.
(2) Nothing herein contained will limit or restrict the sub-adviser
or any of its officers, affiliates or employees from buying,
selling or trading in any securities for its or their own
account or accounts. The trust and fund acknowledge that the
sub-adviser and its officers, affiliates and employees, and its
other clients may at any time have, acquire, increase, decrease
or dispose of positions in investments which are at the same
time being acquired or disposed of by the fund. The sub-adviser
will have no obligation to acquire for the fund, a position in
any investment which the sub-adviser, its officers, affiliates
or employees 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 fund. Nothing herein
contained will prevent the sub-adviser from purchasing or
recommending the purchase of a particular security for one or
more funds or clients while other funds or clients may be
selling the same security.
(3) Any information supplied by the sub-adviser, which is not
otherwise in the public domain, in connection with the
performance of its duties hereunder is confidential and may be
used only by the fund and/or its agents, and only in connection
with the fund and its investments.
(4) Governing Law. This agreement shall be governed by the
substantive law of the State of New York and the applicable
provisions of the 1940 Act.
Yours very truly,
XXXXXXX ASSET MANAGEMENT CORP.
By:_______________________________
Its: ______________________________
-49-
The foregoing agreement is hereby
agreed to as of the date thereof.
XXXXXXX INVESTORS TRUST
on behalf of Xxxxxxx Money
Market Fund
By:______________________________
Its:______________________________
XXXXX & XXXX ASSET MANAGEMENT L.P.
By:______________________________
Its:______________________________
-50-
SCHEDULE I
Annual Fee Rate as a Percentage
Fund of Average Daily Net Asset Value
---- --------------------------------
Xxxxxxx Money Market Fund 0.15% of first $100,000,000
0.10% of next $50,000,000
0.05% over $150,000,000
The average net asset value for the month will be based on the net asset
value used in determining the price at which fund shares are sold, repurchased
or redeemed on each day of the month.
If this agreement becomes effective as to a fund subsequent to the first
day of a month, or terminates before the last day of a month, your compensation
for such fraction of the month will be determined by applying the foregoing
percentages to the average daily net asset value of the fund during such
fraction of a month and in the proportion that such fraction of a month bears to
the entire month.
-51-
