EXHIBIT 99.A
FORM OF
SUB-INVESTMENT ADVISORY AGREEMENT
XXXXX XXXXXX INCOME FUNDS
(Xxxxx Xxxxxx Premium Total Return Fund)
_______________, 1999
Dear Sirs:
Xxxxx Xxxxxx Income Funds (the "Company"), a trust organized under the laws
of the Commonwealth of Massachusetts, on behalf of Xxxxx Xxxxxx Premium Total
Return Fund (the "Fund"), and SSBC Fund Management Inc. (the "Adviser") each
confirms its agreement with Salomon Brothers Asset Management Inc. (the "Sub-
Adviser") as follows:
1. Investment Description; Appointment
The Company desires to employ its capital relating to the Fund by investing
and reinvesting in investments of the kind and in accordance with the investment
objective(s), policies and limitations specified in its Master Trust Agreement,
as amended from time to time (the "Master Trust Agreement"), in the Prospectus
relating to the Fund (the "Prospectus") and the Statement of Additional
Information relating to the Fund (the "Statement") filed with the Securities and
Exchange Commission as part of the Company's Registration Statement on Form N-
1A, as amended from time to time, and in the manner and to the extent as may
from time to time be approved by the Board of Trustees of the Company (the
"Board"). Copies of the Prospectus, the Statement and the Master Trust
Agreement have been or will be submitted to the Sub-Adviser. The Company agrees
to provide copies of all amendments to the Prospectus, the Statement and the
Master Trust Agreement to the Sub-Adviser on an on-going basis. The Company
employs the Adviser as the investment adviser to the Fund, and the Company and
the Adviser desire to employ and hereby appoint the Sub-Adviser to act as the
sub-investment adviser to the Fund. The Sub-Adviser accepts the appointment and
agrees to furnish the services for the compensation set forth below.
2. Services as Sub-Investment Adviser
Subject to the supervision, direction and approval of the Board of the
Company and the Adviser, the Sub-Adviser will: (a) manage the Fund's portfolio
in accordance with the Fund's investment objective(s) and policies as stated in
the Master
Trust Agreement, the Prospectus and the Statement; (b) make investment decisions
for the Fund; (c) place purchase and sale orders for portfolio transactions for
the Fund; and (d) employ professional portfolio managers and securities analysts
who provide research services to the Fund. In providing those services, the Sub-
Adviser will conduct a continual program of investment, evaluation and, if
appropriate, sale and reinvestment of the Fund's assets.
3. Brokerage
In selecting brokers or dealers to execute transactions on behalf of the
Fund, the Sub-Adviser will seek the best overall terms available. In assessing
the best overall terms available for any transaction, the Sub-Adviser will
consider factors it deems relevant, including, but not limited to, 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, for the specific transaction and on a
continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, the Sub-Adviser
is authorized to consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to
the Fund and/or other accounts over which the Sub-Adviser or its affiliates
exercise investment discretion.
4. Information Provided to the Company
The Sub-Adviser will keep the Adviser and the Company informed of
developments materially affecting the Fund and will, on its own initiative,
furnish the Adviser and the Company from time to time with whatever information
the Sub-Adviser believes is appropriate for this purpose.
5. Standard of Care
The Sub-Adviser shall exercise its best judgment in rendering the services
listed in paragraphs 2 and 3 above. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund and the
Adviser 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-Adviser against any liability to the Adviser, the Company or the
shareholders of the Fund to which the Sub-Adviser 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-Adviser's reckless disregard
of its obligations and duties under this Agreement.
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6. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Adviser will pay the Sub-Adviser on the first business day of each month a fee
for the previous month at an annual rate based on the Fund's average daily net
assets in an amount agreed to from time to time by the parties to this
Agreement, but not to exceed the fee paid to the Adviser under its investment
advisory agreement with the Fund. The fee for the period from the Effective
Date (defined below) of the Agreement to the end of the month during which the
Effective Date occurs shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this Agreement
before the end of any month, the fee for such part of that month shall be
prorated according to the proportion that such period bears to the full monthly
period and shall be payable upon the date of termination of this Agreement. For
the purpose of determining fees payable to the Sub-Adviser, the value of the
Fund's net assets shall be computed at the times and in the manner specified in
the Prospectus and/or the Statement.
7. Expenses
The Sub-Adviser will bear all expenses in connection with the performance
of its services under this Agreement. The Fund will bear certain other expenses
to be incurred in its operation, including, but not limited to, investment
advisory fees payable to the Adviser and administration fees; fees for necessary
professional and brokerage services; fees for any pricing service; the costs of
regulatory compliance; and costs associated with maintaining the Company's legal
existence and shareholder relations.
8. Reduction of Fee
If in any fiscal year the aggregate expenses of the Fund (including fees
pursuant to this Agreement and the Fund's investment advisory agreement, but
excluding interest, taxes, brokerage and extraordinary expenses) exceed the
expense limitations of any state having jurisdiction over the Fund, the Sub-
Adviser will reduce its fee by the proportion of such excess expense equal to
the proportion that its fee thereunder bears to the aggregate of fees paid by
the Fund for investment advice and administration in that year, to the extent
required by state law. A fee reduction pursuant to this paragraph 8, if any,
will be estimated, reconciled and paid on a monthly basis.
9. Services to Other Companies or Accounts
The Company understands that the Sub-Adviser now acts, will continue to act
and may act in the future as investment adviser
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to fiduciary and other managed accounts, and as investment adviser to other
investment companies, and the Company has no objection to the Sub-Adviser's so
acting, provided that whenever the Fund and one or more other investment
companies advised by the Sub-Adviser have available funds for investment,
investments suitable and appropriate for each will be allocated in accordance
with a formula believed to be equitable to each company. The Company recognizes
that in some cases this procedure may adversely affect the size of the position
obtainable for the Fund. In addition, the Company understands that the persons
employed by the Sub-Adviser to assist in the performance of the Sub-Adviser's
duties under this Agreement will not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or restrict the
right of the Sub-Adviser or any affiliate of the Sub-Adviser to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature.
10. Term of Agreement
This Agreement shall become effective as of __________, 1999 (the
"Effective Date") and shall continue for an initial two-year term and shall
continue thereafter so long as such continuance is specifically approved at
least annually by (i) the Board of the Company or (ii) a vote of a "majority"
(as that term is defined in the Investment Company Act of 1940, as amended (the
"1940 Act")) of the Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority of the Board who are
not "interested persons" (as defined in the 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board of the Company or by vote of holders of a majority
of the Fund's shares, or upon 90 days' written notice, by the Sub-Adviser. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act and the rules thereunder).
11. Representation by the Company
The Company represents that a copy of the Master Trust Agreement is on file
with the Secretary of The Commonwealth of Massachusetts and with the Boston City
Clerk.
12. Limitation of Liability
The Company, the Adviser and the Sub-Adviser agree that the obligations of
the Company under this Agreement shall not be binding upon any of the members of
the Board, shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Company, individually, but are binding only upon
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the assets and property of the Fund and not upon the assets and property of any
other portfolio of the Company. The execution and delivery of this Agreement
have been authorized by the Board and a majority of the holders of the Fund's
outstanding voting securities, and signed by an authorized officer of the
Company, acting as such, and neither such authorization by such members of the
Board and shareholders nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the assets and property of the
Fund as provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly indicate your
acceptance of this Agreement by signing and returning the enclosed copy of this
Agreement.
Very truly yours,
XXXXX XXXXXX INCOME FUNDS
on behalf of its
Premium Total Return Fund
By:
----------------------------
Name: Xxxxx X. XxXxxxxx
Title: Chairman of the Board
SSBC FUND MANAGEMENT INC.
By:
----------------------------
Name:
Title:
Accepted:
SALOMON BROTHERS ASSET
MANAGEMENT INC.
By:
------------------------------
Name:
Title:
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